Large capital projects
Defining Australia’s investment challenge
The past decade has seen a significant increase in investment in Australia. Public investment has lifted relative to GDP, while real private investment has averaged 8% growth per annum over the decade to 2009-10, easily outstripping the growth in real GDP. While the surge in private investment over the decade has largely been driven by mining, liquefied natural gas (LNG) is the current wonder child. By value some 55% of all resources projects in Deloitte Access Economics’ Investment Monitor database at present – the primary data source for this report – are LNG projects. Outside of LNG, resource projects underway are led very much by iron ore projects in Western Australia.
The Deloitte Access Economics report was commissioned by the Business Council of Australia (BCA) and has a narrower investment focus than Deloitte’s quarterly Investment Monitor, being focussed on investment in resources and infrastructure projects only. Nonetheless the pipeline of resources and infrastructure projects underway/in planning identified total $790.4 billion (compared to the Investment Monitor’s $921.2 billion in total (Q1 2012).
The BCA report Pipeline or Pipe Dream? Securing Australia’s Investment Future (Overview) which drew on the Deloitte Access Economics report, highlights how important the effective delivery of major projects will be to the future shape and health of the economy and living standards. It reinforces that Australia’s massive pipeline of investment is much broader than the resources sector and identifies that high costs and low productivity are risking Australia’s unprecedented $921 billion pipeline of investment in resources, energy and economic infrastructure.
While the findings and recommendations in the BCA study focus on policy levers that governments control, the BCA also highlights that companies have a vital role to play in lifting performance in major project planning, design and management.