A new $20 billion Building Australia fund will form the centrepiece of a budget that delivers significant new money to fix up Australia’s crumbling infrastructure.
The combination of strong revenues and the need to avoid pumping excess cash into the economy meant Treasurer Wayne Swan was always going to need to find some non-inflationary way to squirrel away this year’s $21 billion surplus.
The Building Australia Fund is Swan’s answer, with funds from both the 2007-08 and 2008-09 budget surpluses to be combined with the former Government’s $2.4 billion Communications fund to reach the $20 billion target.
Money from the fund will start being allocated to national transport infrastructure – largely roads, rail and ports – from 2009, although one big ticket item for the fund has already been locked – the Government’s $4.7 billion contribution to the national fibre-to-the-node network.
Dedicated funds for education and health infrastructure have also been established. The former government’s $6 billion higher education endowment fund will be topped up to form a new $11 billion Education Investment Fund for university capital works.
And $10 billion will be devoted to establish a Health and Hospitals Fund to refurbish hospitals across the country and fund medical research.
The substantial spending on infrastructure funds is necessary to improve the productivity capacity of the economy as hard times loom, Swan says.
“We need to undertake a dramatic modernisation of the Australian economy, and these funds will be central to doing that,” Swan says.