Economic woes may force funding reassessment

The worldwide economic crisis may affect infrastructure commitments, as the Opposition claims the Government’s building funds will fall short

By Brad Gardner

The Rudd Government will soon learn if the worldwide economic crisis has affected its infrastructure commitments, as the Opposition claims the Government’s building funds will fall almost $15 billion short.

The Government is waiting on Treasury to return its mid-year economic review, which will detail whether the decline in world markets has impacted on surplus forecasts as well as the Government’s three ‘nation building’ initiatives.

More than $40 billion in total has been earmarked the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund.

The Government has so far invested $14.7 billion to the $20 billion Building Australia Fund, which will bankroll key port, road and rail projects. In total, $25 billion has already been committed to the three funds.

However, the financial woes coupled with the Government’s decision to pump more than $10 billion into the economy to increase consumer spending may force a reassessment of surplus forecasts and funding for the three initiatives.

But a spokesman for Minister for Transport and Infrastructure Anthony Albanese says the funds are a key part of the Government’s agenda.

"We remain committed to using the surpluses for these funds," the spokesman says.

The Opposition, however, claims the Government has misled the public.

Opposition spokesman on transport Warren Truss says the Government’s $41 billion funds actually amount to $26.3 billion.

"Last week, the Government’s financial stimulus announcement referred only to money already put aside for those funds from 2007-08, or $26.3 billion. No mention was made of where the remaining $14.7 billion would be coming from," Truss says.

He has criticised Treasurer Wayne Swan for saying the remaining billions will come from future surpluses despite the fact this is what the Government announced when launching the three funds.

Truss claims Swan "dodged and weaved" on answering whether the Government will inject the remaining funds this financial year, saying "Labor’s talk of a giant infrastructure package is unfunded talk".

He says the Government should not fund public transport projects because they are exclusively the realm of the states. Furthermore, Truss argues the regions are being neglected in favour of cities.

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