Research Briefing | Feb 20, 2024

Engineering Construction in Australia | Executive Summary

Our Engineering Construction in Australia report and accompanying online databank presents our
forecasts of both the volume of construction activity undertaken (work done) and cost escalations across
Australia’s economy. The report begins with an executive summary, highlighting the key trends across all
sectors, and is followed by detailed chapters for the following sectors:

  • Roads, highways and subdivisions (including airport runways)
  • Bridges
  • Railways
  • Harbours
  • Water storage and supply
  • Sewerage and drainage
  • Electricity generation, transmission and supply
  • Pipelines
  • Recreation
  • Telecommunications
  • Mining and heavy industry

Broad Strokes:

  • Government transportation investment driving growth: The government funded infrastructure boom continues to support engineering construction activity. Publicly funded transportation construction work done increased 17.4% to be $33.5bn over the twelve months to September 2023, which is the highest level of activity over a twelve-month period on record. We forecast government funded transportation work will reach a peak of $34.8bn in FY25.

  • No big surprises in the Independent Review: As expected, the Independent Strategic Review of the Infrastructure Investment Program announced delays, cost overruns and cancellations on a number of major projects. The report identified 52 projects valued at an estimated $17.1bn that won’t receive funding – almost all of these projects were not included in our October forecast update. The review also announced an additional $6.8bn in funding to address cost overruns – a significant portion of which was already included in our forecasts.

  • Labour cost price inflation continues to trend higher: The construction sector continues to struggle with labour shortages. The wage price index for construction workers increased 4.1% over the year to September 2023, the largest 12 month increase in a decade. While an increase in migration will help alleviate some shortages on some projects, we expect labour capacity to remain constrained, especially given the strong pipeline of work, and anticipate stronger wage growth over the near-term.
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