Big not always better: builders welcome PM’s local infrastructure push

Bigger is not always better, says the building lobby as it welcomes the PM’s infrastructure push.

A landmark infrastructure audit warns living standards will slip if investment in major infrastructure projects does not stay high. Picture: AP.

Australia’s building lobby has welcomed Scott Morrison’s calls for smaller local contractors to push through nation-building infrastructure projects, saying there is an over-reliance on multinationals.

In response to a landmark infrastructure audit, the Prime Minister today said smaller contractors would boost jobs, build regional skill bases and address current cost pressures in the sector.

Master Builders chief executive Denita Wawn said Mr Morrison’s comments showed “big is not always better” and a shift to tier 2, 3 and 4 contractors would help ease through the government’s $100 billion infrastructure pipeline.

“To overcome capacity constraints, fast-track construction activity and better realise the benefits to local economies and communities, governments must urgently adopt more sophisticated procurement model,” Ms Wawn said.

“Ease the almost overwhelming reliance on a small number of Tier One contractors, unlock the capacity of Tier Two and Tier Three contractors and facilitate local contractors and small businesses working on local projects.

“Big is not always better, so good on the Prime Minister for backing this measure today.”

The Infrastructure Australia report released today says a $200 billion ­investment pipeline in major projects over the next five years must be replicated on a rolling basis for the next 15 years.

The Morrison Government has a decade-long, $100bn infrastructure program under way, but that will not be enough according to this report.

Ms Wawn and Master Builders said it agreed with Infrastructure Australia that “more has to be done.”

“As the Reserve Bank Governor has consistently noted, more infrastructure investment not only adds to demand in the economy and boosts productivity but construction activity needs to actually commence before this occurs — nothing happens if projects languish on lists,” she said.

Mr Morrison’s call came as the audit warned living standards will slip if investment in major projects does not stay high.

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The Prime Minister said cost pressures on infrastructure were already there due to the amount currently being built and that turning to smaller businesses rather than large multinationals was part of the solution.

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“We can always invest in infrastructure, and must, but we’re now at that point where the contracting we’re doing in our infrastructure programs is making better use of our tier two and tier three contractors,” he said.

“There isn’t a lot of big tier one contractors who operate in Australia and most of them are overseas-owned.

“We want to see a lot more of those tier two contractors involved in these works. A good example of that is what the NSW Government is doing on the Pacific Highway.

“That doesn’t just have the goal of lifting the capacity of those companies up, but it means more of the jobs and more of the skills-building is happening regionally.”

The audit lashes governments for inadequate spending and policy inconsistency, which it argues have stalled private investment in key sectors including energy generation and transmission.

According to Infrastructure Australia — set up by Labor in 2008 to advise all levels of government on infrastructure needs — the annual cost of road congestion is projected to grow by $18.9bn to $38.8bn in just over a decade, without further investment.

Mr Morrison today defended the current spending on infrastructure and noted there had been additional spending in the pre-election Budget since the report was finalised.

“It’s worth noting that it predated the 2019-20 Budget which had $23bn specifically extra for projects including 160 congestion-busting projects, which includes 30 commuter car parks in Melbourne alone,” he said.

“There has already been significant addition in terms of what the Commonwealth has been doing.

“The money is there to get on with it. And that’s exactly what we’re seeking to do.”