NSW BUDGET: Govt runs into debt to fund road infrastructure

By: Jason Whittaker

The New South Wales Government will push itself further into debt as it sets about investing in a number of

The New South Wales Government will push itself further into debt as it sets about investing in a number of key transport projects.

In handing down the Budget, Treasurer Michael Costa unveiled a raft of infrastructure projects which form part of the State’s $13.9 billion in capital expenditure. According to forward estimates this will increase to $57.6 billion in four years, pushing up net debt by $20.9 billion.

But while debt levels will increase, the Government plans to use the funds to bankroll major projects for the Pacific, Princes, Hume and Bruxner highways over the next four years.

This, according to Costa, shows "the Iemma Government is delivering on its commitment to invest in new infrastructure".

Transport forms a key part of the Budget, with the Government investing more than $4 billion, or 31.9 percent of capital expenditure, in transport-related projects.

Transport will receive $1.8 million while $2.2 billion will be allocated specifically to roads. The Government’s $4 billion transport investment represents an increase of $400 million over the previous year.

In delivering the Budget, Costa announced the Government expenditure on public transport and roads has increased by 25 percent the last four years.

The major new projects budgeted for the 2008-09 financial year include a $65 million investment in the M5, $150 million for the Victoria Road upgrade and $220 million for the widening project of the Great Western Highway at Lawson and Wentworth Falls.

Of the amount to be spent on transport, the Government will invest $397 million in ports, adding to the almost $14 billion the Iemma Government will invest in infrastructure.

Furthermore, the Roads and Traffic Authority (RTA) will receive the most in government funding across agencies, with the Budget allocating $2.2 million in the 2008-09 financial year. This is more than $200,000 extra over the Sydney Water Corporation, which will receive just under $1.9 million.

"This year the State’s total investment in infrastructure will reach $13.9 billion, 11 percent higher than the 2007-08 Budget," Costa says.

As a result of increased infrastructure expenditure, Costa estimates general government net debt will increase from 1.4 percent of Gross State Product (GSP) to 1.7 percent in June 2012.

"However, net debt will remain at sustainable levels and will stay significantly lower than in 1995 when it was 7.4 percent of GSP," he says.

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