The $11.6 billion Infrastructure Growth Package, including a $5 billion Asset Recycling Initiative (see below), has a large focus on big road projects in NSW, Victoria and WA and is being touted by the government as a much-needed benefit of a controversial revenue raising budget measure – the re-introduction of indexation of the fuel tax excise. This is part of the federal government's commitment to spend $50 billion over seven years on transport infrastructure.

Mr Hockey labelled this expenditure "the biggest increase in road expenditure in Australian history". This comes after successive years of growth in the construction of roads, bridges, railways and harbours in Australia.

Growth in Transport Engineering Construction*

Growth in Transport Engineering Construction

* Includes roads, bridges, railways and harbours. Break in series between Dec 06 and Mar 07. Source: Engineering Construction Activity, Australia, Dec 2013 (ABS cat no. 8762.0)

Norton Rose Fulbright partner James Morgan-Payler says that the "roads projects in the populous eastern states have attracted the most direct federal funds, with Victoria's East West Link and NSW's Badgerys Creek airport-related road projects receiving the lion's share".

The second stage of the East West Link in Victoria will receive $1.5 billion, while $2.9 billion of federal funds will be spent connecting Sydney with the long-awaited second airport to be built at Badgerys Creek. This is on top of a $2 billion concessional loan for the NSW WestConnex Stage 2 project, an extra $866 million for the Perth Freight Link, $500 million for the North-South Road Corridor project in South Australia and funding for the Toowoomba Second Range Crossing in Queensland.

As promised before the 2013 election, the federal government will also establish a new $1 billion National Stronger Regions Fund to provide grants for the construction, expansion and enhancement of infrastructure across Australia.

"The federal government's direct investment in roads projects will add further impetus to the construction and infrastructure sector, which is reeling from slower investment in mining and commodities," Mr Morgan-Payler said.

"A critical issue for state governments now will be to program the proposed mega projects, especially road and rail projects in Melbourne and Sydney, to avoid resourcing shortages and price hikes. Some industry commentators have suggested that it would be better to stagger these mega projects to maximise competitive bids and efficient resourcing."

Builders, project sponsors and other private sector organisations wishing to participate in new government infrastructure projects should "undertake due diligence and planning for the relevant projects, keep abreast of the government's announced plans for the projects and, if possible, maintain direct contact with the relevant state government representatives to understand their plans, timing, scope and budgets for upcoming projects," Mr Morgan-Payler said.

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