Australia unveils AU$ 4.7 billion ‘Nation Building' package

The Australian Government has unveiled an AU$ 4.7 billion (US$ 3.07 billion) ‘Nation Building' package designed to "strengthen the Australian economy and create Australian jobs" through an investment plan for the road, rail, and education sectors, as well as tax changes for businesses.

In a statement on the government's website, Prime Minister Kevin Rudd said the package should boost the level of GDP and help create up to 32000 jobs.

There are three key infrastructure elements to the package that will see AU$ 1.2 billion (US$ 784 million) in new funds injected into the Australian Rail Track Corporation, the bringing forward of the AU$ 711 million (US$ 464 million) assigned to road spending to this financial year and next, alongside the "more than double funding" for the Black Spots program, together with AU$ $1.6 billion (US$ 1.05 billion) assigned to "critical university and TAFE (Technical & Further Education) infrastructure."

The package also includes two tax changes, including a 10% temporary investment allowance to encourage capital investment by businesses and a 20% cut in the next quarterly pay-as-you-go (PAYG) tax instalment for 1.3 million small businesses.

The package is designed to complement the Government's AU$ 10.4 billion (US$ 6.79 billion) Economic Security Strategy, the AU$ 6.2 billion (US$ 4.05 billion) New Car Plan, the AU$ 300 million (US$ 196 million) local infrastructure funding boost, and the AU$ 15.1 billion (US$ 9.87 billion) COAG (Council of Australian Governments) package.

The Government also said it would make further announcements about nation building projects, funded from the Building Australia Fund, and subject to the Infrastructure Australia priority list, early next year.

The AU$ 1.2 billion (US$ 784 million) investment planned for rail infrastructure for the Australian Rail Track Corporation (ARTC) highlights 17 projects designed to improve the reliability and competitiveness of the nation's rail freight network.

AU$ 580 million (US$ 379 million) will be used to expand capacity along the rail corridors connecting Hunter Valley coal mines to the Port of Newcastle. This AU$ 1 billion (US$ 653 million) project will more than double the amount of coal being transported to export markets from 97 to 200 million tonnes a year.

"This represents the single biggest Australian government investment in rail in the history of the Commonwealth," said Prime Minister Rudd.

Other Rail projects funded today include:

• AU$ 55.8 million (US$ million) for Queensland border to Acacia Ridge track upgrade
• AU$ 45.1 million (US$ million) for Sydney to Brisbane line - new, extended and upgraded loops
• AU$ 29.7 million (US$ 36.5 million) for Melbourne to Junee line - passing lanes
• AU$ 45 million (US$ 29.4 million) for Seymour to Wodonga track upgrade
• AU$ 91.5 million (US$ 59.8 million) for Cootamundra to Parkes track upgrade
• AU$ 105.7 million (US$ 69.2 million) for Western Victoria track upgrade
• AU$ 50 million (US$ 32.7 million) for Wodonga Bypass duplication
• AU$ 42 million (US$ 27.5 million) for Cootamundra to Crystal Brook line - new and extended loops
• AU$ 76 million (US$ 49.7 million) for Melbourne to Adelaide line - extended loops
• AU$ 23 million (US$ 15 million) Adelaide to Kalgoorlie line - new and extended loops
• AU$ 45 million (US$ 29.4 million) towards the AU$ 90 million (US$ 58.9 million) Advanced Train Management System (ATMS) trial set to bring train management into the digital age

The AU$ 711 (US$ 464 million) million investment earmarked for the road sector will accelerate the start of 14 road projects. It will also more than double investment this financial year in the Black Spots program from AU$ 50 million (US$ 32.7 million) to AU$ 110 million (US$ 71.9 million).

Other road construction projects bought forward by this package include:

• The NSW Hume Highway - Woomargama Bypass
• The NSW Hume Highway - Tarcutta Bypass
• NSW Pacific Highway - Bulahdelah Bypass
• NSW Pacific Highway - Sexton's Hill, Banora Point
• QLD Ipswich Motorway - Dinmore to Goodna
• QLD Pacific Motorway - Springwood South to Daisy Hill
• QLD Bruce Highway - Douglas Arterial
• VIC Western Ring Road Upgrade
• VIC Goulburn Valley Highway - Nagambie Bypass
• VIC Western Highway - Anthony's Cutting
• VIC Princes Highway - Traralgon to Sale
• WA Mandurah Entrance Road
• SA Northern Expressway
• TAS Midland Highway - Brighton Bypass

On top of this road funding the Government will also set aside AU$ 195 million (US$ 127.5 million) for investment in agricultural and social infrastructure to develop irrigated agricultural land around Kununurra following assessment of the projects by the State and Federal Government.

In addition, AU$ 1.6 billion (US$ 1.05 billion) has been set aside for the ‘Build Better Universites' and TAFEs programs.

Two tax changes

In an effort to bolster business investment the Government will also invest AU$ 1.6 billion (US$ 1.05 billion) in a 10% temporary investment allowance, provided as an additional tax deduction. The move is designed to encourage capital investment by Australian businesses and will be equal to 10% of the cost of an eligible asset.

The package will also help small business by cutting the next quarterly pay-as-you-go (PAYG) instalment for 1.3 million small businesses by -20%. This reduction in the February instalment will provide immediate and much-needed cash flow relief to small businesses over the summer.

The Budget will remain in surplus once this and other packages announced this year are taken into account.