The peak representative body of employers in the New South Wales civil construction industry, the Civil Contractors Federation NSW, has congratulated the NSW Government on its 2020 Budget, but warned that spending outcomes must be achieved, and achieved in a manner that reflects the risks impacting New South Wales.
Thanks to very strong financial management in previous years, the New South Wales Government has reported it is in an excellent position to carry the state through the COVID-19 pandemic. While tough decisions are required, Treasurer Perrottet has presented a coherent plan for economic recovery.
The New South Wales Government has again acknowledged the vital importance to the State economy of civil infrastructure construction. With this Budget they have singled the sector out as a key driver of the State’s recovery from the impact of COVID-19.
The Budget provides considerable promise for the broader infrastructure sector with a forecast increase in spend of 17% on last year, and with initiatives such as payroll tax relief being very well received.
With very low debt levels coming into FY20, the Government is in an excellent position to borrow to stimulate the economy; and the CCF NSW strongly supports such borrowing.
David Castledine, CEO of the Civil Contractors Federation NSW, “CCF NSW has consistently recommended New South Wales borrow to invest in what grows the State economy – civil infrastructure construction. For every $1.00 expended locally on civil, our economy grows by $2.17”
However, Mr Castledine sounded a cautionary note “The expenditure must actually be achieved if the benefits are to be realised.
“Research we have had conducted by BIS Oxford Economics shows that FY20 was the weakest financial year for publicly funded transport contract commencements in New South Wales since FY06.
“Spending is not the only lever that needs to be well managed. Good governments realise that being able to procure, within the jurisdiction, what they want and when, is a sovereign issue and must be carefully managed by that government.
“A civil industry does not just appear when needed; it must be nurtured. That requires the Government to consistently make available packages of work across the full spectrum of company sizes.
“New South Wales has a backlog of mega projects that must be undertaken by Tier 1 companies, but the Government must also provide work for Tier 2, 3 and 4 businesses, else the industry becomes unstable. If such contracts are not released those businesses starve, then fail, and the economic stimulation sought is reversed.
“The New South Wales Government has constructed the largest infrastructure pipeline Australia has ever seen, and funded it responsibly. Treasurer Perrottet and the Government’s performance in managing the broader economy, including this Budget, has been outstanding.
“But for the Government to meet the construction targets it has set and the economic stimulation it desires, it must ensure the work is contracted and that there are contractors of all size in the market. This is the major challenge our industry is facing – sustainability” Mr Castledine said.