Civil contractors speak out on new infrastructure policies

A peak civil construction industry body is calling for the Federal Government to rethink the planned 50/50 funding rule for critical regional projects. Civil Contractors Federation President Mick Boyle said imposing a 50/50 State-Federal funding split for regional projects would put an additional burden on the states, compromising the viability of nationally significant work. Mr Boyle said also that the Federal Government needed to be clear and transparent around the ‘national significance’ threshold of $500 million, to ensure it did 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.” He was commenting after Federal Infrastructure, Transport, Regional Development and Local Government Minister Catherine King this week announced outcomes of a review of the nation’s Infrastructure Investment Program. The Federal Government's new Infrastructure Policy Statement commits the government to delivering nationally significant infrastructure, which it defines as requiring at least two of the following characteristics: Australian Government contribution of at least $250 million; and/or alignment with Government priorities as articulated in the Infrastructure Policy Statement; and/or situated on or connected to the National Land Transport Network and/or other key freight routes; and/or supporting other emerging or broader national priorities – such as housing or critical minerals. "We are reshaping how the Commonwealth funds projects, returning to a preference of 50:50 funding with the states and territories for future investments, so both levels of government carry an equal share of both the benefits and the risks," Ms King said. "This will mean the Commonwealth’s infrastructure spend – which is being maintained at $120 billion – can go further, maximising the benefits of the Commonwealth’s investment and ensuring shared accountability. "It will help end the perverse incentives that saw the Federal Coalition throw money at projects that states did not want to build. "The government may consider funding a greater share of projects in jurisdictions with less capacity to raise revenue on a case-by-case basis." Mr Boyle said the Federal Government may need to accept that its $120 billion infrastructure commitment over 10 years was 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."

Civil contractors speak out on new infrastructure policies

Industry Queensland

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