The Australian Constructors Association has expressed serious concerns that the proposed review of the Federal Government’s $120 billion investment in state infrastructure projects will result in significant cancellations and deferrals.
“Delivery of infrastructure is not like a tap. It can’t simply be turned on and off,” said Australian Constructors Association CEO Jon Davies.
“Developing teams and capabilities that are equipped to bid and deliver large projects can take years, and once assembled, it is difficult to reallocate them, particularly if there is a widespread deferral of projects.
“It is vital that industry is consulted in the review to avoid inflicting further pain on an industry that is already doing it tough as a result of having to absorb significant rises in material and labour costs.
“If projects are cut, governments must take action to reallocate a proportion of the saved funds to help industry by compensating contractors who have incurred significant additional costs without any fault of their own and currently lack contractual relief.
“It is unethical and uneconomical for a government to pay less for an infrastructure project than its construction cost due to uncontrollable factors like a pandemic or distant war.
“Construction currently accounts for 26 per cent of all business insolvencies in Australia and the implications of these failures on the wider economy are huge.
“As contractors mitigate risk by subcontracting works, any relief provided at a head contract level will similarly flow through the supply chain feeding into areas of the market beyond government infrastructure that have no other opportunity for support.
“Having a steady and transparent pipeline of government infrastructure projects is crucial for the industry to plan and invest for the future, and project cancellations and deferrals undermine this effort.