The federal government appears set to cut funding for 82 “high-risk” infrastructure projects as part of its response to a review of infrastructure funding.
Key points:
- A major infrastructure funding study has recommended that 82 projects not receive federal funding.
- The names and locations of these projects as well as the government’s response will be made public
- Regional road and telephone infrastructure was listed as an area requiring more funding.
The government has gone to considerable lengths to defend the review, in anticipation of expected criticism at state, territory and local government levels.
He argued that the existing pipeline of 274 projects over 10 years could not be delivered within the current budget allocation of $120 billion.
Assessors Clare Gardiner-Barnes, Mike Mrdak AO and Reece Waldock AM found many projects lacked merit and were at serious risk of further delay.
“Some projects demonstrate no merit, lack any national strategic rationale and do not meet the Australian Government’s national investment priorities,” the study reads.
“In many cases, these projects are also at high risk of further cost pressures and/or delays.
“A number of projects received a funding commitment from the Australian Government too early in their planning process and before credible detailed planning, design and costing had been undertaken.
“Some projects demonstrate no merit, lack any national strategic rationale and do not meet the Australian Government’s national investment priorities.”
The names and locations of the projects that will no longer receive federal funding have not yet been released.
All 82 projects are recommended to stop “making any payments necessary to fulfill contractual obligations.”
When the review was announced in May, Minister of Infrastructure, Transport, Regional Development and Local Government Catherine King committed to funding a $120 billion infrastructure pipeline over 10 years.
Ms King said there would be no reduction in the total pipeline budget.
“The Albanian Government is committed to delivering infrastructure that builds Australia and improves lives,” she said.
“To do this, we need an infrastructure program that is fit for purpose, financially responsible and, above all, achievable.
“The independent review found that the infrastructure investment program we inherited could not be delivered.
“Thanks to state and territory cooperation, we now have a forward-looking plan of projects that are well planned and targeted to achieve important economic, social and environmental objectives.”
New recommended financing model
The review also recommended the government adopt a 50/50 funding model for all new projects, with the Commonwealth covering half the cost and state, territory and local governments paying the rest.
If adopted, the review also suggests that states and territories should develop, in consultation with local governments, annual infrastructure plans including projects requiring federal funding over the next decade and submit them to the federal government.
For projects already underway, assessors proposed an independent assurance review process to enable transparent review of risks, commercial agreements and timelines for high-risk developments.
Additional funding for the Roads to Recovery program and the mobile phone Black Spot program was also recommended, with the Government announcing a response to this in the coming days.
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