Infrastructure Budget Overview

As an element of the overall proposed 2019/20 Queensland Budget, infrastructure investment comprises $49.5B over the next four years with a planned $12.9B in the 2019/20 financial year. Compared to the 2018/19 Budget, this represents an 8.1% increase for the overall four years Forward Estimates period and an 11.2% increase for the forthcoming 2019/20 financial year.

The forecast 2019/20 financial year infrastructure expenditure is regionally distributed as:

South East Queensland

Brisbane & Redlands: $3.9B

Gold Coast: $0.8B

Ipswich: $0.9B

Logan: $0.49B

Sunshine Coast and Moreton Bay: $1.5B

Total: $7.59B

Regional Queensland

Darling Downs: $0.71B

Wide Bay: $0.59B

Central Queensland: $1.1B

Mackay and Whitsundays: $0.6B

Townsville: $0.9B

Far North Queensland: $0.97B

Outback Queensland: $0.44B

Total: $5.31B

Source: Qld Government 2019/20 Budget: Budget Papers 3 & 4 and Regional Action Plans

Specific Projects comprising the infrastructure investments proposed within each of the 12 budget-nominated regions and sub-regions are explicitly identified and briefly discussed within the budget papers Regional Action Plans.

Significant Government priorities can be identified through the discipline-based distribution of the proposed 2019/20 infrastructure investment, with the significant elements being:

Source: Qld Government 2019/20 Budget: Budget Paper 2: Economic Plan – Backing Qld Jobs

Infrastructure Budget Implications

Debt financing remains the primary mechanism for funding public sector infrastructure investments in Queensland, with no political appetite for any state ‘asset sales’, continuation of a strained negotiating environment between State and Federal Governments, and no significant traction gained to date for alternative project-specific funding and/or financing mechanisms. Consequently, with an increased commitment to infrastructure spending comes an increased level of state debt.

Much media focus has been placed on this increasing debt level in response to the budget release. However, little focus has been given to the differentiation between ‘Good Debt’ (for economic growth investment, such as for economic infrastructure) and ‘Bad Debt’ (for meeting recurrent operating expenses, such as staff salaries and wages, or for spending on ‘pet’ initiatives with poor business cases). Part of this lack of differentiation is associated with the historically poor ability to capture economic benefits resulting from sound infrastructure investments, and transparently treat them as a funding stream to underwrite project financing in the first place. This remains a challenge to further growth in Queensland’s future infrastructure investment.

Increasing debt to specifically finance economic infrastructure investment is regarded as a sound philosophy, particularly in the current low-interest rate economy – provided that benefits and costs can be captured, coordinated and managed.

Delays to major infrastructure projects significantly increase their costs. Despite the increase in infrastructure investment incorporated into the Queensland 2019/20 Budget, the overall level of investment remains relatively low compared with other Australian east coast states. This relativity continues to place Queensland in a somewhat uncompetitive position in the race for the finite engineering resources required to bring our infrastructure projects to fruition. In addition, and due to the large geographic area of our State, our existing infrastructure is challenged to maintain its Level of Service standards, irrespective of the need for new infrastructure. Consequently, and despite the increase in funding in the 2019-20 Budget, the infrastructure demands of Queensland continue to pressure this and future budgets for additional increased funding.

The strong emphasis on highlighting the regional implications of the State’s infrastructure investment is particularly critical for Queensland due to its high level of population and demographic distribution throughout our vast State. Various implications of this distribution were evident in the outcome of the 2019 Federal Election results and many of the underlying issues. Many of the specific projects comprising the infrastructure investment program are in line with the annually reviewed State Infrastructure Plan, which in turn draws its prioritisation from the respective five-year Regional Plans shaping our State’s communities’ futures. However, to date, only the Regional Plan for South East Queensland has been reviewed in recent times (released in August 2017) with all other Regional Plans now being well outside their five-year review timeframe. Consequently, community involvement in the prioritisation of various regional infrastructure investment projects is now somewhat ad-hoc and requires attention.

Infrastructure Budget Observations

If we look at the 2019/20 Queensland infrastructure budget in the context of other eastern states, they continue to maintain their high levels of infrastructure investment – that in turn continues to place a strain on Queensland engineering resources shifting interstate. Whilst the increase in Queensland’s infrastructure investment budget is welcomed, such increase remains to be delivered in the face of continued engineering resource competition from elsewhere in the country.

Almost two-thirds of the Queensland infrastructure budget for 2019-20 is allocated to transport, energy and water investments. These three priority areas align precisely with the priorities nominated by Engineers Australia Queensland over the last four-to-five years and are the subject of ongoing policy focus. In each of these areas there is a tremendous change agenda being discussed within our communities and engineering lies at the core of both the strategic change agenda and the mechanisms to implement such changes effectively. Consequently, Engineers Australia continues to have a critical role to play.

Many of the infrastructure investments nominated within the infrastructure elements of the 2019-20 Budget are continuations of existing projects with cash flow commitments within the 2019-20 financial year. The most significant single project is Cross River Rail, which is an essential initiative for the strategic development of the passenger rail network within South East Queensland. Whilst attracting much media attention, this project is an integral component of the Regional Planning for SEQ and demonstrates the strength of the underlying planning framework and process.

The basis for our communities’ involvement in infrastructure development and prioritisation lies in sound planning, discussion associated with that planning, and the level of ownership that communities feel towards that investment. Engineers Australia continues to promote the necessity for sound Regional Planning, that leads to the consequential Infrastructure Planning, and then leads to sound Delivery Planning. Engineers have critical roles to play in all these planning levels, despite these planning processes currently being at differing levels of maturity throughout our state. The State Government’s role is to facilitate such planning and community engagement and it is essential that more progress is made before the development of the 2020-2021 State Budget.

This article was written by Chris Warnock.