Freight Rail, Passenger Rail

McCormack promises “no white elephants” in equity choices

Transport and infrastructure minister Michael McCormack has reiterated the Turnbull Government’s confidence in funding major projects through equity injections, despite heavy criticism from the opposition and the sector’s peak body.

The Federal Government has opted for equity funding for the Inland Rail project and looks poised to do the same for the rail link to Melbourne Airport, which was announced as a $5 billion commitment before the recent federal budget.

The funding method has come under fire from the Opposition as well as peak body Infrastructure Partnerships Australia, as it requires transport projects to deliver a return on investment, something they do not typically do in a direct way.

Questioned on Monday at the AFR National Infrastructure Summit in Sydney, McCormack said equity would not be used in an irresponsible way, and projects would be chosen carefully.

“Governments cannot fund all infrastructure projects,” the minister, who is also leader of the Nationals and deputy prime minister, said. “We can’t keep giving things to states as grants; we need to look at what we can do and how we can do it as far as the Commonwealth is concerned.”

McCormack dismissed the suggestion that equity funding for public transport would leave future governments having to pay for assets in their on-budget spending.

“I don’t think we’re building a budget risk, because there certainly won’t be white elephants,” he said.

Speaking after McCormack, shadow transport and infrastructure minister Anthony Albanese said the equity funding model was typical of a Turnbull Government he says is not interested in spending actual money on infrastructure.

“You can’t always believe what you read in the papers,” Albanese told the summit. “When the budget was unveiled there’s not a dollar for the Melbourne Airport Rail Link … not a dollar for Western Sydney Rail.

“One of the great cons of Australian politics is instead of talking about forward estimates we talk about the coming decade… it’s a nonsense, and it should be called out as such.”

Albanese said Australian voters would have to re-elect the Coalition “not once, but twice,” if they want to see them follow through with their major infrastructure commitments.

With a federal election possible as soon as August 4, Albanese said a Labor Government would have to review projects like the Melbourne Airport Rail Link, and find a way to attach some “real funding” to those projects.

1 Comment

  1. The United Kingdom Government at it various levels is a bit ahead the those currently in power here in Canberra and elsewhere.
    In the U.K they are using value capture, for example with London’s Crossrail project
    ” the City of London introduced innovative funding methods to capture these benefits to help pay for the project, including direct contributions to capital costs and a Business Rate Supplement (BRS). The BRS
    collects 2% of the value of non-domestic properties in London having a rateable value of over $102,950. These funds will be collected over 30 years and used to finance $7.6 billion (26%) of the $29.6 billion project”
    http://atrf.info/papers/2015/files/ATRF2015_Resubmission_13.pdf