BUDGET 2017 – NEW TRAINS AND A NEW TRANSITIONS FUND

For regional Australia this budget is all about new money for trains and economic transitions.

Major new commitments to rail infrastructure including inland rail and regional passenger rail in Victoria are the big ticket items. These should be transformational for the regions involved, providing much needed freight capacity in our productive inland areas, and bringing regional cities into the mix to ease some of the pressure in our major cities.

A fund to support transformational projects in regions undergoing structural adjustment has been committed to, adding to the existing Regional Jobs and Investment Packages, City Deals, Building Better Regions Fund and various structural adjustment initiatives in place for specific regions around the country. The Government is clearly committed to helping regions and has put its money on the table, but it will be crucial that the outcomes of all this is more than the sum of its parts.

Highlights

• New regional growth fund including $272m for transformational projects in regions undergoing structural adjustment;
• Inland rail from Melbourne to Brisbane to be built including $8.4b for delivery of the new rail and upgrades, and a public‑private partnership for the challenging Toowoomba to Brisbane section to share the major source of project risk;
• Upgrades to passenger rail in Victoria as part of a $10b National Rail Program, and $20m of feasibility studies for other areas suggesting the Government is serious about regional cities as part of the solution for population growth in cities;
• Extension of funding for the Building Better Regions Fund and Regional Development Australia Committees.

Regional Growth Fund

A major new funding announcement for regions is the Regional Growth Fund. This will provide a total of $472.2m from 2017-18. This includes $272m for major transformational projects which support growth and create jobs in regions undergoing structural adjustment. The remaining $200m is devoted to an extension of the Building Better Regions Fund.

This announcement is accompanied by few details on what will constitute a transformational project (is it more than infrastructure?) and which regions will be deemed as undergoing structural transition and which will not. This space is also increasingly crowded with initiatives like City Deals, Jobs and Investment Packages and a range of existing structural adjustment programs targeting regions such as Tasmania, the La Trobe Valley and Geelong, already active in regions.

Regions will no doubt welcome this new investment as an opportunity to pursue their development ambitions, but slotting new funding into a crowded space will be a challenge for those designing the details of the policy.

The Government is committed to regional development financially and has been innovative in putting a range of different approaches on the table compared to the ‘Committees and concrete’ of the past.

But its larger policy ambitions for the future of regions still need clarity. Establishing better connections in regions between initiatives across portfolios and creating flexibility to get it right in different places is something that the Cabinet Committee should turn its mind to in the next 12 months.

Inland Rail – Delivery

The $8.4b commitment to build the inland rail network is probably the signature project of this budget for regional areas. The project will create a new freight rail line between Brisbane and Melbourne through a combination of upgrades to existing tracks and new lines.

Inland hubs of Toowoomba, Parkes and Albury should be major beneficiaries of this project, as will communities through South-West Queensland, Western New South Wales and Northern Victoria during the construction period.

Regional Passenger Rail Program

The Government has committed to a new $10b national rail program. This will be partially expended on rail lines connecting regional areas to capital cities, beginning with a $500m commitment to upgrade rail lines in Victoria including the North-East, Gippsland and Geelong.

The budget also commits to support further feasibility studies into regional rail proposals including to Shepparton in Victoria and $20m for feasibility into other projects outside Victoria.

 Other Relevant Policy Announcements

• Agriculture and Water – A Regional Investment Corporation will be established to manage drought and water concessional loan payments, bypassing the States;
• Education – previously announced Regional Education Review, Regional Study Hubs, Schools Funding Package and Rural Enterprise Scholarships;
• Health – Telehealth for Psychological Services, which means Medicare will now pay for online services to remote and rural areas;
• Immigration – previously announced Skilled Migration Reforms providing capacity for employers to sponsor a broader range of occupations in regional areas.

Need for Regional Policy Framework

The Regional Budget Statement remains the major national policy document for regions. But it is really a collection of individual initiatives across portfolios, saying nothing about the overall goals for regions, or how these strategies connect in different places to support jobs and economic growth, and better health and education outcomes.

The risk that we are not sure what this all adds up to in the end is real for this regional development strategy. The Government’s openness to trialing new approaches like Jobs and Investment Packages and City Deals is commendable because it gets us beyond the limited approaches of the past.

The Government committed in 2016-17 to establishing a clearer regional policy and has established a Cabinet Committee to connect regional issues together. With a good amount of money on the table for regions and the education review and other initiatives on the way, it’s crucial the Government is able to connect these in the next 12 months.

The Regional Budget Statement is available here with further details on new and current initiatives directed at regions.