Queensland, South Australia and the ACT have signed up to a secretive five-year roads and railway deal that will force every state and territory taxpayer to bankroll a greater share of major infrastructure projects.
In a series of agreements that are yet to be made public by the federal government, or the Labor-dominated state and territory governments involved, the Commonwealth appears to have succeeded in shifting its burden for funding projects of “national significance” from an 80:20 split to 50:50.
The potentially politically explosive overhaul is the first major shift in Commonwealth-state land transport infrastructure funding arrangements since 2019 and comes as Labor governments in Queensland and the NT head for elections in the coming weeks and months.
Those jurisdictions have an incentive to agree to federal Transport Minister Catherine King’s policy shift in order to give themselves clarity over the scale and quantity of road and other projects they can announce during their coming political campaigns.
The ABC understands other jurisdictions are close to signing up to the new arrangements, which are determined once a single state or territory agrees to terms with the Commonwealth.
NSW is understood to be close to signing the deal and has already secured Commonwealth funding agreements for its biggest projects.
States to do more heavy lifting
Ms King announced plans in November last year to change the funding deal and force states to share a greater portion of the infrastructure burden, alongside growing concerns about capacity constraints from labour and materials shortages.
It followed a review by former Infrastructure Department official Mike Mrdak who found some projects backed by the Commonwealth had no “national strategic rationale” or merit.
The government has repeatedly sought to reassure voters that the changes will not involve any cuts to the Commonwealth’s planned $120 billion infrastructure pipeline.
However, Ms King told a forum hosted by The Australian Financial Review in November that the “100 per cent Commonwealth-funded, or 80:20 per cent funding split is no longer the default — we are returning to a preference of 50:50”.
The shift means states will need to do a greater share of the heavy lifting and could potentially result in a larger number of projects.
Infrastructure Minister Catherine King announced plans to change the funding deal and force states to share a greater portion of the infrastructure burden last year. (ABC News: Adam Kennedy)
Funding for state and territory projects under the last five-year deal, known as the National Partnership Agreement on Land Transport Infrastructure Projects, ended on June 30.
Ms King’s deals — the first of which appears to have been signed between Canberra and the South Australian government on August 11, largely without fanfare — have been rebranded as Federal Funding Agreements.
They are expected to run through to 2029 and involve tens of billions of dollars in most jurisdictions.
They will also embed for the first time a nationwide agreement for the states and territories to share road death and trauma data.
The ABC can confirm that South Australia, the ACT and Queensland have already signed on.
Queensland Minister for Transport and Main Roads Bart Mellish issued the following statement to the ABC on Friday:Â
“The Federal Funding Agreement (formerly National Partnership on Land Transport Infrastructure Projects) between Queensland and the Australian government has been signed.”
The minister’s office declined to provide further details of the agreement.
A spokesperson for South Australian Infrastructure Minister Tom Koutsantonis confirmed the state has signed up but provided no additional information.
Prime Minister Anthony Albanese said earlier this month, on a visit to Adelaide, that South Australia was the first state to sign up.Â
“Once again, it’s South Australia leading the way first in getting things done,” he said.
“This is about getting proper planning done and making sure, with 50:50 funding, that the Commonwealth is doing our share of the heavy lifting in partnership with the South Australian government.”
Such agreements “ensure, as well, that in terms of planning for a workforce and the roll out of infrastructure around the country, you can maximise the efficiency and productivity benefits,” Mr Albanese said.
Shadow Infrastructure Minister Bridget McKenzie said “the code of silence from the states is deafening”.
“Governments know removal of the 80/20 formula will result in further massive road funding cutbacks,” she said.
“The only conclusion for the silence is that they fear the concrete shoes treatment from the Albanese government — or they don’t want to keep the bad news this will bring under wraps.”