2019 Major Projects Pipeline 2019 Queensland Major Projects Pipeline

A JOINT INITIATIVE $M Total Pipeline 39,800,000,000 Annual Ave 7,960,000,000 Weekly Ave 153,000,000 Daily Ave 21,860,000 Hourly Ave 910,833

AT A GLANCE Major Projects Pipeline readon Unfunded split 1. illion total oer ears

Credil Under Under Unliel Prospectie proposed Announced procureent construction 9 1 1 2 projects valued at projects valued at projects valued at projects valued at projects valued at projects valued at .1n .1n .0n 10.1n .n 10.n

Ununded 1. illion unded 2. illion

*Under construction or completed in 2018/19 Total Pipeline Major Project cale o Major Value Actiit ecurrin Projects Jos Ependiture

. per year The funded pipeline will support . 11900 orers 1. each year on average 2 per day 12. Fully-funding the pipeline undin will support an extra . Central split Various Queensland 000 orers each year on average 2. 1. 2.2 Public Projects 1. Total South East A JOINT INITIATIVE 1.9 Queensland 19 per Private Projects working per week hour $M Total Pipeline 39,800,000,000 Annual Ave 7,960,000,000 Weekly Ave 153,000,000 Daily Ave 21,860,000 Hourly Ave 910,833

Major Projects Pipeline – Breakdown Unfunded split $41.3 billion total (over 5 years)

Credibly Under Under Unlikely Prospective proposed Announced procurement construction* 37 39 15 36 15 52 projects valued at projects valued at projects valued at projects valued at projects valued at projects valued at $3.13bn $6.61bn $4.03bn $10.14bn $6.66bn $10.77bn

Unfunded $13.77 billion Funded $27.57 billion

*Under construction or completed in 2018/19 Total Pipeline Major Project Scale of Major Value Activity Recurring Projects Jobs Expenditure

$8.3b per year The funded pipeline will support $6.5b 11,900 workers $41.3b North Queensland each year on average $23m per day $12.4b Fully-funding the pipeline Funding will support an extra 6.8b Central split Various Queensland 5,000 workers each year on average $23.4b $15.6b $2.2m Public Projects $41.3b Total South East A JOINT INITIATIVE $17.9b Queensland $159m per Private Projects working per week hour CONTENTS

FOREWORD 1 SPONSORS 2 EXECUTIVE SUMMARY 4 THE PIPELINE 2019 14 REGIONAL BREAKDOWN 28 ECONOMIC DRIVERS 46 IMPLICATIONS FOR THE 60 CONSTRUCTION SECTOR CHALLENGES, RISKS 68 AND OPPORTUNITIES CONCLUSION AND 90 RECOMMENDATIONS 2019 MAJOR 98 PROJECTS LIST FOREWORD

We are proud to introduce the 2019 Queensland Major Projects Pipeline Report to you - an initiative of the Queensland Major Contractors Association (QMCA) and the Infrastructure Association of Queensland (IAQ).

The Pipeline Report captures At time of print, communities As industry peak bodies we early stage information enabling in Northern Queensland are are committed to working our members and wider market recovering from the devastating hard for our members and to to plan for their future including impacts of recent heavy promoting Queensland as a resourcing and capacity. For rains and flooding. Given the world leading destination for government and private sector scale and financial impact to economic development and new infrastructure proponents, this governments, it is likely that a infrastructure investment. We ensures healthy and sustainable number of projects listed will be look forward to working with all competition in the market and re-prioritised so that affected our stakeholders in 2019 to grow successful delivery of major communities can receive the the pipeline of major projects in infrastructure. necessary funding to recover in our great State. the shortest time possible. As A unique aspect of the Pipeline is Sincere thanks to our partner reconstruction planning unfolds, that the data is sourced directly BIS Oxford Economics for their both our associations will provide from both government and the expert guidance, compilation their members with updates to private sector, providing state of the project listings and the any impacted projects and advise wide visibility and awareness detailed independent analysis of newly created reconstruction of Queensland’s economic that underpins the report. We packages. infrastructure plans. The report also acknowledge our outgoing provides a pipeline of projects The greatest threats to a partner Construction Skills around a set of six standardised sustainable pipeline of projects Queensland for their past stages through the project remain the identification of contributions to development lifecycle. As projects move investable projects, availability of the report and for their through the defined stages, of funds and timely investment sponsorship this year along with from inception to business case, decisions. This year’s report collaborative partners Accura investment decision, procurement also highlights an unusual Consulting, Cbus, Construction and then construction, the concentration of activity Skills Queensland, Dial Before You report ensures the market is emerging in very large major Dig, Pumps United, and regional kept informed and up to date. projects above $500m in partners Plangrid, BMD, Economx Our report also sends a strong value, that could also threaten and ARTC. signal to potential infrastructure the sustainability of parts of Through the support of our investors that a highly motivated the supply chain. The ability sponsors, it has been possible engineering sector exists, with of governments to package to improve the report format to designers, contractors and service projects in a way that maximises enhance the reading experience providers eminently capable of local industry participation has and provide access to key report preparing for and delivering world assumed even greater importance data through a dedicated website class major engineering projects. to the continued short-term qldmpp.com.au. sustainability of the major projects sector.

JON DAVIES STEVE ABSON CHIEF EXECUTIVE OFFICER CHIEF EXECUTIVE OFFICER

2019 Queensland Major Projects Pipeline 1 SPONSORS

QMCA and IAQ would like to thank our partners and supporters, without whom production of the 2019 Queensland Major Projects Pipeline Report would not be possible.

COLLABORATION PARTNERS

Accura Consulting CBUS Accura Consulting Accura Consulting provides Cbus is the leading industry super fund for the commercial management, claims consulting, construction, building and allied industries. planning support and expert witness services The Fund is focused on maximising retirement in both time and quantum disciplines. outcomes for members and helping employers manage their business superannuation needs.

Construction Skills Queensland Dial before you Dig CSQ assists major projects to access building Dial Before You Dig is a Not for Profit and construction training to address skills organisation that delivers a vital national deficiencies that may hold up the project, community service designed to assist individuals to become more multi-skilled in preventing damage and disruption to and productive, or provide career pathway ’s vast infrastructure networks which opportunities for the workforce. provide essential services we use every day.

Pumps United Pumps United are Australia’s leading provider of dewatering, pump rental and environmental services, with over 45 years of experience, we are the dewatering contractors and pump hire suppliers of choice for landmark construction projects, nationwide. AMRUN JETTY

REGIONAL SPONSORS BMD EconomX

BMD has grown from a small family owned EconomX design and implement leading company to become one of Australia’s Local and Regional Content strategies for largest privately-owned engineering Major Projects and Contractors. We provide design, construction and land development strategy, technology and innovative thinking contractors. which cover contracting, employment and stakeholder management.

Inland Rail Plangrid

The Australian Government has committed PlanGrid is the leader in construction $9.3 billion to deliver the once-in-a-generation productivity software that allows contractors 1,700km Melbourne to Inland Rail. and owners in commercial, heavy civil and Divided into 13 individual projects, it’s the other industries to collaborate easily from largest freight rail infrastructure project in their mobile devices and desktop, managing Australia. drawings, specs, photos, RFIs, field reports and defect lists. EXECUTIVE SUMMARY Welcome to the third Queensland Major Projects Pipeline Report (the Report) developed by the Queensland Major Contractors Association (QMCA) and the Infrastructure Association of Queensland (IAQ).

This annual Report has The Report this year contains In this year’s Report there become the key barometer mixed news. While last year’s is a focus on the regional of current and future major call for increasing the volume implications of the pipeline. project activity in Queensland. of funded work in the pipeline Eleven separate analyses has been answered, there is are provided representing It provides a comprehensive still not enough funded work diverse regions of the state, list of major project work to avoid a decline in major with commentary on the together with the predicted project activity in 2019/20. outlook for each region. This level of construction activity And while the overall size of regional analysis shows that based on both the completion the pipeline is roughly the there are significant winners of existing projects and the same as last year, much more and losers in terms of major likelihood of potential projects of the pipeline is weighted project activity over the proceeding. A complete list towards the latter years of the next five years, with some of major projects considered forecast – and much of this regions set for substantial for this analysis, and the remains unfunded. volatility in work. Industry and explicit assumptions for each government can use these project regarding work done, Other familiar challenges regional profiles to better are provided at the end of remain: the appropriate plan for the coming phase of this report. The report is identification of infrastructure major project work – and also therefore a useful source of initiatives, choosing the use the analysis to see where data to inform infrastructure most productive projects, any emerging latent industry policy and guide the timing of and coming up with funding capacity may be tapped. investment decisions. and financing solutions will remain critical if growth in The Report also provides data major project activity is to and forecasts for the broader be sustained into the future. economic environment in There are also challenges which major project activity is regarding industry capacity taking place: for Queensland, and capability to deliver major Australia and the global projects in Queensland, given economy. substantial infrastructure investment programs underway in and . COMING UP WITH NEW FUNDING AND FINANCING SOLUTIONS WILL REMAIN CRITICAL IF GROWTH IN MAJOR PROJECT ACTIVITIES IS TO BE SUSTAINED INTO THE FUTURE

4 2019 Queensland Major Projects Pipeline THERE IS GREATER CERTAINTY OF MAJOR PROJECTS BEING DELIVERED BY THE PUBLIC SECTOR, WHICH NOW ACCOUNTS FOR 70% (OR $19.3BN) OF FUNDED WORK

PUBLIC SECTOR PIPELINE $23.4 billion total (over 5 years)

Credibly Under Under Unlikely Prospective proposed Announced procurement construction 17 11 4 23 9 26 projects valued at projects valued at projects valued at projects valued at projects valued at projects valued at $1.01bn $2.10bn $1.06bn $7.07bn $6.22bn $5.98bn

Unfunded $4.17 billion Funded $19.27 billion

PRIVATE SECTOR PIPELINE $17.9 billion total (over 5 years)

Credibly Under Under Unlikely Prospective proposed Announced procurement construction 20 28 11 13 6 26 projects valued at projects valued at projects valued at projects valued at projects valued at projects valued at $2.12bn $4.51bn $2.97bn $3.07bn $0.44bn $4.79bn

Unfunded $9.60 billion Funded $8.30 billion

*Under construction or completed in 2018/19

2019 Queensland Major Projects Pipeline 5 KEY FINDINGS In the 5 years between 2018/19 and 2022/23, 2021/22 is predicted to be the strongest year the major projects pipeline is valued at $41.3bn. of major project activity since 2014/15 - with This compares with $39.9bn identified in the a 70% increase from the current 2018/19 2018 Report between 2017/18 to 2021/22. financial year, subject to funding commitments. However, there is a lower level of total work (funded and unfunded) in both 2019/20 Growing mega-project concentration may and 2020/21 than previously forecast have significant implications for industry (see Figure A). competitiveness and sustainability. In 2018/19, 19% of project work is in projects valued The share of overall total pipeline value is at $5m to $200m, whilst another 22% is in weighted towards the public sector (57%) projects valued at between $200m to $500m. – with Inland Rail (Commonwealth funded) However, by 2021/22, 89% of major funded and Cross River Rail (State funded) notable project work is in projects with a value of contributors to Engineering activity in the over $500m. Report period (see Figure B). Around half of all funded work in the pipeline $27.6bn (67%) of the pipeline value is funded, is unsurprisingly focused in south east whilst $13.8bn (33%) is unfunded. Unfunded Queensland. Meanwhile, more of the riskier, projects represent between 39% to 44% unfunded projects lie in central, northern and of the pipeline value in 2020/21, 2021/22 western regions of the state, as these regions and 2022/23, introducing a normal level tend to be weighted to investment in mining of uncertainty associated with business and large water projects (such as ) that case development and financial investment are typically unfunded. decisions. Queensland is now higher than the trough There is greater certainty of major projects in 2014/15 but lags New South Wales and being delivered by the public sector, which Victoria in terms of funding and delivering now accounts for 70% (or $19.3bn) of funded infrastructure. With investment in these work. Whilst there are notable private sector States set to be sustained at very high projects and sustaining capital programs in levels, Queensland may face challenges in delivery, the prospects for major greenfield competitively procuring construction services mine and rail infrastructure development for major projects. in regional areas such as the Galilee Basin remains difficult to predict. According to BIS Oxford Economics, a higher level of major projects activity since 2016/17 Funded work for 2018/19 is currently on par has had a broader, stimulatory effect on the with total work in 2017/18 – just over $6bn – Queensland economy. However, any setback with any slight growth in activity dependent in major project work, alongside weaker on several projects securing funding growth in broader investment and consumer commitments and mobilising in the second spending, is likely to contribute to a slowing half of this financial year. in state economic growth in 2019/20.

A decline in major project work is expected in 2019/20, before recovering in 2020/21. Funded roads and bridges work in 2019/20 is 44% lower than 2018/19 as several very large projects reach completion and are not replaced by similar sized new projects. Declines are also expected in electricity (renewables), telecommunications and mining.

6 2019 Queensland Major Projects Pipeline FIGURE A: COMPARISON OF MAJOR PROJECT ACTIVITY: 2019 VERSUS 2018 BY 2021/22, 89% $Bn 12000 OF MAJOR FUNDED PROJECT WORK IS 10000 IN PROJECTS

8000 WITH A VALUE OF OVER $500M 6000

4000

2000

0 17/18 18/19 19/20 20/21 21/22 22/23

2018 Funded 2019 Funded

2018 Unfunded 2019 Unfunded

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

FIGURE B: FUNDING MIX BY ASSET CLASS, 2019-2023, $MILLIONS, ALL PROJECTS

TOTAL $23,449 $17,895

Defence $810

Water and Sewerage $2,556 $355

Non-Water Utilities $3,272 $4,331

Rail and Harbours $9,313 $855

Roads and Bridges $7,498 $660

Mining & Heavy Industry $11,694

0% 20% 40% 60% 80% 100%

Public Private

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

FIGURE C: MAJOR PROJECT OUTLOOK BY ALL SEGMENTS: 2018/19 TO 2022/23 $Bn

20

15

10

5

0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

Funded Credibly Proposed

Prospective Unlikely

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

2019 Queensland Major Projects Pipeline 7 THERE IS CONSIDERABLE OPPORTUNITY FOR THE DEVELOPMENT OF WATER PROJECTS IN QUEENSLAND TO SUPPORT REGIONAL COMMUNITIES, AGRICULTURE AND INDUSTRY

TOOWOOMBA SECOND RANGE CROSSING

CHALLENGES AND RECOMMENDATIONS The key finding of this However, the last two years In this environment, sustaining Report is that in 2017/18 and has seen a recovery in or growing current levels of 2018/19, major project activity major project work, led by major project work into the has risen out of the trough new investments in roads future will require securing experienced between 2015/16 and telecommunications funding and finance for and 2016/17 – helping to drive (predominantly funded by the identified unfunded projects, a turnaround in Queensland public sector), and renewable and originating, developing State Final Demand and energy generation and mining and funding new projects that employment. But major (mostly funded by the private are currently not identified in project work is likely to suffer sector). the pipeline at all. a setback of around $1.4bn Maintaining this momentum There is considerable in 2019/20 (23%), unless is the core challenge facing opportunity for the funding for new projects Queensland. Funded development of water For the setback is secured. work in the pipeline for projects in Queensland to not to occur in full, currently the four sectors of roads, support regional communities, unfunded projects such as telecommunications, agriculture and industry. Nullinga , the Paradise electricity and mining – falls Meanwhile, there are many Dam Spillway Improvement, away by 45% in 2019/20, and potential private sector Pacific Motorway Section C continues to fall in aggregate funded renewable energy and Gold Coast Light Rail through the subsequent 4 major projects which did not Stage 3 require investment years. While other sectors make the list this year, but decisions and procurement. offer replacement growth in could originate in future years. Major project activity – funded work – particularly rail, However, this will require mirroring the broader but also water, sewerage and stable environmental and Queensland economy – defence – this growth is not energy policies at both has been through a large enough to offset the severity the Commonwealth and resources-driven cycle over of the decline. State level. the past decade.

8 2019 Queensland Major Projects Pipeline FIGURE D: FUNDED MAJOR PROJECT OUTLOOK BY SECTOR: KEY CHALLENGES 2018/19 TO 2022/23 IDENTIFIED IN THIS

Defence YEAR’S REPORT INCLUDE:

Water and Sewerage MAJOR PROJECT Non-Water Utilities DECLINE IN 2019/20 Rail and Harbours The prospect of a 24% decline in major project Roads and Bridges activity over 2019/20. Overall, funded work in the Mining and Heavy Industry pipeline falls from $6.1bn in 2018/19 to $4.6bn in 0 1 2 3 4 5 6 7 8 9 10 $Bn 2019/20 before recovering Source: BIS Oxford Economics, QMCA and IAQ member knowledge slightly in 2020/21.

FIGURE E: FUNDED MAJOR PROJECT OUTLOOK BY REGION: 2019/20 TO 2022/23 Outback SKILLS Cairns SHORTAGES

Gold Coast Queensland still faces Wide Bay significant competition for Townsville construction skills from other Sunshine Coast states – particularly New

Darling Downs – Maranoa South Wales and Victoria. The infrastructure investment Fitzroy program in other east coast Mackay states is unlikely to slow down

Ipswich – Toowoomba – Logan significantly given projects already underway. To the Brisbane contrary, there may be an 0 1 2 3 4 5 6 7 8 $Bn upside to the Commonwealth Source: BIS Oxford Economics, QMCA and IAQ member knowledge Government’s current Infrastructure Investment Program, to ward off the negative impact of the slowdown in residential building or guard against potential external shocks. This may drive even stronger demand for major project skills. WHILE THE OVERALL SIZE OF THE PIPELINE IS ROUGHLY THE SAME AS LAST YEAR, MUCH MORE OF THE PIPELINE IS WEIGHTED TOWARDS THE LATTER YEARS OF THE FORECAST – AND MUCH OF THIS REMAINS UNFUNDED

2019 Queensland Major Projects Pipeline 9 REGIONAL PIPELINE VOLATILITY

There are vast differences in how major project activity will play out by region, by sector and by project size through the forecast period. For many regions and sectors, volatility in the pipeline is set to increase, placing pressure on construction industry contractors and suppliers. The Toowoomba region will transition between the Toowoomba Second Range Crossing (road) and Inland Rail (rail) projects. There is also a strong cycle of work ahead in the Brisbane region that will require careful management. Meanwhile, other regions in the north and the west of the state have very high shares of unfunded work in their pipelines, adding to uncertainty for contractors and industry suppliers.

IN MEETING THESE PIPELINE CHALLENGES, THIS REPORT MAKES THE FOLLOWING RECOMMENDATIONS: INCREASE NUMBER 1 INCREASE INDUSTRY 2 OF SHOVEL READY COLLABORATION PROJECTS Aim for a more collaborative approach Governments should consider raising the number between government and the construction of “shovel ready” projects in the pipeline industry, as is emerging in New South through early identification of infrastructure Wales and Victoria. Looming capacity and network challenges and commit to earlier capability challenges will likely require a evaluation of solutions and business cases. greater partnership approach that maximises Similarly, future infrastructure requirements the legacy of the infrastructure program. should be informed by a comprehensive review Rather than being incentivised to secure of the quality of the existing infrastructure stock the lowest priced work on each and every and the development of frequently updated project, procurement will increasingly need customer metrics that can best indicate where to encourage industry investment in capacity gaps may exist. Increasing the depth of the and capability, reward innovation (and hence pipeline would improve its flexibility to help productivity), and foster the development of smooth cycles in major project activity – that is, critical skills needed to deliver major projects. allowing projects to be accelerated within the pipeline to take advantage of any emerging local industry capacity, such as seems likely to occur in 2019/20.

SECURE COMMONWEALTH CONTRIBUTION 3 TO RAIL PROJECTS

Resolve Commonwealth funding contributions to passenger rail projects – the State Government’s ability to fund infrastructure growth beyond its current budget commitments is challenging. This is likely to hamper its ability to meet contributions required by the Commonwealth per national partnership agreements covering transport and road projects. Securing Commonwealth contributions towards the $5.4bn Cross River Rail project and further contributions to the Beerburrum to Nambour Rail project would liberate funds from the forward estimates to reinvest into other priorities.

10 2019 Queensland Major Projects Pipeline IN THE 5 YEARS BETWEEN 2018/19 AND 2022/23, THE MAJOR PROJECTS PIPELINE IS VALUED AT $41.3BN

DEVELOP A FINALISE A 4 FUNDING PLAN 5 SEQ CITY DEAL

Consider asset recycling. Other states, City deals provide a new approach for all including New South Wales and Victoria, levels of government to work together to have already established long term plans for plan and deliver transformative outcomes for infrastructure development, and have made the Queensland cities and are a key mechanism hard decisions regarding funding and finance. of the Commonwealth Government’s Smart With its traditionally stronger population Cities Plan (2016). The Townsville City Deal and economic growth, Queensland needs struck in December 2016 was the first in to develop a strategic plan for funding and Australia and an important start. A South East financing infrastructure. As noted in previous Queensland (SEQ) Regional City Deal has the Major Project Pipeline Reports, Queensland potential to be the foremost City Deal in the could leverage substantial infrastructure nation involving ten separate Councils. This finance through asset recycling strategies. ‘new generation’ City Deal could provide a structured, coordinated plan for infrastructure development in supported by all tiers of government.

2019 Queensland Major Projects Pipeline 11 IMPROVED NEEDS 6 CAPITAL EXPENDITURE 7 ANALYSIS

The State Government should maintain the Better identification of infrastructure gaps. current focus on ensuring committed funds Broad economic measures and rules of thumb for infrastructure delivery are spent as such as investment/GSP ratios are not ideal planned. The gap between committed and determinants of the existence of infrastructure actual spending on public investment has gaps but can show the cyclicality and trend narrowed, from a peak of $1.7bn in 2014/15 to movements in investment over time. The lack $333m in 2017/18. This positive trend should be of established benchmarks or satisfactory maintained. methods of infrastructure gap identification is problematic and perhaps should be addressed in future infrastructure Audits by Infrastructure Australia, as well as future Queensland State Infrastructure Plans.

8 REVIEW PACKAGING STRATEGIES

Provide a diverse range of projects by size. This Report highlights that a very high proportion of funded work in 2021/22 and 2022/23 is concentrated in projects valued over $500m. A sustainable and competitive construction industry requires diverse participation in project tenders and construction work. With this in mind, the State Government should look to review their packaging strategies to support greater participation from the sector.

2021/22 IS PREDICTED TO BE THE STRONGEST YEAR OF MAJOR PROJECT ACTIVITY SINCE 2014/15 – WITH A 70% INCREASE FROM THE % CURRENT 2018/19 FINANCIAL YEAR, 70 SUBJECT TO FUNDING COMMITMENTS

12 2019 Queensland Major Projects Pipeline ACCURA CONSULTING

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07 3058 0030 Level 18, 175 Eagle Street Brisbane QLD 4000 accuraconsulting.com THE PIPELINE 2019

The 2019 Major Projects List ENGINEERING VALUE is presented on page 98 of this Report. The Major Projects List includes engineering projects in excess of $50m CONSTRUCTION PRINCIPAL'S CONTRACTOR’S COST and was developed by COST BIS Oxford Economics in coordination with QMCA and IAQ member input throughout November 2018 to January 2019.

BASE ESTIMATE

RISK AND CONTINGENCY

TOTAL PROJECT COST (CURRENT $)

ESCALATION

TOTAL PROJECT COST PROJECT VALUE (OUTTURN $ FOR COMPLETION IN 2XXX)

14 2019 Queensland Major Projects Pipeline OVER 90% OF THE RAIL WORK IN THE PIPELINE IS FUNDED

MAJOR PROJECTS OUTLOOK Figures 1 and 2 (overleaf) highlight the current activity and projections for major project work for the period 2018/19 to 2022/23 based on the 2019 Major Projects List, as well as historical data to 2011/12.

KEY ANALYSIS ƒƒ Rail continues to offer ƒƒ The pick up in work from ƒƒ Total Major Project the strongest outlook for 2020/21 is founded on a activity in the current growth in major project relatively small number financial year is expected activity. From just $150m of large value projects in to reach $6.6bn, a slight in 2018/19, major project south east Queensland such improvement on the work in rail is expected as Brisbane Metro, Cross forecast in the 2018 MPP to balloon to just over River Rail and Inland Rail Report. Only $474m of this $4bn by 2021/22, led by with a sharp drop off in figure is unfunded. simultaneous work on number of projects in the Cross River Rail, Inland Rail $100-500m range. ƒƒ A setback to major project and the European Train activity is now expected ƒƒ The value of water and Control System, amongst in 2019/20, with total sewerage, and mining other projects. Over 90% activity falling to $6.5bn and heavy industry of rail work in the pipeline from that forecast last major project work in the is funded. Capacity and year and funded work pipeline rises over time, capability risks for rail sliding to $4.7bn. The but much of the increase remain, however, given with completion of several remains unfunded, the massive wave of rail many projects listed as very large road projects is investment underway unlikely to proceed. Water expected to coincide with nationally. and sewerage major project the completion of a host of work in the pipeline rises renewable energy projects ƒƒ Some sectors simply do from $189m in 2018/19 to and a deceleration in NBN not have enough projects just under $1bn by 2021/22, activity – with not enough in the pipeline – whether with mining and heavy funded or unfunded – to new projects coming industry activity rising from sustain major project work through to sustain activity $1.3bn in 2018/19 to $3.1bn through the next five years. at current levels. by 2021/22. However, at the Funded roads major project 2021/22 peak, 60% of water activity is expected to and sewerage projects decline 44% over 2019/20 (principally dams) and and fall further in the 71% of mining and heavy early 2020s. Non-water industry projects remain utilities activity, comprising unfunded. Indeed, outside mostly electricity and of rail, more than 50% of telecommunications work, the pipeline is unfunded is also forecast to decline from 2021/22. Consequently, substantially over the there is considerable risk to same period. sustainable growth in major project work.

2019 Queensland Major Projects Pipeline 15 WORK UNDERTAKEN IN THE CURRENT FINANCIAL YEAR IS EXPECTED TO REACH $6.6BN, A SLIGHT IMPROVEMENT ON THE FORECAST IN THE 2018 MPP REPORT. ONLY $474M OF THIS FIGURE IS UNFUNDED

TOWNSVILLE RING ROAD

FUNDED VERSUS UNFUNDED PROJECTS Altogether there is $41.3bn in major project work in the pipeline between 2018/19 and 2022/23 inclusive. Including $756m in now completed projects, the total funded pipeline is $27.6bn. Unfunded projects in the pipeline amount to $13.8bn.

“Funded” project categories include: “Unfunded” project categories include: Announced: projects which have Unlikely: projects considered not to funding support but have not yet occur in the next five years, even if entered the procurement stage (as announced. There are $3.1bn in at January 2019). There are $10.1bn unlikely projects in the pipeline. in announced projects in the pipeline. Prospective: projects considered Under Procurement: projects in a likely to occur over next five years procurement stage but have not yet but not yet formally proposed. There started construction (as at January are $6.6bn in prospective projects in 2019). There are $6.7bn in projects the pipeline. under procurement in the pipeline. Credibly Proposed: projects that are Under Construction: projects in supported by government and/or flight / under construction. There are the private sector but still in $10bn in projects currently under prefeasibility/business case mode construction in the pipeline. and so do not have funding committed. There are $4.0bn in credibly proposed projects in the pipeline.

Figure 1 (over the page) illustrates the outlook for major project activity based on the subcategories of funded and unfunded work.

16 2019 Queensland Major Projects Pipeline KEY FEATURES FIGURE 1: MAJOR PROJECT WORK DONE: ALL SEGMENTS $Bn ƒƒ Total major project activity 20 is now expected to rise slightly to $6.6bn in the

current financial year, 15 surpassing the $6.5bn forecast in the 2018 MPPR. Only $474m of this remains 10 unfunded.

ƒƒ Total major project work 5 (funded and unfunded) is expected to decline 0 in 2019/20, however, to FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 $6.5bn. This decline is being driven by the completion Funded Credibly Proposed of many large roads and Prospective Unlikely non-water utilities projects Source: BIS Oxford Economics, QMCA and IAQ member knowledge (particularly electricity FIGURE 2: FUNDED MAJOR PROJECT WORK BY SECTOR and telecommunications) $Bn which is being only partially 20 offset by rising rail, water, defence and mining major 15 project activity. Total activity forecast for 2019/20 is

now approximately $0.7bn 10 less than forecast in the 2018 MPPR – and $1.8bn still remains unfunded 5 compared to the nearly $3bn in unfunded work for 0 2019/20 previously reported. FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

ƒƒ Both funded and unfunded Mining and Heavy Industry Roads and Bridges Rail and Harbours major project activity Non-Water Utilities Water and Sewerage Defence is forecast to rise over Source: BIS Oxford Economics, QMCA and IAQ member knowledge 2020/21 and 2021/22. Funded activity in the ƒƒ Total major project ƒƒ With the exception of pipeline rises to $5.2bn and work falls in 2022/23 to 2019/20, total major $6.8bn respectively, while $8.5bn, of which a hefty project activity is expected the inclusion of unfunded proportion ($3.7bn) to move above 2018/19 projects sees the value of remains unfunded, mostly levels which are themselves the pipeline rise to $8.7bn concentrated in mining and an improvement on in 2020/21 and then surge roads. Railways remains recent years. However, above $11bn in 2021/22. the most significant sector the outlook for funded Mining – and particularly the for major project work in work (incorporating those announced smaller Galilee the year, but funded work projects Announced, Basin coal development declines. The completion Under Procurement or from Adani (now included of large roads and water Under Construction) is as ‘funded’) – is a key driver projects – without visibility much different, moving of the upswing, as well on new projects – is a key below 2018/19 levels in as very large rail projects driver of the decline in both 2019/20 and 2020/21 (Cross River Rail and Inland measured major project and only emerging above Rail) which are timed to work in 2022/23. 2018/19 levels in 2021/22. ramp up in this period.

