The new Queensland government has mentioned little in the way of infrastructure announcements, but changes are needed to stop cost blow-outs
The Queensland State Election is over, and we have a new government. The LNP’s decisive victory over the ALP was based on a campaign on four key issues: youth crime, cost of living, housing and health. There were very few infrastructure announcements and, even under great pressure and criticism, the LNP did not stray from these messages.
Infrastructure is a massive issue in Queensland and the only commitment the LNP would give is that there will be a 100-day review of government spending, including on Olympic infrastructure. It did not suggest that programs would be cut, but it promised that the days of budget blow-outs would be over.
The budget blow-outs we have seen on public infrastructure have been down to a few factors. Inflation of building costs due to the post-COVID-19 stimulus did initially contribute and the Labor government’s own policies such as the Best Practice Industry Conditions added up to 30 per cent on top of the inflationary effects, as well as baking in nonproductive practices. The last contributor is that more of the program is slanted towards projects of significant size. These projects are difficult to price and the majority go to market very quickly due to political decisions that do not allocate sufficient time for planning and design.
The type of procurement practices used are appropriate for this situation, but the true price of the project evolves along the procurement journey.
If the LNP is to guarantee there will be no cost blow-outs on public infrastructure projects, it will need to slow down the procurement of the infrastructure program to allow adequate time to plan, design and derisk these projects. Initiatives to get positive productivity gains back into the industry will be needed. The first call will be to get rid of the Best Practice Industry Conditions. Finally, projects need to be broken down in size so that they are staged over time in discrete packages.
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It has been documented that mega projects are difficult to price, struggle to consider all risk and struggle to come in under budget. Staging larger projects into segments which allows proper evaluation of design, risk and constructability will give more certainty to price. It also allows more of the industry to participate, creating better competition.
The LNP has stated that it will install a Productivity Commission and Commissioner. The full terms of reference of the commission are unclear but it is known it will have the power to provide opinion on a range of issues regarding whether they are providing positive productive outcomes for Queensland.
The LNP has committed to reducing red tape and regulation. The construction industry’s red tape burden seems to be increasing year on year. This is also a contributing factor to cost increases on projects. It is unclear how this will be achieved but there needs to be a full examination of the red and green tape that hangs over our industry. The level of social objectives that contractors now need to also address through their projects should be considered red tape. There are better ways of delivering these outcomes without burdening contractors with this responsibility.
Finally, an independent Infrastructure Coordination Authority will be established to coordinate the infrastructure requirements of the 2032 Olympic Games. Queenslanders and the industry are crying out for certainty of what the program will look like. The Infrastructure Coordination Authority will report within 100 days. Hopefully the program will address true legacy for the sporting and transport infrastructure this state needs well beyond 2032.
Personally, I would like to see a new stadium, which will have the full backing of the AFL and the ICC – a stadium that provides the best facilities for sports people and an outstanding experience for the spectator.