Major cuts to infrastructure projects will be needed due to at least $33bn of cost overruns and to help fight inflation, the Albanese government has conceded.
The infrastructure minister, Catherine King, confirmed that some of the 250 projects that have not begun construction in the $120bn pipeline will need to be cancelled or delayed as a result of the infrastructure review to be released “shortly”.
King said the federal government would still invest $120bn in infrastructure and some 300 projects that have begun construction would go ahead. But she has made no guarantees to save particular states or projects from cuts, prompting a backlash from the Queensland Labor government and others.
“The entire pipeline has not been managed well by the previous government,” King told reporters in Canberra on Monday.
Since taking office in May 2022, Labor has been frank about the need for cuts due to concerns about the feasibility of projects in the pipeline.
The issue has become more acute as the International Monetary Fund has warned a spending boom on infrastructure projects, mainly from the states, is a major factor pushing Australia’s economy beyond full capacity and fuelling inflation.
On Sunday the treasurer, Jim Chalmers, confirmed that the federal government would “need to make some difficult decisions about the infrastructure pipeline”.
On Monday King said “the infrastructure investment pipeline has been left in an absolute mess”, with “no headroom for cost overruns at all”.
“What the review has said … is that the pipeline went from 150 to 800 projects under the previous government, a large proportion of those coming into the pipeline in the lead up to the 2016 and the 2019 election campaigns.”
King said many projects had been announced without knowing how much they would cost, “so those projects are difficult to build because there isn’t enough money to build them”.
“Now what the review has actually shown is that in that $120bn pipeline … there are $33bn of known cost overruns with an expectation that there are more to come.
“And they are across every single one of the projects. We currently have 300 projects in construction. They are currently being built and all of those have continued.”
King said the review focused on the remaining 200 projects, and had made “recommendations around cancelling some … [and] around making sure we’ve got planning money and we slow the process down so we know what the costs are before we commit to construction”.
The minister said the federal government was “in negotiations” with the states, welcoming them for helping clean up the “mess” left by the Morrison government.
The Albanese government “would like to be able to add new projects”, she said, but “we cannot” do so unless it cancelled some projects.
The crossbench senator Jacqui Lambie told Sky News that new suburbs would require “new infrastructure”, as would the 2032 Brisbane Olympics.
“If you bring in migration to this country you’re going to need more housing, more suburbs, and they need a lot of other stuff that goes with them – big builds, big infrastructure, you can’t just stop that.”
The Queensland treasurer, Cameron Dick, has argued that as the state is growing it will need “more infrastructure, not less”.
Queensland is Australia’s growth state and we need more infrastructure, not less. If infrastructure cuts are needed, they should be made to southern states with low growth and high debt. #qldpol #auspol https://t.co/M8FLsPqJLM
— Cameron Dick (@camerondickqld) November 5, 2023
Asked about the $2.2bn committed by the federal government to Victoria’s suburban rail loop, King described the project as an “important part of transforming Melbourne”.
She noted that the federal investment was for “early works” and “any further investment” was be subject to Infrastructure Australia processes.
“We know that you need to be able to build new housing, new investment and new retail around existing suburban transport networks, and that is what suburban rail does.”
The Liberal Senate leader, Simon Birmingham, accused Labor of “chaotic policy” and a “lack of planning”.
“They don’t have a plan to tackle inflation and they appear to be grasping at straws here,” he said.
