Business seeks urgent action to lift productivity
The pipeline of new investment projects had fallen to $877 billion from $921 billion, the Business Council of Australia said. Perhaps more importantly, projects under consideration stood at an estimated $159 billion - down 30 per cent over the past year and 43 per cent over the past two years.
As a result, a variety of measures to cut project costs are necessary to ensure existing projects are completed on budget and work starts on a new round of projects to help sustain the economy.
"The most immediate challenge in continuing economic growth is how we manage the transition from the peak of the resources boom, and pulling out all stops to deliver on the investment pipeline is critical," the president of the council, Tony Shepherd, said.
"Those [countries] who had the GFC have shed their fat," Peter Coleman, the chief executive of Woodside Petroleum, said at the release of the BCA report. "[Australia] didn't make the structural changes others were forced to make."
As a result other countries would rebound strongly, which underscored the need for ongoing reform in Australia, he said.
The Productivity Commission this week called for government approval processes to be streamlined, including establishing a single project assessment and decision process across federal and state governments to remove duplication as well as to clarify often competing compliance demands.
As part of this, the commission advocated statutory time limits be imposed on the assessment process for projects, as well as making the process more transparent.
The decline in productivity has been most marked in the mining sector, which reflects the difficulty of managing costs in a high demand environment. "No one is advocating changes to wages and the wage structure," Mr Shepherd said.
Rather, the issue is labour productivity, which ranges from rostering and work practices, through to government planning and approval processes. "We have no option but to address these issues," Leighton chief executive Hamish Tyrwhitt said.
Frequently Asked Questions about this Article…
The Business Council of Australia says the pipeline of new investment projects has fallen to $877 billion from $921 billion. Projects currently under consideration are about $159 billion — down 30% over the past year and 43% over the past two years. For everyday investors, a shrinking pipeline can mean fewer large projects driving growth, which increases the importance of government and private-sector action to stimulate new investment.
Business leaders warn that as the resources boom eases, the economy needs fresh rounds of investment and higher infrastructure spending to avoid a slowdown. Tony Shepherd of the Business Council of Australia says delivering on the investment pipeline is critical to managing the transition away from the boom and sustaining economic growth.
The Productivity Commission recommended streamlining government approval processes by creating a single project assessment and decision process across federal and state governments to remove duplication, clarifying competing compliance demands, imposing statutory time limits on assessments, and making the process more transparent — all steps aimed at reducing delays that can block investment.
Delays and costly approval processes can push up project costs and cause budget overruns, which reduce potential returns for investors and can deter new projects from starting. The article says cutting project costs and ensuring existing projects finish on budget are necessary to keep investment momentum.
The mining sector has experienced the most marked decline in productivity, reflecting the difficulty of managing costs in a high-demand environment. For investors, lower productivity in mining can translate into higher operating costs, tighter margins and increased project risk unless efficiency and work practices improve.
Woodside’s CEO Peter Coleman said Australia didn’t make the structural changes after the GFC that other countries did, implying the need for ongoing reform to stay competitive. Leighton CEO Hamish Tyrwhitt highlighted labour productivity issues — such as rostering, work practices and government planning — saying these must be addressed to improve project delivery and cost control.
Statutory time limits and a single assessment process would reduce duplication between federal and state approvals, create clearer compliance expectations and speed decision-making. That makes project timelines more predictable and reduces the risk of cost escalation — both positives for investor confidence.
The article suggests measures to cut project costs and improve labour productivity — spanning better rostering and work practices to streamlined government planning and approval processes — along with lifting infrastructure spending to support new projects and sustain the economy as the resources boom winds down.
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