The NSW Government will invest record amounts in critical infrastructure projects but face considerable cost pressures under its State Infrastructure
The NSW Government will invest record amounts in critical infrastructure projects but face considerable cost pressures under its State Infrastructure Strategy released by Treasurer Michael Costa.
The 10-year State Infrastructure Strategy is designed to guide investment in critical infrastructure projects from 2008 to 2018.
The projects in the strategy have previously been announced, such as the Government’s 67 km upgrade of the Hume Highway in Southern NSW and the Pacific Highway upgrade, which is to be finished in 2009 at a cost of $3.9 billion.
All up, the Government will spend $140 billon over the next 10 years, which Premier Morris Iemma says is “the largest capital expenditure in the State’s history”.
Iemma says the strategy also highlights the importance of public-private partnerships in delivering key projects, and will guide the Government in working with the private sector.
Yet the record investment is tempered with a number of cost pressures the Government will need to address as it renews in-demand infrastructure such as roads and bridges.
According to the strategy, the cost of new infrastructure projects will increase in the coming decade due to the expense of installing high standard noise mitigation and constructing tunnels.
“While saving on land acquisition, tunnelling is a significantly higher cost construction method,” the strategy says.
“In response to escalating construction costs, the Government has developed clearer planning strategies, clearer project definition and closer coordination in order to achieve ‘value for money outcomes.”
However, the strategy concedes the Government’s efforts will do little to curb the cost of infrastructure as demand on ports, rail and roads grows due to the burgeoning freight task.
As well as spending $35 million at Newcastle Port, the Government is teaming with the private sector to spend $1 billion expanding Port Botany to cope with its expansion.
“Container trade through Port Botany has been increasing at an average of 10 percent per annum over the last five years and future average annual growth is predicted at 5.7 percent,” the strategy says.
The strategy also champions the Government’s development of an intermodal logistics facility at Enfield designed to increase the amount of rail freight and streamline distribution throughout Sydney.
Transport projects form part of the Government’s Key State Plan priorities, which include 14 long-term goals and 34 priorities. According to the strategy, safer roads and improving the efficiency of the road network are top priorities.
This is reflected in the amount of government expenditure being spent on transport, with the Budget allocating the majority of funds in transport-related projects. Of the $13.93 million allocated to infrastructure in the Budget, almost $4.5 million will be spent on transport.
This money, which will see the Government increase net debt to $20.9 billion by 2012, will be used to ramp up investment in road, rail and port projects.
The Strategy also detailed the need to tackle urban congestion, saying NSW will work with the Federal Government to develop initiatives aimed reducing bottlenecks.