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Construction Materials Industry Conference Delivering Australia’s Pipeline

Construction Materials Industry Conference Delivering Australia’s Pipeline. 20 September 2012. Jennifer Westacott. Overview of presentation. Key growth challenge – pipeline or pipe dream? Australia’s investment opportunity Australia’s project performance Challenges and solutions

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Construction Materials Industry Conference Delivering Australia’s Pipeline

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  1. Construction Materials Industry ConferenceDelivering Australia’s Pipeline 20 September 2012 Jennifer Westacott

  2. Overview of presentation • Key growth challenge – pipeline or pipe dream? • Australia’s investment opportunity • Australia’s project performance • Challenges and solutions • COAG and BCA reviews

  3. Australia’s Investment Opportunity

  4. The project pipeline Australia’s $921b Investment pipeline – projects by status Committed, Committed $66 Under $66b Under consideration $192b Under construction $384b Possible $279b Source: Deloitte Access Economics.

  5. Pipeline facts

  6. This matters Investment and exports as a percentage of GDP, Australia Per cent of GDP Per cent of GDP 35 35 Investment (total) 30 30 Exports 25 25 20 20 Projections 15 15 10 10 1991 - 92 1996 - 97 2001 - 02 2006 - 07 2011 - 12 2016 - 17 2021 - 22 Source: Deloitte Access Economics using real investment and GDP data.

  7. Risks to delivery Pipeline delivery risks • Revenue risk • Cost and time blowouts • Missed opportunities due to project deferral or abandonment

  8. Australia’s Project Performance

  9. Critical question How well do we deliver projects?

  10. Cost premium Cost premium 100% 100% 80% 80% 60% 60% 90% 40% 40% 62% 43% 40% 20% 20% 26% 0% 0% Resources Schools Large Hospitals Airports projects shopping centres Data on project performance Note: cost premium is calculated in US dollars Source: Resources projects data by Independent Project Analysis; other data from Turner & Townsend, International Construction Costs Survey 2012. Note: Turner & Townsend sourced costs are US dollar relativities per m2.

  11. How do we perform? • Project performance • Lack of robust data for infrastructure projects • Need to understand cost drivers • Better measurement can help lift performance • Warnings in global project data

  12. Challenges and Solutions

  13. Barriers to project delivery

  14. Solutions 1. Build higher levels of community understanding and acceptance for projects 2. Expand Australia’s capacity to deliver multiple capital projects

  15. Solutions 3. Improve the efficiency of project delivery in Australia 4. Adequate provision of economic and social infrastructure

  16. Solutions 5. Build the confidence of investors 6. Supportive government institutions, policies and programs

  17. BCA and COAG reviews

  18. BCA/COAG reviews What’s next • COAG review of construction costs • BCA review of project costs

  19. The four steps to recovery • Commonwealth to amend EPBC Act – give states authority to assess/approve projects • State governments to fast-track major development approvals • Amend Fair Work Act – include employer-only agreements on greenfield projects so work can start sooner • Cease tinkering with the tax system

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