State’s investment pipeline falls to decade-low levels

QUEENSLAND'S construction sector will struggle for the next year as the state's investment value outlook falls to the lowest level in a decade, the latest Deloitte Access Economics report notes.

Deloitte's September Investment Monitor, a quarterly report on major business and government investment projects, found Queensland's investment pipeline was 9.6 per cent lower than September last year.

The report found the value of work done in Queensland's engineering construction sector fell for the first time in two years, with the sharpest falls in the rail and telecommunications sectors.

Only heavy industry, which includes mining, recorded positive growth over the year.

"The forward looking indicators remain soft, with the value of work underway slowing from a mid-2018 peak, while work yet to be done has fallen to its lowest level in more than a decade," the report notes.

There is about $26 billion worth of engineering projects under construction in Queensland, led by the $7 billion Cross River Rail project.

 

Cross River Rail, Wooloongabba station.
Cross River Rail, Wooloongabba station.

 

Deloitte found the project pipeline remained around $96 billion, with a large share planned in the slow-moving coal sector.

"That suggests that engineering construction will slow this year and next, before making a recovery," the report noted.

It said stronger export earnings would drive activity in Queensland as the state recovers from natural disasters.

Deloitte is forecasting private business investment will remain subdued in 2019-20, before recovering to grow at a faster rate than overall real GDP.

"Although the Reserve Bank has cut rates, if businesses lack confidence they're not likely to invest in new projects - something the Reserve Bank can't really change by cutting rates further," lead author Stephen Smith said.

Mr Smith said the investment pipeline was dominated by large road and rail projects and said there was still capacity to deliver smaller-scale projects outside the major capital cities.

"These are easier for contractors to coordinate and don't tend to require the same amount of specialised skills and equipment to deliver," he said.



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