2019 Queensland Major Projects Pipeline 17 100%

FIGURE 3: PIPELINE FUNDING MIX BY SECTOR AND YEAR ƒƒ The funded forecast view is

TOTAL $23,449 $17,895 similar to that of a “worst case scenario” outlook, Defence $810 should international developments or public Water and Sewerage $2,556 $355 sector finances deteriorate significantly further, Non-Water Utilities $3,272 $4,331 or the combination of Rail and Harbours $9,313 $855 threats to the Queensland construction industry Roads and Bridges $7,498 $660 remain unaddressed. Maintaining a growing Mining & Heavy Industry $11,694 pipeline of major project 0% 20% 40% 60% 80% 100% work requires shifting

Public Private currently unfunded projects

Source: BIS Oxford Economics, QMCA and IAQ member knowledge into the funded category, as well as growing the value of FIGURE 4: COMBINED PIPELINE FUNDING MIX the pipeline overall. While $Bn the most likely scenario for 8 major project work excludes 7 “unlikely” projects, these are included to show their 6 potential impact on major 5 project work, particularly 4 later in the forecast.

3

2

1

0 FY2019 FY2020 FY2021 FY2022 FY2023

Funded Private Unfunded Private

Funded Public Unfunded Public

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

THE DIVERGENCE BETWEEN FUNDED AND UNFUNDED WORK PROFILES MEANS THAT THERE IS STILL SIGNIFICANT UNCERTAINTY IN THE ULTIMATE DIRECTION OF MAJOR PROJECT ACTIVITY IN QUEENSLAND

18 2019 Queensland Major Projects Pipeline BOUNDARY ROAD

Major projects which have While simultaneous works contributed to the stronger on these large projects have ROADS AND levels of activity in 2018/19 but contributed to a significant BRIDGES will wind down and move to upswing in roads activity in After rising to a peak of completion from here include Queensland, their completion $2.2bn in 2018/19, major (noting their construction – without replacement by project work for roads and value): equivalent sized projects – is bridges is projected to fall ƒƒ Toowoomba Second expected to drive weaker back to lower levels through Range Crossing, $1.25bn, major project activity in this the forecast period, generally completion in 2018/19 sector. It should be noted cycling between $1.2bn to ƒƒ Gateway Upgrade North, that this is not a new outlook $1.5bn in activity per annum. $850m, completion in for the roads sector in While more major roads 2018/19 Queensland – MPPR reports in projects are expected to ƒƒ Logan Motorway 2018 and 2017 also highlighted commence in coming years, Enhancement Project, the decline in major roads these are generally smaller in $420m, completion in investment inherent in the size than projects currently 2018/19 pipeline from 2019/20. underway that will be completed. ƒƒ Kingsford Smith Drive Funded roads activity is Upgrade, $440m, expected to cycle between completion in 2019/20 $1.0bn-$1.3bn between ƒƒ New 2019/20 and 2021/22. Major Parallel Runway, $380m, projects sustaining activity completion in 2019/20 at these lower levels include ƒƒ Sunshine Coast Airport New the Brisbane Metro ($550m), East-West Runway, $240m, Pacific Motorway: Eight Miles completion in 2019/20 Plains to Daisy Hill ($374m) ƒƒ Ipswich Motorway: Rocklea and Varsity Lakes to Tugun to Darra Stage 1, $200m, ($500m) and a range of completion in 2019/20 projects along the Bruce Highway. However, there is ƒƒ Pacific Motorway; Miles also an increasing profile Platting Road to Rochedale of unfunded work in the Road (Gateway Merge), pipeline, with unfunded work $160m, completion in exceeding funded work by 2019/20. 2022/23.

2019 Queensland Major Projects Pipeline 19 FIGURE 5: ROADS AND BRIDGES MAJOR PROJECT WORK DONE BY FUNDING STATUS (INCLUDES BRISBANE METRO) RAILWAYS $Bn AND 3 HARBOURS Major project work across 2.5 the railways and harbours segments in Queensland 2 moved to a higher plane

1.5 in the early 2010s, peaking at over $1.6bn in 2013/14, 1 before falling to just $320m in 2016/17 with the completion 0.5 of the Rail Link. While harbours major project 0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 construction work has been driven predominantly by the Funded Credibly Proposed demands of the resources Prospective Unlikely sector, across railways Source: BIS Oxford Economics, QMCA and IAQ member knowledge there are also significant

FIGURE 6: RAILWAYS AND HARBOURS MAJOR PROJECT WORK DONE BY contributions from the public FUNDING STATUS sector for passenger and $Bn freight projects. 5 Rail and harbours major project activity is anticipated 4 to remain relatively weak in 2018/19 ($285m), but is 3 expected to ramp up very strongly from here and grow 2 more than 10-fold over the next four years, with funded 1 activity estimated to peak at $3.75bn in 2021/22. This profile

0 is similar to that reported in FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 the 2018 MPPR, although with

Funded Credibly Proposed some differences: Prospective Unlikely ƒƒ 2018/19 activity is higher Source: BIS Oxford Economics, QMCA and IAQ member knowledge than previously reported due to the inclusion of the European Train Control System Level 2 (worth $589m over 5 years).

OUTSIDE OF RAIL, MORE THAN 50% OF THE PIPELINE IS UNFUNDED FROM 2021/22

20 2019 Queensland Major Projects Pipeline ƒƒ 2020/21 activity is lower North Galilee Basin Rail, with The main risk to the rail than previously reported, an assumed construction projects is the strong mainly due to a lower value of $750m, for Adani’s competition for key rail value and scope ascribed announced Carmichael Coal construction skills nationally to Adani’s smaller Galilee project, with activity to take given very large investment Basin rail project, with the place between 2019/20 and programs already underway bulk of work ascribed to 2022/23. While now listed as a in New South Wales, that year. Due to Adani’s funded project, it is noted that Victoria, announcement in late 2018 Adani’s Galilee coal project and . that they would fund a is still subject to risk and According to the Australasian smaller Carmichael Coal requires satisfaction of several Railways Association’s mine and rail development outstanding regulatory hurdles (ARA) Skills Capability internally, this project has before it can commence. Study released in November been shifted to ‘announced’ 2018, approximately 70,000 in this report. Beerburrum to Nambour Rail rail construction and Upgrade, with a construction manufacturing jobs will be Overall, the rail sector has estimate of $500m, to be demanded above existing the strongest outlook for any undertaken between 2020/21 supply to support national engineering construction and 2023/24. rail infrastructure delivery by segment in the pipeline, with 2022/23.1 very strong growth in activity In the long term, another supported by several key In contrast to rail, harbours $4bn will likely be needed funded projects including: major project work is to upgrade the rail line from relatively small, and focused Cross River Rail, various Acacia Ridge and the Port exclusively on the 2018/19 to packages with a construction of Brisbane itself. However, 2020/21 period, with no major value of $4.1bn, with early the timing of construction is harbours projects appearing works underway now likely to fall outside the scope in subsequent years. With the and work on the Tunnel of this report (after 2022/23) completion of port facilities Stations and Development with substantial planning for the Amrun bauxite (TSD) package and the Rail required given the urban development, work in this Integration and Systems nature of this project. segment will be supported Package (RIS) to get The staggered timing of these by the: underway late 2019/20. funded projects combines to ƒƒ Brisbane International produce a strong upswing Inland Rail includes three Cruise Terminal ($130m) in funded work over the major sections valued at ƒƒ Townsville Port Expansion next four years, with several $4.45bn in construction work. Project: Channel Capacity unfunded projects – notably The largest of these sections Upgrade ($150m) and the Sunshine Coast Light Rail and – Gowrie to Kagaru – includes ƒƒ RG Tanner Coal Terminal Gold Coast Light Rail Stage 3 complex tunnelling through upgrade as part of the Port – adding potential upside. the Toowoomba Ranges of Gladstone ($200m). and is anticipated to take Other harbour works which place between 2020/21 and could underpin activity are the 2023/24, with earlier works Port of Gladstone - Second in 2019/20. Shipping Lane (Gatcombe and Golding Cutting Channel Duplication Project) and the Port of Townsville - Outer Harbour Expansion (Berths 14+15), although both of these projects remain unfunded.

1 https://ara.net.au/content/rail-sector-skills-crisis-call-action

2019 Queensland Major Projects Pipeline 21 In August 2018, the CSIRO ƒƒ Lower Fitzroy Infrastructure WATER AND Northern Australia Water Project, $195m, SEWERAGE Resource Assessment2 commencing 2019/20 Water and sewerage major mapped three river systems ƒƒ Burdekin Falls Dam - project work spiked in 2012/13, across northern Australia Saddle Dam and Monolith largely underpinned by new which could potentially be Improvement, $210m, water treatment facilities and used for irrigated agriculture commencing 2020/21 pipeline construction projects development. This included ƒƒ Three Rivers Irrigation supporting upstream CSG the Mitchell river system in Project, $120m, field development in the Surat , which commencing 2020/21 Basin. However, as these could drive the development ƒƒ Beaudesert Water Supply projects moved to completion, of up to four dams – Pinnacles, Upgrade Pipeline, $100m, work done weakened Rockwood, Nullinga and near commencing 2020/21 Chillagoe – and which would substantially, falling under ƒƒ Lake McDonald Dam see an extra 140,000 hectares $50m in 2015/16. Upgrade, $80m, of year-round crop irrigated. Activity has risen in commencing 2019/20. While there is still significant subsequent years, however, further assessment and As with water, major project with the total value of major investigative work required on sewerage works are also project work forecast to be specific dam projects before increasing in coming years, $189m in 2018/19. The outlook they can be added to pipeline, with funded work rising for water and sewerage work the harnessing of northern from an estimated $89m in is highly positive, with funded river systems may yet provide 2018/19 to a peak of $232m activity in the pipeline rising longer term opportunities and in 2020/21. The major drivers almost four-fold to $507m by benefits to the Queensland of this are the Gold Coast 2020/21 before easing back economy. Council Long Term Water in subsequent years. Total Recycled Water Release The pipeline identifies $670m major project work done in (Stages 1 and 2), with a in funded water major project the pipeline averages just combined construction value work between 2019/20 and under $600m per annum over of $248m, as well as the 2021/22, a substantial increase the five years to 2022/23, Northern (Inner Brisbane) and on the $50m estimated for although this figure is boosted Southern (Ipswich) Waste 2018/19. Driving much of by several currently unfunded Water Treatment Plant works, this are projects in central, dam projects including: worth a combined $313m. ƒƒ Upgrade, northern and outback regions construction estimate of the state to either provide $450m, credibly proposed water security or agricultural ƒƒ Nullinga Dam, construction opportunities: estimate $180m, credibly ƒƒ Haughton Pipeline proposed Duplication, construction ƒƒ Water estimate $150m, under Treatment Plant Stage construction 1, construction estimate $150m, prospective THE HARNESSING OF ƒƒ Urannah Dam, construction estimate $200m, unlikely. NORTHERN RIVER SYSTEMS MAY YET PROVIDE LONGER TERM OPPORTUNITIES AND BENEFITS TO THE QUEENSLAND ECONOMY

2 https://www.csiro.au/en/Research/Major-initiatives/Northern-Australia/Current-work/NAWRAhttps://www.csiro.au/en/Research/Major-initiatives/Northern-Australia/Current-work/NAWRA 3 https://arena.gov.au/about/how-we-are-funded/

22 2019 Queensland Major Projects Pipeline ELECTRICITY, FIGURE 7: WATER AND SEWERAGE MAJOR PROJECT WORK DONE BY FUNDING STATUS PIPELINES $Bn AND 2 TELECOMS Electricity, pipelines, and telecoms major project work 1.5 done peaked at a record $1.6bn in 2012/13 driven mainly by booming LNG-related gas 1 pipeline construction. In the electricity sector, a host of 0.5 new Powerlink distribution and supply projects were a key driver. The completion of 0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 these major projects saw work done decline sharply over Funded Credibly Proposed 2013/14 and 2014/15. Prospective Unlikely Source: BIS Oxford Economics, QMCA and IAQ member knowledge During 2016/17 and 2017/18, FIGURE 8: ARENA’S RELEASE OF $2 BILLION IN CORE GRANT FUNDING FOR electricity, pipelines and RENEWABLE ENERGY PROJECTS3 telecoms major project work $bn 0.7 done jumped higher again, driven by surging NBN 0.6 activity and a host of smaller electricity generation projects 0.5 getting underway. In 2018/19 non-water utility 0.4 major project works across electricity, pipelines and 0.3 telecoms is estimated to reach an impressive $2.5bn, 0.2 underwritten by no less than 30 separate renewable energy 0.1 generation projects valued over the $50m threshold to 0.0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 be included in the pipeline, as Source: ARENA well as: FIGURE 9: ELECTRICITY, PIPELINES AND TELECOMS MAJOR PROJECT WORK ƒƒ Transmission projects and DONE BY FUNDING STATUS $Bn substation upgrades, ƒƒ A new gas fired power 3

station in the Lockyer Valley, 2.5 ƒƒ Pipelines for the Roma East Gas Project; and 2.0 ƒƒ Over $800m in work 1.5 delivering Australia’s largest public infrastructure project, 1.0 the National Broadband

Network (NBN). 0.5

0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

Funded Credibly Proposed

Prospective Unlikely

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

2019 Queensland Major Projects Pipeline 23 Unlike the rail and water The winding down of works sectors, however, the pipeline on the NBN rollout as it for non-water utilities thins targets completion in 2020. DEFENCE substantially beyond the While failures associated with Queensland is also benefiting current financial year, with the planned use of acquired from the latest round of total work done (funded and HFC cable networks saw the Commonwealth funded unfunded) expected to nearly rollout partially stalled during defence initiatives. Projects halve over the two years to 2018, NBN Co has adopted a include maintenance 2020/21 and remain at lower more construction-intensive infrastructure upgrades and levels. The decline in funded solution – Fibre to the Curb the construction of the new work is even sharper, falling (FTTC) – to service affected Growler Airborne Attack from an estimated $2.1bn in HFC premises. Overall, Capability facilities at South 2018/19 to under $600m in construction activity related East Queensland’s RAAF Base 2021/22. to the NBN is anticipated to Amberley. Activity should also remain high in 2018/19 but fall be boosted by the Australia Key drivers of the decline significantly in subsequent - Singapore Military training include: years as the NBN rollout initiative. The Initiative will High levels of uncertainty moves towards completion. provide increased access to over national energy and Australian military training climate change policy, which, Following a surge of areas for the Singapore coupled with lower levels work related to the (now Armed Forces, building on of public funding through completed) North East Gas Australia and Singapore’s the Australian Renewable Connector, gas pipelines existing Defence cooperation. Energy Agency (ARENA) major project work has Training facilities will be after 2019/20, is constraining eased back in 2018/19, with redeveloped at the Fitzroy’s sustained investment in activity mostly supported by Shoalwater Bay, which will first renewable energy projects the Roma East Gas Project. be remediated, as well as a according to the Clean Energy The ongoing development training facility further north in Council.4 Queensland has of the coal seam gas fields Townsville. been the biggest winner to feed Queensland’s large from the current boom in LNG processing facilities will Combined, the renewable energy investment require continual upstream aforementioned projects so far, with nearly $7bn worth investment in pipelines (and account for $810m in the of investment in total creating other infrastructure) over the pipeline between 2018/19 and 4,500 direct jobs and adding long term. The Arrow Bowen 2022/23. On the downside, 5,640MW of new capacity.5 A Pipeline has been identified there may not be as much lack of consensus on policy as a potential major project in engineering construction in and ARENA funding between this space although it is listed the defence projects listed the major parties at the as unlikely. in the pipeline than Federal level is putting further anticipated here. investment at risk.

QUEENSLAND HAS BEEN THE BIGGEST WINNER FROM THE CURRENT BOOM IN RENEWABLE ENERGY INVESTMENT SO FAR, WITH NEARLY $7BN WORTH OF INVESTMENT IN TOTAL CREATING 4,500 DIRECT JOBS AND ADDING 5,640MW OF NEW CAPACITY

4 https://www.cleanenergycouncil.org.au/news/clean-energy-project-investment-doubles-in-2018-to-top-record-20-4 5 Ibid.

24 2019 Queensland Major Projects Pipeline MINING FIGURE 10: DEFENCE MAJOR PROJECT WORK DONE BY FUNDING STATUS AND HEAVY $Bn INDUSTRY 250 Mining and heavy industry 200 major project work simply boomed between 2010/11 to 2012/13, increasing 150 collectively by over 200% to reach an extraordinary peak 100 of $13.6bn. This represented a second, LNG-focused, 50 phase of the resources boom in Queensland, but there 0 were also substantial coal FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 developments during this time Funded Credibly Proposed including the construction Prospective Unlikely of the Broadmeadow, Caval Source: BIS Oxford Economics, QMCA and IAQ member knowledge Ridge, Daunia and Grosvenor coking coal mines, which also FIGURE 11: MINING AND HEAVY INDUSTRY MAJOR PROJECT WORK DONE BY sustained a high level of major FUNDING STATUS $Bn project work. 14 The completion of “once in a generation” large LNG 12 projects in Queensland saw 10 mining and heavy industry major project work collapse to 8 just $700m in 2016/17. 6

Mining and heavy industry 4 major project work has moved to higher levels over 2017/18 2 and 2018/19, although in total 0 value terms it remains a mere FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 shadow of the previous boom. Funded Credibly Proposed In 2018/19, total major project Prospective Unlikely work eased to $1.3bn following Source: BIS Oxford Economics, QMCA and IAQ member knowledge just over $2bn in activity the previous year.

UNFUNDED WORK IN THE PIPELINE FOR MINING AND HEAVY INDUSTRY PROJECTS RISES FROM 38% IN 2019/20 TO 75% BY 2022/23

2019 Queensland Major Projects Pipeline 25 The breakdown in work for Unfunded work in the pipeline Funded coal works are 2018/19 includes: for mining and heavy industry expected to remain steady projects rises from 40% in through the forecast period, ƒƒ $374m in gas-related 2019/20 to 75% by 2022/23 – with approximately $370m works including $200m the highest unfunded share of in work done per annum on in upstream LNG gasfield any engineering construction average over the five years development, as well as sector considered in this to 2022/23. Much of this is work on the Gladstone LNG, report. Given that Adani’s focused on the Carmichael Roma East project and the Carmichael mine in the Galilee development (assumed Atlas Gas Processing Plant Basin is now considered construction value of $900m) and Pipeline; funded in this report given from 2020/21, as well as the ƒƒ $475m in works on major their announcement to finance Olive Downs ($300m) and coal projects including a smaller scale development South Walker Creek ($100m) Byerwen, the Overland internally – but is still subject developments. Conveyor System at Caval to significant political and By contrast, all other minerals Ridge (now completed) and regulatory risks – the outlook projects in the pipeline remain Caval Ridge Expansion, the for the sector could be unfunded – amounting to Baralaba Coal Expansion, considered even more risky approximately $367m per Jellinbah and Kestral than the unfunded project annum on average between Expansion; and share suggests. 2018/19 and 2022/23 – and ƒƒ $465m in other minerals On a funded basis, oil many of these are categorised major project work, and gas and coal have as ‘unlikely’. Those that are not mostly related to the (now a reasonably sustained considered unlikely include completed) Amrun bauxite profile to 2022/23. Oil and Roseby Copper, Red Dome development in the far gas projects are expected Mungana, Charters Towers north of the state. to remain underpinned by and the North Queensland The easing in mining and regular upstream gasfield Bio Energy Ethanol Plant. heavy industry major development works to There are also seven unfunded project work over 2018/19 feed the downstream LNG coal projects in the list can be most attributed processing trains, with categorised as either credibly to the completion or near the Arcadia Gas Project proposed or prospective completion of several very providing a lift over 2019/20 which could be developed if large projects in 2017/18 and 2020/21. Ongoing Australian dollar prices and including Dugald River Zinc, development of Coal Seam global demand remains firm, Capricorn Copper, Bauxite Gas (CSG) fields over the including Eagle Downs Coking Hills and Phosphate Hills. operational life of LNG Coal, Maryborough, Peak facilities will require continual Downs Expansion, Grosvenor While the outlook for total investment in related field Underground Stage 2, Styx, (funded and unfunded) major infrastructure, including roads, Middlemount Coking Coal project work in mining and pipelines and gas facilities, Stage 2 and Wilkie Creek. heavy industry is positive – the and water. Again, while not value of work in the pipeline as significant as downstream rises to a peak of $3.1bn by processing and infrastructure 2021/22 before easing slightly projects, in aggregate they will in 2022/23 – there remains keep the volume of activity considerable downside risk to high compared to pre-boom this profile. times and offer a higher share of work for domestic contractors compared to that which occurred on the LNG trains themselves.

26 2019 Queensland Major Projects Pipeline MAJOR PROJECT FIGURE 12: MAJOR PROJECT WORKFORCE PROFILE WORKFORCE Persons OUTLOOK 25000 Major project workforces have been rising over the past two 20000 years in response to higher levels of major project activity. 15000 In 2017/18, we estimate that 10000 major project activity catered 10000 for just under 14,000 direct 5000 full time equivalent (FTE) roles 5000 spread across construction labour (approximately 0 0 11,000 FTE positions) and FY18 FY19 FY20 FY21 FY22 FY23 white-collar occupations Project management - Funded Labour - Funded in construction project Project management - Unfunded Labour - Unfunded management (approximately Source: BIS Oxford Economics, QMCA and IAQ member knowledge 3,000 FTE positions). The bulk of these positions were in telecommunications, followed There is significant variation The sectors with the by electricity and roads. in the outlook between total strongest FTE workforce (funded and unfunded) demand growth potential Given differences in the and funded major project to the 2021/22 peak are typical capital and labour workforce demand which is rail (+6,400 FTE positions intensity of major projects implied by the projections across labour and project by sector – and the different in this Report. While the management – most of which projections for major project funded workforce profile is is funded), water (+3,000 FTE work by sector – growth fairly benign – albeit with a positions), coal (+927 FTE in major project workforce sharp retreats in 2019/20 and positions), oil and gas (690 demand does not exactly 2022/23 – there is a strong FTE positions). By contrast, match growth in major project positive cycle which could the weaker major project work done. However, as shown play out over the next few outlook for roads, electricity in Figure 12, the outlook for years if all currently unfunded and telecommunications over major project workforce projects were to proceed. the same period sees their demand is still similar to the In particular, total major respective projected total overall major projects outlook. project workforce demand workforce demand shrink by In particular, following a is projected to rise 31% from 1,100, 2,900 and 2,000 FTE local peak in 2018/19, major around 15,600 FTE positions positions respectively. project workforce demand this financial year (2018/19) is anticipated to weaken in In practice, the path for to a potential peak of over 2019/20 before recovering major project work is likely 20,000 FTE positions. Given in the subsequent two years, to lie between the totals relatively tight conditions with the next local peak to be for funded work (a likely in the major project market 2021/22. minimum demand) and total nationally,6 this means that work (a potential maximum) achieving the full major although more projects could project pipeline of work is yet emerge to push workforce likely to come with significant demand higher. workforce supply challenges.

6 See, for example, https://www.rlb.com/en/news/2019-01-21-skilled-labour-shortages-across-australia-and-new- zealand-create-further-cost-pressure/

2019 Queensland Major Projects Pipeline 27 REGIONAL BREAKDOWN This year’s Report provides a more detailed focus on the regional implications of the Queensland Major Projects Pipeline.

One of the key findings of the For the 2019 MPPR we have Under such an approach, the 2018 MPPR was how disparate examined this issue more regional analysis is now more the growth in major project closely by moving away detailed and includes the work was by broad region, the from the existing “5 region” following areas: high volatility and variability perspective in past MPPRs ƒƒ Greater Brisbane of work in regions, and large to a more detailed and ƒƒ Sunshine Coast differences in each region’s systematic regional analysis ƒƒ Gold Coast share of funded and unfunded based on the ABS SA4 ƒƒ Toowoomba-Ipswich-Logan work which adds to pipeline regions. While there are 19 ƒƒ and Maranoa uncertainty. SA4 regions in Queensland, ƒƒ Wide Bay we have condensed the 5 Brisbane SA4s (East, West, ƒƒ Fitzroy North, South and Inner City) ƒƒ Mackay-Isaac with two Moreton Bay SA4s ƒƒ Townsville (North and South) into a ƒƒ Cairns Greater Brisbane category. ƒƒ Outback We have also combined In this Section, separate Toowoomba with Ipswich major project pipelines are and Logan-Beaudesert. The provided for these 11 diverse Queensland Outback SA4 regions of the state, with region combines Outback commentary on the outlook North, Outback South and for each region. This regional Far North Queensland – analysis shows that there are essentially an area that covers significant regional winners the bulk of non-coal base and losers in terms of major metals and minerals mining, project activity over the next and the townships of Mt Isa, five years, with some regions, Cloncurry and Weipa. particularly, set for substantial volatility in work. Industry and government can use these regional profiles to better plan for the coming phase of INDUSTRY AND major project work – and also use the pipeline to see where GOVERNMENT CAN any emerging latent industry USE THESE REGIONAL capacity may be tapped. PROFILES TO BETTER PLAN FOR THE COMING PHASE OF MAJOR PROJECT WORK

28 2019 Queensland Major Projects Pipeline FIGURE 13: FUNDED MAJOR PROJECT WORK OVER THE NEXT 5 YEARS BY REGION7

CAIRNS $0.8 BN

TOWNSVILLE $1.2 BN

MACKAY – ISAAC $3.4 BN OUTBACK $0.5BN

FITZROY $2.7 BN

WIDE BAY $0.8 BN

SUNSHINE COAST $1.4 BN DARLING DOWNS – MARANOA $2.3 BN BRISBANE $6.7 BN GOLD COAST $0.9 BN IPSWICH, TOOWOOMBA & LOGAN $4.1 BN

7 Regions may not add to total Queensland due to Multi Regional Projects.

2019 Queensland Major Projects Pipeline 29 THERE ARE SIGNIFICANT REGIONAL WINNERS AND LOSERS IN TERMS OF MAJOR PROJECT ACTIVITY OVER NORTHERN GAS PIPELINE THE NEXT FIVE YEARS

KEY POINTS As may be expected given the concentration Meanwhile, the fastest growing regions in of the Queensland population in the south east terms of funded major project work are also corner, the majority of funded major project located in South East Queensland, and include work is located here over the next five years. Brisbane, Gold Coast, Sunshine Coast, Ipswich Major projects in Brisbane, the Sunshine Coast, – Toowoomba – Logan, and Wide Bay. These the Gold Coast and Ipswich-Toowoomba-Logan regions are all expected to see average levels account for $13.2bn or 48% of total funded of funded activity over the next five years 150% major project work. higher than that of the past five years.

Conversely, unfunded projects are more By contrast Darling Downs-Maranoa, Fitzroy, concentrated in the central and northern and Outback regions are facing much lower regions. Two thirds of the major project levels of funded major project work over pipeline in the Outback region remains the next five years compared to the average unfunded, along with 68% of the pipeline in level of activity between 2012/13 and 2017/18 Townsville, 51% in Cairns and around 47% in as previous large projects have moved to both the Wide Bay and Mackay regions. completion.

DARLING DOWNS-MARANOA, FITZROY, AND OUTBACK REGIONS ARE FACING MUCH LOWER LEVELS OF FUNDED MAJOR PROJECT WORK OVER THE NEXT FIVE YEARS COMPARED TO THE AVERAGE LEVEL OF ACTIVITY BETWEEN 2012/13 AND 2017/18

30 2019 Queensland Major Projects Pipeline OVERVIEW By our analysis, funded major project work will average around $5.5bn per annum over the next 5 years, lower than the estimated $7.7bn per annum of the previous 5 years.

