Mr Davies spoke as the ACA, which represents the country’s largest commercial and infrastructure contractors, published a new survey showing the industry was already grappling with slowdowns in commercial and infrastructure work.
Much of the slowdown was expected. Offices and apartments were perceived as declining or stalled, according to the 2024 Construction Market Sentiment Survey conducted with consultancy Arcadis.
Investment in education infrastructure – tertiary, as well as secondary and primary – was seen to be slowing, and even health infrastructure, the strongest sector in the social space, was weaker than a year earlier, the survey responses showed.
There was a concerning slowdown in transport infrastructure work – mainly roads and bridges, but also signs of peaking in rail – Mr Davies said.
“The real concern from a market sector perspective was the transport infrastructure sector is very much coming off the boil,” he said. “It indicates the governments are really starting to be concerned about their budgets.”
Others, such as data centres, water and sewerage, defence and energy were growing.
Industrial relations also impacting the infrastructure sector
A further concern was the increasing cost infrastructure contractors were going to have to bear as a result of the next round of award pay increases locked by companies with the CFMEU construction union across the eastern seaboard.
These range from 26 per cent over five years in Queensland, 20 per cent over four years in Victoria and more than 22 per cent over four years in NSW, Mr Davies said.
“We’ve had Queensland, which kicked it off,” he said. “Victoria … and NSW have trumped everyone with 22 per cent over four years. This is all cost increase without a focus on how we’re going to offset it with … improvements in productivity.”
What the association called “political interference” leading to regulation changes and U-turns on projects was problematic and could hit the development of specialist skills for the NSW offshore wind farm zone the Labor federal government approved earlier this month, Mr Davies said.
“If you’re looking at the Illawarra example, we have not, to date, done any offshore wind, even though they’re a big thing in other parts of the world,” he said.
“As [an] industry we need to gear up to be ready to have those skills. We need to import or train people up to deliver that work. It will be same with nuclear energy.”
Contractors who had built up workforces in the past for particular projects that were then canned after a change of government would be wary about doing so again in the current environment, Mr Davies said.
“Given our history in terms of political interference in the infrastructure pipeline, industry is very hesitant and conservative around this.”