Australia’s peak civil construction industry body is pleased that the Federal Government has finally presented the findings of its infrastructure funding review.
Civil Contractors Federation President Mick Boyle said it is understandable that states and territories were upset at the cuts to their project pipelines. Clarity is required on the timing of funds set aside for delayed projects.
Mr Boyle said each state and territory would need support to deliver the infrastructure it needs, and the Federal Government may need to accept that its $120 billion infrastructure commitment over 10 years is no longer sufficient to deliver a strong nationwide pipeline of road and rail upgrades.
“The reality is that construction costs have increased dramatically,” he said. “Labour, concrete, steel, asphalt, fuel and other inputs are all significantly more expensive than they were a few years ago. The Federal Government needs to adjust for that reality.
“States and Territories have limited ability to raise funds for the infrastructure they need to meet the growth of our nation. The Federal Government’s new 50/50 funding rule for regional projects will put an additional burden on the states, compromising the viability of nationally significant regional projects.
“CCF requests that the Federal Government reconsider the new 50/50 funding rule for critical regional projects which may need more Federal funding to be viable.
Mr Boyle said the Federal Government needs to be clear and transparent around the ‘national significance’ threshold of $500 million, to ensure it does not disadvantage the local and regional contractors and communities the government says it wants to support.
“That threshold could rule out far too many worthy projects, especially in the regions but also in metropolitan areas,” he said. “The guiding principles for the Federal Government should be that projects are cost-effective and have a strong business case. By all means, set a minimum amount to keep the pipeline manageable, but $500 million is too high.
“Research has shown that ‘mega projects’ are the most susceptible to cost blowouts, so the last thing the Federal Government should be doing in setting its funding threshold, so it creates more ‘mega projects’.
“CCF is prepared to work with government as they implement the Infrastructure Policy Statement to find workable productive procurement solutions for industry to ensure that the process creates project sizes for Australia’s local and regional contractors so they are able to deliver Australia’s infrastructure.”