Bill Shorten is promising a $10bn federal infrastructure bank to kick-start rail and road projects around the country as Labor begins to roll out its major policy ideas ahead of next year’s election.
Labor proposes to tip $3.6bn left in the Building Australia Fund – originally established by the Rudd government – into a new financing facility run by Infrastructure Australia, and to borrow another $6.4bn for the fund.
It says the fund would be modelled on the successful $10bn Clean Energy Finance Corporation, set up under the Gillard government, which is lending to major renewable projects and also generating a profit. Tony Abbott ridiculed the CEFC and tried to abolish it as prime minister, but the Turnbull government has indicated a different attitude. The Abbott government is proposing a similar “off budget” lending facility with its $5bn Northern Australia Infrastructure Fund.
The Coalition government had intended to use the $3.6bn in the Building Australia Fund for its own policy to try to kickstart infrastructure investment – the asset recycling fund – but was unable to get enabling legislation through the senate. Its idea is to provide extra funding to state governments that sold existing assets to invest in new roads.
Shorten will use a speech in Brisbane on Thursday to make the case for his approach to spending on infrastructure.
“The truth is, the traditional commonwealth grant funding approach cannot guarantee the scale of the work required. We’ve tried it the old way – on the back of the budgetary process. It isn’t sufficient for our needs. We can’t expect to catch-up the shortfall and unlock the infrastructure market through business-as-usual,” he will say, according to speech notes distributed to the media.
The $10bn financing facility will allow the existing infrastructure planning body, Infrastructure Australia, to provide a combination of guarantees, loans or equity investment to new projects. Labor envisages that once a project is “underway and financeable” Infrastructure Australia could sell its equity or debt interests to long-term investors like super funds.
“This would maximise the return of the commonwealth, while allowing it to re-commit this capital to new projects underway,” Shorten will say.
The commonwealth’s involvement in the financing would be “priced based on what stage and risk profile the project is at.”
Shorten will also announce a list of projects to which Labor will give priority. They have already been assessed as high priority by IA or will fast-tracked. A committee of experts, to be appointed by a Labor government, would decide which existing projects would be funded by the new facility and which by existing or new government grants.
The priority projects are;
- A rail link to Sydney’s new second airport at Badgerys Creek (current plans have it connected to the city by an “efficient” bus service)
- The Melbourne Metro, revived by Victorian Labor premier Daniel Andrews after becoming a major issue in the state election campaign.
- The Cross River Rail project in Brisbane, which was defunded by Abbott government
- Second stage of light rail on the Gold Coast.
- Planning work on the Ipswich Motorway from Darra to Rocklea in Brisbane.
- Tasmania’s Midland Highway.
- Perth public transport.
- Gawler Line electrification in Adelaide.
- Fast-tracking the Pacific and Bruce Highway upgrades.
As prime minister, Abbott said the commonwealth would “stick to its knitting” and fund only major roads – leaving the states “free” to fund public transport. In most cases the states dramatically scaled back public transport plans in favour of the road projects that could attract the federal cash.
Malcolm Turnbull has said the commonwealth should fund both public transport and road projects.
