Federal Treasurer Joe Hockey has announced infrastructure projects equivalent to “eight Snowy Mountains Schemes” over the next decade, as a high point in an otherwise tough federal budget.
As expected, from August 1 the government plans to reintroduce biannual fuel excise rises indexed to inflation, but the treasurer said all of the additional revenue will be tied to infrastructure projects “by law”.
“Over the next six years, the government will help to build new roads, new rail, new ports and airports,” Mr Hockey said during his budget speech.
“The money will drive over $125 billion in spending for new infrastructure by the end of the decade. Over the longer term, this is expected to permanently boost the size of the economy by one percent.”
Mr Hockey said the budget’s infrastructure package will help to ease job losses in the construction industry, as the economy moves from resource-linked growth to “broader-based growth”.
The Treasurer announced a $200 million ‘black-spot’ program, along with $350 million for the Roads To Recovery program, specifically aimed at rural communities.
Elsewhere in the automotive industry, apprentices will soon have access to concessional trade support loans of up to $20,000 over a four-year apprenticeship, while funding models for sectors of the car industry will change.
Several existing packages designed to support new-car manufacturing are now deemed unnecessary and will be scrapped or cut short, as all three remaining carmakers in Australia have announced their intentions to leave before 2018.
Some of the savings will be redirected to the car industry growth fund, while further funding will support schemes to re-employ workers from the four Victorian plants, along with workers from Holden’s Elizabeth plant in South Australia.
Australia’s parts industry will receive funding for a diversification program, with an emphasis on seeking export opportunities to avoid collapse once the local carmakers have departed.
Indirectly, a new ‘debt levy’ for those with an annual income of more than $180,000 per year combined with recent changes to luxury car tax laws could see luxury car sales take a hit.
The market will be waiting to assess the impact of changes to family tax benefits, medical fees and welfare payments, which are expected to affect almost everyone.
Reaction to the budget has been understandably mixed.
The Australian Automobile Association’s Andrew McKellar said the AAA did not support changes to the fuel excise, despite some of the additional revenue being directed to road projects.
“Motorists are paying more than their fair share to see an investment on that returned,” Mr McKellar said.
The NRMA has restated its earlier objection to higher fuel excises, but suggested the government use the additional revenue to guarantee more funding for roads “forever”.
“The NRMA is opposed to the reintroduction of the petrol tax indexation because we know our members are already paying more than their fair share without getting enough back through road investment,” NRMA President Wendy Machin said.
“Petrol tax indexation will mean motorists pay more petrol tax every year – forever. If we are going to pay more tax than ever we need an assurance from the Australian Government that we will see more returned to roads than ever as well.”
Greens leader Christine Milne suggested the party would support the changes to the fuel excise in the Upper House, on the condition that the additional revenue was directed to public transport projects, rather than roads.
Shadow Treasurer Chris Bowen conceded that the new excise laws would probably pass through the Senate, but said the Labor Party would not support them.
The Palmer United Party has also voiced its disapproval of several leaked government measures in the weeks leading up to the budget.
The Federal Government will get two attempts at passing budget legislation through the Senate, but each will involve negotiating with the minor parties.
Whether they succeed in implementing some, all, or none of their proposed budget measures or not remains to be seen.