by Jon Davies.
As Treasurer in 1990, Paul Keating famously described the 1990s recession as “the recession we had to have” to deal with high inflation of the time.
Fast forward nearly thirty years and Queensland has just entered an infrastructure recession. The latest Australian Bureau of Statistics (ABS) numbers show a 16% drop in infrastructure output in Queensland over the last 12 months, fuelled by a lack of collaboration between the three tiers of government that has resulted in projects being delayed.
With inflation well under control, Queensland, like our southern neighbours, should be, leveraging historically attractive lending conditions to undertake major works across the state
Instead, we have a recession we didn’t need to have and more importantly, a recession that should easily have been avoided.
For the past two years, Queensland Major Contractors Association (QMCA) has been warning the State Government of the risk of a recession in the infrastructure sector. As the state’s major purchaser of infrastructure, the government is best placed to manage the pipeline of essential projects and to ensure that it is sufficient to meet the needs of Queensland, providing a boost to productivity and industry, and supporting a growing population.
The 2019 Queensland Major Project Pipeline Report, produced by QMCA and Infrastructure Association of Queensland (IAQ), predicted that if Queensland Government did not take action to speed up projects reaching the market there would be a 24% decline in major project activity in Queensland in this financial year.
Unfortunately, the latest ABS statistics show that this prediction is becoming a reality and the recession could even be deeper than originally feared due to avoidable delays to major projects such as Brisbane Metro, Rookwood Weir, New Acland Mine and Inland Rail.
As the nation’s most decentralised state, Queensland needs to maintain and develop its infrastructure to remain competitive both domestically and internationally by enabling the movement of people and goods, quickly and efficiently. While any downturn, is bad for the construction sector and the thousands of Queenslanders its employs, a prolonged recession runs the risk of derailing the Queensland economy.
The State Government needs to stop treating infrastructure as a political football and to work more constructively with councils and the Federal Government to expedite projects wherever possible. A good place to start would be to sign the Inter-Governmental Agreement (IGA) to allow works on Inland Rail in Queensland to progress (Queensland is the only state yet to sign the IGA).
More effort is required to develop a sustainable pipeline of shovel ready projects so that, when we next find ourselves in this situation, the cupboard is not bare.
Government Owned Corporations, need assistance to effectively and efficiently develop and deliver their own pipeline of major infrastructure projects and a clear focus must be placed on encouraging private sector investment by reducing red tape and by providing a consistent and transparent regulatory environment where due process is not sacrificed for political gain.
We are experiencing a recession we didn’t need to have. We need to need to quickly bring it to an end for the sake of all Queenslanders.
Jon Davies
Chief Executive Officer
Queensland Major Contractors Association
