Budget cuts and Morrison’s pledges: where are the biggest savings coming from?
The Albanese government has ripped at least $9bn of regional, environmental and infrastructure spending out of the federal budget, much of it linked to Scott Morrison’s bid to win Nationals’ support for net zero.
The cuts reverse some of the Morrison government’s most controversial spending, from pre-2019 election commitments including the urban congestion fund, the Hells Gate Dam and regional funds established by the Coalition’s last budget in March.
In this explainer we break down some of the budget’s biggest savings and identify which projects will miss out.
Infrastructure
The single largest saving in the budget is $4.7bn over four years for “building a better future through considered infrastructure investment”.
This includes a cut of $769m from the urban congestion fund, including a $160m saving from the controversial commuter car park fund, which the auditor general found was used to fund Coalition election commitments.
If you’re hoping to park and ride at MacArthur or East Hills on the T8 line, or Hurstville in New South Wales; or Bentleigh, Ferntree Gully or Hampton in Victoria then there is bad news: the budget axes the commuter car parks promised for these suburbs.
Other cuts from the Coalition’s infrastructure investment program include upgrades to the Wakehurst Parkway in NSW and Dorset Road in Victoria.
The government has also “reprofiled” the funding of existing projects, meaning the projects will still be built but over a longer timeframe, with $6.5bn of infrastructure spending pushed out of the forward estimates (the next four years) into the medium term.
The budget papers explain this was done “to better align investment with construction market conditions”.
Although this measure is a net $4.7bn saving, the government is also spending in the infrastructure portfolio, including:
$2.6bn for Victoria, including $2.2bn for the Suburban Rail Loop East
$2.1bn for Queensland, including $866m for the Bruce Highway
$1.4bn for NSW, including $500m for the early planning for Sydney-toNewcastle rail
Regions
The budget shows a $1.4bn saving for “responsible investment to grow our regions”.
The energy security and regional development plan will be slashed by $6.4bn. Just $672.7m of spending remains from that program, which will be spent over seven years to help the Pilbara in Western Australia, the Hunter in NSW and central Queensland to support emerging industries and economic transition. The Northern Territory is now off the list.
The regional accelerator program, which the Coalition set up in the March budget promising $2.1bn for regional manufacturing and industry development, has also been gutted, with $1.8bn cut.
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The community development grant program has been axed, saving $802m, while the building better regions fund is also gone, saving $256m. In their place, the Albanese government is promising $1bn over three years for the growing regions program and regional precincts and partnerships program – which it says will be “competitive” grants programs.
But not all grants programs will be open and competitive: Labor will spend $1bn over five years for the priority community infrastructure program, including $120m to deliver the central Australia plan; and $350m over five years to deliver small-scale community, sport and infrastructure projects. Both of these are “closed grants program to deliver the government’s election commitments”.
Labor will also give a $1.9bn equity injection to the Middle Arm sustainable development precinct in the Northern Territory.
Water
Cuts from the national water grid fund are another huge source of savings: worth $1.7bn over four years or a whopping $4.6bn over 12 years.
This consists of:
$5.4bn saved by not proceeding with the Hells Gate Dam project in Queensland
$900m of funding over four years for the Dungowan and Emu Swamp dams and pipelines, the Hughenden irrigation scheme and the Wyangala Dam wall raising will be deferred “to be reconsidered once business cases are completed and viable pathways to delivery” determined
Returning $174m over four years from unallocated and uncontracted funding from the water grid fund
Climate crisis, energy and environment
A total of $747m will be saved from this portfolio, including $326m from energy measures which included previously undisclosed pre-feasibility studies for gas pipelines and a carbon dioxide pipeline for a carbon capture and storage project.
A further $90m was saved from the reversal of uncommitted funding for international technology partnerships and reducing allocated funding for carbon capture and storage – which have been replaced with more spending on climate diplomacy, and limiting CCS funding to research and development or hard to abate industries.
Other programs being trimmed include the recycling modernisation fund, freight energy productivity programs and diesel storage projects.
Industry
The government is aiming to save $506m in the industry portfolio, including: $303m over three years of cuts to the manufacturing modernisation fund and modern manufacturing initiative
$198m over four years from redirecting uncommitted funding from the entrepreneurs’ program
Miscellaneous
Other measures cut due to Labor’s spending audit include:
$115.3m in the employment portfolio including the mid-career checkpoint program and reboot participation initiative
$50m from axing round seven of the safer communities program
$16m from axing the future leaders program, for which the governor general, David Hurley, personally lobbied Scott Morrison
$16.8m from agricultural shows, field days and related grants
$15.2m in the home affairs portfolio $15m in the social services portfolio $10.4m in the education portfolio There is also a further $1.6bn of “zombie” measures that were announced by the Coalition but not legislated, including the four-year wait period for new arrivals to receive social security payments, voter ID, and pensioner eligibility changes.
Coalition reaction
On Monday the Nationals’ shadow infrastructure minister, Bridget McKenzie, accused the Albanese government of pursuing a “vendetta” against rural and regional Australia through the budget.
McKenzie said it was “incredibly disappointing” that Labor planned to axe the building better regions fund and “quite offensive” that it framed regional spending as “waste”.
She said the energy security and regional development plan was designed to “overcome the challenges which are finally being recognised by the broader commentary and society that are going to come with any trajectory towards net zero by 2050”.
“If you’re going to increase our climate ambition, you cannot then simultaneously cut funding to those regions that are going to unequivocally be impacted by that decision.”