Home' Future Building: The Australian Infrastructure Review : Volume 4 Number 1 Contents 36 futurebuilding Volume 4 Number 1
But when you dig deeper and analyse a lot of
this infrastructure spend, you realise that more and
more of it has, in fact, been driven by booming
mining investment and not necessarily investment
in our cities.
What we've seen over the past ve years is a
movement or a rebalancing of investment away from
cities and into mining regions to service the mining
boom. As the mining construction boom peaks and
starts to fall back, we get a mining production boom,
but at the same time, we need to rebalance some of our
investment thinking back to our cities again.
That's where looking at the Australian
Infrastructure Metric can be very useful, because it's
analysing and quantifying the volume of work won
each quarter by our contractors.
The other thing about the ABS statistics is that
engineering construction also includes offshore
fabricated components. So when we're talking about
big LNG projects being built in the resources space,
you might have to add several billion dollars each
quarter for all the imported fabricated components
that go into those. Consequently, the ABS engineering
construction data is not a great indicator of the health
of the local construction industry and the contractors
industry, which is much better achieved by looking at
the Australian Infrastructure Metric.
There's a big gap between work done and work
commenced that has opened up since 2010--11.
We've been living off past projects, and we've seen a
dearth of new projects coming through the pipeline.
But looking at the downward trend in the
Australian Infrastructure Metric that we've been
calculating and surveying since 2010, we're still
bouncing around the bottom in terms of winning
work for infrastructure, and it's really important that
we nail down some of these infrastructure projects,
because we have substantially underinvested in
A look at non-mine infrastructure work won
shows you that it's coming back from a low base.
Last quarter showed a bump, but we believe it's
only temporary. Some of the most recent data that's
coming through indicates that maybe it was just a
blip, and we're still bouncing around the bottom.
It's a similar story, too, for transport
infrastructure, which saw a boom after the GFC, but,
really, was probably higher before that. Since then,
governments have been trying to pull back, and
maintain and improve their budget bottom lines;
as a consequence of that, there's been less and less
So where do we go from here? Our view is that
when we add up the building, non-building, and
engineering construction markets in Australia, it's
a downward trend for the construction industry.
But within that downward trend, there will be new
growth in sectors and in regions. For the engineering
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