This spending is spread across ƒƒ Work in Darling Downs- ƒƒ The Gold Coast region is 11 diverse regions each with Maranoa will also be principally supported by different drivers and outlooks. underpinned by work on the roads activity, as well as Inland Rail project, as well a small number of water ƒƒ Large transport projects, as ongoing coal seam gas and sewerage projects, and notably Cross River Rail work. This region accounts comprises 3% ($903m) and Inland Rail, underpin for 8% ($2.3bn) of all of the funded pipeline to activity in the more densely funded work. 2022/23. populated south east corner of Queensland. These large ƒƒ The announcement of a ƒƒ Renewables also underpin projects are fully funded smaller scale mine by Adani, work over the short run and secure a significant as well as other resource, in the Townsville region, level of major work into the roads and renewable but there is also support medium term. However, the projects is supporting from a number of roads, central and northern regions the Mackay-. water and harbors projects. have a significant number This region has the third Funded work in the of unfunded projects in the strongest funded pipeline Townsville region makes up pipeline. These projects in Queensland, valued at 4% ($1.2bn) of the funded reflect an upside to activity $3.4bn, over the five years pipeline. if they were to secure to 2022/23. ƒƒ Activity in the region of funding. ƒƒ The Fitzroy region will be Cairns will be supported ƒƒ Around 24% ($6.7bn) of the supported by Defence by a significant amount of funded major project work spending in Shoalwater renewables work, notably in the pipeline over the five Bay, and also water and the Kidston project, as well years to 2022/23 will be renewables projects. While as roads activity. Altogether, centred in Greater Brisbane, accounting for 10% ($2.7bn) the Cairns region has with the major project of the funded pipeline, $770m in funded work in driving this being Cross average activity over the the pipeline. River Rail. five years to 2022/23 will ƒƒ The Outback region has remain far lower than the ƒƒ The next biggest region in only one funded project previous five year average. term of major project work in the pipeline, which was is Ipswich-Toowoomba- ƒƒ Major project work in completed in 2018/19 Logan, which is responsible the Sunshine Coast and (Amrun), yet there is upside for around 15% ($4.1bn) of Wide Bay regions will be here given that two thirds funded work in the pipeline centred around roads and of the pipeline in this region over the next five years. In renewables. Together, these represents resources-related 2018/19, the Toowoomba regions account for 8% (or projects which are currently Range Second Crossing is $2.3bn) of the funded major unfunded. the largest project here, but project pipeline. from the early 2020s this region is heavily supported by work on the Inland Rail project.

2019 Queensland Major Projects Pipeline 31 CHART 14: FUNDED MAJOR PROJECT WORK OVER THE NEXT 5 YEARS BY REGION, $BILLION8

Outback

Cairns

Gold Coast

Wide Bay

Townsville

Sunshine Coast

Darling Downs – Maranoa

Fitzroy

Mackay

Ipswich – Toowoomba – Logan

Brisbane

0 1 2 3 4 5 6 7 8 $Bn Source: BIS Oxford Economics, QMCA and IAQ member knowledge CHART 15: AVERAGE GROWTH IN MAJOR PROJECT WORK OVER THE NEXT 5 YEARS BY REGION9

Fitzroy

Outback

Darling Downs - Maranoa

All regions

Mackay

Townsville

Cairns

Ipswich - Toowomba - Logan

Sunshine Coast

Wide Bay

Brisbane

Gold Coast

-100% -50% 0% 50% 100% 150% 200% 250% CHART 16: ANNUAL FUNDED MAJOR PROJECT WORK OVER THE NEXT 5 YEARS BY REGION8 $Bn 8

7

6

5

4

3

2

1 8 Regions may not add to total 0 Queensland due to Multi Regional AVG FY19 FY20 FY21 FY22 FY23 Projects. FY14-FY18 9 Figures in this chart represent the ratio of average funded work Brisbane Fitzroy Darling Downs - Mackay Ipswich - Maranoa Toowomba - Logan over the next five years (2018/19 to 2022/23) compared to the Sunshine Coast Gold Coast Townsville Outback Wide Bay Cairns estimated average of major project work in the region between Source: BIS Oxford Economics, QMCA and IAQ member knowledge 2012/13 and 2017/18 inclusive.

32 2019 Queensland Major Projects Pipeline GOLD COAST “With a fast growing population, major project activity over the next five years is centred around water, sewerage and transport infrastructure”

Outlook: The Gold Coast region has South Stradbroke one of the fastest growing pipeline populations in Queensland. The State Government has Gold Coast Light Rail Stage 3 responded to this growth with Pacific Motorway; investment in Gold Coast Light Mudgeeraba to Varsity Lakes Capacity Rail and with an expansion Upgrade of the region’s water and Pacific Motorway; Varsity Lakes to Tugan sewerage infrastructure. While Stage 3 of the Gold Coast Light Rail project remains Population: 622,095 unfunded, major project Population growth has averaged 2.3% per annum over the last activity in the region will be 10 years. supported by road works along the Pacific Highway. At Sectors Driving Growth: present there is an average of Roads, water and sewerage. Funded work to average $181m per $181m of funded project work annum over the next 5 years. per annum over the next five Unfunded Share: Key Unfunded Projects: years, a 207% increase from Jabiru Island Bridges (Hope the past five years average. Island Road (Oxley Drive) road 31% duplication - stage 4, $136m), Gold Coast Light Rail Stage 3 ($500m). Pipeline health 100%

CHART 18: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE $Bn $Bn 0.35 0.5

0.3 0.4 0.25

0.2 0.3

0.15 0.2 0.1

0.5 0.1

0.0 FY19 FY20 FY21 FY22 FY23 0.0 Average FY19 FY20 FY21 FY22 FY23 Mining and Roads and Bridges Rail and FY14–FY18 Industry Harbours Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded

2019 Queensland Major Projects Pipeline 33 IPSWICH - TOOWOOMBA - LOGAN “Very large road and rail projects to support activity in the region, but with a strong cycle”

Outlook: Major project activity in the Ipswich-Toowoomba-Logan Somerset Dam Upgrade region is expected to suffer a setback over the next two Toowoomba Range Second Crossing years with the completion Ipswich Motorway, Rocklea to Darra of several significant Stage 1 projects including the $1.6bn Inland Mainline Toowoomba Second Range Freight Upgrade - Gowrie to Crossing, defence-related Kagaru works at RAAF Amberley and a range of renewable generation projects. Funded Population: 854,939 major project work is Population growth has averaged 2.2% per annum over the last anticipated to rise again from 10 years. 2020/21 as work on Inland Rail ramps up – involving complex Sectors Driving Growth: engineering and tunnelling Roads, rail, water and defence. through the Toowoomba Unfunded Share: Key Unfunded Projects: Ranges – as well as ongoing Somerset Dam Upgrade, Pacific water and sewerage activity. Motorway; Section (C) Daisy Work done is unlikely to 31% Hill to Logan Motorway at surpass 2018/19 levels, Loganholme, Wyaralong Dam however, unless currently WTP Stage 1. unfunded projects proceed. Overall funded major project Pipeline health work is set to average $817m 100% per annum, more than double the previous five years.

CHART 20: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE $Bn $Bn 1.5 1.5

1.2 1.2

0.9 0.9

0.6 0.6

0.3 0.3

0.0 FY19 FY20 FY21 FY22 FY23 0.0 Average FY19 FY20 FY21 FY22 FY23 Mining and Roads and Bridges Rail and FY14–FY18 Industry Harbours Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded

34 2019 Queensland Major Projects Pipeline GREATER BRISBANE “Population growth has underpinned the need for publicly funded transport infrastructure”

Outlook: There is a strong pipeline of secured publicly funded infrastructure work for Greater

Brisbane New Parallel Brisbane through the next five Runway Phase years. Funded major project

Cross River Rail work is expected to average Brisbane Metro $1.3bn per annum during this Busway System period, with the bulk of work Pacific Motorway; expected to be done between Eight Mile Plains to Daisy Hill 2020/21 and 2022/23. Cross River Rail is the key project The Greater Brisbane region includes Brisbane underpinning future activity. and the Moreton Bay statistical areas. While work on road projects is expected to decline in the Population: 1,764,220 short term as the Gateway Population growth has averaged 1.9% per annum over the last Motorway Upgrade North 10 years. (GUN) and Kingsford Smith Sectors Driving Growth: Drive Upgrade projects wind Publicly funded transport infrastructure works, notably down, road activity will be Cross River Rail. supported in the medium term by works on the Pacific Funded Share: Key Unfunded Projects: Motorway and Brisbane Metro. There is no unfunded work in the pipeline. 100%

Pipeline health 100%

CHART 17: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE $Bn $Bn 4 3

3 2

2

1 1

0 FY19 FY20 FY21 FY22 FY23 0 Average FY19 FY20 FY21 FY22 FY23 Mining and Roads and Bridges Rail and Industry Harbours FY14–FY18 Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded

2019 Queensland Major Projects Pipeline 35 SUNSHINE COAST “Transport investments to support a lift in major project activity on the Sunshine Coast”

Outlook: Strong population growth in the region, as well as rising Sunshine Coast Airport - New East-West Runway tourism activity, is driving Bruce Highway - Maroochydore Road a wave of new investment Interchange Upgrade in transport infrastructure through the next five years Bruce Highway; Caloundra Road to Sunshine Motorway including upgrades to roads, Bruce Highway; Pine rail and airports. Funded work River to Caloundra Interchange is on track to average close Beerburrum to Nambour Rail Upgrade to $290m per annum over the next five years, more than double the average of the Population: 346,520 previous five years. Work is Population growth has averaged 2.3% per annum over the last largely supported by projects 10 years. along the Bruce Highway, but also by the $780m Sectors Driving Growth: Beerburrum to Nambour Roads (including airport works) and rail. rail upgrade. Unfunded Share: Key Unfunded Projects: Sunshine Coast Light Rail ($500m). 12%

Pipeline health 100%

CHART 19: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE $Bn $Bn 0.4 0.5

0.3 0.4

0.3 0.2

0.2 0.1

0.1

0.0 FY19 FY20 FY21 FY22 FY23 0.0 Average FY19 FY20 FY21 FY22 FY23 Rail and Mining and Roads and Bridges FY14–FY18 Industry Harbours Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded

36 2019 Queensland Major Projects Pipeline DARLING DOWNS – MARANOA “Upstream sustaining works on gas projects and the Inland Rail to underpin activity”

Outlook: Work in this region was underpinned by very large coal seam gas projects in the Arcadia Gas Project Surat Basin. Activity in 2018/19 is expected to be less than GLNG Roma East Gas project half the annual average level Cooper’s Gap Wind Farm of work for the past five years, (438WM) with funded work expected to Inland Mainline Freight Upgrade; decline further in 2019/20 and NSW/QLD Border to Gowrie 2020/21 as several renewable energy projects move towards completion. While upstream Population: 129,067 gas related activities should Population growth has averaged 0.7% per annum over the last provide a floor to work, the 10 years. next phase of growth for the region will likely be driven by Sectors Driving Growth: the Inland Rail project – and Gas developments, renewables and rail. in particular, the substantial Unfunded Share: Key Unfunded Projects: NSW/QLD Border to Gowrie Western Surat Gas Project section. Activity could be ($1.5bn), Bulli Creek Solar Farm higher if currently unfunded 40% (>1000 MW, $1.5bn), projects in renewables, coal New Acland Stage 3 Expansion and gas were to proceed. ($350m). Overall, funded major project work is expected to average Pipeline health $468m per annum through 20% the five years to 2022/23, well below the resources boom fueled average of the previous five years.

CHART 21: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE

$Bn $Bn 0.8 1.4

0.7 1.2 0.6 1.0 0.5 0.8 0.4

0.3 0.6

0.2 0.4 0.1 0.2 0.0 FY19 FY20 FY21 FY22 FY23 0.0 Average FY19 FY20 FY21 FY22 FY23 Rail and Mining and Roads and Bridges FY14–FY18 Industry Harbours Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded

2019 Queensland Major Projects Pipeline 37 Queenslan

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INLAND RAIL – CONNECTING

INLAND RAIL IS THE LARGEST FREIGHT RAIL INFRASTRUCTURE PROJECT IN AUSTRALIA AND ONE OF THE MOST SIGNIFICANT INFRASTRUCTURE PROJECTS IN THE WORLD.

The Inland Rail Programme will involve around $6 billion of capital investment in Queensland over the construction period to 2025 and will boost Queensland’s Gross State HELIDON GOWRIE CALVERT Product by $7.274 billion, including $2.2 billion in the TOOWOOMBA ACACIA RIDGE* Darling Downs region. GRANDCHESTER KAGARU Toowoomba is a key location on the Inland Rail route. BROMELTON As work on Inland Rail progresses, ARTC will expand its YELARBON regional presence and capacity. INGLEWOOD With Inland Rail committed to using local suppliers and labour where possible, opportunities will exist for many years for local businesses to participate in the delivery of *Connects to existing rail Inland Rail. MAJOR CITY TOWN INLAND RAIL ALIGNMENT line to Port of Brisbane

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inlandrail.com.au IR_806 Queenslan

WIDE BAY “Road works to drive major project activity across the next five years”

Outlook: While large renewable energy projects are driving the bulk of major project activity in Susan River Solar Farm 2018/19, large roads projects along the Bruce Highway should see activity sustained at relatively strong levels Northern Access Upgrade through the next five years. Stage 1 Queenslan There is potentially a large Lake McDonald Dam Upgrade upside to major project work Gympie Bypass in the early 2020s if currently unfunded projects across Population: 297,153 roads, water and coal Population growth has averaged 1.1% per annum over the last proceed simultaneously. 10 years. Sectors Driving Growth: Roads, defence, water and renewables. Unfunded Share: Key Unfunded Projects: Mooloolah Road Interchange INLAND RAIL – CONNECTING 48% ($450m), Paradise Dam Spillway Improvement Project SOUTH WEST QUEENSLAND ($200m), Aramara Solar Farm (140 MW, $280m), Maryborough coal ($300m). INLAND RAIL IS THE LARGEST FREIGHT RAIL Pipeline health INFRASTRUCTURE PROJECT IN AUSTRALIA AND ONE OF THE MOST SIGNIFICANT 80% INFRASTRUCTURE PROJECTS IN THE WORLD.

The Inland Rail Programme will involve around $6 billion of capital investment in Queensland over the construction CHART 25: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE $Bn period to 2025 and will boost Queensland’s Gross State HELIDON $Bn GOWRIE CALVERT 0.6 Product by $7.274 billion, including $2.2 billion in the 0.3 TOOWOOMBA ACACIA RIDGE* Darling Downs region. GRANDCHESTER KAGARU 0.5 Toowoomba is a key location on the Inland Rail route. BROMELTON 0.2 0.4 As work on Inland Rail progresses, ARTC will expand its YELARBON INGLEWOOD regional presence and capacity. 0.3

With Inland Rail committed to using local suppliers and 0.1 0.2 labour where possible, opportunities will exist for many years for local businesses to participate in the delivery of 0.1 *Connects to existing rail Inland Rail. MAJOR CITY TOWN INLAND RAIL ALIGNMENT line to Port of Brisbane 0.0 FY19 FY20 FY21 FY22 FY23 0.0 Average FY19 FY20 FY21 FY22 FY23 Mining and Roads and Bridges Rail and FY14–FY18 1800 732 761 Industry Harbours [email protected] Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded inlandrail.com.au IR_806 2019 Queensland Major Projects Pipeline 39 FITZROY “Defence, water and renewables projects will underpin major project activity looking forward, but to a level well below that seen during the LNG-related construction boom” Outlook: Singapore Force Posture The Fitzroy region boomed Initiatives - Shoalwater Bay during the first half of this Capricorn Highway (Rockhampton to decade on the back of a Gracemere) plethora of major projects Lower Fitzroy River across LNG and coal. However, Infrastructure Project - New Weir the completion of these at Rookwood on the Fitzroy River projects has seen major Stage 2 Atlas Gas project activity fall by over Processing Plant 85%. In 2018/19, funded major and Pipeline project activity is expected to be $539m, driven mainly by coal expansions, upstream Population: 226,455 oil and gas works as well as Population growth has averaged 0.9% per annum over the last renewable energy projects. 10 years. Funded work is expected to oscillate around these levels Sectors Driving Growth: for the next few years as the Defence, water, renewables, mining and heavy industry. completion of coal-related Unfunded Share: Key Unfunded Projects: projects is balanced by new initiatives across defence Rockhampton Ring Road (Shoalwater Bay) and water ($950m), Port of Gladstone 41% (Rookwood Weir). However, - Second Shipping Lane there is a substantial volume ($280m), Wandoan South of unfunded work (mostly Solar Project (1000MW, $1.2bn), in coal) which could provide Columboolan Solar Farm upside to this outlook. (310MW, $300m). Pipeline health 30%

CHART 22: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE

$Bn $Bn 0.8 0.4

0.7

0.6 0.3 0.5

0.4 0.2 0.3

0.2 0.1 0.1

0.0 FY19 FY20 FY21 FY22 FY23 0.0 Average FY19 FY20 FY21 FY22 FY23 Mining and Roads and Bridges Rail and FY14–FY18 Industry Harbours Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded

40 2019 Queensland Major Projects Pipeline MACKAY – ISAAC “‘Mini’ Adani coal project and other resources developments should support activity”

Outlook: Major project activity in the Mackay-Isaac region is traditionally supported by Mackay Ring significant resources projects, Road - Stage 1 Olive Downs but has been supplemented in recent years with a burst Adani Coal Mine Project of renewable energy projects including the Daydream, Hayman, Collinsville and solar farms. Looking ahead, funded work in the pipeline is now Population: 174,034 heavily influenced by Adani’s Population growth has averaged 0.7% per annum over the last announcement to construct a 10 years. ‘scaled down’ Carmichael coal mine (10mtpa) and related Sectors Driving Growth: infrastructure across rail, water Resources, roads, rail, renewables. and electricity transmission. Unfunded Share: Key Unfunded Projects: There is potential upside to major project activity in the Shell / Arrow Water Treatment early 2020s if coal prices are Facilities Bowen ($250m), 47% sustained. Urannah Dam ($250m), Arrow Bowen Pipeline ($450m), Eagle Downs coking coal ($1.25bn), Peak Downs coal expansion ($460m). Pipeline health 80%

CHART 27: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE

$Bn $Bn 1.0 2.0 0.9 0.8 1.5 0.7 0.6 0.5 1.0 0.4 0.3 0.2 0.5 0.1 0.0 FY19 FY20 FY21 FY22 FY23 0.0 Average FY19 FY20 FY21 FY22 FY23 Rail and Mining and Roads and Bridges FY14–FY18 Industry Harbours Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded

2019 Queensland Major Projects Pipeline 41 TOWNSVILLE “Funded defence, water and renewables projects will continue to support the Townsville region, however there is a very large volume of unfunded work in the pipeline”

Outlook: Major project work in 2018/19 has been underpinned by nearly $300m in renewable Townsville Port energy works, but funded Expansion Project pipeline activity eases in Sarina to Cairns - coming years as many of Haughton River & Pink Lily Lagoon these projects wind down, Upgrade despite strengthening roads, Burdekin rail and water works. The key Falls Dam - Saddle Dam upside for the region remains and Monolith Improvement electricity, with $873m of the $2.4bn in unfunded work in Population: 238,369 the pipeline associated with Population growth has averaged 1.2% per annum over the last further electricity projects, 10 years. including the credibly proposed North Queensland Sectors Driving Growth: Power Station. Apart from Defence, water, renewables and harbours. electricity, there is also over Unfunded Share: Key Unfunded Projects: $1.2bn in unfunded minerals Sarina to Cairns - Saltwater and other heavy industry Creek Upgrade ($103m), major project work in the 68% Townsville Ring Road Stage Townsville region over the next 5 ($180m), Townsville Port five years, as well as $180m Expansion Project - Outer in unfunded road works Harbour Expansion (Berths (Townsville Ring Road). 14+15, $200m). Pipeline health 50%

CHART 24: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE

$Bn $Bn 1.5 0.4

1.2 0.3

0.9 0.2

0.6 0.1 0.3

0.0 FY19 FY20 FY21 FY22 FY23 0.0 Average FY19 FY20 FY21 FY22 FY23 Rail and Mining and Roads and Bridges FY14–FY18 Industry Harbours Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded

42 2019 Queensland Major Projects Pipeline CAIRNS “Roads activity will continue to support Cairns, but this region has a very high proportion of unfunded work in the pipeline”

Outlook: Funded work is anticipated to be strong in the Cairns region in 2018/19 – well Smithfield Transport above the average for the Corridor Upgrade past five years – supported Cairns Southern by a myriad renewable Access energy projects. However, Corridor Stage 3 & 4 major project activity in the Kidston Energy Cairns region is easing right Hub – Solar, Hydro & Transmission through the next five years, despite a pickup in funded roads works, as the current mix of renewables projects Population: 253,202 wind down to completion. Population growth has averaged 1.3% per annum over the last If the Kidston hydro project 10 years. and transmission link were to proceed, this could result in Sectors Driving Growth: a large upswing in regional Roads and renewable electricity generation. activity in 2019/20 and into 2020/21. The upswing during Unfunded Share: Key Unfunded Projects: this period could be even Red Dome Mungana gold stronger if the $250m Nullinga 51% ($330m), Kidston Stage 3 Dam were to go ahead. Wind Project ($250m), Kidston Pumped Hydro Storage Project ($330m), North Queensland Transmission Line ($150m). Pipeline health 60%

CHART 26: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE

$Bn $Bn 0.3 0.6

0.5

0.2 0.4

0.3

0.1 0.2

0.1 0.0 FY19 FY20 FY21 FY22 FY23 0.0 Average FY19 FY20 FY21 FY22 FY23 Mining and Roads and Bridges Rail and FY14–FY18 Industry Harbours Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded

2019 Queensland Major Projects Pipeline 43 OUTBACK “The resource construction boom in the Outback region is now over and, after 2018/19, all of the major project work in the pipeline is unfunded”

Outlook: The Outback region covers approximately two thirds of Amrun (South of the Queensland land area. Embly), Bauxite Hills While it represents only a very small fraction of the Queensland population, it Merlin Molybdenum- Rhenium Phase 2 does encompass significant Cannington minerals resources areas and Expansion Roseby Copper waterways. After 2018/19, (Little Eva) with the completion of the Amrun bauxite project, there are no funded major projects in the pipeline, although there

Population: 81,753 are a significant number Population growth has averaged -0.2% per annum over the last of unfunded prospective 10 years. resources projects across Sectors Driving Growth: molybdenum, copper, silver- Resources and water. lead-zinc, phosphate and graphite. These projects need Unfunded Share: Key Unfunded Projects: to clear hurdles regarding Merlin Molybdenum-Rhenium financing and financial Phase 2 ($345m), Cannington viability, remoteness, and the 66% Expansion ($400m), Roseby environment. However, while Copper (Little Eva, $320m), some projects may proceed, Ardmore Project -Phosphate it is highly unlikely that total Project ($120m). activity over the next five years will match that of the Pipeline health previous five years, which 10% were driven by the very large Dugald River zinc ($1.5bn) and Amrun bauxite ($2.1bn including port works) projects. CHART 23: FUNDED MAJOR PROJECT PIPELINE BY SECTOR & FUNDED AND UNFUNDED PIPELINE

$Bn $Bn 0.5 0.5

0.4 0.4

0.3 0.3

0.2 0.2

0.1 0.1

0.0 FY19 FY20 FY21 FY22 FY23 0.0 Average FY19 FY20 FY21 FY22 FY23 Mining and Roads and Bridges Rail and FY14–FY18 Industry Harbours Non-Water Utilities Water and Sewerage Defence Total Funded Total Unfunded

44 2019 Queensland Major Projects Pipeline ECONOMX

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For more information and a free trial, visit www.plangrid.com or email [email protected]. PlanGrid, recently acquired by Autodesk. PlanGrid T | 1800 316 406 E | [email protected] W | www.plangrid.com ECONOMIC DRIVERS The Queensland economy is traditionally one of the stronger state performers in Australia, but has been impacted in recent years by weak investment growth.

While one of Australia’s key KEY POINTS ‘resources’ states – and one of the largest exporters of ECONOMIC GROWTH TO SLOW FROM WEAKER coal (and now gas) – the state PUBLIC AND PRIVATE INVESTMENT economy is actually highly Queensland’s economic growth (as measured by Gross State diversified and increasingly Product or GSP) rose from 2.0% in 2016/17 to 3.4% in 2017/18, linked into global trade after averaging just 2.1% growth since 2012/13. The pick-up networks through tourism, in 2017/18 has been underpinned by strong growth in private agriculture and education non-dwelling construction. Economic growth is expected industries. to slow below 3% this financial year however given weaker Overall, Queensland economic stimulus from public and private investment. growth (as measured by GSP) is expected to slow below QUEENSLAND ECONOMY RECOVERING BUT 3% over the next two years, SUSTAINABLE GROWTH STILL YEARS AWAY before stronger growth in Queensland State Final Demand (SFD) grew to 3.6% in investment and consumer 2017/18. SFD growth in 2017/18 has been driven by strong spending pushes GSP higher increases in private investment (up 5.2%) – in turn led by in the early 2020s. private non-dwelling construction (up 16%) and investment in plant and equipment (up 7.6%) – as well as government consumption expenditure (up 5.6%). Unlike private investment, however, public investment fell 0.9% in 2017/18, presenting a drag on state economic growth.

QUEENSLAND ECONOMIC PERFORMANCE SYNCHRONISING WITH OTHER STATES Queensland's economic growth is gradually syncing back in line with other states following the large boom and bust in public and private investment. While economic growth (GSP) will be supported by growth in net exports, SFD is expected to slow this financial year as weaker growth in investment, wages and consumer spending take their toll, despite higher population growth.

GLOBAL ECONOMY HAS BEEN POSITIVE TO QUEENSLAND BUT IS SET TO SLOW Global economic growth is estimated to have peaked in calendar 2018, but will likely moderate in coming years, presenting risks and challenges to the Queensland economy. World Gross Domestic Product (GDP) growth accelerated to 3.7% in calendar 2018. From here, the world economy will begin to slow, with growth forecast to average 3.5% over the next five years, with significant downside risks emerging.

46 2019 Queensland Major Projects Pipeline KEY POINTS – FURTHER ANALYSIS

ECONOMIC GROWTH TO SLOW Private infrastructure construction (non-mining FROM WEAKER PUBLIC AND engineering construction) has also lifted PRIVATE INVESTMENT recently, boosted almost entirely by a near Private residential investment fell 4.1% in 7-fold increase in electricity generation (mostly 2017/18, following a four year upswing, and renewables) construction activity. However, this further modest falls in new dwelling building “renewables boom” is at risk of reversing this activity are likely over the next two years financial year and next as work on a range of due to oversupply (particularly in the unit renewables projects winds down. segment), with higher population growth The trend decline in new public investment helping to limit the housing decline. The falls in Queensland has stabilised somewhat over in new dwelling buildings work will be partially the past two years, after falling by a third over offset by higher alterations and additions the previous six years, although new public activity. The reduced drag from falling mining investment did fall slightly again in 2017/18. investment has helped the turnaround in state Publicly funded engineering construction economic growth. Mining investment is now actually rose in 2017/18 – led by roads and rising, led by increases in mining equipment water projects – as did public non-residential purchases and exploration, with a recovery building, but was offset by lower public in mining-related engineering construction investment in equipment and intangibles. expected to get underway from 2020/21. Public investment is expected to edge higher However, after resource exports made a this financial year and next, led by roads, significant contribution to GSP over recent rail, water and sewerage, electricity and years (and helped keep economic growth non-dwelling building projects, although the positive), export growth has stalled as the completion of the NBN will mute the overall Gladstone LNG plants have finished ramping improvement. up and as some export gas has been diverted back to the domestic market. There have After strong export growth over the four years also been some disruptions to coal and other to 2016/17, export growth stalled in 2017/18. resource exports. However, the Australian dollar is expected to remain in a competitive band, boosting Non-mining business investment is now the tradeable sectors of agriculture, tourism recovering, particularly in the trade-exposed (including parts of retail trade), manufacturing sectors (which are being boosted by the more and mining, with export growth expected to competitive Australian dollar). Equipment recover over the medium term. and intellectual property products investment is expected to rise further over the next two years, before strengthening again through the early 2020s. Private non-residential building rebounded in 2017/18 and is forecast to exhibit robust increases over the next two years, before easing.

2019 Queensland Major Projects Pipeline 47 STATE FINAL DEMAND (SFD) IS EXPECTED TO SLOW THIS FINANCIAL YEAR AS WEAKER GROWTH IN INVESTMENT, WAGES AND CONSUMER SPENDING TAKE THEIR TOLL, DESPITE HIGHER POPULATION GROWTH

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QUEENSLAND Reflecting the economic As in other states, investment ECONOMY RECOVERING improvement, employment cycles are not synchronised BUT SUSTAINABLE growth in Queensland across the different sectors, GROWTH STILL strengthened through 2017/18. while there will be a mixture of YEARS AWAY However, much of the growth drivers and drags on growth The Queensland economy, came through the first six over the next 2 years as measured by State Final months of 2017/18, with Population growth is now re- Demand (SFD), has staged employment growth falling accelerating toward 1.8%, after a recovery over the last back near zero in the first half slower population growth two years, turning from of calendar 2018, and well over recent years (with a low contraction in 2014/15 and below the national pace of of 1.2% in 2014/15) limited 2015/16 to solid growth of growth. At 6.4% Queensland’s spending growth. Accelerating 3.6% in 2017/18. That’s ahead unemployment rate remains population growth is being of the pace of domestic well above the national driven by higher interstate demand growth for Australia average (5.1%) at the end of and international migration of 3.3%. Gross State Product 2018. inflows (see Figure 29 on (GSP) growth also rose to While the Queensland page opposite). The rising 3.4%, bettering national economy is now improving, population will provide GDP growth of 2.9%, albeit it will still be another 3 years some support to aggregate Queensland’s growth was before stronger, sustained household spending, coming off a low base. growth returns. Indeed, although weak wages and growth in SFD is forecast to slower employment growth slow to an average of 2.6% will continue to constrain over the next two years. consumer spending over the next two years.

