Queensland’s peak contracting body has today warned of an extended infrastructure recession in Queensland as two of the state’s major projects have significant clouds of uncertainty hanging over them.
Queensland Major Contractors Association (QMCA) has highlighted delays associated with Inland Rail, Brisbane Metro and other significant infrastructure projects as threatening the ongoing sustainability of Queensland’s infrastructure, contracting and construction sector.
The 2019 Queensland Major Projects Pipeline Report undertaken by BIS Oxford Economics on behalf of QMCA and Infrastructure Association of Queensland (IAQ) predicted a clear and sharp decline in major project activity of 24% in FY2020 (a prediction being borne out by the latest ABS Statistics).
The report predicted a rebound in FY2021 largely on the back of the commencement of Cross River Rail, Brisbane Metro and Inland Rail projects. With two of these projects currently in political limbo, there is a significant risk that the timing of the rebound will not occur as predicted, resulting in a prolonged recession across the infrastructure sector at a time when the RBA Governor, Philip Lowe, is calling for spending on infrastructure to be increased.
QMCA CEO Jon Davies called on Queensland Government to work quickly and collaboratively with the Federal Government to reach agreement on an Intergovernmental Agreement for Inland Rail. “Inland Rail is a critical piece of nation-building infrastructure that has become a tussle between two levels of Government with no indication they are even close to signing the bilateral agreement, meaning Queensland is the only state yet to sign up.”
“It is vital that political games are set aside so that work can commence and regional Queensland can reap the benefit of investment, jobs and long term commercial growth,” said Mr Davies.
Mr Davies also warned that the debacle surrounding Brisbane Metro had created chaos and uncertainty in the industry “The recent Brisbane Metro announcement has sent shockwaves through the contracting industry, which is now questioning when the project will get off the ground.”
“As a sector, we invest millions of dollars tendering for major projects and moving the goalposts at the last minute creates massive uncertainty, which impacts on future investment and employment. National contractors are starting to question their continued participation in the Queensland market, and we are already witnessing a drain of talent South to pursue the opportunities on offer in New South Wales and Victoria where projects are developed, funded and delivered without the political chaos we see here. Without action, this drain is likely to continue with long term impacts on our ability to deliver major projects in Queensland.” said Mr Davies.
QMCA calls on all tiers of government to work more collaboratively to prevent further delays to current projects and to heed the RBA Governor’s call by investigating opportunities to expedite funding for projects languishing in the forward estimates.
Graph Source – Greg Jericho – The Guardian Newspaper