1. Victorian Election: Labor Promises $850 Million for New Schools; Opposition Commits to Doubling the Size of the $689 Million Lara Prison Project

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IN THIS EDITION

1. Victorian Election: Labor promises $850 million for new schools; Opposition commits to doubling the size of the $689 million Lara Prison project

2. NSW Opposition announces $13.5 billion public transport fund in election pledge

3. Federal Government announces funding commitments to projects in Queensland

4. AER releases discussion paper on regulatory tax review

5. Industry news

6. Industry appointments

7. Infrastructure Partnerships Australia news

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1. Victorian Election: Labor promises $850 million for new schools; Opposition commits to doubling the size of the $689 million Lara Prison project

This week, the Victorian Government announced $850 million in funding towards school infrastructure, if re- elected on 24 November. The funding would go towards the construction of 100 new schools across Victoria over the next eight years.

If re-elected, the incumbent Labor Government has committed to open 45 new schools within the next term of government. 21 of these schools are already being delivered by the Government. The 45 schools to open between 2019 and 2022 include: seven in Casey seven in Wyndham six in Hume five in Melton three in Whittlesea two in each of Cardinia, Port Phillip and Greater Geelong, and 11 schools across Ballarat, Bass Coast, Darebin, Glen Eira, Greater Dandenong, Macedon Ranges, Maribyrnong, Melbourne, Mitchell, Stonnington and Yarra.

In addition, the Victorian Government has committed to ensuring that all eight primary schools, set to open in 2021 and all six primary schools opening in 2022, will have a kindergarten adjacent or on their grounds.

The Government will also add a kindergarten to all new schools to open in 2019 and 2020, where possible. Overall, the Government has committed to build or upgrade about 1,000 kindergartens across the State, if re-elected.

In addition, the Victorian Government has announced a fund of $400 million to partner with the non-government school sector for builds and upgrades. This commitment has been matched by the Victorian Liberal-National Party. The Government will also contribute $20 million for the Planned Maintenance Program, which will fund vital maintenance works across schools based on need.

In other announcements this week, the Liberal-National Opposition has committed to almost doubling the size of the proposed Lara Prison Precinct, if elected.

The Victorian Government allocated $689 million in the 2018-19 Budget to build a 700 bed prison. If elected, the Victorian Opposition has announced that it would increase the capacity of the prison to 1,300 beds through a PPP procurement model. The proposed larger prison would consist of 700 maximum-security beds, 300 medium-security beds and a 300 bed remand facility.

The Opposition's timeline for the prison would see construction commence in 2019-20 and be completed in late 2022. Operations would commence in July 2023.

Relevant links

View the Victorian Government's Media Releases HERE and HERE View the Victorian Opposition's Lara Prison media release View the Victorian Opposition's Schools media release View the Lara Prison Precinct Expansion Project on infrastructurepipeline.org

2. NSW Opposition announces $13.5 billion public transport fund in election pledge

This week, the NSW Opposition announced a new $13.5 billion public transport fund ahead of the state election in March 2019. If elected, the Opposition would re-allocate funding for projects currently under development towards public transport. This includes abandoning the conversion of the Sydenham to Bankstown line for Sydney Metro City and Southwest. With contracts for this section expected to be awarded before the NSW State election in March 2019, this raises the possibility of contract cancellations if the NSW Opposition forms Government.

The NSW Opposition’s $13.5 billion “public transport acceleration fund” (the Fund) comprises $3 billion reserved in Restart NSW for Sydney Metro West and the Federal Opposition’s $6 billion pledge toward Western Sydney Rail (North South Rail Link – Stage One) to Western Sydney Airport and $4.5 billion re-allocated from under development projects.

The $4.5 billion to be re-allocated comprises:

$477 million from the Northern Beaches Tunnel (Beaches Link) and Western Harbour Tunnel $2.4 billion from the F6 Corridor - Stage 1 - Extension Project, and $1.6 billion from the Sydenham to Bankstown line conversion as part of Sydney Metro City & Southwest.

The re-allocations would be used to fund Sydney Metro West along with “improved public transport in Sydney’s South, including rail services on the Illawarra and South Coast lines.” It is unclear if this will include or complement works under the More Trains More Services programme, which is investigating increasing peak services on the Illawarra Line by 30 per cent and introducing more services for the South Coast among wider improvements to the Sydney rail network.

In a move that will likely concern the sector, the Opposition’s pledge to abandon the conversion of the Sydney to Bankstown line if elected would require significant augmentation or cancellation of the Line-wide works and Southwest Station and Corridor (SSC) works contracts, which are expected to be awarded before the State election.

