AFR: Hockey says fuel tax rise will fund roads, jobs. 12 May 2014. Phillip Coorey. Chief political correspondent
The petrol tax increase will fund the majority of the new spending required as part of a $82 billion roads package to be announced in Tuesday’s federal budget.
Treasurer Joe Hockey confirmed on Sunday the revenue from the petrol tax increase would be hypothecated towards helping build roads.
In Tuesday’s budget, Mr Hockey’s first, the Commonwealth will set aside $40 billion over the next six years for the building of roads.
Mr Hockey told Channel Nine the states and the private sector would contribute another $42 billion.
“If we are going to make any changes to fuel excise, it will go into roads and we are laying out a plan for the biggest increase in road expenditure in Australian history,’’ he said.
“That is tens of thousands of new jobs.” It would also address the significant investment drop-off in construction associated with mining investment coming off.
Of the Commonwealth’s $40 billion, about $6 billion to $10 billion will be new money over the six years an analysis by The Australian Financial Review has revealed.
The remainder of the funding will come from either re-announcing previous projects pledged by Labor or by scrapping some of those, such as all urban rail projects, and putting the money towards the roads.
The reintroduction of the practice to increase petrol excise in line with inflation twice a year will raise almost $4 billion in the first four years but grow rapidly beyond that as it compounds.
The petrol excise could raise $7 billion to $8 billion in six years.
When Labor lost the last election, it had $34 billion committed to road and rail projects.
Mr Hockey declined to say how much of the Commonwealth’s $40 billion contribution on Tuesday would be new money. He said it would be “a lot”.
The Commonwealth has promised three significant new projects: the East-West Link in Melbourne, funded by scrapping the $3 billion Melbourne Metro rail project; the West Connex road link in Sydney; and the Toowoomba Bypass.
The infrastructure budget will also include an estimated $5 billion fund from which the states will be given extra funding for projects if they are paid for by the privatisation of assets.
Opposition infrastructure spokesman Anthony Albanese said very little of the $40 billion would be new and it was a travesty that rail projects were being scrapped for roads. “You don’t solve traffic congestion by ripping money out of public transport,’’ he said.
Mr Hockey confirmed the petrol tax increase and the decision to spend the money on roads.
The Australian Automobile Association said it would not be mollified by the hypothecation because now, just one-third of petrol excise is spent on roads and motorists were already being “ripped off”.