Infrastructure is a vital economic enabler. It connects people to jobs, producers to markets and creates more opportunities for Australians in our cities and regions.
Our $75 billion 10-year infrastructure plan will create tens of thousands of jobs during construction and will continue to grow the economy when projects are complete.
Infrastructure Australia found that demand on critical urban road and rail corridors will exceed current capacity within 15 years. The cost of congestion in the six largest capital cities will grow to $53 billion in 2031 without intervention.
It is clear our infrastructure needs have never been greater but our fiscal circumstances have never been tighter. The AAA credit rating is under threat following years of Labor first piling unsustainable spending onto the Budget and then blocking Coalition attempts to reign it in.
Our approach to managing this challenge is simple: reduce spending that is no longer fit for purpose so we can get back into surplus and create space for new spending that boosts our productivity and competitiveness.
Our budget needs to reflect the times and so does the way we invest in infrastructure. If the federal government simply hands out grants by default then we will end up with an infrastructure deficit and without an adequate return on our investment.
In the current environment, we need to leverage better returns for the taxpayer. That means more jobs and affordable housing, better planning, less red tape and more amenity from the Commonwealth's record investment.
If we are to deliver the infrastructure we need to grow and prosper in the 21st century, we have to bring the way we plan, finance and build infrastructure into the 21st century as well.
I want the federal government to be more than just an ATM. We must be investment partners in projects, including those that all three levels of government can work together on.
This innovative approach is already delivering outcomes for Australians with the concessional loans to fast-track WestConnex and the Sunshine Coast airport expansion. Our $370 million equity contribution to the Moorebank Intermodal Terminal has leveraged up to $1.5 billion in private investment for the project.
We have successfully delivered a turnaround of the national broadband network and we are funding it with a mixture of government equity and debt. It will be completed by 2020 – more than six years sooner and for $30 billion less than under Labor's plan.
The project will be 50 per cent complete by June 30, is available at over five million premises and is adding more than 250,000 premises to its network every month.
In the budget we announced a further $8.4 billion equity investment to deliver Inland Rail, and a Public Private Partnership to share the risk on the Toowoomba to Kagaru tunnel section.
And we are establishing a government-owned company to build the Western Sydney Airport with up to $5.3 billion in equity. The airport will not only provide a new international gateway and secure Sydney's aviation capacity; it will transform the economy of western Sydney. Our investment will deliver substantial long-term benefits for Australians, returning $1.80 for every dollar spent.
Successive governors of the Reserve Bank of Australia have said the government needs to make better use of both its strength of co-ordination and our strong balance sheet to finance spending on productive infrastructure. For too long we have put these necessary changes in the too-hard basket, but in this budget we committed to changing the status quo.
We have to build the right projects at the right time. We must make investments that both address today's challenges and prepare us for the future. That is why Infrastructure Australia's independent 15-Year Plan and Priority List forms the backbone of our investment decisions.
We have already committed to 15 out of 18 projects on the Priority List. In contrast, Labor tore up contracts for the Perth Freight Link and Melbourne's East West Link, costing taxpayers billions and delaying vital transport for these growing cities for years. Both projects have been identified by Infrastructure Australia as national priorities.
It's time for a smarter approach to infrastructure investment. Of course, there are projects where grant funding is the most appropriate funding mechanism. But where there is a project that generates a return for the taxpayer and for private investors then we want to be a partner in that as well.
To date the approach to these innovative ideas has been ad hoc at best, considered as an exception rather than the rule and where it suited the politics of the time.
Infrastructure decisions are too important, they need to be considered in a thoroughly business-like manner utilising deep expertise. That is why we have established the Infrastructure Financing Agency, to examine each priority project and ask: what is the best way we can support this?
This doesn't mean we abandon grant funding. It means our grant funding goes where it is needed the most.
Under our plan we will deliver more infrastructure, not less, with better projects that deliver a long-run dividend for growth and the taxpayer, and make life better for more Australians.
This opinion piece by Prime Minister Malcolm Turnbull was first published in the Australian Financial Review on Thursday 8 June 2017.