NSW big winner in $4.7b spend
Phillip Coorey and Brian Robins, smh
December 13, 2008
NSW is the chief beneficiary of a $4.7 billion federal spending package announced yesterday to boost road, rail and education infrastructure, as well as give business more than $1.6 billion in tax breaks to encourage investment during the economic downturn.
The Prime Minister, Kevin Rudd, said the package - of which $2.5 billion was new money - was the curtain-raiser for what would be a "much more significant" package of infrastructure measures in the new year when the Government dips into its $12.6 billion Building Australia Fund. It would create 32,000 jobs and boost economic growth by between 0.25 percentage points and 0.5 percentage points.
Of the $4.7 billion, NSW will receive about $1.5 billion for road, rail and education projects, the largest of which will be an upgrade to the rail networks in the Hunter Valley.
Rail capacity to move coal and other commodities through the Hunter Valley will be doubled through six projects, with the aim of increasing coal to the port of Newcastle from 97 million tonnes a year to 200 million tonnes.
The upgrade would cost about $1 billion, with the Government to contribute $580 million and the Australian Rail Track Corporation to borrow the rest.
The Premier, Nathan Rees, said it was about time NSW was looked after and rejected suggestions it received special treatment because it needed it.
He figured that "probably a little more than half" of the estimated 32,000 jobs would be created in NSW.
Nationally, Mr Rudd dedicated $1.2 billion to rail projects, brought forward $711 million for road projects, including an extra $60 million to fix black spots, and promised $1.6 billion to universities and TAFEs.
The $1.6 billion for business tax breaks signalled that attempts to keep the economy out of recession were now focusing on stimulating the business sector.
The so-called investment allowance will provide an additional tax deduction of 10 per cent for investments in assets worth more than $10,000 and which would be operational by June 2010.
The $4.7 billion would be spent by 2011-12, with $1.5 billion spent this financial year.
Despite the budget being under severe threat, Mr Rudd said it would stay in surplus. The Government achieved this by funding the $1.2 billion in rail projects using equity injections into the government-owned Australian Rail Track Corporation.
This cash-for-equity swap avoids the spending coming off the bottom line.
The Opposition's infrastructure spokesman, Andrew Robb, welcomed the package because it consisted "almost entirely of road and rail projects that were initiated and supported by the former Coalition government".
"Mr Rudd is now funding his infrastructure plans from the Coalition's surplus and using it to fund Coalition projects."
The Infrastructure Minister, Anthony Albanese, said the rail component was "the largest single investment by the Commonwealth in rail since Federation".
The Government's expert body, Infrastructure Australia, signed off on a priority list of projects to be funded from the $12.6 billion Building Australia Fund. Projects will be unveiled after January and Mr Rees hosed down expectations NSW would receive the lion's share. "When the music stops … we have to be realistic about our level of expectation," he said.