Over $50 billion is expected to be allocated to infrastructure projects in today’s federal budget. Treasurer Scott Morrison flagged the significant spending in his “good debt” “bad debt” speech last month.
Morrison identified that infrastructure spending should be considered by Australians as “good debt” as it increased productivity and has a net positive financial impact over the lifetime of the asset.
"It can be very wise for governments to borrow, especially while rates are low, to lock in longer term financing and invest in major growth producing infrastructure assets, such as transport or energy infrastructure," Mr Morrison said.
"But to rack up government debt to pay for welfare payments and other everyday expenses, is not a good idea."
Furthermore, it is understood that the Government is now set on taking equity in big infrastructure projects, meaning they will take a cut of any tolls raised on roads which the Government has funded or part funded.
It is believed far more funding the Government provides to States will come with strings attached, including providing more loans to states, rather than grants. This move comes on the back of the Federal Government’s frustration caused by states taking credit for projects the Commonwealth delivered. An often pointed to case is the 41km Toowoomba Second-Range Crossing, which the Federal Government provided $1 billion dollars in funding for (80% of the total cost). But when the project is completed in 2018 it is the State Government which will take credit for the project, and also benefit from the toll, which can be up to $30 per vehicle.