Could things be looking up for the quarrying industry?

Three months ago, I predicted that 2017 would be a ‘crunch’ year for the private and public sectors. There are now signs that a construction boom could be around the corner.

Based on a healthier global outlook, the International Monetary Fund has predicted national economic growth of 3.1 per cent for 2017 and three per cent for 2018. Industry research and forecasting group Macromonitor, which collates transport construction data, has forecast that spending on road and rail infrastructure projects will rise to $33 billion in 2018-19. The increased road and rail expenditure is expected to cover the shortfall in the residential construction market, which has propped up the economy since the end of the mining boom, and keep the economy steady until as late as 2024-25 when it will fall to $24 million.

The forecast is borne out in other analyses by the Australian Industry Group and the Australian Constructors Association. The AiG/ACA Performance of Construction Index in February showed that the construction industry had grown at its fastest rate since mid-2016, aided by increases in housing, commercial and engineering activity. Hays Specialist Recruitment has also predicted in the April to June quarter that mechanical fitters, blast engineers and diesel mechanics with quarrying experience will be amongst the roles most in demand – implying that recruitment in the extractive and construction materials industries is ramping up in anticipation of a busy period

Certainly there are infrastructure projects commencing or building momentum, eg Sydney’s NorthConnex and Barangaroo precinct, Brisbane’s Queen’s Wharf, Adelaide’s Northern Connector, Melbourne Metro, and the 1700km Melbourne to Brisbane Inland Rail. The question is: Will this renewed activity benefit the whole country?

The indications are that, like a decade ago, the country will power along on the back of a ‘two-speed economy’. In 2008-09, the mining states of Western Australia and Queensland were Australia’s ‘engine room’ for countering the shockwaves of the GFC. In 2017, New South Wales and Victoria are leading the way in infrastructure activity.

So how can Australia sustain this cyclical activity? The indications are, that like the mining boom, this infrastructure boom will peter out by 2024-25. Again, it requires leadership and prudence by Commonwealth and state governments to plan beyond electoral cycles.

Governments and politicians at large routinely ignore the sound advice of institutions like the Reserve Bank and Infrastructure Australia, even though appropriate governance on infrastructure projects could mean a steadier stream of construction work. This would be beneficial for everyone – it would create more attractive conditions for financing and asset ownership, encourage more private/public partnerships, solve bottlenecks in our existing infrastructure and provide much needed amenities for all Australians. It would also mean consistent work for quarries and their suppliers.

Will politicians listen to this advice? Unlikely. Nevertheless, organisations like the IQA and the CCAA, coupled with other business groups, must keep lobbying them for improved infrastructure models that direct resources to where they are needed most and not simply to marginal seats that sway votes at elections. It beggars belief that the Federal Government can spend $182 million on upgrading the Princess Highway West – Winchelsea to Colac duplication (a mere 15km of road!) when the new Thornhill Park housing estate between Melton and Caroline Springs, in Melbourne’s west, which is expected to accommodate 400,000 people in coming years, still has potholed and muddy dirt roads!

Leave a Reply

Send this to a friend