In the Australian Infrastructure Plan, Infrastructure Australia Chairman Mark Birell says taking a strategic and ambitious approach to the nation’s infrastructure needs will directly improve living standards and economic growth.
The plan recommends linking federal payments to state and territory governments to facilitate the construction of infrastructure and meet the demands a growing Australian population.
As part of a rolling funding cycle, the Australian Government has committed more than $100 billion to transport infrastructure around the country over the coming decade.
According to Australian Owned Contractors (AOC), a new organisation chaired by John Georgiou, mid-tier construction companies are being excluded from the market.
AOC is made up of twelve mid-tier Australian contracting companies, including Bielby, BMD, Daracon, Decmil, Ertech, FKG Group, Georgiou, MACA, NRW, SRG Global, Wagners and Winslow Constructors.
Mr. Georgiou says as federal and state governments inject billions of dollars into the delivery of major infrastructure projects, AOC is calling on governments to regulate the participation of local companies.
“Of the nearly $50 billion in construction contracts awarded over the country in the past five years, only three per cent were won by mid-tier Australian-owned contractors,” Mr. Georgiou says.
Mr. Georgiou says mid-tier construction companies have the physical and technical capability to deliver large-scale projects but are being risked-out.
“It has become difficult for mid-tier contractors to compete,” Mr. Georgiou says.
For the past 12 months, Mr. Georgiou and other AOC representatives have travelled regularly to Canberra to discuss the issue of local participation with parliamentarians and government agencies.
“We focused on federally funded infrastructure projects greater than five million dollars, 80 per cent of which was awarded to tier-one conglomerates,” Mr. Georgiou says.
Mr. Georgiou says this has created a concentration risk.
“Government intervention would afford Australian owned contractors the opportunity to play a role in the delivery of major public infrastructure projects across Australia and inject much needed competition and diversity into the infrastructure market,” Mr. Georgiou says.
According to Mr. Georgiou, public funding for large-scale projects should be conditional on ensuring Australian owned and controlled contractors are included in the tender process.
“Ideally, 20 to 30 per cent of each major infrastructure project would be delivered by Australian owned contractors,” Mr. Georgiou says.
“This will facilitate a more competitive environment for major infrastructure projects, while increasing the skill set of local contractors and generating partnerships between foreign multinationals and Australian owned contractors.”
Mr. Georgiou says since establishing the validity of the local participation issue, AOC has received government interest and support.
Infrastructure Minister Michael McCormack announced he would commission a report examining how reformed procurement policy and practices could foster the development of expertise and experience in the construction sector.
While change is slow moving, Mr. Georgiou is optimistic, believing government will act to mandate Australian participation.
“The National Partnerships Agreement is coming up for review, which is likely the best instrument for government to manage the issue,” Mr. Georgiou says.
“If handled transparently, in 10-20 years we will see more and more mid-tier companies participating at the prime level of all major projects”