VIC State Budget 2016-17 | Infrastructure

By Craig Whatman - April 27, 2016

Plenty of opportunities arising out of these announcements as the effects of the projects flow through the Victorian economy

Education, health and the construction industry

The construction industry will be a key beneficiary from a state Budget that focuses heavily on infrastructure. The government has identified growing demand for infrastructure and services as a result of Victoria’s increasing population, and it will be encouraging continued economic growth in Victoria through infrastructure investment.

In addition to significant investment in roads and public transport, the Budget provides for substantial investment in education and health infrastructure.

The Andrews Government has announced funding of $287m to acquire land and construct new schools, including in Melbourne’s growth areas. As well as constructing new schools, a further $385m has been allocated to upgrading existing school infrastructure.

Health will also benefit, with over $980m to be invested in new and upgraded health facilities and associated infrastructure to increase the capacity of hospitals and health networks. This includes $135m for the construction of Australia’s first specialist standalone heart hospital, the Victorian Heart Hospital at Monash University in Clayton.

This significant investment in infrastructure will benefit not only the education and health sectors but will also provide considerable opportunities across the construction industry. 

As with investment in transport infrastructure, middle market businesses should look to take advantage of the opportunities arising out of the health and education infrastructure announcements. 

Transport infrastructure

For some time now Melbourne's population growth has been higher than Sydney’s, and our population is expected to exceed Sydney’s by 2030. This growth trend is not limited to Melbourne but extends to key regional areas across Victoria. 

In light of this trending growth in the population, the Andrews Government's focus on improving Victoria’s infrastructure is both necessary and welcome. With this in mind, infrastructure spending continues to be a key focus of the government’s Budget agenda.

The provision of a safe, reliable and efficient transport system is a perennial challenge for the government of the day. And so a key component of the government’s infrastructure initiatives is to improve the transport infrastructure of the state. 

With competing demands for funds and competing transport priorities, making progress on delivering improvements to Victoria’s transport system has often been frustrating and slow. 

Whatever one may think about the merits of particular projects, the current government has made it a priority to fast track and deliver projects for the benefit of Victorians. In the current Budget, the government has earmarked long term transport initiatives for the state spanning forward over the next eight years and valued up to $20bn.

The government's decision to proceed with key projects without federal government funding is a welcome initiative. Specifically, the government has announced that it will now fully fund the Metro Rail Tunnel project and the Mernda rail extension. These projects commit to expenditure of more than $1.5bn over the forward estimates.

In addition to these commitments, parts of the Hurstbridge line and Ballarat line will be duplicated to increase capacity and efficiency at a cost of approximately $650m.

A commitment has also been made to acquire new trains and trams and refurbish existing rolling stock at a cost of over $600m.

Road transport projects will also be progressed. Funding for the CityLink-Tullamarine widening, duplication of the Chandler Highway, Western Distributor and Western Ring Road upgrades, and other key road upgrades in both metropolitan and regional areas will amount to approximately $750m.

With the impending shutdown of the automotive manufacturing industry in Victoria over the next two years, the government is seeking to shore up and create opportunities for new jobs in Victoria. Victoria already has a strong construction sector and the government’s infrastructure announcements are designed to build on the state's construction sector strengths. 

Middle market businesses in the construction and building industries, as well as in manufacturing, will welcome these announcements as they will provide opportunities for growth and jobs for the Victorian economy. There will also be flow on effects for associated service industries. 

Our clients should be well-placed to take advantage of the opportunities arising out of these announcements as the effects of the projects flow through the Victorian economy.

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