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Transport infrastructure construction activity to reach a record high in 2023/24
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Australia’s transport infrastructure construction sector is on the cusp of an unprecedented wave of robust growth, which is expected to last through the next five years. The upswing will be underpinned by a rising number of large infrastructure projects in the pipeline across Australia, with the majority expected to enter their delivery phases in the next three to five years. Very large state and Federal infrastructure programs were increased further over the last few years in response to the pandemic, and there have been delays in this work due to labour shortages and escalating costs, further adding to the spike in the construction activity to come.
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2020/21 and 2021/22 witnessed a return to growth in transport construction activity, rising to $35 billion, and marking the beginning of the next upswing cycle. Construction work done is set to grow by almost 50% over the next two years and is estimated to reach a peak of $51 billion by the end of FY2024, as an unprecedented amount of transport-related construction work gets underway. This upswing will result from:
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- A collection of priority capital city projects (roads and railways),
- A ramping-up of urban renewal, maintenance and improvement programs, (including arterial road upgrades and level crossing removals),
- A general increase in regional works (including Inland Rail and ongoing, large-scale upgrades on the Bruce, Pacific, and Princes Highways), and
- Medium-term stimulus spending by the Federal, state and territory governments, as part of the response to COVID-19.
Road construction is expected to peak in 2023/24, at $30 billion, and since the roads sector accounts for around 60% of overall transport construction, total transport construction is forecasted to peak in the same year.
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In percentage terms, rail construction will experience the most growth, with activity over the next five years to be 80% higher than the previous five – mainly owing to increased funding for fast-tracked heavy and light rail projects in the capital cities.
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After rail, harbour construction activity is expected to grow the fastest in the near term, particularly 2022-2024, where it will rise by 40% per year before peaking in 2025/26 at $2.5 billion.
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Ultimately, we expect a downturn once the current wave of big projects moves to completion, and state governments’ budget circumstances become less conducive to further expansions of capital spending. However, the next downturn will be substantially less severe than the previous downturn, which occurred between 2012/13 and 2015/16, and saw activity decline by 42%.
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If your organisation requires help with project cost escalation forecasts, please get in touch with us, at info@macromonitor.com.au.
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Our most recent reports:
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Australian Construction Cost Trends
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This report examines the outlook for construction costs, in detail be sector and type of input.
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Australian Construction Projects Database
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This latest list of projects corresponds with our fully revised set of forecasts published in November 2023.
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Australian Regional Construction Outlook
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Our latest regional forecasts for residential building and construction have just been released.
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Australian Construction Materials Forecasts
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Our latest forecasts assess the implications for construction materials demand of the current outlook for building and construction.
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Australian Road and Bridge Works
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This report examines the strength and composition of the current upturn, and determines the likely timing of the peak, and subsequent decline.
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