The Budget does not track spending on ‘infrastructure’. The closest proxy, however, is spending on road and rail transport. The bulk of this spending represents the Commonwealth’s grants to the States and Territories for road and rail projects. At $6.5 billion in 2018-19, and $22 billion over the forward estimates, this is the twenty-second largest category of expenditure.
Spending on road and rail transport represents 1.3% of all Commonwealth expenditure, and 0.34% of GDP in 2018-19.
The Commonwealth has also invested in the National Broadband Network, the Australian Rail Track Network, Australia Post (among others) and will contribute up to $5.3 billion in equity to the new WSA Co (Western Sydney Airport corporation). These investments in public sector corporations do not impact Commonwealth revenues or expenses, apart from dividends and write-downs.
Spending on road and rail transport has see-sawed wildly – ramping up in the wake of the Global Financial Crisis before falling and then accelerating again in 2013-14, then falling and then accelerating again in 2016-17 and 2017-18. The average expenditure in real terms over the period 2003-04 to 2017-18 has been around $5.3 billion. The 2018-19 Budget plan is for spending in this area to fall steadily from $6.5 billion in 2018-19 to $4.6 billion in 2021-22.
You can choose:As project spending requires long lead times for planning, approvals, and execution, and has a high degree of ‘lock in’ once in contract, the increases or decreases must be gradual. The more extreme options for increasing or decreasing funding will take longer than four years to achieve, and the model reflects this practical constraint.
The model does not take into account any second round effects.