A new report released by three of Queensland’s leading industry bodies identified major engineering project work in the state is on track to reverse a five-year decline and return to modest growth in 2017/18. However, without more funding commitments, any uptick will be short-lived and lead to sustained levels of low activity.
The health of Queensland’s planned economic infrastructure is revealed in the Queensland Major Projects Pipeline – a report developed by leading independent firm BIS-Oxford Economics for the Queensland Major Contractors Association (QMCA), Construction Skills Queensland (CSQ), and the Infrastructure Association of Queensland (IAQ).
The first report of its kind in Australia details a five-year Pipeline of 166 projects and provides a detailed five- year forecast of both public and private sector engineering projects in excess of $50 million across Queensland. In 2016/2017, major project activity has fallen to $4.9 billion, the lowest level since2009/10.
According to QMCA’s president Iain Ward noted major project activity in Queensland has now completed a sharp transition away from the past 12-year dominance of private sector mining and energy projects.
“The total value of major project work forecast in the Pipeline between now and 2021 is $39.1 billion, just 60% of that completed between 2011 and 2016,” he said.
Half of the Pipeline is now public sector funded, back to the ratio of public/ private funding that existed between 1986 and 2007, before surging infrastructure demand from the mining and energy boom meant private sector capital expenditure outstripped the public sector by up to four times.
“What this means is industry is now looking to government for increased funding certainty of roads, rail and water projects to sustain jobs and provide the priority economic infrastructure the State needs,” said Ward.
According to the report, major project work will recover to a modest $7.4 billion in 2017/18 but any further growth is reliant on 87 of the projects (52% of the Pipeline) securing funding, including Adani’s coal development in the Galilee Basin which accounts for $4.4 billion of work in the Pipeline.
IAQ’s chief executive officer Steve Abson said Queensland was not keeping pace with the demands placed on infrastructure through population growth and needed to invest more in priority economic infrastructure.
“When you size up the next 4 years of public sector projects in the pipeline, a critical number will be unaffordable due to government fiscal constraint. Politicians on all sides should therefore keep the doors firmly open to all funding options, rather than persistently looking to close them,” Abson said.
The largest unfunded public sector project is the $5.4B Cross River Rail, but other notable unfunded projects include Council’s $1 billion Brisbane Metro and the $2+billion Queensland packages of the Brisbane to Melbourne Inland Rail project.
“The Commonwealth Government should now step forward and fully commit to funding Cross River Rail as this is a transformational economic and public transport project,” he said while adding it was important for the government to control spending, that shouldn’t stop it borrowing to build the high-quality infrastructure Queensland needs to create opportunities for people and open markets.
At a State level, recycling the proceeds from leasing assets such as ports to create much needed new infrastructure and regional jobs is likely to be welcomed by most Queenslanders, yet this option is consistently shoved into the too hard basket.”
CSQ chief executive Brett Schimming said Queensland must continue to invest in construction training and skills to meet the demands of major projects.
“While the amount of major project work has fallen from the historic highs reached in 2012/13, the pipeline of major projects represents a significant opportunity for job creation for engineering construction workers in Queensland.”
“The report indicates 2017-18 is set to be an improved year for major project activity and employment is likely to be close to pre-boom levels supporting around 19,000 jobs.”
“We are starting to see increased competition for engineering construction skills due to the boom of major infrastructure projects taking shape in southern states, resulting in workers competing for the opportunity to fulfil a dwindling pipeline of activity in the short term. CSQ is working with industry to attract new entrants to the industry and develop and retain existing workers to ensure we have the right skills, in the right place at the right time here in Queensland,” Schimming said.
“To sustain growth in major project work, the report also highlights the importance of long-term workforce planning, particularly in regional Queensland.”
For the full report click here
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