2018 CCF Victorian Infrastructure Outlook Report 1 | Page 45

Indeed, BIS Oxford Economics anticipates that total
construction industry employment in Victoria will decline
through the next few years towards a trough of 267,000
persons by 2020/21 as the residential building downswing
takes hold. In this respect – and in the context of lower
manufacturing employment in the state – it will be vital
that skills development programs are in place so that
skills can translate within and across industries to support
higher levels of civil work.
While Victoria already has a 10% skills guarantee covering
employment of apprentices and trainees for all current
and future State Government funded projects above
$20m, arguably much more could be done to ensure
skills are developed and retained in the civil construction
industry. This may involve expanding the scope of the
existing skills guarantee, considering new re-training
initiativ es to provide opportunities to those who may
be newly unemployed from other industries or other
construction segments, and promoting and boosting
funding for additional places for civil trades in tertiary
institutions to encourage a greater take up of civil trades
skills amongst younger people and school leavers.
Given the ageing of the workforce across many civil
construction industry occupations, there is an increasing
need to highlight the opportunities ahead for civil trades
in Victoria, where skills supply will not only be required to
meet rising demand, but also to replace many employees
reaching retirement age. This, in turn, entails placing a
greater value on technical skills in high schools and a
higher focus on technical careers.
More broadly, the pressures which are now being brought
to bear on the broader construction industry in Victoria
provide an opportunity to innovate and create a long term
positive legacy for future state development. In planning
for infrastructure investment through the next five years,
the Victorian State Government and various agencies
should consider implementing the following measures:
•
Provide a clearer and more comprehensive
long term project pipeline – including public and private
sector projects – to give the civil construction industry
the best possible chance of planning for and meeting
demands by region across the state.
•
Implement further civil construction workforce
development initiatives to meet demand for key skills
through the next five years.
•
Boost transport agency resources to deal with
the inevitable disruption to networks that planned large
civil infrastructure projects will bring. This will reduce risks
to both construction activity and the broader Victorian
economy.
•
Understand potential risks in the supply of local
construction materials and equipment given the pipeline
of civil projects planned by the public and private sectors.
This can particularly impact on project costs if gaps in
materials capacity emerge and, finally,
•
Ensure that the procurement process itself
is achieving true and sustainable long term value
for money, is competitive, and provides industry
opportunities to innovate. In an environment where
there may be constraints to the supply of future skills
and materials, it is vital that industry can offer innovative
construction solutions that create efficiencies in demand
and project delivery.
Conclusions and
Recommendations
The Victorian economy is set to perform well when
compared to other states. However, there is further room
for improvement particularly to sustainable growth in
demand, employment and incomes.
While government debt has increased substantially in
recent years, the cost of servicing this debt has been
ameliorated by historically low interest rates. At both the
state government and Commonwealth level, there is still
much that can be done to boost domestic demand and
productivity, with infrastructure investment a potential key
plank in transitioning the economy for stronger growth.
If investment is focused on projects that make economic
sense, there are significant benefits (as measured and
recommended by the IMF as well as many other agencies
and prominent economists) in taking advantage of low
interest rates and economic slack and boosting weak
domestic demand and employment through debt-
funded productive infrastructure investment. Outside
of debt funding, there are other positive approaches
to infrastructure funding available including setting up
long-term asset leases as well as considering direct
private investment proposals (both of which are now
benefiting New South Wales and Victorian infrastructure
investment).
45