Australia: Federal budget confirmed a smoother construction ramp-up

The Treasury announced its full acceptance of findings and recommendations in the latest release of the independent review of Inland Rail. This affirms our expectations that the Inland Rail projects total cost estimate has increased to over $19.0bn, with delays resulting in the Gowrie to Kagaru and Kagaru to Acacia Ridge & Bromelton sections being built in the next decade at the earliest. Our estimated completion date for the Inland Rail project is FY40.

Key points:

• The 2023-24 Federal budget affirmed our outlook as published in the May 2023 edition of our Engineering Construction in Australia (ECA) service. Our forecasts assumed a number of major government infrastructure projects will be delayed in the face of industry capacity constraints and rising input cost inflation. We continue to expect publicly funded activity to average $44.1bn over the five years to FY27, compared to an average of $38.4bn over the five years to FY22.
  
  
• In contrast to previous budgets, the focus was on infrastructure spending outlook by programs, rather than by project, making it difficult to monitor changes to individual projects. However, the government emphasised its commitment to the delivery of projects that have already commenced – as their priority, which aligns with our assumptions. In addition, the independent review of the Infrastructure Investment Program is ongoing and will provide more clarity on government spending at the project level when released in three months.