The Morrison government will allocate more than $4bn to infrastructure projects in Tuesday night’s budget as part of efforts to lock in economic recovery after the pandemic and drive down unemployment.
While investments in infrastructure improve the productive capacity of the Australian economy, the program will also help lay the groundwork for an election contest either late in 2021 or early next year.
The budget will contain $2bn in funding for an intermodal terminal in Melbourne and more than $2bn to upgrade the Great Western Highway between Katoomba and Lithgow in Sydney’s Blue Mountains.
The New South Wales government said last week they were considering building Australia’s longest road tunnel linking Medlow Bath to Little Hartley – the final stage of a 130km upgrade of the highway.
The government said a location for the proposed intermodal terminal in Melbourne would be determined after further discussions with the Victorian government. It said the additional capacity delivered by the project, which would include freight warehousing, was necessary to meet the future freight needs of Victoria and Australia’s domestic and international supply chains, “as well as realising the full benefits of inland rail”.
The government said Victoria was currently the largest generator and receiver of inter-capital rail freight, and the terminal was needed in order to reduce congestion on Melbourne’s main arterial roads.
The budget’s infrastructure package will also include funding for upgrades of the inland freight route in Queensland and highway upgrades in the Northern Territory, as well as $161.6m for the Truro bypass in South Australia – a project pushed by the Liberal MP Tony Pasin to link freight routes between South Australia and NSW.
Additionally, there will be $160m to improve the agricultural supply chain in Western Australia and freight upgrades for the state of Tasmania, which has two marginal seats that the Coalition will be defending at the next federal election.
As well as the infrastructure spend, the government has already confirmed it will roll out new rounds of grants programs in the regions, including $250m for the Building Better Regions Fund. In the six months before the last federal election in 2019, the government awarded more than $630m worth of grants from programs like the Building Better Regions Fund, which faced significant criticism for its distribution of cash to Coalition electorates.
In a statement confirming the infrastructure projects, the prime minister Scott Morrison said the investments would create jobs, boost business investment, and secure Australia’s recovery from the Covid-19 pandemic. The deputy prime minister, Michael McCormack, described the infrastructure program as “the centrepiece of our national economic recovery plan”.
While the treasurer, Josh Frydenberg, says the Coalition does not intend to engage in a “spendathon”, Tuesday night’s budget will invest billions in social services, including aged care, mental health, and measures to combat domestic violence. The government has also already announced investments in childcare worth more than $1bn.
In a round of television interviews on Sunday, Frydenberg confirmed the aged care package – which is the government’s response to the aged care royal commission – would be worth more than $10bn.
Frydenberg also said the budget was based on international borders remaining shut until 2022.
“We’ve got to ensure that our communities stay safe and when we suppress the virus as we’ve successfully done our economy recovers,” he told the ABC on Sunday.
The government will also top up the national disability insurance scheme on Tuesday night. But the minister responsible for the program, Linda Reynolds, has signalled she wants a discussion with the states about what she’s characterised as an “unsustainable” funding model – a signal which has already prompted criticism from the states.