Home' InDaily : May 4th 2012 Contents The March 2012 issue of Investment Monitor saw the total
value of projects in the database continuing to increase. The
value of projects rose by $8.4 billion or 0.9% in the March
quarter, and has increased by 20.0% over the past year.
As has been the case for the past few quarters, major
investment projects have continued to transition through
planning stages. In March 2012, the Chevron consortium’s
$29.0 billion Wheatstone LNG project in the Carnarvon basin
got underway, while Inpex Alpha’s $30.8 billion Darwin LNG
project transitioned to committed status.
The near term outlook for engineering construction activity
in Australia has therefore received yet another boost, lifting
again from what had already been a high level. Engineering
construction activity is the key driver of Australia’s economic
growth at present.
These numbers highlight that the challenge for Australia
is not finding investment options. However, the smooth
delivery of Australia’s massive pipeline of investment projects
is not guaranteed. A range of supply side challenges await.
At present, cost inflation is a key issue for the mining sector,
both globally and in Australia. Over the past year engineering
construction price growth in Australia was still relatively
subdued, but it is now trending up. Australia’s experience
over the past decade is that cost growth here over time
can be substantial.
Going forward, cost inflation will be driven by a number
of factors including shortages of key production inputs
as projects compete globally for resources and inputs.
If operating and capital costs continue to increase, there
is a risk that some marginal projects in the investment
pipeline may become uneconomic.
Some 45% of projects in the Investment Monitor database
by value are from the mining sector, and it has clearly
dominated investment growth over recent years.
Investment in economic infrastructure (covering transport, ports,
energy, water and telecommunications projects) is also benefiting
from the mining boom, particularly port and energy projects.
Non-residential building activity is being weighed down
at present by soft job markets, rising office vacancy rates
and weak retail turnover growth. With demand drivers still
generally weak, that suggests a pickup in non-residential
building activity is still some way off.
As has been the case for some time now, resource rich
Western Australia and Queensland are well ahead of
the other States so far as Australia’s pipeline of major
investment projects is concerned. However, the approval
of Inpex Alpha’s $30.8 billion LNG project will soon see
the Northern Territory experiencing a mining investment
boom of its own. The expansion of Australia’s investment
boom could soon also expand to South Australia, with
the decision from BHP Billiton on Olympic Dam expected
in the coming months.
A reasonable level of infrastructure investment and some
mining investment is underway in the southeast of Australia.
But New South Wales and Victoria are continuing to
experience weak levels of commercial construction
new investment in retail, offices and tourist facilities.
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Information sourced from Deloitte
Investment Monitor March 2012: Supply challenges await
The Federal Budget will be delivered by Treasurer Wayne Swan on May 8, 2012 in Canberra.
We will bring you all the highlights of the Budget on Deloitte’s Australian Federal Budget 2012
website, including our Federal Budget Brief, which will offer insights from Deloitte’s tax
practitioners and Australia’s pre-eminent economics practice, Deloitte Access Economics.
With concerns raised by many in the media and business community about reaching
a budget surplus and with policies such as the Minerals Resource Rent
Tax (also known as the MRRT or “mining tax”), the carbon tax, and
potential changes to the R&D tax incentives and fuel tax credits schemes
for business, this year’s Federal Budget will be widely watched.
We will also be tweeting highlights in the lead up to the Federal
Budget and as they happen on Budget night. To subscribe to our
Twitter feed, please follow us @federalbudget
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Federal Budget 2012-13 Surplus or bust?
Deloitte’s Federal Budget insights
Hillard talks to Sky News about the importance of Shared Services. He focuses on
Big Data, explaining what it is and why it is so misunderstood.
and Big Data
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