Budget cuts to hurt construction and mining industry outlook

BUDGET cuts at state and federal level and deferrals of major mining projects in Queensland will hit the construction sector outlook, new figures have revealed.

The data was released by economic forecaster BIS Shrapnel in a mid-term update on the 2013 Queensland Major Projects Report: Queensland Engineering Construction Outlook.

It updated the February estimate of a 40% fall in civil and engineering work in the Sunshine State to an even tougher 53% fall between 2013-14 and 2016-17.

Forecaster Adrian Hart said since the February outlook was released, economic conditions had worsened "more than anticipated" at both the domestic and global level.

He said the outlook for major projects in Queensland was expected to fall each year until 2016-17, from the current $17 billion level to just $8.5 billion in three years' time.

"The Queensland (major projects) construction market is at the forefront of both these negative forces, with the state and federal governments both cutting expenditure to bring their budgets back to surplus, and major mining developments deferred," the report reads.

"Queensland construction activity plateaued in 2012 and has already started to weaken. Without further sizeable projects new projects coming on stream, the pace of the decline ... will accelerate."

Report commissioner, Queensland Major Contractors Association president Tony Hackett, also blamed a raft of other changes, including state government increases in coal mining royalties and other cyclical economic factors.

"Long term infrastructure deficits pose very significant issues for the broader economy given the direct link between investment in infrastructure and economic growth, both actual and potential," he said.

"There is a need to smooth out the boom and bust cycle and deliver a pipeline of major new projects going beyond the next stage of the electoral cycle."

Mr Hackett also called for government to identify more assets "that government should not own and sell or lease these" to spend the proceeds on new government infrastructure projects.

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