2018 CCF Victorian Infrastructure Outlook Report 1 | Page 21

2. Victorian Infrastructure
Outlook
The key points can be summarised as follows:
•
Engineering construction in Victoria was relatively
steady at $10.8 billion annually in the five years to 2016/17,
peaking at $12.2 billion in 2011/12 on the back of work
done in railway, road and telecommmunications sectors
during that year. The private sector accounted for 56 per
cent of engineering construction work done in 2016/17,
and has maintained a proportion above this level since
early 2000s. The roads, electricity, and telecommunication
sectors were the largest contributors to work done over
the past decade and are set to hold a sizable portion in
the medium term to 2025/26.
•
Engineering construction activity has trended
down in the three years since reaching a peak of $12.2
billion in 2011/12. Several sectors declined in activity
including roads (which fell from $3.1 billion in 2011/12 to
$1.9 billion in 2013/14) and, mining and heavy industry
which fell from $1.5 billion to $848 million over the
same period. In aggregate, a gap in major projects led
to engineering activity to a trough of $10.2 billion in
2014/15. In 2015/16, engineering activity rose to $11.0
billion underpinned by increases in telecommunication
and railways (increase of 23 per cent and 43 per cent
respectively) which offset declines in other sectors
including roads.
•
In 2016/17, engineering activity increased by
5.3 per cent to $11.6 billion. Sectors contributing to the
increase include telecommunication (due to the continued
rollout of the NBN and addressing mobile black spots)
and, an increase in roads and railways (impacted by the
investment in level crossing construction work). However,
other sectors recorded declines in 2016/17 including
water, sewerage and drainage, pipelines and harbours,
and mining and heavy industry.
within the roads, railway and telecommunications sectors.
Publicly funded work done is expected to account for
around 45 per cent of total engineering construction
activity, at around $5.7 billion on average each year over
the four-year period. This proportion allocated to public
funded work has increased from around 39 per cent of
the total in the previous five-year period because of large
publically funded projects in rail and roads.
•
As has been the trend previously, the majority
of the public work will be contracted out to the private
sector. We anticipate the contract proportion of 86 per
cent (marginally higher than the 8 per cent contracted out
in the past five years to 2016/17).
•
Because of large projects in several sectors
dominating activity over the next five years, the value of
engineering work will likely remain volatile year on year.
For example, we forecast engineering activity to increase
within telecommunication sector due to the roll out of
the NBN network, peaking in 2017/18 at $2.7 billion while
the peak in engineering activity within the roads sector is
only anticipated to occur in 2020/21 at $4.1 billion, rising
from a low of $2.9 billion in 2017/18. Overall, growth will
be dominated by a handful of sectors particularly in roads
and railways.
•
Over the five years to 2030/31, we are forecasting
engineering construction activity to average $11.6 billion
annually, slightly lower than the period prior. With a
predicted increase in population, we expect key sectors
including roads, railways and telecommunications
construction to hold strong.
•
The Victorian state government has outlined
plans to invest in infrastructure to improve productivity
and drive future economic growth. The major public
infrastructure committed by the government include
the $10 billion Melbourne Metro Rail project, the Level
Crossing program and the $600 million extension of the
South Morang train line to Mernda.
•
Over the next four years, engineering
construction activity is forecast to average $12.8 billion
per year, higher than the $10.9 billion of the previous five-
year period. Major activity will be driven by construction
NBN roll out in Ballarat, Victoria
Source: The Courier
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