Road construction in Sydney.
Changes to how much the Commonwealth will commit to infrastructure projects has angered states. Image by Dan Himbrechts/AAP PHOTOS
  • economy, business and finance

‘Not happy’: states to pay more for infrastructure

Kat Wong November 14, 2023

Premiers are bristling after the federal government announced states would have to pay at least half the bill for new infrastructure projects.

In a major funding overhaul, the Commonwealth will contribute to major infrastructure projects on a 50-50 basis with states and territories, where previously they were entirely funded by the federal government or split 80-20. 

The government will also shift its focus to delivering “nationally significant infrastructure”, meaning projects must either support or align with broader national priorities, be related to the National Land Transport Network or key freight routes or require a Commonwealth contribution of at least $250 million.

But state leaders, including Queensland Premier Annastacia Palaszczuk, said the funding shift was unfair.

Queensland Premier Annastacia Palaszczuk
 Queensland Premier Annastacia Palaszczuk hit out at the changes to federal funding for big projects. Image by Darren England/AAP PHOTOS 

“I’m not happy,” Ms Palaszczuk said on Tuesday.

“For a decade Queensland was ripped off by the former coalition government, which meant our government has done the heavy lifting.”

The Queensland government has invested more than $21 billion in infrastructure over the next four years, more than double the Commonwealth’s $10.8 billion contribution.

The changes would cut the state’s infrastructure projects, increasing inflation and lowering productivity, Ms Palaszczuk said.

“Right now, Queensland needs more infrastructure, not less,” she said.

NSW Premier Chris Minns echoed a similar sentiment.

“I’m not going to gild the lily here, that’s a major concern for the NSW government,” he told ABC radio.

Mr Minns said his state would be hard hit because it would soon be “worse off” on GST payments after Canberra’s deal with Western Australia and paltry GP funding meant patients flocked to state hospitals.

Infrastructure Minister Catherine King
 Catherine King has outlined big changes for infrastructure spending by the Commonwealth. Image by Lukas Coch/AAP PHOTOS 

Victorian Premier Jacinta Allan said the state would keep pushing the federal government to chip in on the cost to build the $34.5 billion Suburban Rail Loop, after it had only committed $2.2 billion to the mega project so far.

“Whether it’s city or country projects, it’s all about ensuring that we get a fairer share,” she said.

Federal Infrastructure Minister Catherine King made the announcement just over a week after an independent review found the federal infrastructure budget had blown out by $33 billion.

“Australia’s infrastructure investment pipeline has become a house built on sand,” she said on Tuesday.  

“If we continue as we currently are, we cannot commit to any new projects for the next 10 years.

“We’re not cutting funding, we’re cutting the lies and we’re cutting the waste.”

The new ratio means federal and state or territory governments will carry an equal share of the benefits and risks involved.

“This is not about saving money – it is about shared accountability and maximising our investments,” Ms King said. 

Victorian Premier Jacinta Allan
 Victorian Premier Jacinta Allan says she will push for a fair share of federal funding. Image by Joel Carrett/AAP PHOTOS 

“What we are doing is ending the perverse incentives that saw the federal coalition throw money at projects that states did not want to build – and then they simply never happened.”

Under the previous government, the number of infrastructure projects ballooned from 150 to 800.

Opposition regional development spokesman Darren Chester said it would be the start of a major cost shift onto local councils and ratepayers.

“We used the 80-20 model to bring forward massive improvements to the Bruce Highway in Queensland, Pacific Highway in NSW and the Princes Highway in Victoria,” the former coalition government transport minister said.

“None of those life-saving and nation building projects would have proceeded if we had tried to get the respective state governments to split the bill 50-50.”