48 2019 Queensland Major Projects Pipeline FIGURE 28: QUEENSLAND ECONOMY – COMPONENTS OF STATE FINAL Private residential investment DEMAND fell 4.1% in 2017/18, following a $Bn 400 Forecast four year upswing, and further modest falls in new dwelling 350 building activity are likely 300 over the next two years due

250 to oversupply (particularly in the unit segment), with higher 200 population growth helping to

150 limit the housing decline. The falls in new dwelling buildings 100 work will be partially offset 50 by higher alterations and

0 additions activity. The reduced 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 drag from falling mining

Private Consumption Government Consumption investment has helped the Public Investment Private Investment turnaround in state economic Source: BBIS Oxford Economics, ABS data growth. Mining investment is FIGURE 29: QUEENSLAND ANNUAL POPULATION INCREASE BY SOURCE, now rising, led by increases in THOUSANDS OF PERSONS mining equipment purchases thosands 120 Forecast and exploration, with a recovery in mining-related

100 engineering construction expected to get underway

80 from 2020/21. However, after resource exports made a significant contribution to 60 GSP over recent years (and helped keep economic growth 40 positive), export growth has stalled as the Gladstone LNG 20 plants have finished ramping up and as some export gas 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 has been diverted back to the

Natural Increase Overseas Migration Interstate Migration domestic market. There have Source: BBIS Oxford Economics, ABS data also been some disruptions FIGURE 30: GROWTH IN STATE FINAL DEMAND (STATES) AND GROSS to coal and other resource NATIONAL EXPENDITURE (AUSTRALIA), 2001-2021, ANNUAL PERCENT CHANGE exports. Non-mining business 20 Forecast investment is now recovering, particularly in the trade- 15 exposed sectors (which are being boosted by the more 10 competitive Australian dollar).

5 Equipment and intellectual property products investment 0 is expected to rise further over the next two years, before -5 strengthening again through the early 2020s. Private non- -10 residential building rebounded 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 in 2017/18 and is forecast to

Queensland New South Wales Victoria exhibit robust increases over South Australia Western Australia Australia the next two years, before easing. Source: BIS Oxford Economics, ABS data

2019 Queensland Major Projects Pipeline 49 Private infrastructure QUEENSLAND Growth in New South Wales construction (non-mining ECONOMIC and Victoria has been engineering construction) PERFORMANCE underpinned by strong levels has also lifted recently, SYNCHRONISING of migration and continued boosted almost entirely by WITH OTHER STATES buoyancy in construction. But a near 7-fold increase in The economic performance of these drivers will ease back in electricity generation (mostly Australia’s states is becoming coming years, and growth is renewables) construction increasingly synchronised. The expected to decelerate from activity. However, this mining states – Queensland 2017/18 levels. Queensland’s “renewables boom” is at risk and Western Australia – economy is also expected of reversing this financial year have borne the worst of the to decelerate in line with and next as work on a range investment downturn, and all investment growth, despite of renewables projects winds states are benefitting from rising migration and net down. the lower Australian dollar exports. (via trade exposed service The trend decline in new Victoria was the strongest and goods industries) and the public investment in performing large state in improvement in the broader Queensland has stabilised 2017/18, benefiting from domestic non-mining sector. somewhat over the past strong population growth two years, after falling by Western Australia will be and dwelling construction, a third over the previous propped up by the ramp up in as well as strength in a range six years, although new LNG production, while growth of services and construction public investment did fall in South Australia is expected related to public infrastructure slightly again in 2017/18. to remain modest. Momentum investment. However, the Publicly funded engineering is also set to moderate slightly state’s economic performance construction actually rose in in the Australian Capital will moderate as migration 2017/18 – led by roads and Territory after their recent and construction fall back. water projects – as did public strong performance. Similarly, New South Wales non-residential building, but Figure 30 (previous page) was an outperforming state, was offset by lower public shows how regional economic but momentum has slowed investment in equipment and performance shifted to service recently - the state lagged intangibles. Public investment the mining-resource rich the national average in is expected to edge higher states of Western Australia 2017/18. Growth will continue this financial year and next, and Queensland during the to decelerate in line with led by roads, rail, water and two phases of the resources the downturn in residential sewerage, electricity and non- investment boom (2003- construction and lower levels dwelling building projects, 08, and again in 2010-13), of migration. although the completion of and allowed these states the NBN will mute the overall to capitalise on any latent improvement. construction capacity from After strong export growth other jurisdictions. over the four years to 2016/17, export growth stalled in 2017/18. However, the Australian dollar is expected to remain in a competitive band, boosting the tradeable sectors of agriculture, tourism (including parts of retail trade), manufacturing and mining, with export growth expected to recover over the medium term.

50 2019 Queensland Major Projects Pipeline FIGURE 31: MAJOR TRANSPORT PROJECTS OVER $2BN, AUSTRALIA, VALUE OF WORK DONE

16.0 Forecast South Australia North-South Corridor Western Australia Forrestfield Airport Rail Link & Metronet 14.0 Hancock Roy Hill (Pilbara) Fortescue Metal Group (Pilbara) BHP Billiton (Pilbara) Rio Tinto (Pilbara) 12.0 Victoria Melbourne Aiport Link Inland Rail (VIC component) Melbourne Metro Rail Level Crossing Removal Program 10.0 Regional Rail Link North East Link West Gate Tunnel EastLink (Mitcham-Frankston Tollway) 8.0 Queensland Acacia Ridge to Port of Brisbane Cross River Rail Inland Rail (QLD component) 6.0 Warrego Highway Gateway Motorway Bruce Highway Upgrade TransApex 4.0 Ipswich Motorway New South Wales Inland Rail (NSW component) Sydney Metro West Sydney Metro City & Southwest 2.0 Sydney Metro Northwest F6 Extension Western Harbour Tunnel & Beaches Link Western Sydney Infrastructure Plan 0.0 NorthConnex 2006 2009 2012 2015 2018 2021 2024 2027 WestConnex Pacific Highway Upgrade

Source: BIS Oxford Economics

On top of the east coast As population growth and However, slowing dwelling building boom, however, the housing activity returned to building and consumer state governments in Victoria these states post resources spending, along with generally and New South Wales were boom, the resultant surge in weaker investment growth is already planning for “catch- property revenues augmented expected to see GNE growth up” infrastructure investment the finance from the asset weaken in coming years. that had been delayed leases, turbo-charging a However, over the last few through the resources boom long – and likely sustained – years, this situation has years – including port and infrastructure cycle. reversed. Resources and skills electricity long term asset Overall, Australian Gross have progressively flowed leases that would provide National Expenditure (or into the New South Wales and critical finance for large, GNE, the national corollary Victorian economies to service generational infrastructure of SFD) accelerated to 3.3% the growing infrastructure and investments. in 2017/18, led mainly by a building boom taking place pickup in private investment there. (particularly non-dwelling construction and purchases of plant and equipment).

2019 Queensland Major Projects Pipeline 51 LAKE MANCHESTER DAM UPGRADE

TRANSPORT Victoria Queensland INFRASTRUCTURE The situation is similar with Transport infrastructure New South Wales transport infrastructure construction has risen only construction already having 37% from $4.1bn in 2015/16 to Transport infrastructure risen 107% since the 2013/14 $5.6bn in 2017/18. However, construction surged to $11.3bn trough (to $7.3bn) and, with further large projects in 2017/18, already up 70% with new investments in the taking place across the Bruce from the 2014/15 trough. Melbourne Metro as well as Highway, Pacific Motorway, Given new projects such as major road projects such as Inland Rail and Cross River Inland Rail, Western Sydney the North East Link, activity Rail projects, this figure is Airport, Sydney Metro Stage will be sustained at a high expected to rise above $7bn, 2 City and Southwest, Sydney level, before edging higher albeit not until the early Metro West and the Western again in the early 2020s. 2020s. Harbour Tunnel and Beaches Link, BIS Oxford Economics is forecasting New South Wales transport infrastructure investment to surpass $14bn in 2022/23 alone.

52 2019 Queensland Major Projects Pipeline FIGURE 32: NET ANNUAL CHANGE IN INVESTMENT AND STATE FINAL The most significant DEMAND, QUEENSLAND A%Ch $Bn infrastructure investments 10 30 undertaken by New

8 South Wales and Victoria 22 have focused on urban 6 solutions to unlock greater 14 4 efficiencies and productivity 6 in Sydney and Melbourne, 2 mirroring concerns from 0 -2 Infrastructure Australia that

-2 -10 more investment here was required to avoid an emerging -4 -18 infrastructure gap. Combined with the Commonwealth 2001 2003 2005 2007 2009 2011 2013 2015 2017 Government’s own large Change in Public Investment (RHS Change in private Investment (RHS) Infrastructure Investment SFD A%Ch (LHS) Program (IIP) and its interest Source: BBIS Oxford Economics, ABS data in revolutionising east coast FIGURE 33: WORLD ECONOMIC GROWTH, ANNUAL PERCENT CHANGE freight links (through the

Calendar year, real $10bn+ Inland Rail project) as Year Ended Euro Developing World well as another direct equity December GDP US Japan area China India Asia GDP investment in building the 2009 -3.5 -2.8 -5.4 -4.3 9.5 5.1 4.4 -0.5 Western Sydney Airport, the 2010 3.0 2.5 4.2 2.1 10.6 10.9 4.8 5.3 infrastructure construction 2011 2.0 1.6 -0.1 1.7 9.5 6.9 4.3 4.1 boom along Australia’s east 2012 1.4 2.2 1.5 -0.4 7.8 5.5 4.2 3.3 coast is unlikely to subside 2013 1.5 1.7 2.0 0.3 7.8 6.2 3.8 3.4 anytime soon, and dominates 2014 2.2 2.6 0.3 1.8 7.3 7.1 4.0 3.5 the outlook for major 2015 2.5 2.9 1.4 2.2 6.9 7.5 4.5 3.2 transport project construction 2016 1.8 1.6 0.6 1.9 6.7 7.9 6.3 3.3 nationally as highlighted in 2017 2.5 2.3 1.8 2.4 6.9 6.2 4.2 3.7 Figure 31 (previous page). Forecast Indeed, the peak of the “major 2018 2.5 2.8 1.7 2.2 6.4 7.5 4.1 3.9 projects” transport investment cycle across road and rail 2019 2.0 2.0 0.9 1.8 6.0 7.0 4.0 3.6 infrastructure is not expected 2020 1.6 1.5 0.0 1.6 5.7 6.9 4.0 3.5 until the early to mid-2020s 2021 1.6 1.5 0.9 1.5 5.4 6.6 3.9 3.4 based on current projections, 2022 1.6 1.5 0.9 1.4 5.2 6.4 3.8 3.3 and the perceived ‘slump’ 2023 1.7 1.9 0.8 1.2 5.0 6.4 5.0 3.4 in investment post 2023/24 Average Growth Rates once current projects run their 2004-2008 2.8 2.4 1.2 2.1 11.6 8.5 9.5 4.8 course may not eventuate if 2009-2013 2.0 1.1 0.4 -0.4 9.0 6.9 7.6 3.1 these states continue to use 2014-2018 2.1 2.4 1.0 1.9 6.9 7.2 6.3 3.5 asset recycling strategies, Forecast debt finance, or private 2019-2023 1.8 2.0 0.8 1.4 5.5 6.8 5.3 3.4 public partnerships to extend 2024-2028 1.5 1.9 0.6 1.0 4.6 6.1 4.6 3.2 infrastructure investment

further. Figure 31, for instance, does not include potential rail links to the Western Sydney Airport, nor Victoria’s recent announcements of a potential $30bn+ development of an outer suburban rail network.

2019 Queensland Major Projects Pipeline 53 With stronger state finances, Global economic growth is On the other hand, solid much of the infrastructure estimated to have peaked growth is expected to investment boom in New at 3.7% in calendar 2018 continue in India and most South Wales and Victoria is (GDP, US$ prices, PPP of east Asia (excluding China being publicly funded, albeit exchange rate), as developed and Japan), which augers with plans to ‘recycle’ funds economies move towards well for Queensland exports. from long term asset leases. full employment and China Nevertheless, rising US By contrast, Queensland continues its steady transition interest rates will pose a risk public investment has actually to a slower, more sustainable for a number of emerging fallen in real terms for 7 of the growth trajectory. Concerns economies given their high past 8 years, with only a 2.6% over protectionism, a weak levels of foreign debt and the increase in 2016/17 breaking Chinese yuan, rising US depreciating impact of US rate a sequence of falls since interest rates, economic rises on their currencies. 2010/11. A 0.9% fall in public instability in emerging markets Of more concern is rising investment in 2017/18 sees as monetary settings revert to protectionism in the form activity a cumulative more ‘normal’ levels, and the of tariffs imposed by the US $7.2bn (or 31%) below the very growing risk of a hard Brexit and reciprocal responses high 2009/10 peak, but still present key economic risks in from China and Europe. well above the levels of (likely the short to medium term. Although our current view is under) investment during the The US economy is currently that the trade war itself will 1990s and early 2000s. growing at its fastest pace in have a relatively small impact GLOBAL ECONOMY four years, but with capacity on overall global growth, HAS BEEN POSITIVE constraints starting to bite, downside risks have increased. TO QUEENSLAND BUT growth is expected to slow Much of the risks relate to IS SET TO SLOW as the fiscal boost from tax uncertainty and their effects The Australian and cuts dissipates and US interest on business and consumer Queensland economies have rates rise. Chinese growth will confidence. Already there been supported by a relatively continue to decelerate as the has been a correction to positive global economy economy proceeds with its commodity prices, and we in calendar 2017 and 2018. own structural transformation expect trade uncertainties to Despite a number of risk toward domestic led growth. weigh on prices for the next factors, global economic Momentum is also expected 1-2 years. However, by the growth over calendar 2018 will to ease in Japan and Europe early 2020s, the tightening likely have been the strongest as they return to supply-demand balance in since 2010. However, recent full employment. a number of commodity quarters of growth have been markets is expected to initiate less spectacular and growth a recovery in prices, which will is expected to slow further likely fuel the next round of in coming years, presenting mining investment. challenges for resources- heavy trade-exposed economies such as Queensland.

THE RISK OF A SHARPER SLOWDOWN IN CHINESE GROWTH (AND DEMAND FOR QUEENSLAND COMMODITIES) WOULD PUT THE STATE IN A MORE VULNERABLE POSITION

54 2019 Queensland Major Projects Pipeline WHILE THE QUEENSLAND ECONOMY IS NOW IMPROVING, IT WILL STILL BE ANOTHER THREE YEARS BEFORE STRONGER, SUSTAINED SWING STAGE GANTRY GROWTH RETURNS

KEY RISKS TO THE Escalation of the These actions have been ECONOMIC OUTLOOK current trade war followed by retaliatory The authorities are committed The most obvious external measures from China and to maintaining growth around downside risk to Queensland’s Europe. With US President 6% per annum over the near economic outlook relates to Donald Trump threatening term. Over the medium term, a further escalation of the to impose tariffs on more we expect the government to current trade war between Chinese imports into the continue to gradually liberalise the US and China and Europe US, the downside risks have the financial system and (and some other countries certainly increased. Analysis broader economy, which that run a trade surplus with by Oxford Economics will allow balance sheets to the US). So far the US has suggests that while the direct adjust and for financial risks imposed punitive tariffs of impact on growth is relatively to ease back. 10% to 25% on a wide range of small the indirect effects can items, with some higher tariffs be material. There is a risk on specific items. that uncertainty around how far the shift in US tariff policy will go will weigh on business and consumer confidence and spending plans.

2019 Queensland Major Projects Pipeline 55 Australia has been a major The most likely trigger for While house prices are beneficiary of the significant a downturn is a correction expected to achieve a soft growth in trade between in financial and/or property landing, there is increasing China and the US, and indeed, markets on the mainland, risk of a more substantial China and the rest of the which could be set off by an adjustment. BIS Oxford world. If Trump significantly aggressive tightening of credit Economics and the RBA still upped the ante (including lending by the authorities. regards this risk as being one of his earlier threats to However, this scenario is low, because in aggregate, impose 45% tariffs on China), unlikely. household debt repayments the resulting retaliatory as a proportion of household action would lead to an Property markets non- income are not at critically mining investment and all-out trade war, with BIS high levels. Indeed, many upcoming election key Oxford Economics modelling households are ahead in terms domestic risks estimating this would cut of mortgage repayments. between 0.5% and 1% off Domestic risks are centred Australia’s economic growth, on property markets, the with potentially even worse pace of growth in non- outcomes for Queensland, mining investment and the given its close trade links with consequences of the next the Asian region. Federal election (due during or before May 2019). The risk of a sharper slowdown in Chinese growth (and demand for Queensland THE ECONOMIC commodities) would put the PERFORMANCE state in a more vulnerable position – China accounts OF AUSTRALIA’S for over 30% of Australia’s STATES IS BECOMING exports, and sits at the heart INCREASINGLY of East Asian supply chains. SYNCHRONISED

56 2019 Queensland Major Projects Pipeline Nevertheless, the housing However, we expect relatively Meanwhile, the related market was due for a high income levels to abandonment of a coherent, correction and if, as expected, continue to attract migrants. market-based carbon- this correction is ‘mild’, it Furthermore, as the positive reduction scheme in 2014, reduces the risk of high benefits of the terms of trade and replacement with an debt in the medium term. and increased labour supply inferior scheme, is hampering Queensland overall remains of the past decade or two efforts to reduce Australia’s better placed than New South start to wane, we expect both greenhouse gas emissions and Wales or Victoria given it has governments and businesses target larger reductions – with already seen a substantial to make a more concerted Australia’s current target of correction in dwelling building effort to invest to sustain 26-28% below 2005 levels by activity (particularly in the growth in productivity in the 2030 unlikely to be achieved. inner-city units segment) long run. This means the economy and, with stronger population Inconsistent energy and will – at some stage over the growth, will likely outperform climate change policy medium to longer term – need other east coast states in to undertake some harder terms of house price growth. A lack of clarity and structural adjustments with consistency in Australia’s larger negative economic There is also an upside energy and climate change impacts on potential growth, risk that non-mining policies represents both a in order to reduce emissions. investment comes through major short term risk and sooner and stronger than longer term threat to the The beneficial flipside to the anticipated, possibly via the Queensland economy, but development of a coherent tradeables sectors ramping this may become clearer after energy and climate change up investment faster than the next Federal election, policy – as well as further we expect, which may then given very different policy funding for clean energy – is flow quickly onto other stances held by both major that it would likely provide industries. Upside growth parties. Policy failures in the certainty needed to potential could also come energy have seen substantial stimulate further investment in from a marked acceleration in rises in gas and electricity renewable energy generation wages growth, which would prices over the past two projects. As outlined in this underpin stronger household years, which have stopped Report, renewable energy consumption expenditure. energy-intensive investments generation and transmission works has been a major driver Longer term, the main risk to proceeding and hampered of growth in privately funded Queensland – and Australia’s the competitiveness of engineering construction growth prospects – relate manufacturers – with some in Queensland recently, to the fundamental drivers major businesses threatened with electricity engineering of growth – lower trend with closure and/or relocation construction activity rising population growth and overseas. Once lost, these five-fold to $1.85bn in 2017/18. declining labour industries are unlikely productivity growth. to return.

2019 Queensland Major Projects Pipeline 57 58 2019 Queensland Major Projects Pipeline CBUS A Role for Superannuation Funds in Financing Major Queensland Projects

Leveraging additional private sector investment is Callebaut notes Cbus is invested in major Queensland a key objective of public sector policy to support projects through IFM’s Australian Infrastructure Fund, the development of major Queensland projects, which acquired shares in Brisbane Airport in 1997 and which will ultimately boost economic growth in the the Port of Brisbane in 2010. Cbus has also developed State. Superannuation funds are a natural investor in commercial and residential projects in Queensland, infrastructure assets, which provide long-term, stable including 1 William Street Brisbane, through its wholly- cashflows that align with the long timeframes of members owned subsidiary Cbus Property. through their accumulation and retirement phases. In addition, Cbus has an increasing allocation to both Superannuation investment has historically focused on greenfield and brownfield direct investments as part of “brownfield”, established operating assets that generate its Next Generation Investment Framework. In 2018, Cbus proven cashflows. However, superannuation funds have directly invested alongside the Dutch Infrastructure Fund also invested in Australian “greenfield” new development and Synergy in a portfolio of wind and solar renewable projects through debt and equity investments with fund generation assets in Western Australia known as Bright managers and there is an increasing focus from a number Energy Investments, as well as taking a stake in UK ports of larger funds on direct investments. group Forth Ports. Superannuation funds like Cbus are Greenfield investments in suitable projects can improve actively monitoring the pipeline of major public private diversification, offer an attractive risk return profile and partnership and other key projects in Queensland. provide access to alternative revenue sources such as There are a number of measures that Callebaut believes availability payments from highly rated Governments. governments have been and can continue to implement These complement traditional GDP-linked assets such to provide greater certainty to superannuation funds and as ports and airports. According to Diana Callebaut, other private sector investors. These include developing Head of Infrastructure at Cbus “For an industry super a committed and steady pipeline of investable projects, fund like Cbus, investing in greenfield assets also has bid processes that are as efficient as possible to minimise a strong alignment with our membership base in the costs, ensuring appropriate risk allocation between the building and construction industry. From the perspective public and private sectors and providing clear direction of governments as procuring authorities for new on key policy issues such as energy policy. For their part, projects, Australian superannuation funds are responsible superannuation funds can continue to maintain discipline custodians of infrastructure assets, with returns funding and rigour in evaluating opportunities, invest in specialist the retirement savings of members.” teams, continue to innovate and consider other alternative As an example, Cbus has total funds under management procurement processes such as unsolicited proposals of circa $46.5 billion at 31 December 2018, with circa $5.3 where it makes economic sense. billion invested in diversified infrastructure assets. The majority of the infrastructure portfolio is invested through This information has been provided by United Super Pty Ltd fund managers, IFM Investors and Morrison and Co, and (ABN 46 006 261 623 AFSL 233792) as trustee for Cbus (ABN 75 associated co-investments. 493 363 262) and contains general information. It doesn’t take into account your specific needs, so you should look at your own financial position, objectives and needs before making any financial decisions. Read the relevant Cbus Product Disclosure Statement and related documents to decide whether Cbus is right for you. Call 1300 361 784 or visit www.cbussuper.com.au for a copy. IMPLICATIONS FOR THE CONSTRUCTION SECTOR

Booms and busts in investment cycles – across mining, economic and social infrastructure, and housing – have had a profound impact on Queensland’s construction industry.

Since the mid-2000s, KEY IMPLICATIONS measured construction activity in Queensland has CONSTRUCTION ACTIVITY been dominated by the ƒƒ Has risen a modest 6.7% over the past two years, following tremendous cycle in resources a 40% collapse over 2014/15 and 2015/16. investment, primarily coal ƒƒ From a peak of $65.3bn in 2013/14, annual construction work and LNG related projects. done (encompassing residential building, non-residential Construction activity tripled building and engineering construction) now sits at just between 2002 and 2014 over $42bn. before collapsing 40% in ƒƒ Much of the boom and bust in construction activity in subsequent years. Queensland was driven by the engineering construction The volatility in work, high segment (including Major Projects). competition for resources, ƒƒ Total engineering construction work done fell from an official and sharp variations in peak of $47bn in 2013/14 to $18.6bn in 2015/16, but has costs and prices continue to risen marginally to $21.4bn in 2017/18 on the back of roads, challenge the sustainability electricity, telecommunications (NBN) and mining projects. of the construction industry in Queensland. While total construction activity in CONSTRUCTION EMPLOYMENT Queensland is likely to WAGES AND PRODUCTIVITY stabilise around current levels ƒƒ Employment growth was strong during the first phase of the for the next few years, this resources boom, but did not rise significantly again post GFC masks wide variations by during the more LNG-intensive boom phase. construction segment – across housing, non-residential ƒƒ There has been a solid construction employment recovery building and engineering through 2017/18, although the modest outlook for construction construction – as well as work from here remains a key risk. within the engineering construction segment itself. Construction costs, which had CONSTRUCTION COSTS flatlined in the wake of the ƒƒ The boom in construction activity in Queensland over the past investment bust – are growing decade produced large increases in construction costs. at the fastest pace for several ƒƒ Overall construction costs have not fallen substantially since years, with sustained, high the boom and are again rising strongly, placing pressure on levels of construction activity industry margins. in New South Wales and Victoria likely to continue to provide resourcing challenges for Queensland projects.

60 2019 Queensland Major Projects Pipeline KEY IMPLICATIONS – FURTHER ANALYSIS

CONSTRUCTION Over 2014/15 and 2015/16, Since the end of the resources ACTIVITY however, the value of total boom, Queensland’s Strong government revenues construction work done fell construction market has from the boom and surging by 40% as several multi-billion been overtaken by both New population growth drove dollar LNG projects reached South Wales and Victoria, a twin cycle in public or neared completion and with activity in those states investment, particularly investment in coal projects supported by a strong where infrastructure gaps continued to decline sharply. turnaround in economic and become apparent in transport population growth driving Over the past two years, (roads and ports particularly, surging social and economic total construction activity but also rail), utilities and infrastructure construction. has more or less stabilised in social and institutional non- In turn, skills and other Queensland, with work done residential building (education construction resources such settling at just over $40bn. and health). While public as plant and equipment However, cycles continue to investment was sustained have moved from the former play out under this steady early on in the subsequent resource boom states into exterior, with residential resources investment bust, the new growth states. building activity falling 6.4% sharply falling revenues While New South Wales and in 2017/18, offset by a pickup eventually drove a retreat in Victoria are near the peak in non-residential building public investment – amplifying of their current construction and engineering construction the effect of the downturn cycle, construction activity work. in private investment on the is still expected to remain at Queensland economy. Over the next two years, very high levels, presenting total construction activity capacity and capability Total construction activity in Queensland is forecast challenges if Queensland is (including residential building, to edge lower, with weaker to sustainably grow its own non-residential building and residential and engineering construction market. engineering construction) construction activity peaked at $65.3bn in work offsetting modest growth in done through 2013/14, almost non-residential building. 140% higher than 2004/05 levels.

2019 Queensland Major Projects Pipeline 61 FIGURE 34: TOTAL CONSTRUCTION WORK DONE BY STATE CONSTRUCTION $BILLION, CONSTANT 2015/16 PRICES $Bn ACTIVITY 70 – RESIDENTIAL BUILDING 60 After five consecutive years of 50 growth, residential work done

40 in Queensland eased back in 2017/18 (-6.4%). High density 30 residential construction

20 focused in inner Brisbane pulled back 21% in 2017/18. 10 Total dwelling activity is set 0 to fall by a further 6% over 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 Year ended June 2018/19 and 2019/20, despite

Queensland New South Wales Victoria South Australia the pickup in population Western Australia Australian Capital Territory growth, with detached house and attached dwelling Source: BIS Oxford Economics, ABS data segments contributing to FIGURE 35: QUEENSLAND CONSTRUCTION WORK DONE BY SEGMENT $BILLION, CONSTANT 2015/16 PRICES the fall. The oversupply of apartments in the Brisbane $Bn 70 market is projected to see

60 high density work done drop significantly over the 50 forecast horizon. Houses 40 are expected to fare better,

30 holding at a relatively strong level, as regional areas 20 including the Gold Coast 10 and Sunshine Coast benefit

0 from solid population inflow. North Queensland is also 2011 2021 2017 2012 2015 2013 2018 2016 2019 2014 2010 2022 2023 2007 2002 2020 2003 2005 2008 2006 2009 2004 Year ended June set to bounce back after

Residential Building Non-Residential Building underperforming for several years. Engineering Construction less Oil and Gas Oil and Gas Source: BIS Oxford Economics, ABS data While stronger growth in residential building is expected late in the forecast period as excess stock of housing is absorbed, it is unlikely to surpass the previous peak in work in 2016/17.

