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Australian public infrastructure spending expected to rebound by AU$7.3 billion

Australia is set to enjoy an AU$7.3 billion ($5.8 billion) boost in transport and utilities infrastructure spending, the strongest growth in nearly a decade, according to Infrastructure Partnerships Australia (IPA) and BIS Oxford Economics.27 Sep 2017

Overall construction activity is also set to expand for the first time in four years, IPA said in a statement.

"We forecast that transport and utilities infrastructure will surge by AU$7.3 billion next year, the strongest growth in a decade and the strongest sign yet that we’ve finally hit bottom and rebounded on infrastructure," said IPA chief executive Brendan Lyon.

The figures confirm Australia’s transport infrastructure-led recovery, with the last quarter seeing the highest-ever level of rail infrastructure activity, Lyon said.

"Our forecasts will see … non-mining infrastructure more than fill the AU$6.6bn ($5.3bn) retreat in mining infrastructure, with total engineering construction to grow for the first time since 2012- 2013," he said.

However, Lyon said: "These figures largely reflect the massive infrastructure programmes in New South Wales and Victoria, which are masking the collapse in infrastructure in the other states."

Infrastructure expert Anthony Arrow of Pinsent Masons, the law firm behind Out-Law.com said: "The exponential growth in infrastructure spend means that Australian contractors are experiencing what can only be described as a very heated market, placing significant upward pressure on prices and driving a scarcity of quality and experienced human resources."

"We are destined to see the ramifications of these issues during the execution phases of these projects, including a likely spike in disputes and potential insolvencies. At the same time, there are tremendous opportunities for contractors out there right now, and an influx of new players into the market from offshore seeking to ride the spending wave," Arrow said.

Graham Robinson, also of Pinsent Masons, said: "Australia has a significant infrastructure deficit, with current estimates of between AU$770bn ($605bn) and AU$800bn ($628bn) and has a widening infrastructure funding gap moving forward."

"Infrastructure in Australia’s main cities is poor by international standards, especially so when ranked against modern developed economies, and requires significant investment. The country's urban population is expected to increase by over four million people by 2030 which will drive considerable infrastructure needs over the medium and longer term," he said.

Recent Infrastructure Experience