Funding for road projects trimmed back as Victoria delivers annual Budget

Timings for the roll-out of major road projects in Victoria have been thrown into doubt today, with the State Government announcing it is dialling back funding in an effort to bring its growing debt under control.

The Victorian Government revealed its annual budget on Tuesday, showing its infrastructure spend will be downsized from a high of $24 billion in 2023-2024 to $15.6 billion in forward estimates.

The state’s net debt is set to reach $135.9 billion by the end of June, and will keep growing – reaching $156.2 billion in 2024-25 and $187.8 billion in 2027-28, reports The Guardian.

As a result a number of projects are likely to be put on the back burner, including the final section of the Western Freeway upgrade between Melton and Caroline Springs, according to sources who spoke to The Age.

Although the Federal Government is understood to have committed $10 million for the upgrade, a source told the newspaper it was uncertain whether state money could be found for its delivery due to rocketing material and labour costs.

The hit to progress on local road projects has been compounded by a funding standoff between the state and federal governments, which has come about due to the Australian Government reducing its funding commitment for nationally significant roads to a 50/50 split rather than the 80/20 provided in recent years.

According to The Age, Transport Infrastructure Minister Danny Pearson has warned some projects would not be able to go ahead as planned if the Commonwealth enforced the policy, according to two sources familiar with discussions.

The Federal Government is due to deliver its own budget next week, on 14 May 2024. Federal Transport Minister Catherine King has said there would be money for new road projects – but didn’t say which ones.

In recent months the Victorian Government has been pushed to provide more cash to help patch up the state's road network after months of high rainfall.

Potholes, cracking, rutting, uneven surfaces and broken-up road shoulders are becoming more frequent and motorists across the state are “fed up”, alleges the opposition. 

Data provided to State Parliament shows the number of Victorian drivers seeking compensation for damage to their vehicles caused by dodgy roads has soared 414 per cent in just three years.

“There needs to be an immediate package of new funding just to catch up on the backlog of works needed to fix our roads,” said Shadow Minister for Roads and Road Safety, Danny O’Brien in a statement.

In October 2022, the State Government allocated $165 million for post-flood road repairs, but, according to Mr O’Brien, “councils are still waiting for funding support to help fix local roads”.

In today’s budget, Treasurer Tim Pallas announced $964 million to maintain Victorian roads.

Pallas said the winding back of infrastructure spending was a return to “pre-Covid levels”.