Federal Budget 2011-12 provides support to cities; infrastructure

THE Federal Budget 2011-12, released last Tuesday, provides $181.4 million for a range of practical measures that aim to promote more productive, sustainable and liveable cities. It also increases funding for Infrastructure Australia by nearly 40 per cent to $36 million over four years.

The Budget measures coincided with the release of the key principles for a national urban policy for Australia, 'Our Cities, Our Future - a National Urban Policy Framework', which articulates the Australian Government's objectives and priorities for the nation's 18 major cities.

To support the new national urban policy, the 2011-12 Budget puts in place an' Action Plan for Our Cities' with an initial investment of $181.4 million over four years for: 

  • A 'Sustainable Australia - Liveable Cities and Urban Renewal Program' - $20 million - to leverage additional resources from state and territory governments as well as local councils for innovative solutions to poor urban design, high levels of car dependency, traffic congestion, a lack of open space and rising carbon emissions;
  • A 'Sustainable Australia - National Smart Managed Motorways Trial' to be developed by Infrastructure Australia and involving the retrofitting of smart technology to improve traffic flows along congested motorways and outer city roads, with $61.4 million available to co-fund projects with those states and territories which sign up to the government's national transport reforms; and
  • $100 million for a new program, the 'Sustainable Australia - Suburban Jobs' initiative, to develop job opportunities and employment precincts within easy reach of where people live in the outer suburbs of Australia's major capital cities. This will be administered by the Minister for Sustainability, Environment, Water, Population and Communities.

In addition to the above programs, Infrastructure and Transport Minister Anthony Albanese said the Australian Government "will implement a reform package to strengthen Infrastructure Australia (IA) and drive lasting improvements to the way our nation plans, finances and builds the infrastructure it needs to compete in the 21st century."

Funding for Infrastructure Australia will be increased by nearly 40 per cent to $36 million over four years.

According to the Minister, the extra funding will enable Infrastructure Australia to expand its work to include providing independent policy advice on national infrastructure reform such as the National Port and Freight Strategies, while working with governments and the private sector to develop a deeper 'pipeline' of priority infrastructure projects in the Australian market.

As part of the reforms, there will be a revamped governing council and greater independence and financial autonomy for Infrastructure Australia. In addition, Infrastructure Australia will be tasked with the production of an enhanced list of priority projects, focusing on those projects worth over $100 million or those of national significance and value.

To improve transparency and promote investor confidence, the government will publish information about Infrastructure Australia's assessments of projects, including cost-benefit analyses.

In a Statement of Expectations letter delivered to the chairman of Infrastructure Australia, Sir Rod Eddington, Mr Albanese said "the work of IA must continue, and its capacity should be enhanced."

He added that the government "expects that IA will develop a greater 'top-down' approach, developing a deeper National Priority List that looks beyond individual proposals from jurisdictions."

"To underscore this strategic role, the Council should consider projects above a threshold of $100 million except in relation to Regional Infrastructure Fund projects and projects that are flagship or demonstrate unique national interest qualities."

"As a first step, it would be timely for IA to update its analysis in 2011 of the nation's infrastructure priorities against the seven priorities identified in the 2008 audit. These priorities are a national broadband network, creation of a true national energy market, competitive international gateways, a national rail freight network, adaptable and secure water supplies, transforming our cities and providing essential indigenous services. It is important that these priorities are informed by future forecasts and would ideally flow from a biennial audit of the nation's infrastructure needs and gaps," the Minister wrote.

A National Infrastructure Construction Schedule will be established to provide information on major infrastructure construction across all levels of government and the Australian Government said it will work with state and territory governments to improve approaches to managing forecasting and patronage risk for infrastructure projects, such as toll roads.

To promote private investment in infrastructure, the government said it will remove impediments to private sector investment in infrastructure by establishing tax provisions for infrastructure projects designated to be of national significance.

New infrastructure investment incentive measures will aim to encourage private and superannuation sector investment up to a cap of $25 billion by removing impediments in the tax system to invest in projects listed on Infrastructure Australia's National Priority List.

Losses generated by designated infrastructure projects will be exempt from the Continuity of Ownership Test and the Same Business Test, and uplifted at the government bond rate. Consultation will be undertaken regarding the implementation of this reform.

Development industry group, Urban Taskforce, said the Budget "has taken some new, but small, steps towards improving the fabric of Australia's cities."

The Taskforce's chief executive, Aaron Gadiel, said the new measures are mostly good news, but represent only a small fraction of the federal investment that will ultimately be required.

Mr Gadiel said the promise of a $36 million 'top-down' strategic review of infrastructure by Infrastructure Australia would help sharpen the Australian Government's accountability for its funding decisions.

Mr Gadiel added that the $100 million four-year initiative to fund employment hubs in suburban areas is a very practical measure to reduce congestion in big cities but said the $20 million urban renewal scheme, while welcome, has a modest budget and limited effectiveness due to its focus on demonstration projects.

The Planning Institute of Australia (PIA) said it welcomed the introduction of the new programs and initiatives contained in the Budget but said they will need to be properly integrated with the wider Infrastructure Australia effort.

"The imminent release of the National Urban Policy and associated $181.4 million initial funding signals the start a new era for planning in Australia, acknowledging that far greater investment will be needed to create real improvements," said PIA National President Dyan Currie.

Ms Currie said the establishment of a Liveable Cities and Urban Renewal Program is a great start but "seriously underfunded."

Ms Currie was also supportive of the Suburban Jobs initiative, but added that metropolitan restructuring will require significant investment in 'city shaping' infrastructure. 

"This initiative is another great start, but there are very powerful forces pulling employment into the centre of our cities - metropolitan areas as a whole have to be restructured if we are to make progress," Ms Currie said.

Subscribe to our Weekly Newsletter

Newsletter Subscription - Banner

Urbanalyst Banner