Professionals Australia has welcomed the Government’s investment in infrastructure and medical research, but is concerned by proposed cuts to science, public sector jobs & automotive transition plans.

Professionals Australia CEO Chris Walton reflects on what this Budget means for members in key sectors such as infrastructure, science, pharmacy, the public sector and the automotive industry.

Infrastructure

The Government has announced a $50 billion commitment over seven years for roads and rail infrastructure spending, starting with a $5 billion investment in the next twelve months.

Chris Walton said “We welcome this investment in infrastructure, but we are concerned that public service cuts will mean that governments do not have sufficient in-house engineering capacity to deliver projects on-budget and on-time.

“Without engineering capacity, governments are rendered uninformed purchasers – with billions of taxpayer dollars set to be wasted.

“It is now critical that governments – both Federal and State – invest in their engineering capacity, to ensure this massive program of infrastructure can be delivered without immense waste.

“Research from Blake Dawson shows that without proper engineering oversight, projects over $1 billion routinely cost another $200 million to deliver – as a country, we simply can’t afford this waste.

The infrastructure spending announced in the Budget will be funded in large part by the Government’s Asset Recycling Initiative and a $3.7 billion Infrastructure Growth Package. The Government has committed $229 million in a National Highway Upgrade Programme; $200 million for the Black Spot Programme; $350 million for the Roads to Recovery Programme; and $2.9 billion to be spread across the East West Link (stage 2) in Melbourne; WestConnex (stage 2) in Sydney; the Perth Freight Link; the Toowoomba Second Range Crossing, the North South Road Corridor in Adelaide; and road upgrades in the NT.

State by State – Infrastructure committments

• ACT – $293 million
• New South Wales – $14.9 billion (over ten years)
• Northern Territory – $594 million
• Queensland – $13.4 billion (over eight years),
• South Australia – $2 billion
• Tasmania – $1 billion
• Victoria – $7.6 billion (over eight years)
• Western Australia – $4.7 billion
• Inland Rail link from Melbourne to Brisbane. Government is committing $300 million to pre-construction works.

Infrastructure Australia

As part of its infrastructure program, the Government has announced that it will restructure Infrastructure Australia and it has issued the organisation with new goals – which Professionals Australia supports.  These include:

• To undertake 5-yearly evidence-based audits of Australia’s infrastructure assets;
• Develop top-down priority lists at national and state levels;
• Develop a 15-year infrastructure plan; and
• Evaluate proposals for nationally significant economic infrastructure, as well as proposals in the education and health sectors.
• Projects seeking Australian Government funding of $100 million or more will be required to be evaluated. Infrastructure Australia will be expected to publish its findings.

The 15-year infrastructure plan is designed to provide early and rigorous planning for Australia’s infrastructure. It will include defined standards for project delivery, outline short- and long-term productivity gains and identify any complementary projects required to maximise productivity gains. The plan will also articulate a recommended timeframe in which projects be brought to market, commencing with those projects of highest productivity value.

Science

Professionals Australia has welcomed the creation of the Medical Research Future Fund that will eventually see $1 billion dedicated to medical research in Australia.

“Professionals Australia has been a long-time advocate for greater investment in scientific research and this fund is particularly good news for our many members in medical research.

“It is vital that we increase our science investment now and grow it for decades to come. We believe that this commitment to medical research needs to be matched in the rest of the science sector or we will not be able to meet Australia’s big challenges,” Mr Walton said.

The Budget has allocated a one-year, $150 million funding lifeline to the National Collaborative Research Infrastructure Strategy (NCRIS) – the body responsible for allocating funds to the Synchrotron.

Mr Walton said, “This $150 million investment is welcome; however, we all know that the Synchrotron needs much greater funding and certainty, so it can continue to serve our science community in the long term.

“We would hope that this funding would provide some level of certainty for Australian scientists, in that they won’t have to go overseas to do their research and that we can keep making discoveries here.

