FEDERAL BUDGET: bonanza for construction industry

With $8.5 billion promised for “nationally significant” rail, road and port infrastructure, and construction components of $3.2 billion for hospitals and health services, and $2.6 billion for education and research institute spending, there’s no doubt the government is planning a construction-led recovery from the current downturn.Roads, rail and ports are the centrepiece of the infrastructure package. The federal government will spend $4.6 billion on metropolitan rail networks in Sydney, Melbourne, Brisbane, Perth, Adelaide and the Gold Coast.Another $3.4 billion will be spent on the “Network 1” road freight link between Melbourne and Cairns (and key roads feeding into it), and the government will also spend $389 million on extending ports in Geraldton, in Western Australia, and in Darwin.The infrastructure spend has been guided by Infrastructure Australia’s National Infrastructure Priority List, according to federal Infrastructure Minister Anthony Albanese.Its flagship project is the $1.5 billion in spending on the Hunter Expressway in New South Wales, 40 kilometres of dual carriageway between the F3 and the New England Highway. Construction will begin in 2010, and is scheduled for completion in 2013.In addition the government will spend $618 million between 2010 and 2014 on the Pacific Highway-Kempsey Bypass, NSW, and $884 million on additional work on the Ipswich Motorway in Queensland.The flagship rail project is $3.2 billion on a 40km dual track link from West Werribee to the Southern Cross Station in central Melbourne via Sunshine. The government says the new Regional Rail Express line will segregate V/Line regional rail services from metropolitan rail services and include a new metropolitan rail tunnel linking the western suburbs with Melbourne’s central business district.In addition, the federal government will contribute $365 million to the construction of a light rail route to the Gold Coast in Queensland, expected to be operational by 2013.Residential construction companies will also benefit from the three-month extension of the government’s boosted first home owners scheme. Since October last year, first home buyers have received an extra $7000 when purchasing an established home, and an additional $14,000 for new homes, on top of the $7000 provided under the original first home owners scheme.The larger grant scheme was due to end on June 30, but will now apply to homes purchased before September 30. The grant will then be reduced to an extra $3500 for established homes and $7000 for new homes until the end of the year, when the scheme reverts to its original levels. Tax breaks for businessSmall and medium-sized construction companies may also benefit from the proposed expansion of the government’s Small Business and General Business Tax Break scheme.The tax break will be increased from 30% to 50% for small businesses, and the deduction will be available on new capital worth $1000 or more (such as vehicles) purchased between December 13, 2008, and the end of this year.The previously announced 30% bonus (with a $10,000 threshold) will continue to apply to all other businesses, but has extended it to allow companies to aggregate their spending on similar assets (a fleet of cars, for example), to meet the threshold level.In total, the extension of the scheme will cost the government around $141 million over the next five years.Infrastructure spending listHunter Expressway (NSW): $1.5 billion, with construction to start in 2010 and end in 2013.Pacific Highway-Kempsey Bypass (NSW): $618 million, with construction to start in 2010 and end in 2014.Ipswich Motorway – additional works (Qld): $884 million, with construction beginning in 2009 and ending in 2012.Regional Rail Express (Victoria): $3.2 billion, with construction starting in 2010 and ending in 2014.Gawler Rail Line Modernisation (SA): $293.5 million, with construction to start in 2010 and end in 2013.Noarlunga to Seaford Rail Extension (SA): $291.2 million, with construction to begin in 2010 and end in 2013.Gold Coast Light Rail (Qld): $365 million, with construction starting in 2011 and ending in 2013.East-West Rail Tunnel – Preconstruction Work (Vic): $40 million, with construction to begin in 2012 and end in 2018.In addition, Albanese said the government would contribute funds towards six projects in the pipeline of projects identified by Infrastructure Australia:Bruce Highway – Cooroy to Curra (Section B) duplication (Qld): $488 million, with work to start in 2009 and finish in 2012. Northbridge Rail Link (WA): $236 million, with construction expected to start in 2009 and end in 2014.West Metro – Preconstruction Work (NSW): The federal government will provide an immediate $91 million to advance the West Metro project in Sydney to the next stage.Brisbane Inner City Rail Feasibility Study (Qld): $20 million to undertake a feasibility study to determine potential route alignment, construction timetables and preferred funding model. Oakajee Port Common User Facilities (WA): $339 million for an equity injection into the Oakajee Port Common User Facilities. Darwin Port Expansion (NT): $50 million for Darwin Port Expansion.Money for the last two projects will be set aside subject to further work and consideration by Infrastructure Australia.

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