1

Construction Materials Industry ConferenceDelivering Australia’s Pipeline

Jennifer Westacott

20 September 2012

2

Overview of presentation

Key growth challenge – pipeline or pipe dream?

• Australia’s investment opportunity

• Australia’s project performance

• Challenges and solutions

• COAG and BCA reviews

3

Australia’s Investment Opportunity

4

The project pipeline

Source: Deloitte Access Economics.

Australia’s $921b Investment pipeline – projects by status

Under

Committed, $66

Under consideration

$192b

Possible $279b

Under construction

$384b

Committed $66b

5

Pipeline facts

Projects unprecedented in size

Projects unprecedented in number

Remoteness

Narrow sector base

6

This matters

Source: Deloitte Access Economics using real investment and GDP data.

Investment and exports as a percentage of GDP, Australia

10

15

20

25

30

35

10

15

20

25

30

35

1991-92 1996-97 2001-02 2006-07 2011-12 2016-17 2021-22

Investment (total)

Exports

Per cent of GDPPer cent of GDP

Projections

7

Risks to delivery

Pipeline delivery risks

• Revenue risk

• Cost and time blowouts

• Missed opportunities due to project deferral or abandonment

8

Australia’s Project Performance

9

Critical question

How well do we deliver projects?

10

Data on project performance

Note: cost premium is calculated in US dollars

Source: Resources projects data by Independent Project Analysis; other data from Turner & Townsend, International Construction Costs Survey 2012. Note: Turner & Townsend sourced costs are US dollar relativities per m2.

40% 26% 43%62%

90%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

Resources projects

Schools Large shoppingcentres

Hospitals Airports

Cost premium Cost premium

11

How do we perform?

Project performance

• Lack of robust data for infrastructure projects

• Need to understand cost drivers

• Better measurement can help lift performance

• Warnings in global project data

12

Challenges and Solutions

13

Barriers to project delivery

Community concerns

Capacity constraints

Efficiency problems

Timely funding and delivery of public infrastructure

Investor confidence

14

Solutions

1. Build higher levels of community understanding and acceptance for projects

2. Expand Australia’s capacity to deliver multiple capital projects

15

Solutions

3. Improve the efficiency of project delivery in Australia

4. Adequate provision of economic and social infrastructure

16

Solutions

5. Build the confidence of investors

6. Supportive government institutions, policies and programs

17

BCA and COAG reviews

18

BCA/COAG reviews

What’s next

• COAG review of construction costs

• BCA review of project costs

19

The four steps to recovery

• Commonwealth to amend EPBC Act – give states authority to assess/approve projects

• State governments to fast-track major development approvals

• Amend Fair Work Act – include employer-only agreements on greenfield projects so work can start sooner

• Cease tinkering with the tax system