Home' Future Building Australian Infrastructure Review : Volume 4 Number 1 Contents futurebuilding 35
Volume 4 Number 1
Australian Infrastructure Metric is actually a very good
sanity check on what's going on in the infrastructure
market quarter by quarter.
Then I want to discuss what the infrastructure
outlook is, and go through a few of the risks and
challenges that result from this outlook.
In the total construction market in Australia over
the last couple of decades, we've had a tremendous
increase in the overall volume of construction work;
however, it's been highly unbalanced.
Throughout the 1990s, you could say we were
underinvesting in infrastructure. Engineering
construction spend as a proportion of Gross Domestic
Product (GDP) was between one and three per cent.
The 1990s were a period of budgetary
consolidation and economic ef ciency -- trying to
squeeze the best use out of our assets. But at the same
time, we didn't really build the assets we needed, so
we quickly ran into capacity constraints in the late
1990s and early 2000s that required quite substantial
investment in new infrastructure.
During the 2000s, we had several factors that
drove infrastructure. We started off with the housing
boom (from 1997 right up to about 2004--05) and
this created a number of infrastructure requirements
around the housing market.
During the 1990s, we also saw the development
of a lot of private sector avenues in terms of attracting
nance and building infrastructure, and that
continued right up until the global nancial crisis
(GFC) hit in 2008. Then, suddenly, it became harder
to nd nance in that way to fund infrastructure.
Also driving the infrastructure and construction
markets during this period was a virtuous cycle in
the Australian economy that saw a lot of taxation
revenues (driven through the simultaneous mining
boom) being recycled into infrastructure. We saw the
development of the AusLink land transport program
from 2004, which later became the Nation Building
Program, and suddenly we started to nd funding
mechanisms for infrastructure that worked.
The other interesting thing about the past decade
has been the substantial increase in engineering
construction. Engineering construction is everything
that is built in Australia that isn't a building (residential
or non-residential). You might think that we're doing
a pretty good job and that we've managed to boost
the amount of infrastructure that is being built -- and
by a substantial margin.
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