May 25, 2017 / News
Public Infrastructure is expected to be the source of major economic growth in the foreseeable future.
In Australia, growth in public infrastructure is expected to eclipse the growth in mining and residential construction, as these sectors are expected to slow down.
One major reason for the slowdown of the mining industry is China's weakening economy. This has caused China to be more wary of their expenditure, which includes decreased spending on Australia's raw material mining exports. Since Australia's mining industry is heavily dependent on China, as it is a major buyer, this has had a significant ripple effect on the industry. Construction companies have implemented cost-cutting strategies, are more cautious of commissioning new projects, and scaling back current projects to compensate for the decreased demand. The boom in residential construction is also projected to slowdown, as demand softens and approval rates decrease, resulting in fewer developments in the pipelines.
In the recent budget, the federal government has allocated a staggering $70 billion to the development of public infrastructure across Australia. A reason for this is that the federal government has identified investment into public infrastructure as a 'good debt', that will provide future benefit, such as increased employment opportunities, productivity, ease of traffic congestion, and so on.
Another driving factor behind the increased investment in public infrastructure is the expected exponential growth of Australia's population. Australia's population is predicted to soar from 23.7 million to 46 million by 2075, so upgrading and adding public infrastructure now will be important to help accommodate the increasing population and keep Australia moving.
Eastern states, such as New South Wales, Victoria and Brisbane are expected to benefit the most from the additional allocation of federal funds to infrastructure.
In addition to these states, Western Australia will also benefit significantly from this public infrastructure boom. A $2.3 billion roads and rail deal has been agreed to by the state government of WA and the federal government. These funds will be dedicated to 17 roads and rail projects, such as the expansion of the Metronet railway, the Thornlie-Cockburn link, an extension of the Joondalup line to Yanchep, and so on. This deal will also bring about an additional 6000 jobs over the next two years.
Increased federal investment in public infrastructure spells the beginning of this industry driving significant economic growth in Australia. This growth is predicted to overshadow the economic contributions of residential and mining construction, which have typically been the front-runners.
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