Not surprisingly, the upcoming State and Federal elections are the common topic of conversation for households across the country. It’s an emotive subject. After all, the performance of the Australian economy ultimately determines one’s standard of living. Only last week our Prime Minister, Scott Morrison, alluded to the fact that under Labour, the Australian economy will go backwards.
With Q3 and Q4 GDP prints both underperforming analysts’ expectations, potentially leading indicators such as car sales, building permit approvals falling and a residential property market slowing rapidly, consumer sentiment has been on the downturn for a while. So, when it was reported on March 6th that Australia had fallen into a ‘per capita’ recession (where the rate of economic growth fails to keep up with population growth as opposed to back to back negative GDP prints), people should not have been surprised.
Whilst it is important to note that a technical ‘per capita’ recession does not mean an actual recession, it certainly does heighten awareness and fuel questions around where further economic stimulus would come from.
In my opinion, the answer to that question; is the infrastructure sector. The last few years has been dominated by NSW centric large projects such as WestConnex, Sydney Metro and the CBD Light Rail, amongst others. In the coming years, the infrastructure boom is going Australia wide.
Sydney's biggest project will the Western Sydney Airport at Badgery's Creek whilst the Melbourne’s Airport Link project is expected to begin construction by 2022 and will cost upwards of $10bn. Brisbane is moving ahead with a $5bn+ Cross River Rail project and a potential Brisbane Metro project in the pipeline for 2023. Not to be left out, WA is seeing a spike in activity driven by demand for lithium with large American mines stepping up their investment in the region.
This is extremely encouraging news for jobs across Australia, though not so for an already stretched, skilled white-collar Engineering, Construction and Infrastructure workforce. The brain drain that has been experienced across QLD and WA will subside, though that would only shift the pressure to NSW which will lead to organisations importing the skills and capabilities from overseas. Historically, the preference has always been for candidates to have local experience, though over the last several years we've seen employers relax their attitude towards that parochial outlook.
Whilst there appears to be a sufficient pipeline of projects and activity that will drive growth and GDP over the next decade, whoever forms Government in May have a big task of keeping ahead of demand for a skilled workforce. Once again, immigration and labour policy is likely to have a key hand to play in not only the shaping of Australian politics, but the wider Australian economy.