QUEENSLAND CONSTRUCTION ACTIVITY HAS RISEN A MODEST 6.7% OVER THE PAST TWO YEARS, FOLLOWING A 40% COLLAPSE OVER 2014/15 AND 2015/16

62 2019 Queensland Major Projects Pipeline NEW OPPORTUNITIES MAY EMERGE WITH THE COMMONWEALTH GOVERNMENT’S INFRASTRUCTURE INVESTMENT PROGRAM (IIP)

LOGAN ENHANCEMENT PROJECT

CONSTRUCTION Looking ahead, a number of CONSTRUCTION ACTIVITY – NON- hospitality developments, ACTIVITY RESIDENTIAL including the $1+ billion New – ENGINEERING BUILDING Brisbane Casino, along with CONSTRUCTION In 2016/17, non-residential education, accommodation A boom in mining and building work done eased and health projects – including heavy industry construction, back by 5% as work on a the second stage of the combined with elevated number of major projects Sunshine Coast University levels of transport-related came to an end. Health Hospital – is driving a construction, drove roaring building declined sharply with strong surge in social engineering construction the completion of the $950m and institutional building. activity over the first half Sunshine Coast University Combined with further of this decade. Activity in Hospital while office building increases in defence work, 2012/13 was more than double also fell as projects like the total non-residential building the levels seen only a few $265m 480 Queen Street work done is forecast to years earlier, although this and $320m 1 William Street move above $9bn per annum, figure was heavily driven by were completed. However, compared to the average of work on three simultaneous with improving economic $7.4bn over the five years to LNG projects which saw conditions and stronger 2017/18. Here, Queensland is oil and gas work done rise population growth, non- joining the strong upswing from just $232m in 2008/09 residential building work in non-residential building to a peak of $23.3bn by done rose 8.5% in 2017/18 activity nationally, although 2013/14. While engineering and is expected to move to a this is principally being driven construction activity has fallen higher plane over the next five by commercial and industrial dramatically from the 2013/14 years. Large defence projects development in New South peak, it has settled at a level helped drive the rise in work Wales and Victoria. higher than the pre-resource in 2017/18, along with rising boom years, supported by commercial and industrial public investment in roads activity. and telecommunications (the NBN) and private investment in renewable electricity generation and resources.

2019 Queensland Major Projects Pipeline 63 As reflected in the outlook CONSTRUCTION Higher levels of residential for work in the Major Projects EMPLOYMENT, building activity – a major Pipeline in this Report, total WAGES AND employer of construction engineering construction PRODUCTIVITY labour – was a key driver of activity in Queensland is EMPLOYMENT the employment rebound, expected to track lower in along with an uptick in coming years as key drivers Queensland construction engineering construction supporting current strength industry employment has work from lower levels. begin to reverse. In particular, surged 14.7% over the However, more recent quarters engineering construction past two years, following show that the upswing in activity is expected to ease as a long period of decline construction employment is major roads projects move to since 2009/10. While there now reversing – in line with completion, as uncertainty in was a substantial surge the near-term outlook of renewable energy and climate in measured construction falling total construction change policy impacts on activity during the second work done. Looking ahead, electricity investment, and phase of the resources boom construction employment as the rollout of the NBN in Queensland (between is likely to ease further as begins to wind down. This will 2010 and 2014), construction residential building and be partially offset by rising employment remained engineering construction activity in rail, water and relatively steady at around fall back, followed by a mild recreation. 228,000 persons during this recovery in the early 2020s. period. This was due to the A mild recovery in engineering bulk of the increased activity WAGES construction activity is being focused in LNG facilities, Queensland construction expected in Queensland where much of the recognised wages (measured by in the early 2020s, led value of construction work construction industry Wage predominantly by large rail was actually fabricated Price Index data) grew projects as well as further offshore and only assembled significantly through the resources investment. Overall, locally. 2000s construction boom – total engineering construction rising over 40% between 2003 activity is expected to average Construction employment and 2012 at an annual average $20.7bn per annum through rose 14.7% to 239,000 persons pace of 4.5% per annum. the next five years to 2022/23. over the two years to 2017/18, rebounding from declines However, the slowdown experienced over 2014/15 in growth in domestic and 2015/16. construction work (excluding fabricated LNG imports) post boom saw construction wage growth slow significantly. Annual average construction wage growth slumped to 1.8% in 2014/15, before falling further to 1.2% through 2015/16 and 2016/17. Over the 2018 calendar year, wages growth in the construction industry has accelerated ENGINEERING CONSTRUCTION to 1.8% and is expected to ACTIVITY IS EXPECTED TO accelerate further in 2019. EASE AS MAJOR ROADS PROJECTS MOVE TO COMPLETION

64 2019 Queensland Major Projects Pipeline FIGURE 36: QUEENSLAND CONSTRUCTION INDUSTRY INDICATORS $Bn 70 300

60 250

50 200

40

150

30

100 20

50 10

0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

QLD Construction GVA QLD Construction Work Done QLD Construction Employment (RHS, 000s) QLD Construction Labour Productivity (RHS, 2008/09=100) QLD Construction Wage Price Index (RHS, 2008/09=100) Source: BIS Oxford Economics, ABS data

PRODUCTIVITY However, this productivity While construction labour Queensland construction surge is likely to have productivity declined sharply labour productivity growth been overstated given the again between 2014/15 and has historically been near likely understatement of 2016/17, it has settled at a zero between the mid-1980s employment growth in the level some 10% above the and mid-2000s, reflecting industry between 2009 decade average preceding international trends.10 and 2013 (as Queensland the boom, indicating some However, data from the ABS construction workers may structural improvements to on Construction Gross Value have been misclassified as labour productivity in the Added (i.e. the output of mining employees in the industry have taken place but the domestic construction official statistics) coupled with this growth lags significantly industry in Queensland, as unusually large increases in compared to other industries opposed to “work done”) construction industry GVA as such as manufacturing. versus employment revealed heavily offshore fabricated growth in labour productivity LNG projects were rolled out. during the second, post-GFC, phase of the resources boom (2009/10 and 2013/14).

10 McKinsey Global Institute (2013) “Infrastructure Productivity: How to Save $1 Trillion a Year”, McKinsey and Company.

2019 Queensland Major Projects Pipeline 65 QUEENSLAND Rapid increases in Given the use of similar CONSTRUCTION construction activity can construction materials, COSTS go hand in hand with equipment and skilled Along with much higher accelerating construction labour, the trend for costs in volumes of Queensland costs is not surprising. High engineering construction can construction activity during (and rising) levels of demand be extended to broader cost the 2000s, there was also (i.e. construction activity) trends in the building and a marked acceleration in places pressure on the existing construction industry. supply of inputs, boosting the costs of delivering The history of both of these local input prices. Where construction projects. High construction cost measures capacity constraints exist, and rising construction costs since 2010/11 is shown in rising construction activity are an important issue for the Figure 37. Construction costs can lead to strong increases major projects industry as well fell in 2008/09 following the in local input prices as as the broader economy as: onset of the GFC, but this investment in new capacity is ƒƒ It limits the quantum of proved to be temporary, as itself costly and takes time to publicly funded projects the large Chinese stimulus come on stream. that can be delivered program and the fall in the against given State and But construction costs may Australian dollar cushioned Commonwealth budgets. also vary due to changes in the domestic economy and Where unplanned increases input prices determined in improved the prospects for in construction costs occur, global markets (for example, the major resources projects. it can effectively reduce the steel and oil products such Costs resumed their upward funding available for further as bitumen and diesel fuel). trend from 2009/10, as work. These price changes may the LNG sector joined the occur independently from construction boom. The sheer ƒƒ It worsens the domestic construction activity. size of the LNG boom had the competitiveness of potential to overwhelm the developing private sector COST TRENDS local construction industry, industrial projects (e.g. in The ABS publishes two however, the heavy use of mining or manufacturing) broad price series which are imported pre-fabricated in Australia relative to pertinent to and provide an modular structures helped the rest of the world, in insight into the cost trends take pressure off local turn potentially impacting experienced in Queensland’s supplies. on decisions to invest in engineering construction Australian projects. sector (see box below).

Implicit price deflator (IPD) for engineering construction work done Is derived by dividing current price (nominal) engineering construction data from the Australian Bureau of Statistics by its corresponding constant price (real) data series. This effectively isolates changes in the price of construction, as opposed to changes in activity.

The Road and Bridge Index (RBI) As part of the Producer Price Index at the state level, the RBI is an output price index measuring changes in the prices (revenues) received by businesses undertaking road and bridge construction less any direct tax paid. Being an output index, the RBI takes account of contractor margins, and is available at the national level as well as for the five largest jurisdictions in Australia: New South Wales, Victoria, Queensland, South Australia and Western Australia.

66 2019 Queensland Major Projects Pipeline FIGURE 37: GROWTH IN ENGINEERING CONSTRUCTION PRICES, QUEENSLAND

4.0

3.0

2.0

1.0

0.0

-1.0

2.0

-3.0 Jun-11 Mar-11 Sep-11 Dec-11 Jun-17 Jun-12 Jun-15 Jun-13 Jun-18 Jun-16 Mar-17 Mar-12 Jun-14 Mar-15 Mar-13 Mar-18 Sep-17 Sep-12 Mar-16 Sep-15 Sep-13 Mar-14 Dec-17 Sep-16 Dec-12 Dec-15 Dec-13 Sep-14 Dec-16 Dec-14

QLD Road and Bridge Index Q%ch QLD Engineering Construction IPD Q%ch QLD Road and Bridge MAA M%ch QLD Engineering Construction MAT A%ch

Source: BIS Oxford Economics, ABS data

With construction activity In particular, slowing global While this has been largely falling sharply in Queensland demand for commodities due to sharply higher oil (and also declining at the coupled with rapid increases prices (feeding through to national level) from 2014/15, in supply courtesy of the diesel fuel for construction growth in engineering resources investment boom plant and vehicles, as well construction prices slowed in Australia and elsewhere as bitumen prices), other sharply, as captured by both resulted in a commodities glut industry costs are also starting the RBI and the engineering and substantial falls in prices to reaccelerate, albeit from a construction IPD. Construction for those commodities used weak base. Given the number prices actually declined in the construction process of construction projects between 2014/5 and 2015/16 (particularly for oil and related already in flight at contracted according to the RBI and products – such as bitumen prices, the prospect of fell close to zero for the and fuel – as well as steel). persistent, higher growth in engineering construction IPD construction costs is likely to By contrast, over the past during 2016/17. While falling presents risks and challenges year, construction costs have construction activity certainly to industry sustainability re-accelerated sharply, with played a part in slowing down and the financial health of readings for both the RBI and the growth in construction contractors and projects. engineering construction IPD costs – particularly through its surging back to resource- impact on slowing growth in boom highs close to 4% construction wages and the in moving annual average pricing of local equipment and growth terms. materials – it was also likely influenced by international factors.

2019 Queensland Major Projects Pipeline 67 CHALLENGES, RISKS AND OPPORTUNITIES

Within this year’s pipeline there are a number of challenges, and risks but also opportunities.

MAJOR PROJECTS DECLINE IN 2019/20

Overall, funded work in the pipeline falls from $6.1bn in 2018/19 to $4.6bn in 2019/20 before recovering slightly in 2020/21 with a 24% decline in major project activity over 2019/20. Figure 38 (over leaf) compares last year’s MPPR five-year outlook to the present forecast (note 2017/18 is now historical rather than forecast, and 2022/23 is added to this year’s pipeline). As per the 2018 MPPR, we include all major engineering construction projects in Queensland above $50m, as well as significant programs of work in utilities and mining.11

PUBLIC AND PRIVATE INVESTMENT

Queensland’s historical economic performance is heavily influenced by large, long investment cycles – with major projects funded by both the public and private sector playing an important role. Over the past decade, the resources investment boom and bust (and the public investment it helped finance) drove a boom and bust in the Queensland economy. More recently, however, Queensland’s economic performance has been driven by other investment cycles across residential building as well as infrastructure (both publicly and privately funded). While investment has picked up in Queensland in recent years, the outlook for growth in investment, employment and the broader economy is not exactly spectacular over the remainder of the decade.

11 Programmed work includes estimates of the rollout of the National Broadband Network – Australia’s largest single infrastructure project – as well as works in water, sewerage and upstream oil and gas development to feed Queensland’s LNG processing trains.

68 2019 Queensland Major Projects Pipeline THIS REPORT’S OUTLOOK FOR FALLING MAJOR PROJECT ACTIVITY IN 2019/20 – AND LOW LEVELS OF FUNDED WORK EXTENDING INTO 2020/21 – REPRESENTS A RISK TO SUSTAINING STRONGER GROWTH IN THE QUEENSLAND ECONOMY

REGIONAL PIPELINE VOLATILITY

There are vast differences in how major project activity will play out by region, by sector and by project size through the forecast period. For many regions and sectors, volatility in the pipeline is set to increase, placing pressure on construction industry contractors and suppliers. The Toowoomba region will transition between the Toowoomba Second Range Crossing (road) and Inland Rail (rail) projects. There is also a strong cycle of work ahead in the Brisbane region that will require careful management. Meanwhile, other regions in the north and the west of the state have very high shares of unfunded work in their pipelines, adding to uncertainty for contractors and industry suppliers.

SKILLS SHORTAGES

Queensland still faces significant competition for construction skills from other states – particularly New South Wales and Victoria. The infrastructure investment program in other east coast states is unlikely to slow down significantly given projects already underway. To the contrary, there may be an upside to the Commonwealth Government’s current Infrastructure Investment Program, to ward off the negative impact of the ADANI’S slowdown in residential building or guard against potential external shocks. This may drive even stronger demand for major CARMICHAEL COAL project skills. DEVELOPMENT ACCOUNTS FOR $1.6BN OR 6% OF THE FUNDED MAJOR PROJECTS PIPELINE 6%

2019 Queensland Major Projects Pipeline 69 MAJOR PROJECTS DECLINE IN 2019/20

Opportunity Opportunity Telecoms (NBN) activity is As forecast in the previous The value of funded work also projected to be lower, Report, major project work in the pipeline has risen to while privately funded is expected to rise slightly $27.6bn, up from $23.8bn last electricity (renewables) in the current financial year year. A significant component and mining activity is also (2018/19). Funded work for of this increase is the inclusion expected to fall from previous 2018/19 is currently on a par of Adani’s smaller scale levels. By contrast, funded with total work in 2017/18, with Carmichael coal development work in rail, harbours, water, overall growth in activity in as funded in the 2019 pipeline sewerage and defence is 2018/19 now dependent on (totalling $1.6bn in activity expected to move higher. several currently unfunded to 2022/23) which remains Risk projects proceeding. subject to commercial, regulatory and political risk. A higher level of major Opportunity and challenge The other key contributor is projects activity since The total value of projects rail, where funded work in the 2016/17 has had a broader, in the pipeline has remained final year of the projection stimulatory effect on the relatively steady. This year, (2022/23) remains very high, Queensland economy but the the major projects pipeline is supported by the Inland Rail setback projected in 2019/20, valued at $41.3bn, compared packages. along with weaker growth to $39.9bn in the 2018 in broader investment and pipeline. Importantly, however, Challenge consumer spending, is likely the total value of work in A setback in major project to contribute to a slowing the pipeline (funded and work is expected in 2019/20. in state economic growth. unfunded) is lower in 2019/20 The total value of major Major project work of the and 2020/21 compared to project work in the pipeline type presented in this report the projections in last year’s for 2019/20 is $6.5bn, down is a key contributor to public MPPR, driven by falling on the $6.6bn estimated and private investment, which construction value estimates / for 2018/19. Funded work is an important driver of the scope on existing projects, as in 2019/20 currently rests Queensland economy. While well as the removal of highly at $4.6bn, 24% lower than very large falls in major project unlikely projects from the list. the estimate for 2018/19, work in 2014/15 and 2015/16 Sustaining the project pipeline representing significant drove a decline in Queensland above $40bn is mainly due to downside risk. The decline in State Final Demand (SFD), a the $8.3bn in work (funded funded work for 2019/20 is rise in major project activity and unfunded) projected being driven by both public in 2017/18 was a key driver of for 2022/23 – $2.1bn or 34% and private sectors. Funded stronger growth in both SFD above the $6.2bn work for roads and bridges work in and the broader economy in 2017/18. We note, however, 2019/20 is 44% lower than that year. In this respect, this that only $4.8bn of major 2018/19 as several large report’s outlook for falling project work for 2022/23 is projects – including the major project activity in currently classified as funded. Gateway Upgrade North, 2019/20 – and low levels of Toowoomba Range Second funded work extending into Crossing and the Logan 2020/21 – represents a risk to Motorway Enhancement – sustaining stronger growth in reach completion and are the Queensland economy. not replaced by similar sized new projects.

70 2019 Queensland Major Projects Pipeline FIGURE 38: MAJOR PROJECT WORK DONE FORECAST: 2019 VERSUS 2018 $Bn 12000

10000 Challenge The pipeline also highlights 8000 a significant shift in the mix 6000 of projects by value through the next five years, which is 4000 likely to have implications for the competitiveness 2000 and sustainability of the construction industry. 0 17/18 18/19 19/20 20/21 21/22 22/23 In 2018/19, 19% of project specific funded work (i.e. Previously Funded Current Funded excluding programmed works) Previously Unfunded Current Unfunded is on projects valued at $50m Source: BIS Oxford Economics, QMCA and IAQ member knowledge to $200m, whilst another 22% FIGURE 39: FUNDED PIPELINE BY SIZE OF PROJECT is based on projects valued $BILLION, CONSTANT 2015/16 PRICES at $200m to $500m in value. $Bn However, by 2021/22, these 7 shares fall to 6% and 5% 6 respectively, meaning that 89% of major funded project 5 work in 2021/22 is based on 4 projects valued over $500m, with this share rising to 94% 3 in 2022/23, as shown in 2 Figure 39. 1 Risk 0 While more complex, larger FY18 FY19 FY20 FY21 FY22 FY23 projects are perhaps more $1bn+ $500m-$1bn $200m-$500m likely to attract earlier $100m-$200m $50m-100m indications of funding to Source: BIS Oxford Economics, QMCA and IAQ member knowledge ensure timely delivery, the falling share of funded FIGURE 40: TRANSPORT AND UTILITIES ENGINEERING CONSTRUCTION BY STATE: 1986-2018 $BILLION, CONSTANT 2015/16 PRICES projects in the $50m to $Bn $200m range, particularly, is a 25 cause for concern considering that these projects tend 20 to support a large number of highly competitive 15 construction contractors which form the backbone for the industry. 10

5

0 1986 1990 1994 1998 2002 2006 2010 2014 2019

Queensland New South Wales Victoria South Australia Western Australia

Source: BIS Oxford Economics, ABS data

2019 Queensland Major Projects Pipeline 71 PUBLIC AND PRIVATE INVESTMENT

Challenge Risk championed by the private Major project activity A high and rising share sector, including $6.8bn in has risen in recent years of unfunded work in the resources-related investment (following the post resources pipeline over time remains and $2.3bn in electricity – slump) – helping to drive a a downside risk to major overwhelmingly renewable turnaround in Queensland project work. While unfunded generation projects of the State Final Demand and work represents just 7% of kind which has helped drive employment – but is likely to total activity in 2018/19, this the current rise in work. suffer a significant setback share rises sharply to 40% by Opportunity and risk in 2019/20 unless funding for 2020/21 and 44% by 2022/23. new projects is secured. Major Excluding the large (and While private investment project activity – mirroring mostly funded) rail segment, decisions are heavily the broader Queensland the share of unfunded work influenced by commercial economy – has been through rises to 57% by 2021/22 and factors, there is much that a large resources-driven 64% by 2022/23. Sectors governments at all levels cycle over the past decade. with the highest share of can do to encourage private However, the last two years unfunded work by 2022/23 projects, such as creating a has seen a recovery in include mining and heavy stable policy environment, major project work, led by industry (75%), water and setting clear and fair policy new investments in roads sewerage (68%) and, perhaps targets and regulations, and telecommunications surprisingly, roads and bridges and supporting transparent (predominantly funded (52%). While commercial risk regulatory and approvals by the public sector), and for the private sector tends to processes. Ultimately, electricity and mining (mostly drive a high share of unfunded increasing certainty in the funded by the private sector). work in the resources sector, way government deals with Maintaining this momentum the high and rising proportion industry can go a long way is the core challenge facing of unfunded work in water and to fostering future private Queensland. Funded work roads by 2022/23 is mainly a investment although, in the in the pipeline for the four public sector phenomenon. case of resources projects growth sectors just mentioned particularly, much still – roads, telecommunications, Opportunity depends on global factors electricity and mining – falls In this environment, sustaining outside of direct government away 45% in 2019/20, and or growing current levels of control. continues to fall in aggregate major project work into the Challenge and opportunity through the subsequent four future will require securing years. While other sectors funding and finance for The pipeline also includes offer growth in funded work existing unfunded projects, or $4.2bn in unfunded public from here – particularly rail, originating, developing and sector projects through the but also water, sewerage and funding new projects that are next five years, including defence – this growth is not currently not in the pipeline $2bn in unfunded road and enough to offset the severity at all. The 2019 pipeline shows rail projects, and $1.4bn in of the decline in other asset that, despite falling from last unfunded water projects. This classes. year, there is still a substantial is down from the $4.7bn in volume ($13.8bn) of unfunded unfunded work in last year’s work which may yet be pipeline, with the bulk of tapped. Well over half of this unfunded work lying in the unfunded total are projects latter two years of the pipeline projection.

72 2019 Queensland Major Projects Pipeline For these projects, it makes In particular, governments Combined with the sense that governments should be prepared to be Commonwealth Government’s apply a robust cost-benefit flexible in the delivery of own large Infrastructure framework in assessing the public sector pipeline, Investment Program (IIP) and whether these projects should bringing forward projects its interest in revolutionising proceed – and, where the with positive net economic east coast freight links projects fail on this criteria, be benefits during periods of (through the $10bn+ ready to consider alternative pipeline weakness or having Inland Rail project) as well solutions. By definition, only the discretion to shift delivery as another direct equity projects that offer positive timelines on other projects investment in building the net economic benefits can when these may clash with a Western Sydney Airport, the possibly help bridge any surge in major project work. infrastructure construction perceived ‘infrastructure gap’.12 In turn, pipeline flexibility boom along Australia’s east requires pipeline depth (i.e. coast is unlikely to subside Even so, the pipeline shows having projects which can be substantially anytime soon that even if all currently called upon in weak times) – despite near term pipeline unfunded projects were to and having the financial risks in Queensland – and proceed in 2019/20, major capability to fund and deliver. dominates the outlook for project activity may still end This suggests that project major transport project up below the level of 2018/19. origination – i.e. the generation construction nationally. However, if all unfunded of actual project opportunities Indeed, risks are emerging work were to proceed in – along with employing on the upside to the subsequent years also, major appropriate funding and Commonwealth Government’s project work could increase by financing mechanisms, remain current IIP and equity as much as 70% (exceeding core challenges. infrastructure investments $11bn) by 2021/22. This plan. potential volatility suggests Opportunity and risk that there is still a challenge Expectations of a slowing Public infrastructure ahead if government and national economy this investment amongst industry wish to maintain financial year and next as Australia’s east coast a relatively stable (instead residential building activity states has surged in recent of highly cyclical) project continues to cool, along with years. The most significant pipeline which delivers a potential change of Federal infrastructure investments infrastructure in a timely way Government that may favour undertaken by New South to meet demand whilst also increasing public investment Wales and Victoria have allowing the construction rather than cutting taxes as focused on urban solutions to industry to sustainably build a method of stimulus, could unlock greater efficiencies and capacity and capability yet lengthen the current productivity in Sydney and without driving significant upswing in publicly-funded Melbourne, mirroring concerns cost increases as seen during infrastructure construction from Infrastructure Australia the resources boom. nationally despite the winding that more investment here down in NBN-related work.14 was required to avoid an emerging infrastructure gap.13

12 Terrill, M. and B. Coates (2016) “Budget Explainer: does Australia really have an infrastructure deficit?”, The Conversation, April 28th. 13 Infrastructure Australia (2016) Infrastructure Plan. 14 Jericho, G. (2019) “How the drop-off in construction gives Labor an election spending blueprint”, Guardian Australia, January 17th, https://www.theguardian.com/business/grogonomics/2019/jan/17/how-the-drop-off-in-construction- gives-labor-an-election-spending-blueprint?CMP=Share_iOSApp_Other

2019 Queensland Major Projects Pipeline 73 Negative global shocks Public investment growth has It also means investing in affecting growth in key been very weak or negative critical infrastructure for new trading partners, particularly over 2016/17 and 2017/18, growth regions – which are China, could also have the and is anticipated to move benefiting from the lower Federal Government reaching lower again over 2018/19 and post-boom Australian dollar – for the fiscal stimulus lever. 2019/20 before recovering to ‘crowd in’ private business Having ‘shovel ready’ projects – in line with the outlook for investment decisions. available (i.e. that have publicly funded major project According to the pipeline, the been properly planned and activity in this report. Private public sector will continue assessed through rigorous investment, meanwhile, to play a significant role in cost benefit analysis) would while rising 5.2% in 2017/18, funding and developing many be vital for an investment- is expected to slow in line categories of infrastructure driven stimulus program to with housing activity and over the coming five work and it would be likely private non-dwelling building. years. Over the five years that those states with a Consequently, economic to 2022/23, public sector certified pipeline of productive growth (as captured by Gross funded major project work projects available would be State Product or GSP) is (whether currently funded the most to benefit. expected to slow back below or not) makes up 56% of 3% by the end of the decade the total pipeline value (up Challenge and opportunity according to the State Budget, from 50% two years ago), Queensland’s historical compared to average growth but the share is much higher economic performance is rate exceeding 4% prior to in the transport, water and heavily influenced by large, the resources boom – with sewerage, and defence long investment cycles – with deleterious consequences for segments of activity. major projects funded by both growth in employment and the public and private sector incomes. Interestingly, the pipeline playing an important role.15 does provide some indication Over the past decade, the Challenge and opportunity of the level of new funding resources investment boom While the share of public commitments required to and bust (and the public sector investment in total keep annual activity on major investment it helped finance) engineering construction is projects on a sustained or drove a boom and bust in lower in Queensland than in upward trajectory. According the Queensland economy. other states such as Victoria to the pipeline, funded work More recently, however, and New South Wales due to for 2018/19 is now matching Queensland’s economic higher private sector funded total activity for 2017/18, performance has been driven mining-related activities, with some small upside if the by other investment cycles publicly funded projects play remaining unfunded projects across residential building as a major role in driving the in 2018/19 were to achieve well as infrastructure (both state’s economic growth. funding and proceed. publicly and privately funded). Sustained investment in However, the challenge will While investment has picked productive infrastructure will be sustaining major project up in Queensland in recent remain a critical component work in 2019/20 and 2020/21, years, the outlook for growth of Queensland’s broader where funded work dips in investment, employment economic strategy to ensure substantially. Currently, the and the broader economy is cities and regional centres pipeline shows that a further not exactly spectacular over offer competitive benefits $1.4bn in activity on major the remainder of the decade. and help keep cost of living projects is still required on top (and cost of business) of currently funded work to pressures contained. sustain funded 2018/19 levels of activity into 2019/20.

15 Investment in economics represents the addition to capital stock or productive capacity. It mostly consists of the construction of buildings and structures and purchases of plant and equipment, but also includes growth in livestock, minerals exploration and intellectual property. This is a very different meaning from finance, where investment refers to the purchase or creation of an asset with the expectation of generating financial returns.

74 2019 Queensland Major Projects Pipeline While this represents an improvement on the even REGIONAL PIPELINE VOLATILITY larger funding gap highlighted in last year’s report, this is still a very substantial challenge. Opportunity and risk While Brisbane activity is on By 2020/21, the additional The regional analysis the increase again in 2020/21, funding requirement is still presented in this report the same cannot be said for $900m. highlights differences in the the Ipswich-Toowoomba- The main issue is that while outlook in major project Logan and Darling Downs- there is $1.8bn in unfunded work across the state. Maranoa (where funded major major project work in the Unsurprisingly, given the project work will not recover pipeline in 2019/20 and $3.4bn concentration of population until the rollout of Inland Rail in 2020/21 – only $425m and in south east Queensland, in the early 2020s) or the $755m of this represents around half of all funded work Outback region (where there public infrastructure projects. in the pipeline is focused here. is no funded work at all in The bulk of unfunded work Brisbane itself is expected to the pipeline beyond 2018/19). in these years is held by the see the strongest growth in Furthermore, while funded private sector in resources work. Meanwhile, more of the major project work booms in and electricity (renewable riskier, unfunded projects lie in Brisbane in the early 2020s, generation) projects. If central, northern and western for most other regions it these projects do not regions of the state, as these begins to decline significantly. achieve funding (through regions tend to be relatively At the very least, falling either unsatisfactory global more prominent with regards activity in a region may economic conditions or, in the to investment in mining and indicate an emerging surplus case of renewable generation, large water projects (such as in local industry capacity failures in Australian climate dams) that are more typically and capability which could and energy policy that restrict unfunded in the pipeline. be put to use on new works development), there is simply – potentially offering better Challenge and opportunity not enough public sector value for money procurement major project work currently The large differences in the and delivery – whilst also available to fill the gap. outlook for funded major helping smooth local project work by region While publicly funded activity investment cycles. suggest that governments and has risen in recent years, industry should give serious this gap in public sector consideration to location in major project work has been guiding new investment or known for some time and funding decisions. was highlighted in last year’s MPPR. Not having enough In 2019/20, the biggest “shovel ready” projects declines in funded work occur available over the next two in the Ipswich-Toowoomba- years – while funded work Logan and Outback regions, increases significantly in with falls also anticipated in 2021/22 on the back of major Brisbane, the Sunshine Coast rail projects – represents a and Darling Downs-Maranoa. significant public sector failure which puts the stability of the pipeline at risk and opens up cyclical challenges for industry.

