$270bn in infrastructure pipeline to boost economy

The value of infrastructure projects under construction or set to commence lifted by $27bn to more than $270bn in the December quarter, according to Deloitte’s.

Sydney’s city and southwest metro project – costing close to $17 billion – is set to be finished by 2024 and is part of some $270bn in infrastructure projects either under construction or committed during the December quarter.

This year is set to be a big one for infrastructure investment, after the value of infrastructure projects under construction or set to commence lifted by $27bn to more than $270bn in the December quarter, according to Deloitte’s latest investment monitor.

Deloitte Access Economics partner Stephen Smith said the value of contracts awarded had lifted “sharply” in the final quarter of 2020. And after an extra $50bn in funding in recent state and federal budgets, 2021 “will see an ­elevated level of infrastructure construction activity”, he said.

The $272bn pipeline of infrastructure investment was dominated by a series of large projects, the report said. Transport projects with an estimated cost of $1bn or more account for about 60 per cent of total infrastructure project investment, with the bulk concentrated in NSW and Victoria.

“Investment in infrastructure will play a key role in the efforts of governments to stimulate the economy and create jobs,” Mr Smith said.

Nearly $760bn in infrastructure spending is classed as either “definite”, such as the $270bn referred to earlier, or “planned”, which accounts for the other $490bn under consideration.

More than $160bn worth of definite investment is in NSW and Victoria, the highest level since Investment Monitor began keeping records almost two decades ago, the report said, with transport investment more than doubling over the past five years.

While economists and policymakers favour infrastructure as an effective stimulus measure when well spent and targeted appropriately, Mr Smith said there were “looming challenges” in getting a surge of government projects off the ground. In particular, there was a growing wariness by private firms to work with the public sector.

“After … highly publicised losses among contractors, the list of builders willing to bid on major projects has been shrinking,” Mr Smith said. “There are also concerns around short­ages of everything from building materials to skilled builders, (which) raises the risk of cost blowouts and delays.”