The 10th annual report from the Queensland Major Contractors Association, released October 2021, has revealed some interesting statistics and projections for Queensland’s infrastructure.
In the report the QMCA delves into all infrastructure projects both funded and unfunded, proposed and underway, to give the reader a sense of where the sector is heading in the next five years.
You can download the full report or read through our key takeaways here.
The five year pipeline is $11.3b larger than in April 2020, despite long term volatility in the major projects market in Queensland and the state's broader economic behaviour.
The outlook is positive with over $35 billion of those projects being counted as funded, whether privately or publicly, and over $15 billion of that is accounted for in projects which are already underway.
While the public sector is still bearing the majority weight of funding, the private sector has increased its backing of electricity, mining, and heavy industry projects.
97% of 2021/22 projects are funded, and major project activity has surpassed $10 billion for the first time since 2013/14.
This means that - assuming all goes to plan - this 41% increase in project activity is all but assured and is expected to continue into 2022/23. However, 33% of project activity in 2022/23 is still unfunded and therefore cannot be counted as a sure thing.
Mega Projects continue to attract funding over time. In 2019/20 20% of major project activity was in projects valued between 50 and 200 million dollars, and this year that has dropped to 13%. Over 50% of project activity is headed for projects worth over $1 billion in each of the next 5 years - which challenges overall stability and growth outlook for companies over the course of execution.
A significant portion of these major projects are within the Roads and Non-Water sectors.
Roads has risen by $4.5 billion since April 2020 to $11.5 billion, while Non-Water has very nearly doubled in value from $2.3b to $5.5b thanks to the ongoing investment in the NBN and renewable energy projects.
Mining and Heavy Industry have bumped their value from $4 to $5.4 billion, which is a 35% increase.
Railways, Harbours and Defence are showing slightly lower activity in the period since April 2020.
The SEQ accounts for 50% of all funded activity, and 66% of funded transport projects - even though Brisbane and the SEQ are seeing less activity than in 2020 overall. This concentration of funded work is expected, as the majority of Queensland’s population resides in the area.
The share of unfunded work is significantly higher outside of the SEQ region. Considering that many of the projects for Regional Queensland are unfunded and based in Resources and Energy - which are particularly influenced by global market forces - you can see where the most substantial risks lay.
Brisbane’s bid to host the 2032 Olympic and Paralympic Games has given infrastructure development in the area a once-in-a-generation booster. The upcoming games will spur a flurry of infrastructure improvements, developments, and renovations especially in terms of transport links.
The inevitable Olympics projects are also predicted to pick up any tailing off in the second half of the decade between now and the opening ceremony. These projects will likely be a mixture of new infrastructure required for the commencement of the games and other projects being brought forward to meet the event.
There are a great many challenges facing the sector in the coming years; including the ongoing impacts of the global pandemic, industry capacity and capability, as well as the pressures of population growth, sustainability, and environmental concerns.
The global economy, skills and materials shortages, and overall falling productivity all challenge the resilience and adaptability of the industry.
Counteracting some of these concerns requires forward thinking from individual companies, the private sector and the government, in order to minimise negative impact and maximise positive outcomes.
With challenges pushing our innovation and resilience, now is the time to strengthen our position in key areas to keep our growth going. Regional water and energy security is a major area for improvement, finding new energy and minerals projects to suit a changing landscape, and figuring out how existing resources like gas and met coal maintain their ability to run.
With so much focus on sustainability and environmental concerns, we have an amazing opportunity to delve into renewable energy generation and storage solutions. This includes well established methods like solar and wind farming, but also newer technologies like solar thermal and hydro.
The Olympics represent a fantastic opportunity to upgrade, improve, and expand many aspects of our public infrastructure. Whether this comes in the form of massively improved and extended transport links in and around Brisbane or improved stadiums and facilities, there’s no doubt the Olympics will bring big changes to the infrastructure of our state.
Collaborative contracting, funding solutions, technological interaction, private sector utilisation and ensuring good outcomes for all involved are vital factors to consider over the next few horizons.
The report recommends that the government needs to continue seeking long term value while focussing on medium term development, transition to more stable revenue streams for infrastructure funding, and to investigate how policies may be constraining growth. A major part of the government's role over the next few years needs to be in an infrastructure plan that reduces carbon emissions and prepatres the industries for future investments in the low carbon economy.
The report also states that accelerating development in fast growing areas of the state should support regional development, and that the government should target regional deepening of the project pipeline.
In addition, the report paints a clear recommendation that the industry and governments (state and federal) need to work on resilience and adaptation work in infrastructure audits, and to develop a comprehensive quantitative analysis to aid public decision-making.
Overall, infrastructure and construction is changing - be that environmentally, technologically, and geographically - and we need to keep ahead of that change to ensure the best for our state’s future.
28 Mar 2024