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ACA eager to implement proposed infrastructure costs inquiry

19 November, 2013

The Australian Constructors Association (ACA) has welcomed the recent announcement by the federal government of a Productivity Commission inquiry into infrastructure costs.

ACA executive director, Lindsay Le Compte, said: "The ACA fully supports the proposed Inquiry and is hopeful that the Productivity Commission will identify the key actions that governments and the private sector need to take to reduce the cost of construction to both clients and constructors.

"The ACA commends the Abbott government for announcing the Inquiry as the issue is of critical importance to the industry and all Australians. Construction contractors have been saying for a long time that there has to be a fundamental re-think about how infrastructure projects are funded and managed through the project development, tendering and operational phases.

"The industry is no longer able to bear the project financial risks that have been thrust upon it over a long period, nor the financial impact of poorly developed and managed projects. Industry needs certainty that the pipeline of infrastructure projects will be sustainable, and when projects are announced those projects will actually proceed within stated timeframes.

"New approaches to the financing of infrastructure are necessary if governments in Australia are to unlock the economic benefits that are available to provide for sustainable communities to be developed and employment and economic benefits created right across the supply chain. This may also lead to potentially significant benefits for taxpayers who often bear the increased cost of projects.

"An example of unnecessary cost is the requirement that contractors tendering on major projects must develop responses to extensive tender documentation that adds tens of millions of dollars to the cost of each tender.

"On some projects, the tender costs alone will exceed $30m to $40m for each respondent, and often there will be three or more tenderers required to carry these costs. This is not sustainable, particularly in the current financial climate faced by the industry," Le Compte said.

Le Compte also said that the Productivity Commission should examine the implementation of key performance indicators for governments to be able to assess their own performance as this would assist in the efficient and effective development and management of projects and lead to further cost savings.

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