public infrastructure

Analysis

Major infrastructure projects

Costs and productivity trends

With the Productivity Commission conducting an inquiry into the delivery of public infrastructure, the Australian Constructors Association asked Deloitte Access Economics to investigate costs and productivity trends in the delivery of public infrastructure projects in Australia in recent years.

The Productivity Commission (the Commission) was tasked with undertaking a broad-ranging inquiry into public infrastructure, comprising two broad streams of work:

  • The provision, funding, and financing of major public infrastructure
  • The scope for reducing the costs associated with such infrastructure.

The Australian Constructors Association (ACA) is providing a submission to the Commission’s inquiry and asked Deloitte Access Economics to investigate a range of issues, focusing on costs, competitiveness and productivity in providing economic infrastructure. This report seeks to provide some evidence in relation to construction sector costs and productivity in the delivery of public infrastructure projects.

Key points from the analysis include:

  • Consistent with the demand cycles of recent years, relative costs in engineering construction rose notably up until the GFC, but have since moderated some of their gains
  • Construction sector wages relative to other sectors grew notably across the same period, but have not fallen back
  • Wage growth has been stronger with Enterprise Bargaining Agreements (EBAs) where union impacts are more evident, and wage rises from EBAs have grown faster than wages in general to a much greater extent in the construction sector than in any other sector
  • There is some sign that construction sector productivity relative to other sectors also rose, however it did so to a smaller extent than relative wages did.
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