More than 80 per cent of Australia’s largest infrastructure projects ($500m+) are delivered by foreign owned multinationals.
The latest report from the Construction Intelligence Centre shows that outside of Africa, Australasia is the continent with the highest concentration of foreign contractors delivering infrastructure projects.
Australian owned contractors have the physical and technical capacity to play a significant role in building public infrastructure, particularly at a time when governments are facing an increasing shortage of resources to deliver an increasing volume of projects.
But Australian owned contractors have been 'risked out’ of 80 per cent of the market. Contract risk apportionment has escalated on major public infrastructure projects to the point where only Tier One contractors (the majority of which are (or soon will be) foreign owned and/or controlled) have the balance sheet capacity to accept these sorts of risks.
Unless the current market distortion is rectified with some form of Government-mandated involvement of Australian owned contractors, these are the likely consequences:
Profits, expertise, knowledge and IP flows overseas.
Local contractors cannot build capability and grow to support the Australian economy.
Concentration risk – foreign multinationals have a disproportionate share of mega infrastructure projects.
These foreign companies are now joint venturing with other foreign companies – reducing competition even further.
Not good for competition and the Australian taxpayer
We urge Government intervention to restore the balance.
Federal and state governments should mandate that Australian owned contractors are included in the head contract, with an appropriate risk profile, for all major infrastructure projects ($500m+) in Australia.
The Federal Government contributes billions of dollars to the states to deliver infrastructure each year. Funding should be conditional on the states ensuring an Australian owned and controlled contractor is included in the head contract.
Ideally, 20-30 per cent of each major infrastructure project should be delivered by Australian owned contractors.
This policy would provide the following benefits:
Partnerships between foreign multinationals and Australian owned contractors
Increase the knowledges, skills, expertise and capability of local contractors
Supports the growth of the Australian contracting industry
Allows local contractors to compete and participate in major infrastructure projects
A more competitive environment for major infrastructure projects
Australian owned contractors can work successfully with foreign multinationals to deliver major infrastructure projects across the country – all we need is a fair go!