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Are Victoria and the feds back on track?

10 May 2018

The prime minister and the Victorian premier are talking infrastructure after a long federal funding drought

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The protracted standoff between Victoria and the federal government began when Tony Abbott (centre) demanded that Victoria build the financially dubious East West Link. He is shown here with state opposition leader Matthew Guy (left) and local member Michael Sukkar in May 2015. Tracey Nearmy/AAP Image

The protracted standoff between Victoria and the federal government began when Tony Abbott (centre) demanded that Victoria build the financially dubious East West Link. He is shown here with state opposition leader Matthew Guy (left) and local member Michael Sukkar in May 2015. Tracey Nearmy/AAP Image


In 2018–19 the federal government plans to spend almost $500 billion of taxpayers’ money. Listen to Malcom Turnbull, and you might think much of it is being spent on building infrastructure in Victoria, especially a rail link to Melbourne airport. Not so — not yet.

Yet-to-be-released budget figures show that the Turnbull government’s spending plans for infrastructure in Melbourne for 2018–19 amount to just $103 million — or less than a tenth of the $1.16 billion it has offered for equivalent projects in Sydney.

And most of its spending in Melbourne will be on putting together business plans and other preparatory work. It has committed just $49 million to build new transport infrastructure — mostly for the final stage of widening the Tullamarine Freeway.

But the new figures come in the midst of a startling shift in the long stand-off between Turnbull and Victorian premier Daniel Andrews. For years they have been at odds over the federal government’s refusal to invest in the transport projects of the Victorian government — a refusal that means Victoria has been badly shortchanged by the Turnbull government in favour of the prime minister’s home state of New South Wales.

Turnbull and Andrews, who have rarely if ever met one on one to talk about issues, will sit down soon to discuss how they can cooperate to build the Melbourne airport rail link, the proposed North East Link to join the Eastern Freeway to the Outer Ring Road, a tram or rail line to Monash University, and other transport projects.

Sources on both sides say they have already had several “productive discussions” by phone. “They’re as friendly as they’ve been in a long time,” one adviser says. Similarly positive discussions have taken place in recent weeks between Turnbull’s major projects minister, Paul Fletcher, and Victoria’s public transport minister, Jacinta Allan.

It’s too early to call it a bromance, but it is a sharp reversal of the longstanding hostility between the two governments, and it’s even reflected in 2018–19 budget allocations. The discussions, which were initiated by Turnbull, came after Victorian opposition leader Matthew Guy turned on his federal leader, accusing him of giving Victoria less than its share and favouring other states.

The budget papers for the last two years reveal that, under Turnbull, Victoria has received less than 8 per cent of federal spending on transport infrastructure, while New South Wales has received almost 40 per cent. Victoria is home to 26 per cent of Australians, New South Wales to 32 per cent.

Over 2016–17 and 2017–18, the federal government has given the states $14.7 billion of taxpayers’ money to build transport infrastructure. Of that, it gave $6.26 billion to transport works in New South Wales and just $1.15 billion for similar works in Victoria.

Melbourne, which absorbed almost a third of Australia’s population growth in 2016–17, will receive just 2 per cent of federal infrastructure spending in the coming financial year, according to the list of key projects prepared by the Department of Infrastructure.

But the long stand-off, which began with the Abbott government’s demands that Victoria build the financially unviable East West Link, a proposed road tunnel through the inner suburbs, appears to be coming to an end. Under pressure from his own federal and state MPs in Victoria, Turnbull announced last month that his government would “build the Melbourne airport rail link,” offering $5 billion in return for joint ownership of the project. While the offer was presented like a command, and was clearly intended to be abrasive — Turnbull told the Murdoch press first, then sent an email to the premier at around midnight — Andrews decided to ignore the slight and focus on the money.

After reporters criticised his negotiating style, Turnbull phoned Andrews, who thanked him and expressed a willingness to talk. Turnbull also played down suggestions in the Herald Sun that his government wanted the route changed to run through contaminated former defence land at Maribyrnong that the Commonwealth hopes one day to sell.

More phone calls have followed, including a warm one from Andrews on Monday after Turnbull announced that his government would offer $1.5 billion towards the $16 billion cost of the North East Link; $475 million towards the cost of a train or tram line from Caulfield to Monash University at Clayton, and then ultimately to outer-suburban Rowville; and funds to extend the Frankston line to Baxter and duplicate the line from South Geelong to Waurn Ponds.

“Rail link a reality,” blared the Herald Sun in its report on the Monash plan. No, it isn’t, and probably never will be. A tram line could become a reality, though; it would be very much cheaper and could go to Chadstone, the biggest shopping mall in the southern hemisphere, on its way to Clayton. A report earlier this decade for the Baillieu government warned that heavy rail would be the most expensive option to build and maintain.

Federal sources say they are open to either option. They also say Turnbull is not insisting on changing the route of the airport rail link, which is planned to go through Sunshine station to link with trains to Ballarat and Bendigo. Rather, he wants to be engaged in the project, and make it a genuine partnership between the two governments.

The sources would not be drawn on why the prime minister wanted half ownership of the rail line to Melbourne airport, whereas a month earlier he imposed no such condition when agreeing to pay half the cost of a rail line to Western Sydney airport. He still appears to have double standards when it comes to the two states.

The budget papers reveal that in the financial year just ending, his government has given New South Wales $2.7 billion for transport spending alone, roughly five times the $562 million it gave to Victoria. At least that was a more even split than the year before, when he gave his home state $3.6 billion, more than six times the $590 million given to Victoria.

But compared to its predecessors, this year’s budget seems almost egalitarian. On the figures in the budget papers, New South Wales will get a tad under $2 billion for transport spending, which is only a bit over twice as much as Victoria’s $890 million.

As I pointed out in my budget overview, despite the PM’s waving a list of new transport projects, the budget plans to cut federal investment in key transport projects by 13 per cent in 2018–19, compared to its equivalent list a year ago. Investment in Victoria, however, is projected to rise, mostly due to $504 million of spending on a package of regional rail upgrades negotiated by former infrastructure minister Darren Chester.

Even so, over the five years to 2019, the Abbott and Turnbull governments will have spent $12 billion of Commonwealth taxpayers’ money on transport infrastructure for New South Wales, but just $3 billion in Victoria.

Turnbull and his ministers blame the Victorian government for refusing the $3 billion they offered it to build the East West Link, which a conventional cost-benefit analysis revealed would return benefits of just 45 cents for every dollar it cost.

Fletcher has accused Victoria of sitting on a cash pile of $2.8 billion of money the federal government has allocated to it for projects that have yet to start, or are still incomplete. His office did not respond to a request for a list of these projects before publication.

Maybe that too is part of the warming of relations between the two governments. With an unfriendly redistribution looming in Victoria, the Turnbull government desperately needs to shore up its marginal electorates in Melbourne’s eastern suburbs — whose voters might not like seeing their taxes used to build the prime minister’s pet projects in Sydney when so much is needed in their own town. ●

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Just weeks before his meeting with Kim Jong-un, Donald Trump has pulled the United States out of the Iran nuclear agreement. What is likely to happen next?

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High stakes: US president Donald Trump announcing the US pull-out from the Iran nuclear deal yesterday. Martin H. Simon/CNP/Abacapress

High stakes: US president Donald Trump announcing the US pull-out from the Iran nuclear deal yesterday. Martin H. Simon/CNP/Abacapress