The NSW Government intends to begin procurement of the Beaches Link, Western Harbour Tunnel and F6 Corridor Extension Stage 1 following the State election, if they are re-elected.

The NSW Opposition has also committed to delivering:

Westconnex Stage 3A and 3B, but with the latter subject to a design review Sydney Gateway, noting a taskforce would be established to “get the Gateway to Port Botany”, and the M12, part of the Western Sydney Infrastructure Plan.

Relevant links

Read the NSW Opposition's media release View NSW projects on infrastructurepipeline.org

3. Federal Government announces funding commitments to projects in Queensland

This week, the Federal Government has made a series of funding commitments in Queensland. The announcements include funding for water and transport projects in Queensland, headlined by an $800 million allocation to the Rockhampton Ring Road.

The Federal Government has indicated the funding commitments were included but not detailed in their 2018-19 Budget. The commitments include:

$800 million for the Rockhampton Ring Road $200 million for the Haughton Pipeline Extension Stage 2, and $112 million for Gold Coast Light Rail Stage 3A.

Both the Rockhampton Ring Road and the Haughton Pipeline have bipartisan support from both major parties. The Opposition has also stated it would refer the business case for Gold Coast Light Rail Stage 3A to Infrastructure Australia for assessment once completed.

Rockhampton Ring Road

The Federal Government has indicated it is providing $800 million for the Rockhampton Ring Road based on an 80/20 funding split between the Federal and Queensland governments. While planning and corridor preservation have not been completed, the 2013 Fitzroy River Floodplain and Road Planning Study identified that the Ring Road would pass to the West of Rockhampton Airport, via the Western Road Corridor (Figure 1).

Figure 1: Western Road Corridor

Source: Fitzroy River Floodplain and Road Planning Study

Haughton Pipeline Extension Stage 2

The Haughton Pipeline Extension, or Haughton Pipeline Duplication Project (HPDP), will link the Burdekin Haughton Water Supply Scheme to the Ross River Dam. The alignment of the new pipe will generally follow the existing pipeline’s route.

The $215 million Stage 1 of HPDP, which duplicates 36.5 kilometres of pipe between Ross River Dam and the Haughton Channel along with ancillary upgrades (orange in Figure 2), has already been funded by the Queensland Government. Townsville Council expects construction of HPDP Stage 1 to be completed by December 2019.

Stage 2 (light blue in Figure 2) will extend the duplication from Haughton Channel to the Burdekin River.

Figure 2: Haughton Pipeline Duplication Project

Source: Townsville Water Security Taskforce Final Report

The Federal Government’s $200 million commitment fully funds the $195 million Stage 2 as well as providing $5 million for development of the business case. The Federal Government has noted that the $200 million partially comprises funding originally allocated to the Townsville Eastern Access Rail Corridor (TEARC) project.

The Federal Opposition has stated it would also fully fund Stage 2 of the project if elected.

Gold Coast Light Rail Stage 3A

The Federal Government’s $112 million commitment will go to funding part of the circa $670 million Stage 3A of Gold Coast Light Rail. The project will see the Gold Coast Light Rail network extended south from Broadbeach along the Gold Coast Highway to Burleigh Heads (Figure 3). The Queensland Government has indicated construction could start in 2020 and be completed by 2023. This will be subject to completion of the business case, which is currently under development, and funding commitments from Local, State and Federal governments.

The business case is expected to be finalised in December 2018 for government consideration in early 2019.

Figure 3: Gold Coast Light Rail Stage 3A

Source: Queensland Government Department of Transport and Main Roads

Relevant links

Read the Federal Government’s transcript on Rockhampton Ring Road and media releases on Haughton Pipeline Extension Stage 2 and Gold Coast Light Rail Stage 3A Read the Townsville Water Security Taskforce’s final report View Rockhampton Ring Road and Gold Coast Light Rail Stage 3 on infrastructurepipeline.org

BACK TO TOP Read our submission to the Department of Environment and Energy on the Government's Underwriting New Generation Investments consultation paper.

4. AER releases discussion paper on regulatory tax review

The Australian Energy Regulator has released a discussion paper as part of an ongoing review into the regulatory tax approach for energy networks. The AER is seeking stakeholder comments on the discussion paper and intends to provide the COAG Energy Council with a final report and recommendations in December.

