Cutting tax revenue over the next 7 years could spell a worrisome infrastructure finance deficit

Cutting tax revenue over the next 7 years could spell a worrisome infrastructure finance deficit
Alastair TaylorMay 9, 2018


It's now quite obvious why Tuesday's budget speech had effectively every infrastructure initiative announced well before the Treasurer's speech - the Turnbull Government wanted everyone to focus on its 'surprise!' tax cut plan.

All of the infrastructure items in the Federal Government's 2018/2019 budget were announced before Scott Morrison rose to the despatch box in Canberra on Tuesday night - the biggest item out of all of them, the $5 billion for the Melbourne Airport Rail Link was announced at a media conference by the Prime Minister and Treasurer back in mid April.

In the context of the ongoing argy-bargy between the State and Federal Governments, it's been a case of 'will there be more information, other than a nice big dollar figure, disclosed at any time soon?' ever since.

We have our answer now: no there wasn't, but yes there will be.

It's toward the end of the year, in September, two months before the state election and about the time Turnbull will be seriously thinking about when he'll call his own next election, that we're likely to see something other than big dollar headlines.

We're all just going to have to deal with the fact that public transport initiatives get planning money while big-arse freeway projects get the capital they need before anyone can do a sane comparison of options.  Australian politics & infrastructure planning, eat your heart out.

There will be an enormous amount of time devoted to the Federal Government's 7-year plan to flatten the tax system & the ALP's opposing policy in the days and weeks ahead but it would be nice if a smidgen of the forthcoming public debate focuses on the implications for infrastructure projects.

It's pretty hard not to get swept up in the pre-budget announcements about headline dollar figures on what's going to be allocated.  Guilty as charged!  But it's when the budget documents get released and the lack of any clarifying information in the respective treasurer's speeches that depression starts to set in.

It doesn't surprise anyone that when both major parties are in office at either the state or federal level that there's argy-bargy, but now that elections are around the corner, suddenly the purse strings are loosened.

Victoria has for the last three to four years been way out in front in terms of population growth because Western Australia and Queensland's economies have been in a post-mining boom toilet. 

Whether predictions for Melbourne's population growth come to fruition remains to be seen however imagine if Melbourne's population kept on growing around the 100,000 per annum mark for the next 7-10 years when, potentially, a massive Federal Government revenue shortfall kicks in?

Here's something else to ponder.

Look at the time it takes to get a major public transport project implemented - the first Metro tunnel project will probably take, from start to finish, 10 years.  What's Malcolm Turnbull and Scott Morrison, the holders of the biggest purse strings in the nation, just announced in the budget?  Huge tax cuts over the 7 years - $140 billion in revenue we might be able to use to transform our cities, gone.

So does that mean Spring Street - or any other state government for that matter - now have to factor in less grant money flowing from Canberra?  What's the impact on infrastructure projects long-term? 

Taking the layman approach: less money coming in via taxes means cutbacks will happen in services, and new infrastructure, unless 'creative' new financing options are created.

When it comes to building the transport infrastructure fast growing cities will need over the next decade, the Turnbull Government's plan to reduce Commonwealth revenue should be interpreted like a giant air raid siren with flashing red lights going off.

Alastair Taylor

Alastair Taylor is a co-founder of Now a freelance writer, Alastair focuses on the intersection of public transport, public policy and related impacts on medium and high-density development.

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