2019 Queensland Major Projects Pipeline 75 SKILLS SHORTAGES

Challenge Challenge Challenge While economic infrastructure It is in this heated east coast For the rail industry, there investment16 in Queensland is major project environment will also be a substantial now higher than the trough that the Queensland pull on skills required in in 2014/15, Queensland Government will be rolling out manufacturing in support of lags New South Wales and its own $43bn capital works local content (again, including Victoria in terms of funding budget over the coming four electrical and mechanical and delivering infrastructure years, placing further pressure trades) as well as longer term investment as shown in Figure on skills and resources. Even operations and maintenance 40 (refer to page 71). As New Western Australia is likely to skills as new lines are South Wales and Victoria are put increasing pressure on commissioned. This is on top likely to continue to ramp key ‘in demand’ skill sets as of the emerging construction up or sustain infrastructure infrastructure and mining- skills task as over $8.6bn in investment over the next related construction rises in funded rail major project work five years, Queensland that state in coming years, is rolled out in Queensland may face challenges in following a long period of through the period to 2022/23 competitively procuring decline. as part of a $44bn program of construction services for works nationally. While more research will need major projects. To minimise to be undertaken to identify The major projects workforce risks of project delays, failures Queensland’s specific needs, analysis presented earlier in and rising construction costs, various skills demand and this report also highlights Queensland needs to apply ‘workforce gap’ analyses potential skills constraints a longer-term approach to recently undertaken for New that may present a risk to the planning for capacity and South Wales17, as well as the pipeline. Overall, total major capability in the construction road18 and rail19 industries, project activity (funded and industry. Such a plan should indicate that the greatest unfunded) in the pipeline is cover: skills risks will revolve around projected to raise workforce ƒƒ future workforce key ‘on site’ occupations demand by 32%, with the requirements and skills including onsite engineers and strongest increases likely to be ƒƒ planning for required surveyors, site supervisors in rail: an additional 6,400 FTE construction materials, and and construction managers, direct construction positions ƒƒ meeting critical transport concreters, form workers and required for the mostly funded and logistics challenges as steel fixers, mechanical and rail pipeline. major projects reach the electrical trades, tunnellers construction phase. and truck drivers.

16 That is, investment in non-building infrastructure such as transport and utilities. 17 BIS Oxford Economics (2018a) NSW Construction Delivery Assessment: Capacity and Capability, for Infrastructure NSW and available online: https://insw-sis.visualise.today/documents/about/NSW_Construction_Delivery_ Assessment_Capability_and_Capacity.pdf 18 BIS Oxford Economics (2018b) Roads Workforce Capability 2017-2027, Austroads, https://www.onlinepublications. austroads.com.au/items/AP-R574-18 19 BIS Oxford Economics (2018c), Australasian Railways Association Skills Capability Study, Skills Crisis: A Call to Action. https://ara.net.au/ara-skills-capability-study

76 2019 Queensland Major Projects Pipeline THE 2019 PIPELINE SHOWS THAT, DESPITE FALLING FROM LAST YEAR, THERE IS STILL A SUBSTANTIAL VOLUME ($13.3BN) OF UNFUNDED WORK WHICH MAY YET BE TAPPED

GOLD COAST SEAWAY OUTFALL TUNNEL

CHALLENGES AND RISKS - FURTHER ANALYSIS

COLLABORATION Capacity and capability risks ƒƒ Maintain workforce BETWEEN INDUSTRY have been recognised by development initiatives AND GOVERNMENT infrastructure agencies in New that mandate participation REMAINS THE KEY TO South Wales and Victoria. on eligible projects by MEETING CAPACITY Recent work undertaken by apprentices and/or AND CAPABILITY RISKS BIS Oxford Economics for trainees and through other In an environment where Infrastructure New South workforce training. strong east coast demand for 20 Wales, for example, points ƒƒ Develop and maintain infrastructure construction towards several strategies a plan for construction is likely to be sustained or that help reduce risks and materials, so that the even increase further, coupled leave a positive legacy of demand and supply balance with potential limits on public infrastructure investment: for scarce quarry products finance, it remains sensible for ƒƒ The provision of a clear can be quantified, mapped, governments and industry to and coherent long term emerging gaps identified seek collaborative solutions to project pipeline to give quickly, and strategies put project delivery challenges to industry the best possible into place to accelerate the ensure value for money. chance of responding, development of new supply rather than separate sources and related logistics pipelines by governments where appropriate. and the private sector – this is a key feature of this report.

20 BIS Oxford Economics (2018a), p116-117.

2019 Queensland Major Projects Pipeline 77 ƒƒ Search continually Procurement reform requires While it remains to be seen for improvements a more collaborative approach whether the high ideals of in procurement that to be adopted between the 10 Point Commitment encourage industry industry and government effectively filter down from the participation, innovation to encourage maximum executive level to the working and investment in capacity participation and investment procurement departments and capability. In particular, in capacity and capability; and within government agencies, processes should be appropriately manage risks to the likely risks from capability reformed if they: ensure value for money. and capacity pressures over the coming five years ƒƒ create long term risks to Such approaches – as suggests that similar plans industry sustainability and embodied in the New South should be considered by other costs by inadvertently Wales Government’s recently state governments such as encouraging contractors released 10 Point Commitment Queensland. to take risks on quality for the Construction Industry21 ƒƒ take up scarce resources – are increasingly becoming The market for major through the tendering seen as “best practice” in this infrastructure projects is, process space. Key points of the plan after all, a national one ƒƒ do not provide a include: where decisions by Tier One sustainable risk/ 1. Procure and manage contractors whether to bid margins balance that will projects in a more on particular projects are encourage firms to invest collaborative way taken on a national rather in skilled staff 2. Adopt partnership- than State basis. ƒƒ do not encourage the based approaches to risk In this environment, the participation of the full allocation Queensland Government spectrum of resources 3. Standardise contracts and should be looking at what it across the construction procurement methods now needs to do to achieve industry, across all tiers 4. Develop and promote a value for money procurement ƒƒ do not encourage transparent pipeline of and a sustainable construction innovation or the use projects industry. of new technologies, 5. Reduce the cost of bidding ranging from Building PUT POLICIES AND 6. Establish a consistent Information Modelling PLANS IN PLACE Government policy on bid (BIM), new resource- cost contributions Overall, sustaining growth saving materials or in the Queensland economy 7. Monitor and reward high construction techniques, requires putting into place performance or appropriate skills plans and policies that will 8. Improve the security and development. encourage and sustain both timeliness of contract private and public investment payments in the state over the long term. 9. Improve skills and training 10. Increase industry diversity

21 NSW Government (2018) NSW Government Action Plan: A ten point commitment to the construction sector, view 2/11/18 http://www.infrastructure.nsw.gov.au/media/1649/10-point-commitment-to-the-construction-industry- final-002.pdf

78 2019 Queensland Major Projects Pipeline Queensland’s long-term FIGURE 41: MIX OF MAJOR PROJECT WORK DONE BY FUNDING SOURCE: SECTORS AND TOTAL: 2018/19-2022/23 economic strategy should $Bn concentrate on leveraging 12 from (or improving) core (or potential) strengths. For 10 Queensland, this includes its vast natural resource 8 wealth, its close proximity to Australia’s largest trading 6 partners, its iconic Australian 4 tourism destinations and enviable lifestyle benefits. 2 State Government strategy should continue to focus 0 on boosting programs to Roads and Railways and Defence Water and Non-water Mining and create more jobs and attract Bridges Harbours Sewerage Utilities Heavy industry businesses and enable Public Private Queensland’s economy Source: BIS Oxford Economics, QMCA and IAQ member knowledge to transition to be more balanced, innovative and Due to Commence 2019/20: ƒƒ Paradise Dam Spillway productive. ƒƒ Townsville Port Expansion Improvement Project - ACCELERATE Project - Outer Harbour $200m CURRENTLY UNFUNDED Expansion (berths 14+15) - ƒƒ Burdekin Falls - hydro- PUBLIC PROJECTS $200m electric power station Decisions to fund, or ƒƒ Nullinga Dam - $323m (50MW) - $200m accelerate, the development ƒƒ Somerset Dam Upgrade - A further $1.3bn and $1.2bn in of currently unfunded public $600m unfunded public sector major sector projects will assist Due to Commence 2020/21 project work is in the pipeline in stabilising major project ƒƒ Yamanto to Ebenezer for 2021/22 and 2022/23 work over the next two years Upgrade - $340m respectively, which may be – but will not be a complete able to be accelerated if weak ƒƒ Hope Island Road (Oxley solution. Ideally, governments major project conditions Drive) road duplication - at the State and Federal level persist in coming years, Stage 4 - $136m should also be investigating include: ƒƒ Pacific Motorway; Section new projects that will be ƒƒ Centenary Hwy Bus Lanes (C) Daisy Hill to Logan required to meet Queensland’s - Ipswich Mwy to Toowong Motorway - $250m infrastructure challenges in - $400m the coming decade – ƒƒ Sarina to Cairns - Saltwater ƒƒ Centenary Hwy Bridge and be prepared to accelerate Creek Upgrade - $103m Duplication - $150m these in periods of ƒƒ Townsville Ring Road ƒƒ Rockhampton Ring Road - pipeline weakness. Stage 5 - $180m $950m ƒƒ Gold Coast Light Rail ƒƒ Ipswich Rail Line - Darra- Stage 3 - $500m Redbank 3rd track - $218m ƒƒ North Coast Line Capacity ƒƒ Sunshine Coast Light Rail - Upgrade (Brisbane to $500m Cairns) - $116m ƒƒ Urannah Dam - $250m ƒƒ Wyralong Dam WTP Stage 1 - $200m

2019 Queensland Major Projects Pipeline 79 BRISBANE AIRPORT INTERNATIONAL APRON EXPANSION

GOVERNMENTS While public investment is ENCOURAGING PRIVATE NEED TO SPEND projected to rise according INVESTMENT WILL AS COMMITTED to MYFER, it is important ALSO BE IMPORTANT This analysis assumes that to note that this also While public infrastructure all funded work proceeds as includes spending on social investment is important, planned: that governments infrastructure (e.g. hospitals, it is not an end in itself. actually spend what they schools and other non- The core aim of public have committed to funding residential building projects) infrastructure investment – in Budgets. Here, the State as well as purchases of and Queensland’s broader Government’s performance equipment (e.g. rollingstock economic strategy – should shows some improvement for railways lines, IT and be to boost productivity in recent years, with the office equipment) and and competitiveness which gap between actual and intangibles (e.g. software will also help stimulate local committed funding on public systems) not considered in private investment decisions. infrastructure – referred to this report. Realising this As shown in Figure 43 as purchases of non-financial growth outcome, in any case, (over the page), the bulk of assets – from that year’s means continuing to close currently unfunded major Budget falling from around the gap between actual and project activity, year by year, $1.5bn in both 2014/15 and committed expenditure. is actually related to private 2015/16, to $333m in 2017/18, sector projects. according to latest data from the 2018 Mid-Year Fiscal and Economic Review (MYFER) and shown in Figure 42.

80 2019 Queensland Major Projects Pipeline FIGURE 42: PURCHASES OF NON-FINANCIAL ASSETS, $BILLION NON-FINANCIAL PUBLIC SECTOR, QUEENSLAND

14

12

10

8

6

4

2

0 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022

Actual 2011–12 Budget 2012–13 Budget 2013–14 Budget 2014–15 Budget 2015–16 Budget 2016–17 Budget 2017–18 Budget 2018–19 Budget 2018–MYFER

Source: BIS Oxford Economics, Queensland Budget Papers, Various

Therefore, another path to Beyond public investment Boosting private sector avoiding a future slump in itself, State and Federal investment can also be major project work requires Governments should also achieved through good public governments doing what be looking at ways to investment choices which they can to provide the right encourage the return of ‘crowd in’ private investment conditions for these projects private investment (by far the (e.g. building better transport to proceed (while recognising bigger part of the investment links which encourage broad that there may also be ‘pie’) and re-establish the regional investment by the broader constraints, such as positive growth mindset. private sector, or investing in the state of global commodity While supporting market-led lower cost energy to attract markets). proposals is an important industry and other business). plank here, the overall record Perhaps more importantly, The public sector only makes of success for getting these governments should also set up a very small part of the projects to the construction clearer messages about future total Queensland economy phase is not strong. policy to give the private (around 25 per cent in Meanwhile, the Northern sector confidence to invest. expenditure terms) and this Australia Infrastructure Facility Unfortunately, the record here is not expected to change (NAIF) was also supposed has not been consistent, with substantially in the future. to encourage private sector arguments over energy policy, Consequently, achieving long projects but few projects mining, financing, and tax and term economic goals will have materialised from spend policies likely to have depend crucially on how the this initiative. had a negative impact on public sector can develop business confidence. policies to stimulate private decisions on where to invest and live.

2019 Queensland Major Projects Pipeline 81 FIGURE 43: FUTURE UNFUNDED WORK DONE PROFILE: PUBLIC VERSUS ENSURING PRIVATE SECTOR, $BILLIONS SUSTAINABLE $Bn 3.0 INVESTMENT IN ECONOMIC INFRASTRUCTURE 2.5 Queensland is currently 2.0 relying heavily on new Commonwealth and private 1.5 sector funding to drive the upswing in major project 1.0 work from the 2014/15 trough. Through the next five years to 0.5 2022/23, nearly one third of proposed major project work 0 FY19 FY20 FY21 FY22 FY23 remains unfunded, presenting risks to the sustainability of Unfunded Private Unfunded Public the project pipeline. For the Source: BIS Oxford Economics, QMCA and IAQ member knowledge public sector, only around

FIGURE 44: QUEENSLAND PUBLIC INVESTMENT: 1986-2018 $3.7bn of the $23bn pipeline $Bn Percent of work is unfunded. However, 30 10% as noted, there is simply 9% not enough projects in the 25 8% pipeline to sustain major 7% 20 project work over the next 6% two years. 15 5% This raises important 4% 10 questions: 3% ƒƒ Is Queensland investing in 2% 50 economic infrastructure at 1% an appropriate level – and

0 0% is the risk of falling major project work over the next

Publicly funded Other public investment two years an indication that engineering construction excluding asset sales an infrastructure gap is re- Public engineering construction 30 year average Public EC / 10m persons per 10 million persons emerging? Total public investment as a % 30 year average Pub Inv / GSP ƒƒ Are there funding and of Queensland GSP (RHS) financing constraints that BIS Oxford Economics, ABS data may prevent Queensland from maintaining an appropriate level of economic infrastructure investment in future?

QUEENSLAND NEEDS TO APPLY A LONGER- TERM APPROACH TO PLANNING FOR CAPACITY AND CAPABILITY IN THE CONSTRUCTION INDUSTRY

82 2019 Queensland Major Projects Pipeline With regards to the first Indeed, Terrill and Batrouney Figure 44 shows the path question, identifying (2018) show that Australian of public investment in underinvestment in cities have already been Queensland over the past infrastructure and “remarkably adaptive” in 32 years, with investment ‘infrastructure gaps’ in dealing with strong increases in economic infrastructure practice is very difficult. While in population, potentially reflected in the engineering various organisations have reducing the need for construction share. This attempted to quantify the infrastructure investment as a shows a rising trend (in size of the infrastructure gap solution.24 Growing population volume terms) over time, in Australia – with estimates density within cities – and with a significant “catch typically ranging in the changing behaviours by up” cycle in the 2000s as hundreds of billions of dollars commuters in where to live the state invested in large – they are invariably based and how to travel – means water systems and networks on methodologies which that infrastructure spending to battle the Millennium are not publicly available, or does not necessarily Drought and used surging ‘rules of thumb’ (e.g. share need to keep pace with royalty revenue to “catch up” of infrastructure spending to population growth. And on transport infrastructure GDP) that are not adequately rather than requiring “mega” spending.25 On a population explained or tested.22 Ideally, infrastructure solutions, basis, public investment specific quality or service governments should also in economic infrastructure indicators such as engineering consider a range of other in 2017/18 was back to its ‘report cards’23, rising policies that can help cities 30-year average, following congestion costs, increasing adapt to growing populations, a dip below this average travel times, or number of including abolishing stamp between 2014 and 2016. While blackouts for example tend to duties on homes, revisiting publicly funded engineering indicate when infrastructure zoning laws, introduce construction is still well below gaps may be present – but of demand management policies the 2008/09 peak, on this themselves do not necessarily such as road user charging, basis it seems to be not at provide optimal solutions to and consider smaller projects critically low levels yet, though the infrastructure problem (including maintenance) with there is still a concern that at hand: whether it requires high net benefits. this may drop back in coming substantial new investment years. As a share of GSP, With these caveats in at all, or the quantum of however, public investment mind, it is worth comparing investment required. continues a trend decline Queensland’s recent and, as at 2017/18, reached a infrastructure investment record low. performance over time, and against other states.

22 See, for example, Terrill, M. and B. Coates (2016) for a discussion of such studies. 23 Such as those formerly produced by Engineers Australia – the last Engineers Report card for Queensland was produced in 2010. 24 Terrill, M. and H. Batrouney (2018) Remarkably adaptive: Australian cities in a time of growth, Grattan Institute, October 2018. 25 There was also during this time substantial private investment in road transport infrastructure in Brisbane, including the and Airport Link.

2019 Queensland Major Projects Pipeline 83 The difference in recent As per Figure 44 (page 82), Recent analysis by the behaviour between public there is a trend weakening International Monetary Fund engineering construction as a in this ratio during the shows that, across advanced share of population and public 1990s before a stronger economies, average public investment as a share of GSP phase of investment in the investment as a ratio of GDP measures may be caused by 2000s. Again, as per Figure has decreased from 5% in several factors including: 44 (page 82), there is a the 1960s to just over 3% in significant weakening again 2012, and was in the 4% range ƒƒ The broader public between 2014 and 2016, through the mid-1980s.26 The investment measure before a recent recovery decline is fairly consistent over includes investment in which places activity close the period. social building, equipment to the long run average as a and intangibles, which may In Queensland, public share of GSP. Unsurprisingly, not be keeping pace with investment as a share of GSP the “investment premium” economic growth, or has fallen from around 7% in between the Queensland ƒƒ The development of highly the 1980s to around 4% by transport and utilities capital-intensive industries 2018 but was still very high construction to GSP ratio and in Queensland, such as (around 6.9%) in 2012 due to that for New South Wales mining, gas extracting the surge in public investment and Victoria has narrowed and processing, and that commenced in 2006 in recent years given the energy, which now deliver which delivered major water large rollout of infrastructure substantially higher levels security schemes, hospitals investment in the other east of economic production and major road projects. coast states, from an average whilst driving weak (or of 1.1% that existed prior to Overall, between 1986 and even negative) employment 2008, to 0.7% over the past 2018, public investment as a growth in their operations decade. share of GDP in Queensland phase. This may suggest has averaged around 6% Meanwhile, comparing that a lower level of public though it had fallen away Queensland against investment is required to in more recent years. international ‘norms’ for public meet a given level of GSP, Publicly funded engineering investment is challenging other things being equal. construction in Queensland as given that different countries Figure 45 shows the share a share of GSP also shows the often use different definitions of transport and utilities same downward trend – from of both the ‘public sector’ engineering construction 3.4% in the late 1980s, to 2.3% and ‘public investment’, (public and privately funded) currently (and rising from a and there can also be sharp to GSP in Queensland has trough of 1.9% in 2015/16). differences in outcomes wavered between 2.5-4.5% of across countries given Overall, the trend of declining GSP over the past 32 years, differing stages of economic public investment as a share considerably higher than development, population of GDP in Queensland mirrors other states, likely reflecting growth and a range of other that seen for advanced its stronger rate of population factors including the use of economies globally, with any growth, its typically wider the private sector to deliver discrepancies likely explained distances, and relatively ‘traditional’ public sector by timing of local public high resources investment investment. investment cycles and the intensity which also drives impact of (private sector led, infrastructure investment. and highly capital intensive) Interestingly, it is also well resources and mining above Western Australia – investment. Australia’s other key resources state.

26 IMF (2018) World Economic Outlook Database, April 2018.

84 2019 Queensland Major Projects Pipeline Research suggests that FIGURE 45: QUEENSLAND TRANSPORT AND UTILITIES CONSTRUCTION AS SHARE OF GSP: 1986-2018 following strong investment 7% between 2006 and 2012, it is difficult to argue convincingly 6% that Queensland has a major “infrastructure deficit” and 5% the Building Queensland 4% Pipeline and Business Case

Framework is providing 3% improved assurance that Queensland is investing in 2% the right projects. However, 1% the lack of established benchmarks or satisfactory 0% methods of infrastructure 1986 1990 1994 1998 2002 2006 2010 2014 2019 pipeline assessment may be Queensland New South Wales Victoria problematic and perhaps South Australia Western Australia could be addressed in future Source: BIS Oxford Economics, ABS data infrastructure Audits by FIGURE 46: PUBLIC SECTOR NET DEBT AS A SHARE OF GSP Infrastructure Australia, as well 20% as future Queensland State Infrastructure Plans. 15% Overall, this analysis suggests that Queensland economic infrastructure spending is just 10% keeping pace with historical norms, but risks remain if 5% activity were to fall away from here; that is, if projects in 0% the pipeline do not proceed. Ideally, a more nuanced analysis of infrastructure gaps -5% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 in Queensland would be better informed by regular and Queensland New South Wales Victoria South Australia Western Australia timely data on the quality of Source: BIS Oxford Economicx, ABS data, Budget Papers (various) services which infrastructure provides – for example, commute times in major cities, the number of faults reported, or capacity constraints in the provision of utilities services across water, electricity, gas and telecommunications – as well as the structural quality of the infrastructure itself through regular engineering reports to assess how much stock needs to be replaced or renewed.

2019 Queensland Major Projects Pipeline 85 AT A BROADER LEVEL, THE DEBT LEVELS OF AUSTRALIA’S MAJOR STATES ARE STILL CONSIDERED LOW BY INTERNATIONAL STANDARDS

BCC FERRY TERMINAL

While some data is available SUSTAINABLY As noted in previous MPPRs, publicly (for example, FUNDING PUBLIC the use of debt finance for commuting times and INFRASTRUCTURE long lived infrastructure distances data can be sourced Ideally, the availability of projects makes sense on from analysis by the Bureau funding and finance for both economic efficiency of Infrastructure, Transport sustainable productive and intergenerational and Regional Economics as infrastructure investment equity grounds, so long well as the Census) there should not derail investment as the projects funded are can be lag in the availability itself – and exploring shown to be productive of data. In some cases, such innovating funding through rigorous cost as independent analyses of mechanisms remain critical to benefit analysis. And from asset quality such as that the outlook for the pipeline a financial perspective, the undertaken in the past by and the Queensland economy. Queensland economy (and Engineers Australia, there can more importantly, revenue Despite its weakened post- be a very long time between generation to the State boom financial position, the reviews. This suggests that Government) has improved at Queensland Government still governments should collect a rate better than anticipated has important funding levers and publish detailed data in recent years. This has available to it. Indeed, recent on asset and service quality helped bring down the public State Budgets and the 2018 frequently to provide a sector net debt to GSP ratio MYFER show that the State better basis for assessing from a peak of 13% in 2013/14 Government will be increasing the existence or risk of to 10% in 2017/18 – as shown in its use of debt finance to help future infrastructure gaps Figure 46 – and has afforded deliver its $43.6bn capital emerging – and what the most the State Government program over the next four appropriate solutions may be. the headroom to increase years, with net debt27 rising debt to finance productive from $34.2bn in 2017/18 to infrastructure investment. $51.5bn in 2021/22.28

27 Public sector net debt is defined here as the sum of general government net debt plus the net debt of publicly owned non-financial corporations but excludes the debt of public financial corporations. In State Budgets this is referred to as the net debt of the non-financial public sector. 28 Queensland Treasury (2018), Mid-Year Fiscal and Economic Review, p27.

86 2019 Queensland Major Projects Pipeline The debt to revenue ratio However, it remains important Finally, with the notable for the general government that debt is used only to exception of the Cross River sector in Queensland has also fund capital rather than Rail project, Queensland has fallen substantially, from a recurrent expenses, and that been able to extract funding peak of 91% in 2012/13 to 54% provision is made when raising from the Commonwealth in 2017/18.29 Indeed, over the borrowing levels for likely Government in recent years in next four years, Queensland’s increases in interest rates as helping to fund major public public sector net debt/GSP monetary policies normalise sector projects. The next ratio is not anticipated to rise in the United States and other Federal election (required to back to the 2013/14 peak – countries following looser take place by May 2019 at even allowing for reduced monetary policy settings the latest) will no doubt see royalty revenues – and in the wake of the global many promises of further remains in the ‘middle range’ financial crisis. Commonwealth infrastructure of indebtedness amongst funding assistance for Apart from debt, Queensland Australia’s five largest states. Queensland, particularly if still retains significant options there is evidence that these Figure 46 shows that in raising finance for higher projects are productive and Queensland is not alone levels of infrastructure have a positive net benefit in using debt to fund investment. Crucially, asset under rigorous analysis. infrastructure investment, recycling has not been with Victoria and New South used to the same degree in However, Queensland Wales, particularly, using Queensland as it has in other will only be able to take debt now or in the future to states and this remains a advantage of any increases in deliver large infrastructure potential source of finance Commonwealth infrastructure investment programs. Western for future infrastructure funding if it has a store of Australia, by contrast, is projects, so long as there is such “shovel ready” projects looking to reduce net debt effective post-sale regulation available. With only one ‘High as a share of GSP in coming of privatised assets to ensure Priority’ project out of 9 on years, which suggests there prices remain competitive. Infrastructure Australia’s will be constraints to future Introducing tolling on major current (February 2019) State borrowing for public roads (possibly to manage Infrastructure Priority List infrastructure. At a broader peak demands) or more (Brisbane Metro), and only level, the debt levels of fundamental reform such two ‘Priority’ projects out of Australia’s major states as a broad-based road user 10 (Beerburrum to Nambour are still considered low by charge, could also help fund Rail Upgrade, and the Inland international standards, with future infrastructure projects Rail project), Queensland has the net debt to GDP ratio for – as well as potentially few major projects which have Australia (19%) comparing pushing out the need for been positively evaluated by favourably to similar advanced reinvesting in roads networks. Infrastructure Australia. A economies including Canada And there are other funding further 15 projects are listed (27%), the United Kingdom options too, as detailed in as Initiatives (including Cross (78%), the United States (82%) previous MPPRs, including River Rail), meaning that they and France (87%), but above expanding the number of City are still being assessed. This Sweden (9%), New Zealand Deals (bringing all levels of compares to 103 projects (5%) and Denmark (16%).30 government to the table for nationally. a region), value capture, and implementing genuine tax and expenditure reforms.

29 Ibid, p34. 30 IMF (2018) World Economic Outlook Database, April 2018.

2019 Queensland Major Projects Pipeline 87

With the next Federal election Currently, Infrastructure on the horizon, securing Australia is evaluating the Commonwealth contributions business cases for two towards the $5.4bn Cross projects on the Pacific River Rail project and Motorway which were further contributions to the submitted in January 2019 – Beerburrum to Nambour the $1.03bn Varsity Lakes to Rail project would liberate Tugun and the $749m Eight significant state capital from Miles Plains to Daisy Hill the forward estimates to sections. These are both listed reinvest into other priorities. as funded (announced) in the current MPP, but successful evaluation by Infrastructure Australia could also see a greater share of Federal Funding attracted to these projects.

CRUCIALLY, ASSET RECYCLING HAS NOT BEEN USED TO THE SAME DEGREE IN QUEENSLAND AS IT HAS IN OTHER STATES AND THIS REMAINS A POTENTIAL SOURCE OF FINANCE FOR FUTURE INFRASTRUCTURE PROJECTS

88 2019 Queensland Major Projects Pipeline CONSTRUCTION SKILLS QUEENSLAND CSQ aims to underpin the future prosperity of building and construction in Queensland using evidence and data to plan investment in a skilled workforce to meet industry needs. Construction Skills Queensland (CSQ) is We also undertake comprehensive industry proud to be a collaboration partner of the research and forecasting to ensure our training QMPPR Report. investment continues to develop a pipeline of the right skills for Queensland’s future building CSQ works collaboratively with the industry and construction activities. to future-proof the building and construction workforce and support the economic growth CSQ programs provide a pathway for eligible of Queensland. new entrants and existing workers in the industry to obtain new skills and qualifications Reports such as the Queensland Major in civil construction. Projects Pipeline report play an important part in identifying future infrastructure and CSQ assists major projects to access building investment needs and helping to inform and construction training to address skills planning by industry and government. deficiencies that may hold up the project, individuals to become more multi-skilled For our part, CSQ is here to help the and productive, or provide career pathway construction workforce connect with the skills opportunities for the workforce. they will require through subsidised training delivered by registered training organisations. CSQ also supports strategic and innovative skilling solutions to respond to emerging issues and to pursue best practice in building and construction.

CONTACT [email protected] 1800 798 488 www.csq.org.au

2019 Queensland Major Projects Pipeline 89 CONCLUSION AND RECOMMENDATIONS

This Report shows that major project activity in Queensland is now higher than the very low trough experienced through 2015/16 and 2016/17.