The AER review of the regulatory approach to tax investigates the differences between the regulatory forecast of allowed tax costs and actual tax payments made by energy networks. The discussion paper offers further analysis of the current tax management practices of regulated networks and identifies possible changes to the AER’s regulatory tax approach following submissions to the initial report released in June this year.

The AER notes there are valid explanations for some of the differences between allowed and actual tax costs, and that changes to the regulatory approach are not necessary. However, the AER has noted some aspects appear to be inconsistent with efficient tax management practices and therefore warrant consideration. As such, the AER has identified seven prominent issues for analysis and has provided advice in its discussion paper on whether each issue warrants change. These include:

1. changing the benchmark tax rate to a lower statutory tax rate (15% or 0%) – AER proposes no change and to maintain use of the standard corporate tax rate (30%) 2. amending models to enable capex to be immediately expensed for tax, but capitalised and depreciated for Regulated Asset Base – AER considers this a possible change 3. amending models to reflect diminishing value method for tax depreciation – AER considers this a possible change 4. amending models to apply statutory tax cap of 20 years to gas pipeline assets – AER considers this a possible change 5. revising Tax Asset Base value to reflect the actual market value of the tax asset base – AER proposes no change warranted 6. amending interest expense in the tax calculations but leave the rate of return calculations unchanged – insufficient information at this stage to determine whether this should be a possible change, and 7. pass through of actual tax paid (or actual tax below benchmark provision) – AER proposes no change warranted and to maintain a benchmark approach and not adopt a cost pass through model.

The discussion paper also notes that most of the energy networks voluntarily provided core tax information to assist the AER’s analysis. However, regulatory information notices (RINs) were also issued asking for more detailed tax information. The analysis in the discussion paper is based on the first tranche of tax information voluntarily provided by networks. The AER is yet to examine the material provided in response to the RINs.

PwC has published an expert report to help inform the consultation process. It presents key findings and recommendations based on information provided to date from energy networks. Dr Martin Lally has also released a second expert report, reviewing submissions received following the AER’s initial paper.

Infrastructure Partnerships Australia’s submission to the initial paper highlighted the impact of the high volume of reviews into the energy sector and the effect this has on confidence in policy and regulatory stability. It also advocated for the preservation of incentive-based regulation and to rule out any retrospective changes to the regulatory tax approach.

The AER is inviting submissions on the discussion paper until 23 November 2018. The AER will provide the COAG Energy Council with a final report and recommendations on any changes by December 2018.

Relevant links

Read the AER’s regulatory tax review discussion paper Read our submission to the AER

5. Industry news

The Australian Federal Treasurer, Josh Frydenberg, has released his preliminary view on CK Asset Holding’s proposed $13 billion acquisition of APA, stating that the acquisition is not in the national interest. The preliminary view followed a whole-of-government assessment and consultation process and was formed on the grounds that the transaction would “result in an undue concentration of foreign ownership by a single company group in our most significant gas transmission business”. The final decision will be made in the next two weeks.

The Federal Government has announced a $498 million investment to redevelop the Australian War Memorial. The redevelopment will increase visitor areas by 83 per cent to expand the exhibition and public programme space, which is currently at capacity.

The NSW Government has reached a funding agreement with the Federal Government on Gonski 2.0. Under the agreement, an extra $3 billion in Commonwealth funding will be made available to NSW government schools to 2027, allowing more than $6.4 billion of funding to flow to schools over the next decade.

The NZ Government has announced a NZ$1.5 billion (A$1.4 billion) investment to renew and build 2,900 state houses, 500 public housing homes and 2,000 KiwiBuild and market homes in Porirua. The investment will be delivered over 25-years, with works expected to start in 2019. The first public housing is scheduled to be delivered in 2019 and the first set of KiwiBuild homes in 2020.

The NSW Government has announced that stamp duty will now be indexed to CPI. Under the changes the seven price brackets which determine how much stamp duty is paid by home purchasers will start to rise with inflation from the middle of next year. This will affect transactions made on or after 1 July 2019. The price brackets have remained largely unchanged since 1986 despite steep increases in property prices.

The NZ Government has announced a NZ$45.6 million (A$42.4 million) commitment to the new Wellington children’s hospital. The project has been fast tracked by a NZ$50 million (A$46.5 million) donation by businessman Mark Dunajtschik. The new hospital will be three-levels, with 50 inpatient beds and 21 clinic rooms. The hospital is scheduled to open in early 2021.

