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Questions over SA's infrastructure priorities following budget

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Key lobby groups are questioning the delivery of South Australia’s infrastructure priorities after last night’s budget funded a huge project that is yet to have a business case completed and failed to make a significant dent in the state’s $780 million road maintenance backlog.

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The Marshall Government’s independent advisory body, Infrastructure South Australia, produced a strategic plan this year, which highlighted the need to address maintenance backlogs across all infrastructure, as well as the need for evidence-based decision-making on funding priorities.

However, both the Freight Council and the Civil Contractors Federation are questioning whether the $625 million infrastructure injection into the state from last night’s budget hits those marks.

Key projects funded by the budget include upgrades to the Princes Highway, the next stage of the Main South Road duplication between Aldinga and Sellicks Beach, the Strzelecki Track upgrade, and $200 million for improving roads around Hahndorf.

The latter project does not yet have a finalised business case, but the State Government said this week it would allocate $50 million of its own funds.

Works won’t commence until late 2022, raising questions about the impact of the project – which will include a revamped interchange with the freeway – on economic stimulus.

State Treasurer Rob Lucas is hoping for a short to medium-term economic spur from a new $2 billion road safety upgrade fund and flagged new infrastructure initiatives in the state budget, to be handed down on November 10.

“In South Australia, we have a series of projects ready to go, which we will be putting forward for consideration as part of this initiative,” he said.

The Civil Contractors Federation in SA is nervous about the capacity of the state Transport and Infrastructure Department to compete successfully for the $2 billion pool.

“While SA is to share in the $2 billion road safety funding program, it is of concern, given the slow pace of the SA Department of Infrastructure and Transport bringing projects to the market, that the money is available on a use-it or lose-it basis,” said federation chief executive Phil Sutherland.

“The CCF (SA) hopes this provides the Department with the sense of urgency required.”

He said at least half of the $625 million injected into SA road infrastructure was dedicated to projects that were not shovel-ready, with construction two to three years away.

The Freight Council echoed some of his sentiments, while welcoming the business support measures in the budget and noting the importance of the Strzelecki Track project.

Council executive officer Evan Knapp said the instant asset write-off scheme in the budget may encourage trucking companies to invest in newer, safer trucks.

“However, we question the allocation of $200m to Hahndorf road upgrades without a completed business case including a positive cost-benefit ratio, ” he said.

“This may well be a worthy project, but that will not be known until the preliminary analysis work is complete. There are other areas in which this money can be beneficially spent while these studies are undertaken – particularly towards combating SA’s $780m road maintenance backlog, which has been identified as a priority by Infrastructure SA.”

The apparent disconnection between Infrastructure SA’s priorities and the Hahndorf project, in particular, was also of concern to Sutherland, who said he was disappointed the body had not produced a 20-year pipeline of projects for the state.

“There’s no real alignment at all between what we have seen in the budget and the strategies and priorities of Infrastructure SA,” he told InDaily.

He also cast doubt on the State Government’s often-touted “record” infrastructure spending pipeline, saying he had “no visibility” on it at all.

However, he was more upbeat about the stimulus measures more broadly in the budget that he described as “very impressive”, and also welcomed a national allocation of $1 billion to local councils Australia-wide for road upgrades.

Premier Steven Marshall promised Infrastructure SA would take the politics out of project funding and lead to orderly, evidence-based decision-making.

Labor’s treasury spokesman Stephen Mullighan said he couldn’t see a connection between Infrastructure SA’s strategy and the project funded in last night’s budget.

“The infrastructure funding in last night’s budget wasn’t even equivalent to the state’s population share – if we had received the bare minimum of our population share, SA would have received an additional $580m over the next four years,” he said.

“The lack of any link between the funding in last night’s budget and the state’s strategic infrastructure strategy shows the state government has failed to lobby the federal government for infrastructure funds.

“Glaringly, there is no extra money in the next four years for the next stage of the North-South corridor upgrade, meaning works won’t commence until 2024 at the earliest.”

Rob Lucas is promising his state budget will not reduce public infrastructure spending, saying he will rack up more debt and increase the deficit rather than pull back on any of his economic levers.

“We already have a record $12.9 billion infrastructure program but, just as a secret between you and me and your listeners, that record infrastructure program will be further increased in our State Budget…,” Lucas told ABC radio.

“I know there’s been criticism we don’t get enough funding from the Federal Government for infrastructure, that’s a nonsense: we’ve already got a record $12.9 billion infrastructure program, it will be even higher when we bring the budget down in four weeks’ time.”

The Treasurer also promised there would be no new taxes or “significant” cuts to services in his budget, despite the federal books last night confirming a GST write-down for SA of more than $1.3 billion in 2021, compared to the amount forecast last year and that foreshadowed in Lucas’s June 2020 budget and economic update.

The result, he said, would be an increase in the state’s debt and higher-than forecast deficits.

“We are committed to spending whatever we need to save as many jobs as we can in the state budget and state economy,” he told InDaily.

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