With a significant amount of instability in the market, it’s a challenging time to plan future infrastructure spending
The Trump World Tariff Wars are creating extreme volatility in our stock markets.
Confidence is down, uncertainty is up, and we wait for some stabilisation so businesses can plot their direction. On top of that, us Queenslanders are facing our own uncertainty as well.
Since the LNP government came to power, it has been airing the dirty laundry of the previous Labor government. In particular, it highlighted the lack of planning over the Olympic infrastructure and the cost blowouts of current and planned infrastructure projects.
The scale of the problem has made the LNP reconsider current projects and even pre-election commitments. The Pioneer-Burdekin Pumped Hydro Project was dumped prior the election based on escalating costs – with the LNP labelling it “unachievable”. The Sunshine Coast Rail link, which was promised from Beerwah to Maroochydore by 2032, has been drastically rescoped by terminating the rail line at Birtinya. The extension instead being replaced with a metro-style alternative that will connect to the Sunshine Coast Airport. There has also been the consideration of rescoping some of the hospital projects.
The Olympic infrastructure plan was rolled out to positive reviews. The Premier acknowledged that his pre-election commitment of ‘no new stadiums’ was wrong and that it was right to put the interest of Queenslanders ahead of any political decisions. In addition, there is some significant Olympic infrastructure that will now be built in the Victoria Park precent.
Whilst the new Queensland government was busy establishing its plan for the state, Queensland was hit with two major flood events and a tropical cyclone. The full damage is still being assessed and whilst it is known the damage bill is high, we still don’t know how high.
Add into the mix a federal election where infrastructure announcements are king and both sides of government are mirroring each other’s commitments. A major announcement is the $7.2 billion in Bruce Highway safety improvements on an 80/20 split between the federal and state governments. That’s yet another $1.8 billion that the state government needs to finance.
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The uncertainty now lies around the upcoming Queensland State Budget due to be handed down on June 24. It is too early for leaks, but the Treasurer did forecast that the LNP’s assessment of the finances show that the state’s debt could reach $217.8 billion by 2028. Coal royalty revenues are projected to be lower and Queensland’s GST allocation has been reduced by $2.4 billion.
These events have put enormous pressure on Queensland’s finances. The Crisafulli government promised that there would not be any reduction in infrastructure spending.
There is no reason to doubt this commitment, but it is becoming urgent to understand how the commitments will be financed in the short term and to ensure that there is a continued strong pipeline of projects beyond 2032.
We do know that the Commonwealth government will aid with disaster recovery, Olympic infrastructure, and the Bruce Highway – but we do not know the timing nor the overlap of the funding. It is prudent to ensure efficiency of spending to ensure flood reconstruction, safety improvements and betterment are done at the same time to maximise output for the funds available. However, this needs to be understood very quickly so that companies can make decisions regarding staffing and capital expenditure.
The delay in handing down an Olympic Infrastructure Plan, coupled with changes of government and associated priorities, has slowed the roll-out of new projects. It is reported that some companies are laying off people.
Infrastructure forecast reports and associated profiling on labour demands show peaks around 2026–2027 and a return to current levels at the end of the decade. We need to retain our workforce and have the confidence to build the stocks through recruitment and training to ensure we can meet the forecast program.
Two elections in the one financial year and, when you add in the Trump phenomenon, the industry is naturally nervous.
The positive is that the Queensland government is collaborating with industry and understands that we need to invest in infrastructure to grow this state.
The budget will come around quickly, and I expect the new financial year will kick off with clarity and confidence.