Infrastructure investment confidence high, but challenges looming over the horizon
A critical shortage of skills remains the number one concern of construction industry leaders charged with delivering Australia’s record transport infrastructure spend over the next decade, according to a new survey by Roads Australia.
Released at last week’s national Transport Summit in Sydney, the RA Industry Confidence Outlook shows that while short-term confidence is running high, industry leaders believe there’s an urgent need to take strong collective action to attract and retain the skilled workers needed to deliver projects beyond 2020.
The survey results are based on responses from some 50 senior executives from contracting and consulting firms and industry suppliers with a combined net worth of more than $7 billion.
Of those polled, 87 per cent say they have confidence to invest in plant, people and/or equipment in Australia over the next year. (On a scale of one to 10, the average confidence rating is 7.6 across those who responded positively. This is broadly consistent across all states and territories.)
Also on the plus side, 89 per cent of those surveyed expect to increase or maintain staff levels in the next 12 months, with only 11 per cent anticipating a decrease.
However, the lack of a skilled worker pipeline and ‘fit-for-purpose’ procurement processes rate as areas of highest concern over the longer term.
“Skill shortages are the number one risk to delivering Australia’s record infrastructure pipeline, and if not addressed may lead to cost blowouts, delays and unprofitable projects,” says Roads Australia President, David Stuart-Watt.
“Government and industry need to work together to identify strategies to encourage more women and young people into the industry. Gender diversity, in particular, remains a very big problem in our industry and we need to redress it far more quickly than we’re doing at present.
There’s also an urgent need to supplement our workforce with skills from overseas. To that end, we think some of the skill eligibility requirements in the new Temporary Skills Shortage (TSS) visa system need to be looked at again.”
Mr Stuart-Watt said the Confidence Outlook survey also rates current procurement processes as a potential brake on industry’s ability to deliver future work on time and budget.
“There are a lot of inefficiencies and inconsistencies that add to the overall cost of bidding, and which could be addressed through greater standardization of contracts and processes,” he says.
“Industry and government also need to find the middle ground on project risk. We need to come up with a more balanced, partnership-based approach.”
The survey also identifies concerns around the longer term, reliable and cost-effective supply of construction materials, such as sand and aggregates.
Conducted in April, the RA Industry Confidence Outlook is the first of what will become an annual survey providing an industry benchmark on confidence and top business challenges.
Victorian Budget good news for road and rail users
Last week’s Victorian Budget continues the Government’s strong commitment to transport infrastructure planning and delivery.
The $27.4 billion Suburban Transport Blitz, which includes $15.8 billion to fully fund and build North East Link, $6.6 billion to remove another 25 level crossings and $608 million to upgrade local roads, will go a long way towards improving journey reliability on Melbourne’s road network, RA President, David Stuart-Watt, said last week.
Regional roads also get a boost of $425 million, with a further $30.3 million for upgrades, traffic light installation and pedestrian improvements in regional cities.
The Budget also includes a $3.4 billion spending commitment to the suburban rail network to deliver upgrades to the Sunbury, Cranbourne and Hurstbridge lines, as well as $100 million for the Western Rail Plan and another $300 million for planning, technical investigations and development for the Suburban Rail Loop.
“With Victoria set to experience the largest and fastest increase in population over the next 50 years, and projected to reach between 7.5 million and 7.9 million people by 2027, it’s vital that we are planning for the future,” RA President, David Stuart-Watt.
“But we also need to deal with our immediate challenges around congestion, public transport and road maintenance and renewal.
“This Budget strikes a good balance, providing a vision for the future and delivering for the present.”
Visit the Budget website for more information.
Roma Street busway interchange to go underground
Brisbane’s Roma Street Station busway interchange will undergo a $250 million underground transformation to create a seamless connection to the new Cross River Rail Project. Announced last week, the project will be delivered by the Cross River Rail team as an additional public transport infrastructure project.
The existing above-ground Inner Northern Busway interchange at Roma Street will be demolished to make way for the new underground terminal, creating opportunities for new community space.
The underground busway interchange will be funded separately by Transport and Main Roads.
Cross River Rail early works are already underway in Woolloongabba with contractors expected to start on Roma Street Station’s underground busway interchange by late-2019.
National transport regulatory reform subject of new review
The Productivity Commission has released an issues paper and is seeking submissions for an inquiry into national transport regulatory reform.
The terms of reference require the Commission to:
- investigate the long running benefits of COAG’s transport regulatory reform agenda,
- examine the implementation and development of the national regulators and the extent to which the objectives of the agenda have been achieved, and
- identify opportunities to further integrate and harmonise the national freight market and the current focus and remit of the three national regulators.
Broader COAG reform goals are also to go under the microscope, including (but not limited to) rail standards harmonisation and inter-operability, improved network access for higher productivity vehicles and the development of the National Freight and Supply Chain Strategy.
Reform measures that are being progressed separately, such as cost reflective heavy vehicle pricing, are to be excluded from the inquiry except where their consideration is necessary for the Commission to reach a view on COAG’s transport regulatory reforms.
The Commission has been asked to complete the inquiry by April 2020. Initial submissions are due by June 28, and there will be another opportunity to make a submission following the public release of the draft report in November 2019.