The Victorian Government will invest $58.6 million to upgrade intersections and roads in Ballarat, if re-elected this month. Some of the planned upgrades include replacing congested roundabouts with traffic lights, adding new lanes to both Cuthberts Road and Learmonth Street roundabout and Learmonth Street and Sturt Street roundabout, and upgrading pedestrian crossings at Ballarat High School.

The Victorian Government and Opposition have both committed to removing level crossings in Pakenham and rebuilding Pakenham station as part of their respective election commitments. The Victorian Government has committed to removing four level crossings at McGregor Road, Racecourse Road, Main Street and Cardinia Road. This forms part of the Victorian Government’s 25 additional removals under the Level Crossing Removal Project. The Opposition will remove three level crossings at McGregor Road, Main Street and Racecourse Road as part of its plan for high-speed rail to the Latrobe Valley.

The Victorian Opposition will invest $130 million to duplicate 6.4 kilometres of the Berwick to Cranbourne Road to manage population growth and road capacity, if elected this month. The Opposition will fund the construction by adding the duplication of the Berwick to Cranbourne Road to the existing South Eastern Roads Package, funded in the 2018 State Budget.

The Victorian Government has announced it will invest $150 million to create over 6,500 hectares of parkland, if re-elected this month. Parkland will be established in Melbourne’s south-eastern, north and north-eastern, and west and north-western suburbs.

The Victorian Government will extend the Victorian Renewable Energy Target to 50 per cent by 2030, if re-elected this month. This announcement builds on the Victorian Government’s current VRET legislation, which aims to have 25 per cent of Victorian electricity generation coming from renewable sources by 2020, and 40 per cent by 2025.

The University of Sydney is entering formal negotiations with the NSW Government to establish a campus in the Westmead health and education precinct. Health Infrastructure NSW and UrbanGrowth NSW Development Corporation will jointly lead a 24-month exclusive negotiation period with the University of Sydney, with community feedback to be sought during the master planning process.

The NSW Government has released the Tourism and Transport Plan. The plan outlines how the transport network will help achieve the NSW Government’s target to more than triple 2009 overnight visitor expenditure by 2030. It explores Government initiatives that can help grow the tourist economy, including through the introduction of a new Tourist Drives Strategy, streamlined ticketing, improving connections to regional air and cruise ports, and providing more transport services to regional destinations. For more information, read the complete Tourism and Transport Plan

The NSW Government has released the designs for the new $250 million Sydney Fish Market. The new fish market is expected to open in 2023. View the designs HERE

The SA Government has referred an independent inquiry into government procurement and participation of SA businesses to the new State Productivity Commission. As part of the inquiry, the Productivity Commission has been asked to evaluate time and costs associated with procurement, assess the effectiveness of the Industry Participation Policy and the level of compliance by public authorities with government procurement policies, and consider contemporary procurement strategies.

The SA Government has announced that under the South Australia Industry Participation Policy, businesses who employ apprentices and trainees will receive an increased weighting to win tenders for projects under $50 million. Read the South Australia Industry Participation Policy

The Queensland Government has opened 6,600 kilometres of land in Chinchilla for gas exploration. Companies have been invited to bid for the right to explore the land. Tenders close at 2.30 pm on 28 February 2019.

AMP Capital’s Community Infrastructure Fund will acquire an additional 6.8 per cent stake in AquaSure’s Victorian Desalination Project (VDP). The deal will take AMP Capital’s share of the VDP to 16.5 per cent.

The Commonwealth Bank has announced a joint bid with Link Administration Holdings and Morgan Stanley Infrastructure Partners to acquire Property Exchange Australia Limited (PEXA). The acquisition would increase CBA’s stake in PEXA from 13.1 per cent to approximately 16 per cent.

Infrastructure Capital has successfully completed a refinancing of the Hallett 4 Wind Farm. The facility comprises two long term tranches of senior debt – Tranche A ($160 million) and Tranche B ($178 million). Tranche A has been funded by a bank debt facility from ANZ, Mizuho Bank, NAB and Westpac for a 6-year term. Tranche B is being financed by a Samurai loan underwritten by MUFG Bank over a 12 year term.

Plenary has completed a $230 million refinancing of the AgriBio Centre Public Private Partnership. The refinancing comprises a single 17-year debt tranche that is fully underwritten by NAB.

Macquarie Capital has announced a net profit contribution of $406 million for the first half of FY2019. This is an increase of 114 per cent from $109 million in the first half of FY2018.

SNC-Lavalin has announced financial results attributable to its shareholders for the third quarter of 2018, with a net income of CAD$121 million (A$127 million). This is 17 per cent higher than the third quarter of 2017.