In conclusion there are downside risks to major MAJOR PROJECTS DECLINE project activity in the state in IN 2019/20 the near term, and there are significant challenges ahead ƒƒ The likely prospect of a 24% decline in major project if meeting the twin goals of activity over 2019/20. sustainability in infrastructure ƒƒ Overall, funded work in the pipeline falls from $6.1bn in provision and sustainability in 2018/19 to $4.7bn in 2019/20 before recovering slightly the Queensland construction the following year. industry are to be achieved. PUBLIC AND PRIVATE INVESTMENT

ƒƒ There may be an upside to the Commonwealth Government’s current Infrastructure Investment Program, to ward off the negative impact of the slowdown in residential building or guard against potential external shocks.

REGIONAL PIPELINE VOLATILITY

ƒƒ There are vast differences in how major project activity will play out by region, by sector and by project size through the forecast period. ƒƒ For many regions and sectors, volatility in the pipeline is set to increase, placing pressure on construction industry contractors and suppliers. ƒƒ Regions in the north and the west of the state have very high shares of unfunded work in their pipelines, adding to uncertainty for contractors and industry suppliers.

SKILLS SHORTAGES

ƒƒ Queensland still faces significant competition for construction skills from other states – particularly New South Wales and Victoria. ƒƒ The infrastructure investment program in other east coast states is unlikely to slow down given projects already in flight.

90 2019 Queensland Major Projects Pipeline This Report makes the following recommendations:

INCREASE INDUSTRY INCREASE NUMBER 1 COLLABORATION 2 OF SHOVEL READY PROJECTS Aim for a more collaborative approach Governments should consider raising the between government and the construction number of “shovel ready” projects in the industry, as is emerging in New South pipeline through early identification of Wales and Victoria. Looming capacity and infrastructure network challenges and capability challenges will likely require a commit to earlier evaluation of solutions and greater partnership approach that maximises business cases. Similarly, future infrastructure the legacy of the infrastructure program. requirements should be informed by a Rather than being incentivised to secure comprehensive review of the quality of the lowest priced work on each and every the existing infrastructure stock and the project, procurement will increasingly need development of frequently updated customer to encourage industry investment in capacity metrics that can best indicate where gaps may and capability, reward innovation (and hence exist. Increasing the depth of the pipeline would productivity), and foster the development of improve its flexibility to help smooth cycles in critical skills needed to deliver major projects. major project activity – that is, allowing projects to be accelerated within the pipeline to take advantage of any emerging local industry SECURE capacity, such as seems likely to occur in COMMONWEALTH 2019/20. 3 CONTRIBUTION TO RAIL PROJECTS DEVELOP A Resolve Commonwealth funding 4 contributions to passenger rail projects FUNDING PLAN – the State Government’s ability to fund Other states, infrastructure growth beyond its current Consider asset recycling. including New South Wales and Victoria, budget commitments is challenging. have already established long term plans for This is likely to hamper its ability to meet infrastructure development, and have made the contributions required by the Commonwealth hard decisions regarding funding and finance. per national partnership agreements covering With its traditionally stronger population transport and road projects. Securing and economic growth, Queensland needs Commonwealth contributions towards the to develop a strategic plan for funding and $5.4bn Cross River Rail project and further financing infrastructure. As noted in previous contributions to the Beerburrum to Nambour Major Project Pipeline Reports, Queensland Rail project would liberate funds from the could leverage substantial infrastructure forward estimates to reinvest into other finance through asset recycling strategies. priorities.

2019 Queensland Major Projects Pipeline 91 FINALISE A 5 CITY SEQ DEAL 6 CAPITAL EXPENDITURE

City deals provide a new approach for all The State Government should maintain the levels of government to work together to current focus on ensuring committed funds plan and deliver transformative outcomes for for infrastructure delivery are spent as Queensland cities and are a key mechanism planned. The gap between committed and of the Commonwealth Government’s Smart actual spending on public investment has Cities Plan (2016). The Townsville City Deal narrowed, from a peak of $1.7bn in 2014/15 struck in December 2016 was the first in to $333m in 2017/18. This positive trend should Australia and an important start. A South East be maintained. Queensland (SEQ) Regional City Deal has the potential to be the foremost City Deal in the nation involving ten separate Councils. This ‘new generation’ City Deal could provide a structured, coordinated plan for infrastructure development in south east Queensland supported by all tiers of government.

IMPROVED NEEDS REVIEW PACKAGING 7 ANALYSIS 8 STRATEGIES

Better identification of infrastructure gaps. Provide a diverse range of projects by Broad economic measures and rules of thumb size. This Report highlights that a very such as investment/GSP ratios are not ideal high proportion of funded work in 2021/22 determinants of the existence of infrastructure and 2022/23 is concentrated in projects gaps but can show the cyclicality and trend valued over $500m. A sustainable and movements in investment over time. The lack competitive construction industry requires of established benchmarks or satisfactory diverse participation in project tenders and methods of infrastructure gap identification is construction work. With this in mind, the problematic and perhaps should be addressed State Government should look to review in future infrastructure Audits by Infrastructure their packaging strategies to support greater Australia, as well as future Queensland State participation from the sector. Infrastructure Plans.

92 2019 Queensland Major Projects Pipeline BEST PRACTICE INFRASTRUCTURE PROVISIONS

On top of these recommendations, the more general rules of ‘best practice’ infrastructure provision continue to apply. Governments, particularly, will need to maintain and improve reporting systems to ensure the timely identification of any infrastructure gaps, choose the most productive projects and infrastructure solutions to address gaps, and come up with funding and financing solutions if major project activity is to be matched with Queensland’s infrastructure demands over the long term:

IDENTIFY THE GAPS REVIEW THE OPTIONS

Better identification of infrastructure gaps. Ensure that the best infrastructure solutions Broad economic measures and rules of thumb are picked. This means that the business cases such as investment/GSP ratios are not ideal for short and long-term public investment determinants of the presence of infrastructure programs are based on maximising economic gaps but can show the cyclicality and trend benefits through transparent cost benefit movements in investment over time. Changing analysis (CBA). The creation of Building behaviours and a rising population density are Queensland (BQ), along with the ongoing increasing the adaptability of cities in meeting work of Infrastructure Australia evaluating infrastructure constraints. business cases submitted for Commonwealth Government funding, has seen far more rigorous analysis undertaken in project evaluation and selection in Queensland than in the past.

FIND THE MONEY

Ensure there is appropriate funding and financing mechanisms in place. Sustainable investment in economic infrastructure for Queensland will involve moving more major projects from ‘unfunded’ to ‘funded’ categories in coming years, as well as potentially accelerating developments to take advantage of industry capacity and developing new projects. The high cyclicality of State government revenues create challenges here for publicly funded work as it encourages more spending on infrastructure in the good economic times (at a time when industry capacity to deliver infrastructure is more stretched and costs are higher) and then pull back on infrastructure spending in the bad economic times (when the broader economy could do with the spending boost and costs can be lower). Because of this, governments should continue to look for ways to smooth and increase project finance such as through City Deals, asset leases, market-led proposals, value capture and the judicious use of debt finance. Inevitably, sustainable financing of infrastructure over the long term will require genuine tax and expenditure reforms.

2019 Queensland Major Projects Pipeline 93 RISKS TO THE OUTLOOK The outlook contained in this report is subject to significant upside and downside risks. Despite the cyclicality of work projected, there is still the potential for further, more volatile, cycles ahead given Queensland’s natural strengths and advantages: increasing connections with the fast growing economies of Asia, traditionally strong population growth, and high quality natural resources. In this respect, the key risks which will affect the outlook for major project work as identified in this Report, are:

HEALTH OF TRADING 1 PARTNERS 2 COMMODITY PRICES

The economic outlook for key trading partners, The trajectory of commodity prices, particularly the strategic decisions they make in achieving for coal (both thermal and coking), as well as sustainable growth, and how this will impact oil prices (which can influence returns to LNG on the global trade of resources for which projects). Commodity price movements also Queensland has a strong supply position, impact on Queensland Government royalty particularly coking coal, thermal coal, and gas. revenues (as well as business taxes collected at the Commonwealth level) which can influence the future path of public infrastructure CURRENCY investment. 3 FLUCTUATIONS

Movements in the value of the Australian dollar, which not only affect the profitability 4 GOVERNMENT POLICY and competitiveness of resources projects but also helps drive investment in other Policy decisions by State and Federal tradeable sectors of the Queensland economy, Governments, particularly with regard to the including tourism, agriculture, education and resources and energy and how this may play manufacturing. out in terms of encouraging private investment in resources projects and energy infrastructure.

94 2019 Queensland Major Projects Pipeline While most of these risks are Maintaining a healthy outside of the control of those Queensland economy operating in the construction depends on sustaining an of major projects, it remains innovative construction important that governments industry which is flexible in and industry participants responding to the challenges focus on what can be ahead, and has the right mix controlled to ensure that the of skills and competencies to Queensland construction meet future demand. industry and economy remains on a sustainable footing. This includes taking on the recommendations in this Report with the aim of mitigating the volatility of the boom/bust investment cycle and achieving high quality, predictable and sustainable outcomes, safe workplaces and decent working conditions.

2019 Queensland Major Projects Pipeline 95 PUMPS UNITED

Founded 45 years ago Pumps United are very With 11 branches and over 130 staff proud to have opened our first Queensland nationally our team are excited to be branch in Cairns during 2015 and then collaborative partners with the QMCA Sunshine Coast with Gold Coast soon after. supporting its members. As the experts in We employ local staff most having been in the water management specialising in Rental, industry for over 20 years. Dewatering & Enviro solutions, we are driven to exceed expectations within the Queensland market and like most QMCA members Pumps United are optimistic about the upcoming projects detailed within this report.

FOR MORE INFORMATION

1300 137 137 www.pumpsunited.com.au DIAL BEFORE YOU DIG

You wouldn’t employ an unlicensed electrician or plumber therefore don’t take the risk when hiring a locator, ensure he is a DBYD Certified Locator.

DBYD CERTIFICATION LIMITED (DCL) has DBYD has addressed this concern by been set up to offer certification for locators developing a rigorous assessment for working with asset owners and contractors. locating that contains both theory and The Certification recognises locators who have practical elements. demonstrated a high level of understanding It is the intention of DBYD and supported by and practical expertise. Our mission is to its members that locators will aspire to be a deliver training and certification to ensure the DBYD Certified Locator. Having successfully location of network infrastructure. Our vision passed the assessment the locator will have is to have safer communities through training recognition that he/she has met a standard and locator certification. that is endorsed by our asset owning members WHAT IT MEANS TO BE and will be listed on the DCL website as a A DBYD CERTIFIED LOCATOR DBYD Certified Locator. In recent years the asset owning members of DBYD is “The Essential First Step” and we now DBYD have voiced their concerns surrounding see engaging a DBYD Certified Locator as the inconsistency of skill sets associated with “The Essential Second Step”. locating, which can lead to damages to their respective assets or more concerning serious injuries to workers or the general public.

FOR MORE INFORMATION

Paul Newman 1300 329 375 www.1100.com.au 2019 MAJOR PROJECTS LIST As at February 2019

TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 ROADS, BRIDGES and RUNWAYS Kingsford Smith Drive Upgrade Brisbane City Council Brisbane Inner City 650 440 Under Construction 106 30 Brisbane Metro Busway System Brisbane City Council Brisbane Inner City 944 550 Under Procurement 50 200 250 50 Brisbane New Parallel Runway Phase 2 Brisbane Airport Brisbane - North 830 380 Under Construction 280 80 BAC Automall Brisbane Airport Brisbane - North 89 50 Under Procurement 25 25 Logan Motorway Enhancement Project Transurban Logan - Beaudesert 512 420 Under Construction 180 Yamanto to Ebenezer Upgrade Qld Government Ipswich 340 263 Prospective 38 97 128 Centenary Hwy Bus Lanes - Ipswich Mwy to Qld Government Ipswich 400 240 Prospective 18 120 Toowong Centenary Hwy Bridge Duplication Qld Government Ipswich 150 100 Prospective 50 50 Jabiru Island Bridges (Hope Island Road (Oxley Qld Government Gold Coast 136 102 Unlikely 10 20 72 Drive) road duplication - stage 4) Ipswich Motorway; Rocklea to Darra Stage 1 - Qld Government & Federal Ipswich 400 200 Under Construction 50 130 Between Suscatand Street and Oxley Road Inc. Government Bridge Gateway Motorway Upgrade North (GUN) - Single Qld Government & Federal Brisbane - North 1142 850 Under Construction 100 Package Government Pacific Motorway; Section (C) Daisy Hill to Logan Qld Government & Federal Logan - Beaudesert 250 188 Prospective 20 100 68 Motorway at Loganholme Government Coomera Connector - Loganholme to Nerang Qld Government & Federal Gold Coast 2400 1500 Unlikely Government Pacific Motorway; Eight Mile Plains to Daisy Hill Qld Government & Federal Brisbane - South 749 374 Announced 74 120 120 Government Pacific Motorway; Miles Platting Road to Rochedale Qld Government & Federal Logan - Beaudesert 196 160 Under Construction 80 50 Road (Gateway Merge) Government Pacific Motorway; Mudgeeraba to Varsity Lakes Qld Government & Federal Gold Coast 197 165 Under Construction 58 58 39 Capacity Upgrade Government Sunshine Coast Airport - New East-West Runway Queensland Airports Limited Sunshine Coast 297 240 Under Construction 150 40 Mooloolah Road Interchange Qld Government Wide Bay 450 250 Prospective 50 150 Pacific Motorway - Varsity Lakes to Tugun Qld Government & Federal Gold Coast 1030 550 Announced 150 200 150 Government Rockhampton Ring Road Qld Government & Federal Fitzroy 950 750 Unlikely 50 Government Capricorn Highway (Rockhampton to Gracemere) Qld Government & Federal Fitzroy 75 60 Under Procurement 40 20 Government Toowoomba Range Second Crossing Qld Government & Federal Toowoomba 1606 1250 Under Construction 800 Government Bruce Highway; Caloundra Road to Sunshine Qld Government & Federal Sunshine Coast 929 442 Under Construction 125 150 107 Motorway Government Bruce Highway; Pine River to Caloundra Interchange Qld Government & Federal Sunshine Coast 662 430 Announced 20 150 150 110 Government Bruce Highway; Deception Bay Road Upgrades Qld Government & Federal Moreton Bay - North 150 75 Announced 10 40 25 Government Bruce Highway - Maroochydore Road Interchange Qld Government & Federal Sunshine Coast 187 149 Announced 10 70 69 Upgrade Government Bruce Highway - Burdekin Deviation Qld Government & Federal Townsville 1400 1050 Unlikely Government Bruce Highway - Ingham to Cardwell Range Qld Government & Federal Townsville 460 345 Unlikely Deviation Government Bruce Highway - Goorganga Plains Upgrade Qld Government & Federal Mackay - Isaac 330 248 Unlikely Government

98 2019 Queensland Major Projects Pipeline TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 ROADS, BRIDGES and RUNWAYS Kingsford Smith Drive Upgrade Brisbane City Council Brisbane Inner City 650 440 Under Construction 106 30 Brisbane Metro Busway System Brisbane City Council Brisbane Inner City 944 550 Under Procurement 50 200 250 50 Brisbane New Parallel Runway Phase 2 Brisbane Airport Brisbane - North 830 380 Under Construction 280 80 BAC Automall Brisbane Airport Brisbane - North 89 50 Under Procurement 25 25 Logan Motorway Enhancement Project Transurban Logan - Beaudesert 512 420 Under Construction 180 Yamanto to Ebenezer Upgrade Qld Government Ipswich 340 263 Prospective 38 97 128 Centenary Hwy Bus Lanes - Ipswich Mwy to Qld Government Ipswich 400 240 Prospective 18 120 Toowong Centenary Hwy Bridge Duplication Qld Government Ipswich 150 100 Prospective 50 50 Jabiru Island Bridges (Hope Island Road (Oxley Qld Government Gold Coast 136 102 Unlikely 10 20 72 Drive) road duplication - stage 4) Ipswich Motorway; Rocklea to Darra Stage 1 - Qld Government & Federal Ipswich 400 200 Under Construction 50 130 Between Suscatand Street and Oxley Road Inc. Government Bridge Gateway Motorway Upgrade North (GUN) - Single Qld Government & Federal Brisbane - North 1142 850 Under Construction 100 Package Government Pacific Motorway; Section (C) Daisy Hill to Logan Qld Government & Federal Logan - Beaudesert 250 188 Prospective 20 100 68 Motorway at Loganholme Government Coomera Connector - Loganholme to Nerang Qld Government & Federal Gold Coast 2400 1500 Unlikely Government Pacific Motorway; Eight Mile Plains to Daisy Hill Qld Government & Federal Brisbane - South 749 374 Announced 74 120 120 Government Pacific Motorway; Miles Platting Road to Rochedale Qld Government & Federal Logan - Beaudesert 196 160 Under Construction 80 50 Road (Gateway Merge) Government Pacific Motorway; Mudgeeraba to Varsity Lakes Qld Government & Federal Gold Coast 197 165 Under Construction 58 58 39 Capacity Upgrade Government Sunshine Coast Airport - New East-West Runway Queensland Airports Limited Sunshine Coast 297 240 Under Construction 150 40 Mooloolah Road Interchange Qld Government Wide Bay 450 250 Prospective 50 150 Pacific Motorway - Varsity Lakes to Tugun Qld Government & Federal Gold Coast 1030 550 Announced 150 200 150 Government Rockhampton Ring Road Qld Government & Federal Fitzroy 950 750 Unlikely 50 Government Capricorn Highway (Rockhampton to Gracemere) Qld Government & Federal Fitzroy 75 60 Under Procurement 40 20 Government Toowoomba Range Second Crossing Qld Government & Federal Toowoomba 1606 1250 Under Construction 800 Government Bruce Highway; Caloundra Road to Sunshine Qld Government & Federal Sunshine Coast 929 442 Under Construction 125 150 107 Motorway Government Bruce Highway; Pine River to Caloundra Interchange Qld Government & Federal Sunshine Coast 662 430 Announced 20 150 150 110 Government Bruce Highway; Deception Bay Road Upgrades Qld Government & Federal Moreton Bay - North 150 75 Announced 10 40 25 Government Bruce Highway - Maroochydore Road Interchange Qld Government & Federal Sunshine Coast 187 149 Announced 10 70 69 Upgrade Government Bruce Highway - Burdekin Deviation Qld Government & Federal Townsville 1400 1050 Unlikely Government Bruce Highway - Ingham to Cardwell Range Qld Government & Federal Townsville 460 345 Unlikely Deviation Government Bruce Highway - Goorganga Plains Upgrade Qld Government & Federal Mackay - Isaac 330 248 Unlikely Government

2019 Queensland Major Projects Pipeline 99 2019 MAJOR PROJECTS LIST As at February 2019

TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 ROADS, BRIDGES and RUNWAYS Cooroy to Curra: (Section D) - Keefton Road to Qld Government & Federal Wide Bay 1000 800 Under Procurement 125 125 125 125 Curra (Gympie bypass) Government Bruce Highway - Rockhampton Northern Access Federal Government Wide Bay 121 91 Under Procurement 10 51 30 Upgrade Stage 1 Sarina to Cairns - Cairns Southern Access Corridor Federal Government Cairns 481 300 Under Procurement 25 100 100 75 Stage 3 - Edmonton to Gordonvale Sarina to Cairns - Cairns Southern Access Corridor Federal Government Cairns 104 60 Under Construction 15 30 15 Stage 4 - Kate Street to Aumuller Street Sarina to Cairns - Haughton River & Pink Lily Lagoon Qld Government & Federal Townsville 515 240 Under Construction 60 100 80 Upgrade Government Sarina to Cairns - Mackay Ring Road/Bypass - Qld Government & Federal Mackay - Isaac 497 215 Under Construction 120 45 Stage 1 Government Sarina to Cairns - Mackay Northern Access Upgrade Federal Government Mackay - Isaac 80 60 Announced 15 35 10 Sarina to Cairns - Ingham to Cardwell Range Federal Government Townsville 460 280 Unlikely Deviation Sarina to Cairns - Saltwater Creek Upgrade Federal Government Townsville 103 77 Unlikely 19 38 21 Sarina to Cairns - Tiaro Flood Immunity Upgrade Federal Government Wide Bay 107 80 Unlikely 40 40 Townsville Ringroad stage 5 Qld Government & Federal Townsville 180 90 Prospective 45 45 Government Peak Downs Hwy Improvements - Eton Range Qld Government & Federal Mackay - Isaac 189 120 Under Construction Government Peak Downs Highway - Walkerston Bypass Qld Government & Federal Mackay - Isaac 150 113 Announced 65 48 Government Smithfield Transport Corridor Upgrade Qld Government & Federal Cairns 150 75 Under Construction 25 50 Government Neville Bonner Bridge Destination Brisbane Brisbane Inner City 110 70 Under Procurement 35 35 RAIL Beerburrum to Nambour Rail Upgrade Qld Government & Federal Sunshine Coast 780 500 Announced 25 50 200 Government Varsity Lakes to Elanora Extension Qld Government / QR Gold Coast 859 600 Unlikely Ipswich Rail Line - Darra-Redbank 3rd track Qld Government Ipswich 218 153 Unlikely 70 83 CRR; Early Works - Site Preperation + Demolition Qld Government Brisbane Inner City 100 100 Under Construction 50 CRR; Tunnel, Stations and Development (TSD) PPP Qld Government Brisbane Inner City 3700 3400 Under Procurement 50 450 2000 900 CRR; Rail, Integration and Systems package (RIS) Qld Government Brisbane Inner City 900 600 Under Procurement 10 100 300 190 European Train Control System Level 2 Qld Government Brisbane Inner City 634 589 Under Procurement 100 129 130 130 100 Gold Coast Light Rail Stage 3 Qld Government / Private Gold Coast 500 300 Credibly Proposed 50 200 50 Sunshine Coast Light Rail Sunshine Coast Council Sunshine Coast 500 300 Unlikely 50 150 North Coast Line Capacity (Brisbane to Cairns) Qld Government 116 70 Prospective 35 35 Inland Mainline Freight Upgrade; NSW/QLD Border ARTC Darling Downs - 1600 1350 Announced 200 500 to Gowrie Maranoa Inland Mainline Freight Upgrade; Gowrie to Kagaru ARTC Ipswich 3500 3000 Announced 200 400 800 800 Inland Mainline Freight Upgrade; Kagaru to Acacia ARTC Logan - Beaudesert 150 100 Announced 20 60 Ridge & Bromelton Brisbane Freight Corridor (POB Connection) Port Of Brisbane / Brisbane - East 4000 3250 Prospective Government North Galilee Basin Rail Adani Mackay - Isaac 1000 750 Announced 150 250 250 100

100 2019 Queensland Major Projects Pipeline TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 ROADS, BRIDGES and RUNWAYS Cooroy to Curra: (Section D) - Keefton Road to Qld Government & Federal Wide Bay 1000 800 Under Procurement 125 125 125 125 Curra (Gympie bypass) Government Bruce Highway - Rockhampton Northern Access Federal Government Wide Bay 121 91 Under Procurement 10 51 30 Upgrade Stage 1 Sarina to Cairns - Cairns Southern Access Corridor Federal Government Cairns 481 300 Under Procurement 25 100 100 75 Stage 3 - Edmonton to Gordonvale Sarina to Cairns - Cairns Southern Access Corridor Federal Government Cairns 104 60 Under Construction 15 30 15 Stage 4 - Kate Street to Aumuller Street Sarina to Cairns - Haughton River & Pink Lily Lagoon Qld Government & Federal Townsville 515 240 Under Construction 60 100 80 Upgrade Government Sarina to Cairns - Mackay Ring Road/Bypass - Qld Government & Federal Mackay - Isaac 497 215 Under Construction 120 45 Stage 1 Government Sarina to Cairns - Mackay Northern Access Upgrade Federal Government Mackay - Isaac 80 60 Announced 15 35 10 Sarina to Cairns - Ingham to Cardwell Range Federal Government Townsville 460 280 Unlikely Deviation Sarina to Cairns - Saltwater Creek Upgrade Federal Government Townsville 103 77 Unlikely 19 38 21 Sarina to Cairns - Tiaro Flood Immunity Upgrade Federal Government Wide Bay 107 80 Unlikely 40 40 Townsville Ringroad stage 5 Qld Government & Federal Townsville 180 90 Prospective 45 45 Government Peak Downs Hwy Improvements - Eton Range Qld Government & Federal Mackay - Isaac 189 120 Under Construction Government Peak Downs Highway - Walkerston Bypass Qld Government & Federal Mackay - Isaac 150 113 Announced 65 48 Government Smithfield Transport Corridor Upgrade Qld Government & Federal Cairns 150 75 Under Construction 25 50 Government Neville Bonner Bridge Destination Brisbane Brisbane Inner City 110 70 Under Procurement 35 35 RAIL Beerburrum to Nambour Rail Upgrade Qld Government & Federal Sunshine Coast 780 500 Announced 25 50 200 Government Varsity Lakes to Elanora Extension Qld Government / QR Gold Coast 859 600 Unlikely Ipswich Rail Line - Darra-Redbank 3rd track Qld Government Ipswich 218 153 Unlikely 70 83 CRR; Early Works - Site Preperation + Demolition Qld Government Brisbane Inner City 100 100 Under Construction 50 CRR; Tunnel, Stations and Development (TSD) PPP Qld Government Brisbane Inner City 3700 3400 Under Procurement 50 450 2000 900 CRR; Rail, Integration and Systems package (RIS) Qld Government Brisbane Inner City 900 600 Under Procurement 10 100 300 190 European Train Control System Level 2 Qld Government Brisbane Inner City 634 589 Under Procurement 100 129 130 130 100 Gold Coast Light Rail Stage 3 Qld Government / Private Gold Coast 500 300 Credibly Proposed 50 200 50 Sunshine Coast Light Rail Sunshine Coast Council Sunshine Coast 500 300 Unlikely 50 150 North Coast Line Capacity (Brisbane to Cairns) Qld Government 116 70 Prospective 35 35 Inland Mainline Freight Upgrade; NSW/QLD Border ARTC Darling Downs - 1600 1350 Announced 200 500 to Gowrie Maranoa Inland Mainline Freight Upgrade; Gowrie to Kagaru ARTC Ipswich 3500 3000 Announced 200 400 800 800 Inland Mainline Freight Upgrade; Kagaru to Acacia ARTC Logan - Beaudesert 150 100 Announced 20 60 Ridge & Bromelton Brisbane Freight Corridor (POB Connection) Port Of Brisbane / Brisbane - East 4000 3250 Prospective Government North Galilee Basin Rail Adani Mackay - Isaac 1000 750 Announced 150 250 250 100

2019 Queensland Major Projects Pipeline 101 2019 MAJOR PROJECTS LIST As at February 2019

TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 HARBORS Brisbane International Cruise Terminal (including Port of Brisbane Brisbane - North 150 120 Under Construction 40 65 dredging) Port of Gladstone - Second Shipping Lane Gladstone Ports Corporation Fitzroy 280 196 Prospective 35 100 61 (Gatcombe and Golding Cutting Channel Duplication Project) Townsville Port Expansion Project - Outer Harbour Qld Government Townsville 200 150 Unlikely 75 75 Expansion (berths 14+15) Townsville Port Expansion Project - Channel Qld Government Townsville 193 150 Announced 75 75 Capacity Upgrade Port of Gladstone - RG Tanner Coal Terminal Qld Government Fitzroy 225 200 Announced 60 80 60 Abbot Point Coal Terminal Expansion Adani Mackay - Isaac Unlikely DEFENCE RAAF Amberley - Growler Project Federal Government Ipswich 180 150 Under Construction 60 60 30 RAAF Amberley - C17 project Federal Government Ipswich 200 120 Under Construction 20 20 Shoalwater Bay - Remediation Federal Government Fitzroy 140 120 Under Construction 20 50 50 Singapore Force Posture Initiatives - Shoalwater Bay Federal Government Fitzroy 1100 400 Announced 100 100 100 100 Singapore Force Posture Initiatives - Townsville Federal Government Townsville 1100 100 Announced 25 25 25 25 WATER Lower Fitzroy River Infrastructure Project - New Gladstone Area Water Board Fitzroy 352 195 Announced 35 65 95 Weir at Rookwood on the Fitzroy River Stage 2 (GAWB) Gladstone to Fitzroy River Pipeline Gladstone Area Water Board Fitzroy 250 120 Unlikely (GAWB) Three Rivers Irrigation Project Stanbroke Outback - North 250 120 Credibly Proposed 60 60 Shell / Arrow Water Treatment Facilities Bowen Shell/Arrow/Bow Mackay - Isaac 250 175 Prospective 90 85 Wyaralong Dam WTP Stage 1 SEQ Water Logan - Beaudesert 200 150 Prospective 50 50 50 Beaudesert Water Supply Upgrade Pipeline SEQ Water Logan - Beaudesert 135 100 Announced 50 50 Nullinga Dam Federal/Queensland Cairns 250 180 Credibly Proposed 50 80 50 Governemnt Somerset Dam Upgrade Ipswich 600 450 Credibly Proposed 150 150 150 Lake McDonald Dam Upgrade SEQWater Wide Bay 100 80 Announced 40 40 Haughton Pipeline Duplication Townsville Council Townsville 215 150 Announced 100 50 Urannah Dam Bowen Collinsville Enterprises Mackay - Isaac 250 200 Unlikely 100 100 Burdekin Falls Dam - Saddle Dam and Monolith Sunwater Townsville 330 210 Announced 90 95 25 Improvement Hells Gate Dam - Upper Burdekin Townsville Enterprise Townsville 313 250 Unlikely Hells Gate Diversion Canal - 240km from Hells Gates Townsville Enterprise Townsville 490 400 Unlikely to a Delineated Area Paradise Dam Spillway Improvement Project Sunwater Wide Bay 200 145 Prospective 35 80 30 Galilee Basin Water Supply Adani Mackay - Isaac 80 60 Announced 30 30 SEWERAGE Bulimba Creek - Brisbane Queensland Urban Utilities Brisbane Inner City 100 75 Under Construction 10 (QUU) Luggage Point Sewerage Scheme Queensland Urban Utilities Brisbane - North 600 500 Under Construction 25 25 25 25 25 (QUU) Rubyanna WWTP Bundaberg Wide Bay 71 50 Under Construction Gold Coast Council Long Term Water Recycled GCC Gold Coast 75 53 Under Construction 40 20 Water Release Stage 1 Gold Coast Council Long Term Water Recycled GCC Gold Coast 250 188 Announced 60 128 Water Release Stage 2 - South Stradbroke pipeline Northern treatment Urban Utilities Brisbane Inner City 220 175 Under Construction 12 40 75 37 23 Southern treatment Urban Utilities Ipswich 170 136 Under Procurement 2 26 5 40 53

