The Australian Government, together with its States and Territories, is keeping its infrastructure and construction industries going as a matter of economic priority. Whilst State and Territory Governments have the power to close constructions sites, construction continues to be classified as essential, meaning work can continue on building sites under the rules of COVID-19 social distancing.
Both the Victorian and NSW governments have recently announced that they are looking at bringing forward "shovel-ready" projects. Key developments include:
In NSW, the Premier announced on 28 April the first 24 projects to undergo a fast-tracked assessment process. The projects will potentially inject AU$7.54 billion into the state's economy.
The Victorian Government has set up a dedicated taskforce to help keep the state's building and development industry running through the coronavirus crisis, while announcing the approval of four new projects worth more than AU$1.5 billion.
The Western Australia government has also announced 11 road and bridge projects that will be accelerated by several months, including the Fremantle Traffic Bridge and the Bunbury Outer Ring Road. This includes speeding up the procurement process to stimulate the economy.
Despite the government allowing work on construction sites to continue, analysts (from Moody's Investors Service and the Australian Bureau of Statistics) expect the industry will decline further in 2020 (following a 2.9% drop in late 2019) on the back of COVID-19 disruptions and slowing economic growth.
While most large construction sites are still operating, COVID-19 is restricting mobility and causing a rise in supply chain costs, impacting cash flows. Contractors with fixed price contracts are exposed, as delays impact wage costs and rising input costs narrow margins. Some privately funded projects are being put on hold and it is expected that the private construction sector will soften in the next 12 months. Nonetheless, the essential infrastructure status will see the pipeline of Government infrastructure projects proceeding and the industry is expected to return to pre-COVID-19 levels by 2021.
The State Government are fast-tracking infrastructure projects due to COVID-19: