Transport Construction Boom Set to Roll On 1

Wednesday, December 24th, 2014
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As Tony Abbott attempts to fulfil his promise to become an infrastructure Prime Minister, transport remains one of the most promising sectors of the building and construction industry in Australia.

Australian Construction Industry Forum (ACIF) expects the combined dollar value of work done on roads and non-road forms of transport infrastructure such as railways, bridges, airports and harbours to come in at $29.533 billion and $30.164 billion in 2014/15 and 2015/16 respectively before levelling off thereon after. Those figures are lower than the recent peak of $33.036 billion in 2011/12 but more than 70 per cent above the $17.606 billion in work done as recently as 2005/16.

Consistent with currently stated federal priorities, ACIF expects work on roads to increase from $15.686 billion in 2013/14 to almost $20 billion by 2016/17. Conversely, it expects work on other forms of transport to fall from $13.384 billion in 2013/14 to $10.233 billion in 2016/17, although the election of the more public transport orientated Labour government in Victoria is expected to see a shift back toward public transport in that state.

Aside from federal government rhetoric about ‘infrastructure prime ministers’ and ‘putting cranes all over the sky,” as well as a perceived need to boost an otherwise mostly subdued economy, the fundamental long-term driver of demand in this area revolves around a dual need to accommodate expansion of a population which is growing at around three times the pace of that in the United States, Europe or China and to eat into an ‘infrastructure deficit’, which Infrastructure Partnerships Australia a couple of years back put at $700 billion. In Western Sydney alone, road and transport systems are expected to have to cope with around one million more people between now and 2025.

Moreover, challenges associated with tight government finances are being overcome by a push toward selling off public sector assets and a greater willingness on the part of governments to welcome private sector investment in public infrastructure.

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State by State

On a state by state, basis, ACIF sees the outlook as follows:

  • Following a massive build-up earlier this decade, road building activity in New South Wales is set to level off but remain at extremely high levels as work on the $11.5 billion WestConnex project gets into full swing, while that on non-road forms of transport is expected to edge up slightly and be helped along later in the decade by the start of building of Sydney’s second airport at Badgerys Creek.
  • In Victoria, work on roads will bottom out at $1.617 billion this year before rising to $2.225 billion in 2016/17, while that on bridges, railways and harbours will drop from a peak of $1.519 billion in 2013/14 to more historically normal levels of $787 million by 2017/18. It important to note, however, that these forecasts were primarily derived before the recent election of a new Labour government, which promises to dump the massive East West Link road project and beef up investment on projects like the Metropolitan Rail Link.
  • Work on a number of Bruce Highway upgrade projects along with that on the upgrade of the Gateway Motorway between Nudgee and Bracken Ridge will see activity on road construction in Queensland return to levels of $6 billion plus by 2015/16 after bottoming out at $4.297 billion in 2013/14. Work on non-road forms of transport will bounce back from horrible lows of $1.195 billion in 2013/14 but remain below $1.5 billion until at least 2017/18.
  • In South Australia, activity on roads will bottom out at shocking lows of $751 million this year but then more than double in the two years following to reach $1.633 billion as work on a number of parts of the South Road upgrade project get going. Work on bridges, railways and harbours will bounce back from six-year lows of $377 million in 2013/14 and reach $498 million by 2015/16 before easing back in subsequent years.
  • In Western Australia, work on roads will bottom out at nine-year lows of $1.758 billion in 2014/15 before returning to levels of $2.718 billion in 2016/17 and levelling off thereon after. Work on bridges, railways and harbours will continue to drop right off from the recent peak of $7.845 billion in 2012/13 to still historically respectable levels of below $4 billion by 2017/18.
  • In Tasmania, a number of state road upgrade and maintenance projects will see work on roads rise from $211 million in 2013/14 to $258 million this year and be maintained at these levels thereon after. Work on non-road forms of transport will peak at $120 million this year before dropping back to a still respectable $65 million by 2017/18.
  • Having surged in recent years, work on transport projects in the Northern Territory is set to drop back in years to come but remain at historically respectable levels.
  • Likewise, that in the ACT will reach its highest level in at least ten year in 2014/15 before dropping back in subsequent years.
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  1. Mohammed Zubair Deen

    Hopefully it will pick up in Qld towards the end of this year and kick start a whole range of projects.