102 2019 Queensland Major Projects Pipeline TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 HARBORS Brisbane International Cruise Terminal (including Port of Brisbane Brisbane - North 150 120 Under Construction 40 65 dredging) Port of Gladstone - Second Shipping Lane Gladstone Ports Corporation Fitzroy 280 196 Prospective 35 100 61 (Gatcombe and Golding Cutting Channel Duplication Project) Townsville Port Expansion Project - Outer Harbour Qld Government Townsville 200 150 Unlikely 75 75 Expansion (berths 14+15) Townsville Port Expansion Project - Channel Qld Government Townsville 193 150 Announced 75 75 Capacity Upgrade Port of Gladstone - RG Tanner Coal Terminal Qld Government Fitzroy 225 200 Announced 60 80 60 Abbot Point Coal Terminal Expansion Adani Mackay - Isaac Unlikely DEFENCE RAAF Amberley - Growler Project Federal Government Ipswich 180 150 Under Construction 60 60 30 RAAF Amberley - C17 project Federal Government Ipswich 200 120 Under Construction 20 20 Shoalwater Bay - Remediation Federal Government Fitzroy 140 120 Under Construction 20 50 50 Singapore Force Posture Initiatives - Shoalwater Bay Federal Government Fitzroy 1100 400 Announced 100 100 100 100 Singapore Force Posture Initiatives - Townsville Federal Government Townsville 1100 100 Announced 25 25 25 25 WATER Lower Fitzroy River Infrastructure Project - New Gladstone Area Water Board Fitzroy 352 195 Announced 35 65 95 Weir at Rookwood on the Fitzroy River Stage 2 (GAWB) Gladstone to Fitzroy River Pipeline Gladstone Area Water Board Fitzroy 250 120 Unlikely (GAWB) Three Rivers Irrigation Project Stanbroke Outback - North 250 120 Credibly Proposed 60 60 Shell / Arrow Water Treatment Facilities Bowen Shell/Arrow/Bow Mackay - Isaac 250 175 Prospective 90 85 Wyaralong Dam WTP Stage 1 SEQ Water Logan - Beaudesert 200 150 Prospective 50 50 50 Beaudesert Water Supply Upgrade Pipeline SEQ Water Logan - Beaudesert 135 100 Announced 50 50 Nullinga Dam Federal/Queensland Cairns 250 180 Credibly Proposed 50 80 50 Governemnt Somerset Dam Upgrade SEQWater Ipswich 600 450 Credibly Proposed 150 150 150 Lake McDonald Dam Upgrade SEQWater Wide Bay 100 80 Announced 40 40 Haughton Pipeline Duplication Townsville Council Townsville 215 150 Announced 100 50 Urannah Dam Bowen Collinsville Enterprises Mackay - Isaac 250 200 Unlikely 100 100 Burdekin Falls Dam - Saddle Dam and Monolith Sunwater Townsville 330 210 Announced 90 95 25 Improvement Hells Gate Dam - Upper Burdekin Townsville Enterprise Townsville 313 250 Unlikely Hells Gate Diversion Canal - 240km from Hells Gates Townsville Enterprise Townsville 490 400 Unlikely to a Delineated Area Paradise Dam Spillway Improvement Project Sunwater Wide Bay 200 145 Prospective 35 80 30 Galilee Basin Water Supply Adani Mackay - Isaac 80 60 Announced 30 30 SEWERAGE Bulimba Creek - Brisbane Queensland Urban Utilities Brisbane Inner City 100 75 Under Construction 10 (QUU) Luggage Point Sewerage Scheme Queensland Urban Utilities Brisbane - North 600 500 Under Construction 25 25 25 25 25 (QUU) Rubyanna WWTP Bundaberg Wide Bay 71 50 Under Construction Gold Coast Council Long Term Water Recycled GCC Gold Coast 75 53 Under Construction 40 20 Water Release Stage 1 Gold Coast Council Long Term Water Recycled GCC Gold Coast 250 188 Announced 60 128 Water Release Stage 2 - South Stradbroke pipeline Northern treatment Urban Utilities Brisbane Inner City 220 175 Under Construction 12 40 75 37 23 Southern treatment Urban Utilities Ipswich 170 136 Under Procurement 2 26 5 40 53

2019 Queensland Major Projects Pipeline 103 2019 MAJOR PROJECTS LIST As at February 2019

TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 ELECTRICITY North Queensland Power Station Private / Qld Gov / Feds Townsville 800 600 Credibly Proposed 100 250 250 Mt Emerald Wind Farm (180 MW) Ratch-Australia Port Bajool Cairns 380 133 Completed 95 JV Cooper’s Gap Wind Farm (438MW) AGL Darling Downs - 700 245 Under Construction 170 Maranoa Stage 1 (Wind 40MW, Windlab / Eurus Energy Townsville 160 56 Completed 31 Solar 15MW) Wandoan South Solar Project (1000MW) Equis Energy Fitzroy 1200 420 Prospective 125 170 125 Bulli Creek Solar Farm (>1000 MW) Solar Choice Darling Downs - 1500 525 Prospective 75 75 100 100 Maranoa Clarke Creek Wind (800MW) Energy Pacific Vic Pty Ltd Mackay - Isaac 1000 350 Announced 75 100 100 75 Raglan Solar (350MW) Eco Energy Group Fitzroy 310 109 Announced 54 54 Columboolan Solar Farm (Miles) (310MW) Luminous Energy Fitzroy 300 105 Credibly Proposed 52 53 Solar Farm (200MW) Eco Energy Group Fitzroy 240 84 Prospective 42 42 (106.8 MW) APA Darling Downs - 210 74 Under Construction 38 Maranoa - Stage 2 (270 MW) Genex Power Cairns 400 140 Announced 70 70 150MW Kidston Stage 3 Wind Project Genex Cairns 250 88 Credibly Proposed 44 44 Kidston Transmission Project Genex/Powerlink Cairns 200 100 Announced 100 Munna Creek Solar Farm Project (120 MW) Renewable Energy System Wide Bay 150 53 Announced 25 27 Technologies Kidston Pumped Hydro Storage Project Genex Power Cairns 330 200 Credibly Proposed 100 100 Moranbah Solar Farm (170MW) Adani Mackay - Isaac 200 70 Announced 70 Clare Solar Farm Project (100MW) FRV Townsville 200 70 Under Construction 25 Oakey Solar Farm Stage 2 (55 MW) Oakey 1 AssetCo Pty Ltd Darling Downs - 106 37 Under Construction 43 Maranoa Lilyvale Solar Farm (100 MW) FRV Toowoomba 200 70 Under Construction 20 Childers Solar Farm (80 MW) ESCO Pacific Wide Bay 125 44 Under Construction 25 20 Works Qld Government Fitzroy 131 100 Under Construction 60 Rollingstone Solar Farm (110 MW) ESCO Pacific Townsville 210 74 Prospective 40 33 Emerald Solar Farm (100 MW) RES Australia Fitzroy 100 35 Under Construction 15 Yarranlea Solar Farm (100MW) Risen Energy Darling Downs - 160 56 Under Construction 28 Maranoa Whitsunday Solar Farm (57.5 MW) Edify Energy / Wirsol Mackay - Isaac 112 39 Under Construction 22 Susan River Solar Farm (100MW) ESCO Pacific Wide Bay 160 56 Under Construction 56 (150 MW) Edify Energy / BlackRock Mackay - Isaac 300 105 Completed 30 Real Assets Hayman Solar Farm (50 MW) Edify Energy / BlackRock Mackay - Isaac 100 35 Under Construction 12 Real Assets Rodds Bay Solar (300MW) Renew Estate Fitzroy 350 123 Announced 60 63 Lower Wonga Solar Farm (Stage 1) 350MW Solar Q Wide Bay 560 196 Prospective Haughton Solar Farm 100MW Pacific Hydro Townsville 175 61 Under Construction 50 Beelbee Solar Farm 150MW APA Group Darling Downs - 240 84 Prospective Maranoa Clarke Creek Wind and Solar Farm 200MW Lacour Mackay - Isaac 320 112 Prospective Comet Solar Farm 309MW Hadstone Energy Fitzroy 490 172 Prospective Majors Creek Solar Project 400MW Edify Energy Townsville 640 224 Prospective Burdekin Solar Farm 140MW CleanGen Mackay - Isaac 220 77 Prospective

104 2019 Queensland Major Projects Pipeline TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 ELECTRICITY North Queensland Power Station Private / Qld Gov / Feds Townsville 800 600 Credibly Proposed 100 250 250 Mt Emerald Wind Farm (180 MW) Ratch-Australia Port Bajool Cairns 380 133 Completed 95 JV Cooper’s Gap Wind Farm (438MW) AGL Darling Downs - 700 245 Under Construction 170 Maranoa Kennedy Energy Park Stage 1 (Wind 40MW, Windlab / Eurus Energy Townsville 160 56 Completed 31 Solar 15MW) Wandoan South Solar Project (1000MW) Equis Energy Fitzroy 1200 420 Prospective 125 170 125 Bulli Creek Solar Farm (>1000 MW) Solar Choice Darling Downs - 1500 525 Prospective 75 75 100 100 Maranoa Clarke Creek Wind (800MW) Energy Pacific Vic Pty Ltd Mackay - Isaac 1000 350 Announced 75 100 100 75 Raglan Solar (350MW) Eco Energy Group Fitzroy 310 109 Announced 54 54 Columboolan Solar Farm (Miles) (310MW) Luminous Energy Fitzroy 300 105 Credibly Proposed 52 53 Bouldercombe Solar Farm (200MW) Eco Energy Group Fitzroy 240 84 Prospective 42 42 Darling Downs Solar Farm (106.8 MW) APA Darling Downs - 210 74 Under Construction 38 Maranoa Kidston Solar Project - Stage 2 (270 MW) Genex Power Cairns 400 140 Announced 70 70 150MW Kidston Stage 3 Wind Project Genex Cairns 250 88 Credibly Proposed 44 44 Kidston Transmission Project Genex/Powerlink Cairns 200 100 Announced 100 Munna Creek Solar Farm Project (120 MW) Renewable Energy System Wide Bay 150 53 Announced 25 27 Technologies Kidston Pumped Hydro Storage Project Genex Power Cairns 330 200 Credibly Proposed 100 100 Moranbah Solar Farm (170MW) Adani Mackay - Isaac 200 70 Announced 70 Clare Solar Farm Project (100MW) FRV Townsville 200 70 Under Construction 25 Oakey Solar Farm Stage 2 (55 MW) Oakey 1 AssetCo Pty Ltd Darling Downs - 106 37 Under Construction 43 Maranoa Lilyvale Solar Farm (100 MW) FRV Toowoomba 200 70 Under Construction 20 Childers Solar Farm (80 MW) ESCO Pacific Wide Bay 125 44 Under Construction 25 20 Stanwell Power Station Works Qld Government Fitzroy 131 100 Under Construction 60 Rollingstone Solar Farm (110 MW) ESCO Pacific Townsville 210 74 Prospective 40 33 Emerald Solar Farm (100 MW) RES Australia Fitzroy 100 35 Under Construction 15 Yarranlea Solar Farm (100MW) Risen Energy Darling Downs - 160 56 Under Construction 28 Maranoa Whitsunday Solar Farm (57.5 MW) Edify Energy / Wirsol Mackay - Isaac 112 39 Under Construction 22 Susan River Solar Farm (100MW) ESCO Pacific Wide Bay 160 56 Under Construction 56 Daydream Solar Farm (150 MW) Edify Energy / BlackRock Mackay - Isaac 300 105 Completed 30 Real Assets Hayman Solar Farm (50 MW) Edify Energy / BlackRock Mackay - Isaac 100 35 Under Construction 12 Real Assets Rodds Bay Solar (300MW) Renew Estate Fitzroy 350 123 Announced 60 63 Lower Wonga Solar Farm (Stage 1) 350MW Solar Q Wide Bay 560 196 Prospective Haughton Solar Farm 100MW Pacific Hydro Townsville 175 61 Under Construction 50 Beelbee Solar Farm 150MW APA Group Darling Downs - 240 84 Prospective Maranoa Clarke Creek Wind and Solar Farm 200MW Lacour Mackay - Isaac 320 112 Prospective Comet Solar Farm 309MW Hadstone Energy Fitzroy 490 172 Prospective Majors Creek Solar Project 400MW Edify Energy Townsville 640 224 Prospective Burdekin Solar Farm 140MW CleanGen Mackay - Isaac 220 77 Prospective

2019 Queensland Major Projects Pipeline 105 2019 MAJOR PROJECTS LIST As at February 2019

TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 ELECTRICITY Desailly Renewable Energy Park 1000MW DP Energy Cairns 1600 560 Prospective Archer Point Wind Farm 120MW Wind Power Queensland Townsville 190 67 Prospective Ingham Bio-Energy Project (110MW) North Queensland Bio- Townsville 640 110 Credibly Proposed 80 Energy Corporation Aramara Solar Farm (140 MW) Eco Energy World (EEW) Wide Bay 280 98 Prospective 48 50 Australia Powering North Queensland: Transmission Line Powerlink Cairns 150 128 Credibly Proposed 50 50 28 Burdekin Falls - Hydro-Electric Power Station Stanwell Townsville 200 120 Prospective 60 60 (50MW) Substation Upgrades at Various SEQ Locations Qld Government Multi Multi 110 80 Under Construction 45 SunCoast Powerline Project - Palmwoods to Qld Government Sunshine Coast 89 69 Under Construction 16 Maroochydore Lockyear Valley Gas Power Station Quin Brook Toowoomba 100 80 Under Procurement 50 30 Galilee Basin Transmission Project Adani Mackay - Isaac 100 80 Announced 20 40 20 PIPELINES Roma East Gas Project (pipeline component) Santos Darling Downs - 300 240 Under Construction 50 90 50 Maranoa Arrow Bowen Pipeline Shell/Arrow/Bow Mackay - Isaac 450 360 Unlikely 160 200 TELECOMMUNICATIONS National Broadband Network - Qld component NBN Co. Multi Multi 6928 4850 Under Construction 830 453 421 400 400 Public Safety Regional Radio Communication Qld Government Multi Multi 500 300 Announced 75 75 75 75 OIL & GAS Queensland Curtis LNG Upstream Field QGC & Shell Fitzroy 650 Under Construction 50 150 150 150 150 Development (Sustaining) Gladstone LNG Upstream Field Development Santos & Petronas Fitzroy 500 Under Construction 100 100 100 100 100 (Sustaining) Western Surat Gas Project Senex Darling Downs - 1500 1200 Prospective 30 60 60 60 Maranoa Arcadia Gas Project Santos Darling Downs - 400 200 Under Construction 100 100 Maranoa GLNG Roma East Project Santos & Petronas Darling Downs - 750 320 Under Construction 120 80 40 40 40 Maranoa Australia Pacific LNG Upstream Field Development Origin/Conoco Phillips Darling Downs - 650 Under Construction 50 150 150 150 150 (Sustaining) Maranoa Arrow - Upstream Field Development (Sustaining) Arrow/Shell Darling Downs - 600 Prospective 150 150 150 150 Maranoa Atlas Gas Processing Plant and Pipeline Jemena Fitzroy 140 84 Announced 54 30 COAL Eagle Downs Coking Coal Aqulia / Vale Mackay - Isaac 1250 600 Prospective 158 228 215 Byerwen Qcoal Mackay - Isaac 300 250 Under Construction 50 100 50 Maryborough (Colton) Northern Energy (Owned By Wide Bay 300 180 Prospective 70 110 New Hope) New Acland Stage 3 Expansion New Hope Corporation Darling Downs - 350 210 Unlikely 60 90 60 Maranoa Caval Ridge Expansion (part of the gazetted Bowen BHP Billiton / Mitsubishi Mackay - Isaac 200 160 Under Construction 80 80 Basin Coal Growth Project) Alliance (BMA) Peak Downs Expansion BHP Billiton / Mitsubishi Mackay - Isaac 460 345 Credibly Proposed 80 160 105 Alliance (BMA) South Walker Creek BHP / Mitsui Mackay - Isaac 150 100 Under Procurement 20 40 40 Grosvenor Underground Stage 2 Anglo Coal Mackay - Isaac 500 350 Credibly Proposed 70 105 175 Styx’s Coal Project Waratah Coal / Queensland Fitzroy 300 270 Credibly Proposed 50 220 Nickel

106 2019 Queensland Major Projects Pipeline TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 ELECTRICITY Desailly Renewable Energy Park 1000MW DP Energy Cairns 1600 560 Prospective Archer Point Wind Farm 120MW Wind Power Queensland Townsville 190 67 Prospective Ingham Bio-Energy Project (110MW) North Queensland Bio- Townsville 640 110 Credibly Proposed 80 Energy Corporation Aramara Solar Farm (140 MW) Eco Energy World (EEW) Wide Bay 280 98 Prospective 48 50 Australia Powering North Queensland: Transmission Line Powerlink Cairns 150 128 Credibly Proposed 50 50 28 Burdekin Falls - Hydro-Electric Power Station Stanwell Townsville 200 120 Prospective 60 60 (50MW) Substation Upgrades at Various SEQ Locations Qld Government Multi Multi 110 80 Under Construction 45 SunCoast Powerline Project - Palmwoods to Qld Government Sunshine Coast 89 69 Under Construction 16 Maroochydore Lockyear Valley Gas Power Station Quin Brook Toowoomba 100 80 Under Procurement 50 30 Galilee Basin Transmission Project Adani Mackay - Isaac 100 80 Announced 20 40 20 PIPELINES Roma East Gas Project (pipeline component) Santos Darling Downs - 300 240 Under Construction 50 90 50 Maranoa Arrow Bowen Pipeline Shell/Arrow/Bow Mackay - Isaac 450 360 Unlikely 160 200 TELECOMMUNICATIONS National Broadband Network - Qld component NBN Co. Multi Multi 6928 4850 Under Construction 830 453 421 400 400 Public Safety Regional Radio Communication Qld Government Multi Multi 500 300 Announced 75 75 75 75 OIL & GAS Queensland Curtis LNG Upstream Field QGC & Shell Fitzroy 650 Under Construction 50 150 150 150 150 Development (Sustaining) Gladstone LNG Upstream Field Development Santos & Petronas Fitzroy 500 Under Construction 100 100 100 100 100 (Sustaining) Western Surat Gas Project Senex Darling Downs - 1500 1200 Prospective 30 60 60 60 Maranoa Arcadia Gas Project Santos Darling Downs - 400 200 Under Construction 100 100 Maranoa GLNG Roma East Project Santos & Petronas Darling Downs - 750 320 Under Construction 120 80 40 40 40 Maranoa Australia Pacific LNG Upstream Field Development Origin/Conoco Phillips Darling Downs - 650 Under Construction 50 150 150 150 150 (Sustaining) Maranoa Arrow - Upstream Field Development (Sustaining) Arrow/Shell Darling Downs - 600 Prospective 150 150 150 150 Maranoa Atlas Gas Processing Plant and Pipeline Jemena Fitzroy 140 84 Announced 54 30 COAL Eagle Downs Coking Coal Aqulia / Vale Mackay - Isaac 1250 600 Prospective 158 228 215 Byerwen Qcoal Mackay - Isaac 300 250 Under Construction 50 100 50 Maryborough (Colton) Northern Energy (Owned By Wide Bay 300 180 Prospective 70 110 New Hope) New Acland Stage 3 Expansion New Hope Corporation Darling Downs - 350 210 Unlikely 60 90 60 Maranoa Caval Ridge Expansion (part of the gazetted Bowen BHP Billiton / Mitsubishi Mackay - Isaac 200 160 Under Construction 80 80 Basin Coal Growth Project) Alliance (BMA) Peak Downs Expansion BHP Billiton / Mitsubishi Mackay - Isaac 460 345 Credibly Proposed 80 160 105 Alliance (BMA) South Walker Creek BHP / Mitsui Mackay - Isaac 150 100 Under Procurement 20 40 40 Grosvenor Underground Stage 2 Anglo Coal Mackay - Isaac 500 350 Credibly Proposed 70 105 175 Styx’s Coal Project Waratah Coal / Queensland Fitzroy 300 270 Credibly Proposed 50 220 Nickel

2019 Queensland Major Projects Pipeline 107 2019 MAJOR PROJECTS LIST As at February 2019

TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 COAL Middlemount Coking Coal Mine Stage 2 Peabody / Yancoal Mackay - Isaac 325 284 Prospective 100 184 Hail Creek Extension - Underground Rio Tinto Mackay - Isaac 1100 660 Unlikely 150 310 Rolleston Expansion Xstrata/Glencore Fitzroy 400 120 Unlikely 70 50 Yarrabee Yancoal Fitzroy 260 150 Unlikely Boundary Hill South Mine Extension Anglo Coal Fitzroy 100 70 Unlikely Aquila Anglo Coal Mackay - Isaac 200 140 Unlikely 70 Foxleigh Plains Project Anglo/CAML/Nippon Mackay - Isaac 200 140 Unlikely 70 Eaglefield Coal Mine Expansion Peabody Mackay - Isaac 1500 1200 Unlikely Monto Coal Mine Further Stages Peabody / China Huaneng Wide Bay 265 159 Unlikely 60 Group Yamala (Emerald Project) Northern Energy Fitzroy 350 280 Unlikely Olive Downs Pembroke Resources Mackay - Isaac 500 300 Announced 100 100 100 South Burnett Coal Project (Tarong) MRV Tarong Basin Coal Wide Bay 250 200 Prospective Curragh Mine - Next stage Expansion Wesfarmers Fitzroy 200 160 Prospective Jellinbah Jellinbah Fitzroy 110 90 Under Procurement 70 Kestral Expansion Kestral Joint Venture Fitzroy 120 80 Under Procurement 70 Wilkie Creek New Black Energy Darling Downs - 250 200 Prospective 50 100 50 Maranoa Carmichael Coal Mine Project (Stage 1) Adani Mackay - Isaac 1100 900 Announced 50 200 300 200 OTHER MINERALS Mt Elliot Chinova Outback - North 95 48 Unlikely 48 Merlin Molybdenum-Rhenium Phase 2 Chinova Outback - North 345 250 Unlikely 75 100 75 Cannington Expansion BHP Billiton Outback - North 400 120 Unlikely 30 60 30 Roseby Copper (Little Eva) Altona Resources Outback - North 320 96 Prospective 21 45 30 Red Dome Mungana Mungana gold mines Cairns 330 215 Credibly Proposed 65 85 65 Ravenswood Extension Project Resolute Mining Townsville 167 92 Unlikely 38 54 Charters Towers Citigold Corporation Townsville 246 135 Prospective 35 80 20 SCONI Scandium Project (Phase 1) Metallica Minerals Townsville 1300 800 Prospective 80 400 320 Sarsfield Resoulte Mining Townsville 250 100 Prospective Paradise Phosphate South project Legand International holdings Outback - North 400 300 Unlikely Ardmore Project - Phosphate Project Centrex Metals Outback - North 120 100 Unlikely 50 50 Highland Plains - Phosphate Project POZ Minerals Outback - North 100 80 Unlikely 40 40 Mt Dromerdary - Graphite Project Novonix Outback - North 100 80 Unlikely 40 40 North Queensland Bio Energy - Ethanol Plant North Queensland Bio Energy Townsville 640 200 Prospective 75 75 50 Gladstone Energy and Ammonia Project Australian Future Energy Fitzroy 1000 600 Credibly Proposed 200 200 200 Sun Metals Zinc Refinery Stage 2 Sun Metals Townsville 300 200 Announced 50 100 50

108 2019 Queensland Major Projects Pipeline TOTAL VALUE ENGINEERING PROJECT DESCRIPTION SPONSOR REGION ($M) VALUE ($M) STATUS 18/19 19/20 20/21 21/22 22/23 COAL Middlemount Coking Coal Mine Stage 2 Peabody / Yancoal Mackay - Isaac 325 284 Prospective 100 184 Hail Creek Extension - Underground Rio Tinto Mackay - Isaac 1100 660 Unlikely 150 310 Rolleston Expansion Xstrata/Glencore Fitzroy 400 120 Unlikely 70 50 Yarrabee Yancoal Fitzroy 260 150 Unlikely Boundary Hill South Mine Extension Anglo Coal Fitzroy 100 70 Unlikely Aquila Anglo Coal Mackay - Isaac 200 140 Unlikely 70 Foxleigh Plains Project Anglo/CAML/Nippon Mackay - Isaac 200 140 Unlikely 70 Eaglefield Coal Mine Expansion Peabody Mackay - Isaac 1500 1200 Unlikely Monto Coal Mine Further Stages Peabody / China Huaneng Wide Bay 265 159 Unlikely 60 Group Yamala (Emerald Project) Northern Energy Fitzroy 350 280 Unlikely Olive Downs Pembroke Resources Mackay - Isaac 500 300 Announced 100 100 100 South Burnett Coal Project (Tarong) MRV Tarong Basin Coal Wide Bay 250 200 Prospective Curragh Mine - Next stage Expansion Wesfarmers Fitzroy 200 160 Prospective Jellinbah Jellinbah Fitzroy 110 90 Under Procurement 70 Kestral Expansion Kestral Joint Venture Fitzroy 120 80 Under Procurement 70 Wilkie Creek New Black Energy Darling Downs - 250 200 Prospective 50 100 50 Maranoa Carmichael Coal Mine Project (Stage 1) Adani Mackay - Isaac 1100 900 Announced 50 200 300 200 OTHER MINERALS Mt Elliot Chinova Outback - North 95 48 Unlikely 48 Merlin Molybdenum-Rhenium Phase 2 Chinova Outback - North 345 250 Unlikely 75 100 75 Cannington Expansion BHP Billiton Outback - North 400 120 Unlikely 30 60 30 Roseby Copper (Little Eva) Altona Resources Outback - North 320 96 Prospective 21 45 30 Red Dome Mungana Mungana gold mines Cairns 330 215 Credibly Proposed 65 85 65 Ravenswood Extension Project Resolute Mining Townsville 167 92 Unlikely 38 54 Charters Towers Citigold Corporation Townsville 246 135 Prospective 35 80 20 SCONI Scandium Project (Phase 1) Metallica Minerals Townsville 1300 800 Prospective 80 400 320 Sarsfield Resoulte Mining Townsville 250 100 Prospective Paradise Phosphate South project Legand International holdings Outback - North 400 300 Unlikely Ardmore Project - Phosphate Project Centrex Metals Outback - North 120 100 Unlikely 50 50 Highland Plains - Phosphate Project POZ Minerals Outback - North 100 80 Unlikely 40 40 Mt Dromerdary - Graphite Project Novonix Outback - North 100 80 Unlikely 40 40 North Queensland Bio Energy - Ethanol Plant North Queensland Bio Energy Townsville 640 200 Prospective 75 75 50 Gladstone Energy and Ammonia Project Australian Future Energy Fitzroy 1000 600 Credibly Proposed 200 200 200 Sun Metals Zinc Refinery Stage 2 Sun Metals Townsville 300 200 Announced 50 100 50

2019 Queensland Major Projects Pipeline 109 RATHER THAN BEING INCENTIVISED TO SECURE THE LOWEST PRICED WORK ON EACH AND EVERY PROJECT, PROCUREMENT WILL INCREASINGLY NEED TO ENCOURAGE INDUSTRY INVESTMENT IN CAPACITY AND CAPABILITY, REWARD INNOVATION (AND HENCE PRODUCTIVITY), AND CONSIDER VALUE FOR MONEY IN A “LONG TERM” SENSE WHICH RESULTS IN A SUSTAINABLE INDUSTRY DELIVERING QUALITY, LONG-LIVED INFRASTRUCTURE

2019 Queensland Major Projects Pipeline

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