Mr Walton said that he was particularly concerned to see cuts of $430 million across science agencies.

“Most concerning, are the measures to cut $10 million from the Bureau of Meteorology, $120 million from DSTO and $27.6 million from ANSTO. We will be working closely with members in these agencies to understand the implications of these cuts, and to ensure that proper checks and balances are in place through any change process.

The Budget cut $74.9m from the Australian Research Council; $114 million from the CSIRO; $7.8 million from the Australian Institute of Marine Science (AIMS) and cuts of $80 million to Cooperative Research Centres (CRCs).

“These cuts are the opposite of what Australia needs. Unfortunately, in this Budget it seems that the Government has fallen for the ‘penny-wise, pound-stupid trap’” Mr Walton said.

“We know these cuts are not smart. We know there is nothing smart about cutting scientific endeavour. However, this Budget illustrates that we all need to be working to shift thinking, from politicians seeing science as a cost, to seeing it as the economic enabler that it is.

Local Government

Local Government Financial Assistance Grants — pause indexation for three years
The Government will achieve savings of $925.2 million over four years by pausing indexation of the Local Government Financial Assistance Grants Programme for three years commencing 1 July 2014.

The Government will achieve savings of $1.2 million in 2013 14 by withdrawing the remaining uncommitted funding from the Local Government Reform Fund.

The Local Government Engineers Association (LGEA), a division of Professionals Australia, is working closely to ascertain further detail as to the implications of this reduced funding.

Public Sector

The Budget announced measures to scrap 70 agencies and 230 programs, including plans to increase the efficiency dividend from 1.25% to 2.5%.

These measures will result in an additional 2,000 public sector job losses – bringing total job losses to around 16,500 in three years.

Mr Walton said, “We are very concerned by any cuts to the public sector; it is vital that our public sector is equipped to be an effective manager of the programs, services and infrastructure that the public demands and expects.

“Cutting the public sector erodes capacity and results in waste and cost-blowouts – and ultimately it is the taxpayer that foots the bill.

“We will be working closely with members across the public sector to question and respond to these proposed cuts,” Mr Walton said.

“In particular, we will be working closely with members in Defence, as the Budget identified plans to reduce civilian employees by 1200 and contractors by 300, by 2017-18.

Automotive

The Budget has now seen the Government commit funds to the Growth Fund it announced last year in response to the closure of auto manufacturing.

This consists of $100.6 million over six years from 2013 14 (including $0.5 million in 2018 19) to establish a $155 million Growth Fund to support new jobs, investment and economic growth in South Australia and Victoria.

The remaining funding will be provided by the Victorian and South Australian governments, Holden and Toyota.

Mr Walton explained that Professionals Australia is “actively lobbying all governments” to ensure that the Growth Fund provides useful retraining and skills development resources that can benefit automotive engineers.

The Budget did include measures to reduce the Automotive Transformation Scheme (ATS), terminating it on 1 January 2018.

“Professionals Australia has been a loud voice in its criticism of any dismantling of the ATS, however given this Government’s policy of withholding support from the auto manufacturing sector, this announcement is not a surprise.

However, the Government did commit to maintaining $1 billion over five years to support vehicle manufacturers and supply chain companies. This is particularly relevant to those at Ford, where the company has committed to maintain its engineering and design operations in Australia beyond the end of manufacturing in 2017.

“This funding will be instrumental in facilitating Ford’s transition from a manufacturing business to an R&D business in Australia, which will result in the company keeping 1200 engineers and designers in Melbourne beyond 2017.

Mr Walton said that he was pleased to see that the Government had established a new Entrepreneur’s Infrastructure Program – which consisted of $484 million over five years – to support the commercialisation of good ideas and business management advice from experienced private sector providers and researchers.

Mr Walton said that he hoped that members in the automotive sector would consider accessing this funding as a useful resource to transitioning to new and potentially, niche industries.

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