Budget breakdown: what’s the story for infrastructure?

Road and rail connectivity accounted for the majority of infrastructure funding, including newly announced projects like the Melbourne Intermodal Terminal (Victoria), North-South corridor (South Australia) and the Great Western Highway (regional New South Wales).

Other sectors including water ($2.5bn), health infrastructure ($774m) and renewables ($216m) will also receive significant injections over the next four years to support the further development of project delivery.

The budget is a welcome opportunity for job creation, productivity enhancement and economic growth across all states and territories, with projects announced for metropolitan and regional areas. But while this presents a positive economic outlook, there are inherent risks and challenges to deliver this unprecedented infrastructure pipeline.

National skills shortage reaching crisis point

Well in advance of the COVID-19 pandemic, the construction industry was facing a shortage in skilled professional services and labour to deliver the national infrastructure pipeline. In rail specifically, specialists are in high demand and short supply.

Now, with back-to-back Federal budgets featuring record infrastructure investment compounding the problem of an already constrained workforce, project and delivery agencies will need to consider the impacts and delivery risks associated with uncertainty. Questions remain about the capacity and capability of the Australian market to deliver such a volume of projects across so many geographies.

Noting that state and territory budgets are being finalised and will be released over coming months, further announcements to stimulate the economy through infrastructure spending are expected.

Delivering in disruption

The COVID-19 pandemic has seen all industries find ways of adapting and responding to disruption. The movement of people and goods remains a challenge both globally and domestically.

Despite the construction sector enjoying work continuity throughout 2020 lockdowns, Australian borders will likely remain shut until mid-2022, largely preventing international construction specialists from travelling here. The instability of domestic travel will continue to cause disruptions until the national vaccine program is delivered.

The international supply chain remains affected by the impact of COVID-19, while trade relations with China will have uncertain and ongoing impacts to supply and manufacturing for Australian projects.

Opportunities for new and emerging delivery technologies and growth in local manufacturing will present options for projects in lieu of continuing to incur time and cost impacts.

Accelerate, but keep the end game in sight

Among the benefits of an infrastructure-led economic recovery is the immediate flow of cash into the economy – jobs and productivity benefits can be immediate and contribute to positive outcomes for the nation, its states and territories.

However, with a push from all levels of government to get shovels in the ground and expenditure high, projects need to ensure the rush to get work out the door does not come at the expense of critical long-term success factors:

• Projects must maintain the focus on delivering community outcomes

• Asset design must focus on resilience and sustainability for the life of the asset

• Funding must be afforded to operational readiness planning and change management to safely and sustainably integrate the new infrastructure into service.