CANBERRA - The Australian government announced plans to invest A$75 billion ($55 billion) in major infrastructure projects over the next 10 years, including an expansive inland railway and the potential purchase of a larger stake in the Snow Hydro Scheme, as it attempts to kickstart the country’s next growth phase.
“To support growth, we choose to invest in building Australia, rail by rail, runway by runway and road by road,” Treasurer Scott Morrison said in his budget address to parliament.
Australia has outpaced many of its developed country peers since the global financial crisis, but steady economic growth has been challenged in recent years by the end of the mining investment boom.
Morrison said investing in long-term infrastructure projects would support the country well into the future.
The flagship project is a 1,700 kilometer long new rail line between Melbourne in the southeast of the country and Brisbane on the northeast coast. The budget pledges $8.4 billion in equity to the Australian Rail Track Corporation to pay for the project that it forecasts will generate 16,000 jobs at the peak of construction.
CommSec chief economist Craig James said prior to the budget’s release that increased infrastructure spending would lift activity for developers and contractors, engineering and building material companies.
“A broad raft of infrastructure spending across the country will also serve to lift a number of boats - boosting economic momentum in cities and regions,” James said.
The budget forecast economic growth of 2.75 percent in 2017/18, strengthening to 3 percent through 2020/21. That was slightly weaker than the Reserve Bank of Australia’s estimates of 2.75-3.75 by mid-2018 through to June 2019.
Morrison also said the government was open to acquiring a larger share or outright ownership of the Snowy Mountains Hydro Scheme.
Prime Minister Malcolm Turnbull announced a A$2 billion taxpayer funded upgrade of the Scheme earlier this year to provide stable power amid a series of embarrassing blackouts across the east of the country.
Morrison said any increased government stake would be dependent on the project remaining in public hands and the New South Wales and Victoria state governments returning reinvesting the funds in priority infrastructure projects.
Also on the infrastructure agenda was a A$10 billion National Rail Programme to build networks to better connect cities and regions.
The budget also gave some more detail on the government's plans to develop a second international airport in Sydney. The government stepped in to take the reins last week after Sydney Airport Holdings SYD.AX declined its right of first refusal for the development.
Morrison said the government would inject up to A$5.3 billion over the next 10 years into the newly developed Sydney Airport Corporation, which will both build and operate the facility.
The government expects the airport, scheduled to open in 2020, to create 20,000 jobs by 2030 and 60,000 in the longer term.