According to the Australian Constructors Association (ACA), the emerging trend of opposition political parties threatening to cancel the infrastructure contracts established by their elected counterparts is causing “long-term harm” and “significant angst” within the construction sector.
ACA executive director Lindsay Le Compte explained that regardless of whether a contract was ultimately cancelled, the political statements alone could lead to many unexpected consequences both locally and internationally.
“[These statements are] raising the spectre of sovereign risk that could impact on all Australian infrastructure projects and the community in general,” he stated. “There are serious consequences to bear such as impacts on the timing and availability of funding and financing of projects, increases in the cost of projects and reduction in competition and innovation.”
Le Compte warned that if political parties did not start honouring their infrastructure commitments, funding for these projects would start being diverted to other countries.
“It’s absolutely critical that all political parties act responsibly,” he said. “Failure to do so will put at risk billions of dollars of much needed infrastructure, jeopardise jobs growth and significantly damage the country’s economic credibility.”
The ACA’s appeal follows the release of a statement from the Canberra Liberals indicating that the political party would stop the Australian Capital Territory Government’s planned light rail project if elected next year.
There was also extensive media attention surrounding the cancellation of the East West Link, a high-profile infrastructure project that was proposed by Victoria’s former government but which was aborted after the new state government was elected in November 2014.
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