The Australian economy is about to be lifted by a wave of investment in transport infrastructure projects, hitting $16 billion in the next three years.
The September quarter Deloitte Access Economics Investment Monitor shows the outlook for business investment in Australia healthier than it’s been for some time.
And Australia has for the first time in five years gone nine months without any further falls in business investment.
“The overhang of engineering work that commenced construction during the mining boom has finally passed,” says says Deloitte Access Economics partner Stephen Smith.
“Businesses have spent years improving their balance sheets. So although it is true that Australian household debt remains a concern, the opposite is true of many businesses operating in Australia.”
Company gross operating profits increased by more than one fifth in 2016-17, bringing an end to years of little growth.
And while much of the increase has been driven by mining, profits have lifted across most other sectors.
Smith says the improvement is happening at the same time as state and federal governments are spending large amounts of money on transport projects.
Here’s how Deloitte sees a surge in major projects:
Activity is expected to continue lifting from the trough in 2015, reaching a peak of around $16 billion in 2020.
Since the peak of the mining construction boom in 2012-13, there have been large falls in engineering activity.
However, in the last few years, public infrastructure investment has emerged as a key driver of engineering activity. The value of public sector work done grew by 10% in 2016-17, after 5% growth in the previous year.
Much of this increase has been driven by road and rail investment in New South Wales, Victoria and Queensland.
The value of projects in the Investment Monitor database rose by $5.1 billion during the September quarter to $749.7 billion, a 0.7% rise from the previous quarter but still 7.5% below the level recorded a year earlier.