Push to keep economy on an even keel
The pipeline of new investment projects has fallen to $877 billion from $921 billion, the Business Council of Australia said on Thursday.
Perhaps more importantly, projects under consideration now stand 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 that work begins 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," council president Tony Shepherd said.
"Those [countries] who had the GFC [global financial crisis] have shed their fat," Woodside Petroleum chief executive Peter Coleman 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 will rebound strongly, which underscores the need for ongoing reform in Australia, he said.
The Productivity Commission this week called for streamlining of government approval processes, including establishing a single project assessment and decision process across federal and state governments to remove duplication as well as clarify often competing compliance demands. As part of this, the commission advocated statutory time limits be imposed on assessments 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.
The incoming federal government needed to ensure these issues were tackled jointly by federal and state governments to sustain growth, the group said.
Frequently Asked Questions about this Article…
According to the Business Council of Australia, the pipeline of new investment projects has fallen to $877 billion from $921 billion. Projects currently under consideration are estimated at $159 billion, down 30% over the past year and 43% over the past two years.
A shrinking pipeline can signal slower future business activity and fewer new construction and resources projects, which can weigh on economic growth, jobs and earnings across sectors. The article warns the economy needs fresh rounds of investment to help sustain growth as the resources boom eases.
The article highlights calls to cut project costs, lift infrastructure spending and streamline government approval processes. Suggestions include a single project assessment across federal and state governments, imposing statutory time limits on assessments and making the process more transparent to speed up decisions.
Streamlining approvals—by removing duplication between federal and state processes, clarifying competing compliance demands and setting time limits—should speed project starts, reduce uncertainty and lower costs. Faster, clearer approvals can make more projects viable and support sustained economic activity.
The decline in productivity has been most marked in the mining sector, reflecting the difficulty of managing costs in a high-demand environment. Lower productivity in key sectors can increase project costs and reduce returns, which is important for investors monitoring corporate performance and project viability.
No. The article notes council president Tony Shepherd specifically said no one is advocating changes to wages or the wage structure. The focus is on improving labour productivity through better rostering, work practices and government planning and approval processes.
Woodside Petroleum chief executive Peter Coleman said Australia didn’t make the structural changes others were forced to make after the GFC, suggesting other countries may rebound more strongly and underscoring the need for reform. Leighton chief executive Hamish Tyrwhitt said the issues must be addressed and that federal and state governments should tackle them jointly to sustain growth.
Investors should watch for government action on approval reform (such as single project assessments and statutory time limits), signs of increased infrastructure spending, updates to the project pipeline figures and corporate progress on cutting project costs and improving labour productivity—because these factors will influence the pace of new investment and economic momentum.
Call 1300 880 160
Start a chat
Schedule a call
