Meeting the growing demand for skilled employees will be the key challenge for Government and the industry as infrastructure construction activity increases in the coming years, according to the 2020 WA Infrastructure Report, released today by the Civil Contractors Federation WA and the Construction Contractors Association WA in conjunction with ACIL Allen Consulting.
Lead author of the report, ACIL Allen Executive Director John Nicolaou said infrastructure development was a key enabler of the State’s economy. “Targeted infrastructure investment can provide a significant stimulus in the short term through increased construction activity, but also over the longer term by driving productivity improvements throughout the economy,” he said.
“With engineering construction activity in WA forecast to grow at 7.7% per annum over the next four years, it’s imperative that the State Government focus its efforts on the sector’s human capital needs.”
Mr Nicolaou said vacancies for skilled construction workers in WA were on the rise, while the number of construction industry apprentices and trainees in training had fallen to historic lows.
“Current Government policy settings will limit the ability of international migration to address short-term skills needs where the supply of local labour is inadequate,” he said. “The high competition from the Eastern States for skilled construction workers – particularly skills around rail construction – is another factor affecting local supply.”
CCA WA CEO Peter Moore said the construction sector’s capability could be further challenged in the light of recent moves by the Federal and State Governments to bring some infrastructure spending forward and to provide additional funding.
“We see this as an ideal opportunity for the State Government to work collaboratively with the industry to ensure the works can be delivered efficiently and effectively, smoothing out the humps and ensuring the skills and resources are available to ensure value for money is achieved,” Mr Moore said.
The 2020 WA Infrastructure Report calls for deeper engagement by the State Government with industry to ensure the State’s approach to procurement is fit for purpose and it remains as a ‘client of choice’ in an increasingly competitive market.
CCF WA CEO Andy Graham said the report highlighted Main Roads’ frequent and structured engagement with industry as a model that other infrastructure delivery agencies could adopt.
“Our industry has certainly seen the positive outcomes from that regular exchange of ideas, and we believe all Government agencies and corporations can only benefit from closer engagement,” he said.
Mr Nicolaou said a closer relationship with industry could help address an ongoing and substantial underspend on State Government infrastructure.
“Over the past five years, the State Government has underspent a total of $5 billion on its budgeted capital works program,” Mr Nicolaou said. “If that rate continues, the actual capital works spend projected in the 2019-20 State Budget will be $3.6 billion lower over the forward estimates.
Mr Nicolaou said some of the factors influencing the actual volume of infrastructure spending versus planned infrastructure spending were outside the Government’s control.
“It is therefore important for Government to ensure those things which are within its control are managed effectively, to ensure it meets its capital investment ambitions,” he said.
The 2020 WA Infrastructure Report says the preconditions for a return to trend growth in the WA economy have become more evident over the past year. The resources sector continues to leverage from its most recent investments, which is realising significant export income for the State, while high commodity prices are also acting as a catalyst for the next wave of major investments in the sector.
At the same time, domestic conditions continue to improve, and the stronger financial position of the Commonwealth and State Governments provides the opportunity to progress important economic and social infrastructure priorities.
The improved investment outlook – both private and public – is reflected in the size of the current and future projects that exist in WA. Based on data sourced from the Business News Major Projects List and the Deloitte Access Economics Investment Monitor, it is estimated that there is approximately $160 billion in major projects that are either under construction or under active consideration in WA in 2019.
ACIL Allen expects that Western Australia’s GSP will expand by 3.1 per cent per annum between 2019-20 and 2022-23, with both iron ore and LNG sectors likely to remain the State’s growth engines over the outlook period. Double digit growth rates are forecast in these sectors, fuelled by the combination of both increased production and the new expansion projects.
The 2020 WA Infrastructure Report is available for download at:
2020 Infrastructure Report for web.pdf