Labor’s scrutiny of mega-projects needs to put nation’s interests above politics

Does it stack up? This should be the simple question guiding the new federal government as it scrutinises billions of dollars of infrastructure projects in the attempt to find budget savings.

With national gross debt predicted to reach $1.2 trillion within three years, Prime Minister Anthony Albanese has committed to audit spending by the previous government line by line to weed out what he branded waste and rorts. In his sights, among other things, is the $4 billion listed as a contingency in the March budget for Melbourne’s East West Link project, and the $1.6 billion that was set aside for the Perth Freight Link project.

A 2014 rendering of the proposed East West Link.

Albanese confirmed the audit by Treasury and Finance was under way, saying the Morrison government had “abused the system of the contingency reserve to create these pots of money that were there just to be used for political purposes and we need to do better than that”. The implication is that Labor will remove “political purposes” from its assessments of infrastructure projects.

Getting the East West Link off the books is the right call. Victoria’s independent infrastructure adviser determined late last year that there was no “immediate need” for it, estimating it would return just 50¢ for every $1 spent on the project.

But this road proposal has been contaminated by political manoeuvring for years, and it was destined to be a feature again in the upcoming Victorian state election in November. A decision by Albanese to take the proposed $4 billion off the table would make life harder for state Opposition Leader Matthew Guy, because his party was planning to take the project to the election for a third time.

But if the Albanese government banks the savings in the name of budget repair, this would probably test the early stages of the relationship between the Prime Minister and Premier Daniel Andrews, given the Victorian government’s vociferous calls for a better deal from Canberra on infrastructure funding with a federal Labor government in place.

The state was allocated just 5.9 per cent of new infrastructure funding over the four-year budget period in the most recent federal budget, even though Victoria has 25 per cent of the nation’s population. Victoria would no doubt argue that the $4 billion promised for the East West Link should still be made available to it, just for a different project.

Andrews is already on a potential collision course with the federal government over federal funding for the state’s massive Suburban Rail Loop project. The Prime Minister has pledged $2.2 billion as an initial investment for the first stage of the project, but that is well short of the $11.5 billion requested by the state, and the many tens of billions of dollars the project is likely to finally cost.

Further funding is expected to hinge on approval from Infrastructure Australia, the independent advisory body set up by Albanese when he was infrastructure minister in the Rudd government in 2008. This body advises on infrastructure priorities, with a view to whether they are economically sensible investments.

The Suburban Rail Loop has not yet faced this scrutiny, and some believe it would not pass muster, suggesting it is not only the federal government that is tempted to promise big infrastructure projects for political reasons.

Also in Victoria, Albanese will be under pressure to choose which of two competing freight terminals – one in Melbourne’s north backed by the previous Morrison government and another in the west preferred by the Andrews government – is selected for federal funding assistance.

If Albanese is to have a hope of finding savings for the budget bottom line in the audit of infrastructure projects, he must meet these political challenges head-on and empower Infrastructure Australia to make the right decisions for Australians, and not for politicians with self-serving agendas.

Gay Alcorn sends a newsletter to subscribers each week. Sign up to receive her Note from the Editor.

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