Fears have risen that a multi-billion dollar upgrade to the Pacific Highway may not go ahead after New South Wales state premier Barry O’Farrell warned that road projects in his state may have to be shelved due to lack of funding allocation in the federal budget.
The NSW government says Canberra had previously agreed to pay for 80 per cent of the upgrade. Tuesday’s federal budget, however, included only $3.56 billion in funding for the project, a sum that will cover only 50 per cent of the upgrade cost. The state itself will have to come up with the rest if the project is to proceed.
O’Farrell, who told reporters in Sydney on Wednesday that the state must now find an extra $2.3 billion to complete the upgrade, says the upgrade project, along with work on other roads such as the Great Western Highway and Princess Highway, may have to be shelved if the federal government does not budge from its current position.
“If this (deal) stands…that $2.3 billion dollars could only be found by stopping other roadworks across NSW, by stopping other capital works projects,” O’Farrell says. “I hope the federal government stops playing politics with a road that’s killed and injured too many people.”
NSW Treasurer Mike Baird says a letter between former NSW Transport Minister David Campbell and Federal Infrastructure Minister Anthony Albanese confirms the 80/20 split. Funding was to be split that way, he says, because the federal government receives about 80 per cent of tax income.
Baird says the loss of Pacific Highway funding, on top of a $5.4 billion shortfall in GST revenues over four years, would force a rethink in next month’s state budget. O’Farrell has not ruled out raising state taxes to cover the funding shortfall.
Federal Transport Minister Anthony Albanese denies, however, that there was ever an agreement for the federal government to fund 80 per cent of the project.
“It’s difficult to understand the NSW government sometimes,” Albanese told ABC Radio. “They know full well…it was always a 50-50 split”.
By Ahn Jae Wook