Goldman Sachs has released 2018 financial results for the last three quarters, posting a net revenue of USD$28 billion (A$38.4 billion). This is a USD$4 billion (A$5.5 billion) increase since 2017.

McConnell Dowell has been awarded a $1.5 million Roads and Maritime Services contract to upgrade Jane Street in Penrith, as part of the Mulgoa Road and Castlereagh Road Upgrade. The Federal and NSW governments have jointly funded the project. Work is expected to commence in December 2018 and be completed by 2020.

Snowy Hydro has signed eight wind and solar contracts in NSW and Victoria. The deal will allow Snowy Hydro to provide firm wholesale prices for below $70/MWh for up to 15 years. The four wind farms and four solar farms would generate approximately 2.8 terawatt hours of energy annually.

The WA Chamber of Commerce and Industry has released the WA’s Future in the Lithium Battery Value Chain report, indicating WA’s potential to become a competitor in the lithium battery value chain. The report highlights that demand for lithium will quadruple by 2025, as electric vehicles become more common. Read the WA’s Future in the Lithium Battery Value Chain report

The Australian and German governments have signed a Memorandum of Understanding to establish a permanent Joint Economic Committee. The Joint Economic Committee will focus on increasing cooperation on economic issues, enhancing bilateral trade, market access and investment, and facilitating cooperation between the Australian and German private sectors.

6. Industry appointments

Transport for NSW has announced new divisions and managerial movements within the organisation. Elizabeth Mildwater has been appointed as the Deputy Secretary for the new Customer Technology and Services division, from 12 November. Peter Regan will become the Deputy Secretary for the new Infrastructure and Place Division, from 26 November.

Robyn Denholm has been appointed Chair of Tesla’s Board of Directors. Ms Denholm will leave her current role as Chief Financial Officer at Telstra after a six month notice period. Ms Denholm has served on the Tesla Board as an independent director since 2014.

Katie Page has been appointed as an independent member to the NSW Government’s Board of Place Management for a three-year term. Ms Page is also the CEO of Harvey Norman.

Malcolm McDowall has been appointed as Arcadis’ Australia Pacific Chief Executive Officer. Mr McDowall has been with Arcadis for over 18 years, with positions as Managing Director of Environment, Advisory and Assurance and Managing Director of Buildings and Urban Development.

Andrew Batch has been appointed as acting Chief Financial Officer of RCR Tomlinson, following the resignation of Andrew Phipps.

Downer has appointed Nicole Hollows and re-appointed Phillip Garling as Directors on the Board. Ms Hollows has over two years of experience as a CEO of SunWater. Mr Garling has been on the Board since 2011 and is currently the Chair of the Rail Projects Committee.

Macquarie Group has announced several new appointments. Jillian Broadbent AO has joined Macquarie Group and Macquarie Bank as an independent director. Martin Stanley has been appointed as the Group Head of Macquarie Assessment Management and will join the Executive Committee. Florian Herold has been appointed Group Head of Corporate and Asset Finance Principal and will also join the Executive Committee.

Goldman Sachs has announced the promotion of 69 partners, including David Gribble, Craig Murray and Nell Hutton in Sydney. See the full list of promotions

Mark Claassen has been appointed as GHD’s Senior Technical Director of Tunnels in Brisbane. Prior to joining GHD, Mr Claassen served as the Vice President for Operations for COWI North America. Brendan Henry has also been named Service Line Leader for Tunnels in Australia.

Dr Jennifer Pope has been appointed to the board of the WA Government’s Environmental Protection Authority for a five- year term. Dr Pope is also a Senior Lecturer in Edith Cowan University’s School of Science, specialising in environmental management, impact assessment and sustainability.

Craig Andrew Holden and Helen Louise Dyer have been appointed to the SA Government’s State Planning Commission. Mr Holden and Ms Dyer have joined after the resignation of Fairlie Delbridge, Janet Finlay and Matt Davis.

Nina Fitzgerald has been appointed as a Partner for Ashurst’s Intellectual Property Practice in Sydney. Ms Fitzgerald joins from her latest position as a Senior Associate at Deacons in Hong Kong.

Perpetual has announced the re-appointment of Nancy Fox, Ian Hammond and Craig Ueland to the Board at their 2018 Annual General Meeting.

7. Infrastructure Partnerships Australia's news

There are currently no more Taskforces scheduled for the remainder 2018. To read more about our Taskforces visit our website.

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