The Mt Ousley interchange development will receive $240 million in much-needed funding in Tuesday's federal budget.
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The shot in the arm is the single biggest investment in the project to date, the state government having allocated smaller amounts over the last few years.
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The latest state government injection was $21 million in November last year to help complete the detailed design work and begin property acquisition.
The $240 million from the federal government should see the project, now in the final planning stages, move towards construction faster than previously thought.
While no firm figure on construction costs for the interchange has been put forward, Transport and Roads Minister Andrew Constance has previously stated it would not be as expensive as the $630 million Albion Park Rail bypass.
If so, the $240 million in funding could represent a significant chunk of the overall cost of the project.
Executive Director of Business Illawarra, Adam Zarth - whose group has campaigned for the long-awaited interchange - praised the federal funding.
"Clearly the Commonwealth has heard the call from business, particularly our research-based advocacy, to commit funding to complete the Mt Ousley interchange; a key economic pinch-point for heavy vehicles heading south from Sydney to the Illawarra and Shoalhaven, and a danger to the community," Mr Zarth said.
"Our 2018 road research has found the planned Mt Ousley Interchange project will deliver $46 million per year in economic benefits."
The interchange was one of the projects touted by the Illawarra Shoalhaven Joint Organisation's push for a City Deal, unveiled in October last year.
Regional Development Australia (RDA) Illawarra is part of that group and chief executive Debra Murphy was pleased with the funding.
"We are delighted about the announced funding for a project that is included as transformational infrastructure in the Illawarra-Shoalhaven City Deal," Ms Murphy said.
"The combined support of NSW and Federal Governments should see the project fully funded to completion,"
Further south, the Shoalhaven will receive $519 million in the federal budget for key infrastructure projects including improvements to the Princes Highway south of Nowra and the much talked about Jervis Bay Road intersection upgrade.
Tuesday's budget will see $500 million towards the upgrade of the Princes Highway between Jervis Bay Road and Sussex Inlet Road, including the Jervis Bay Road intersection.
Prime Minister Scott Morrison has revealed $400 million will be allocated for stage one of the $500 million Princes Highway upgrade from Jervis Bay Road to Sussex Inlet Road.
A further $100 million will also be available for the Jervis Bay Road intersection upgrade, a project valued at $125 million.
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