The Queensland government needs to support the industry to deliver value for money, CCF QLD CEO Damian Long says
The new LNP Queensland government has completed its first 100 days of governing. They set departmental goals for their first 100 days and – according to their own report card – they achieved all of them.
The key achievements for our sector were: the revealing of the true cost of the Cross River Rail, establishing the Bruce Highway Advisory Council, committing $1.5 billion over four years to maintain 50 cent public transport fares, establishing a Ministerial Housing Taskforce, abolishing stamp duty for first home buyers, and setting up the Games Independent Infrastructure & Coordination Authority, which is conducting a review into the infrastructure required for the 2032 Olympic and Paralympic Games.
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These are not cost-saving initiatives, but rather investments in the Queensland economy.
However, once elected, the government conducted a review of the state’s finances. The findings are quite sobering.
State debt is projected to hit $217 billion by 2027–2028. The budget will be in deficit this financial year by $500 million and escalating to $6.9 billion in subsequent years, totaling $30.2 billion by 2028.
Blowouts in capital expenditure are projected to reach $22.6 billion over four years. Key blowouts are $4.2 billion in health projects, $4 billion in energy, water and port projects, and $3.1 billion in transport.
Coal royalties will also drop by $400 million due to reduced export volumes.
There are significant financial challenges for Queensland, particularly in delivering infrastructure through to 2032 and beyond. The Treasurer’s analysis of the state finances was conducted prior to the federal government announcing $7.2 billion for the Bruce Highway and the flood event in north Queensland, which could worsen by the end of this wet season. Whilst the Australian government is providing the bulk of the funds, the state government will need to fund its portion, which will run into the multiple billions of dollars.
The current state government’s strategy is to reassess major infrastructure projects as this is where the bulk of the cost overruns is attributable. They have cancelled the Pioneer – Burdekin Pumped Hydro project and will establish a $7 billion public service savings reform aimed at reducing consultants and contractors. The Crisafulli government also believes it will show better fiscal restraint in managing the budgets.
The LNP government has expressed a wiliness to not cut infrastructure programs but aims to deliver more for the money allocated. In other words, be more productive in all aspects of infrastructure delivery.
The time is right to revisit the definitions of productivity and value for money. The conversation must get more granular. Motherhood statements that make decision makers feel good must be treated with caution. Care must be taken to not impose control over the industry – especially where regulation exists under current laws and jurisdictions.
We must allow the industry to do what it does best and focus on delivering infrastructure. The industry cannot be distracted by the ever-growing requirements to manage social outcomes, deliver senseless environmental outcomes, overblown subjective management plans and other nonsensical red tape. The amount of overhead that companies and projects are carrying is adding to the cost of projects, both in terms of direct cost and time.
Recognising that every project is different and has its own challenges is the only way to embed fairness in the industry. It is vital that each project’s challenges and inherent risks are identified and/or addressed during the planning and design phase. Otherwise, it is near on impossible for a contractor to adequately understand price and control in the short time they must tender the project.
The key issues to focus on are:
- Flexibility of the workforce
- Financial support for training
- Faster procurement
- Adequately address risk through better planned and designed projects
- Contracts must reflect fair treatment and management of risk
- Staging projects so they are a manageable size
- Promote early works packages
- Standardised management plans with a simplification of the approval process
- Programming projects to take advantage of the seasons
- Embrace innovation by providing flexibility in specifications and addressing liability issues that create barriers to new products and construction methodologies
- Embed collaboration throughout the project life cycle to have everyone be solution-focused by commercialising behaviours
- Do not duplicate requirements that exist through legislation, regulation, or local law
The aim is to get out of the way of the process. It is important to avoid distractions around things that are ‘nice to have’ and instead simply focus on the essentials of project delivery.