Queensland may have to tap private funds for Olympic projects
Brisbane’s labour shortage will drive a faster rise in construction costs than Sydney and Melbourne over the next four years, forcing the state government to allow private groups to fund and operate assets such as a new Olympic stadium, consultancy Arcadis says.
With fewer than eight years until the start of the 2032 Games that the city was awarded in mid-2021, authorities have yet to make key decisions on whether to build facilities or upgrade existing ones for flagship events such as the opening and closing ceremonies, athletics and aquatics.
A building sector already stretched by an $11.2 billion health spending program adds to time pressures on the newly elected LNP government and will prompt it to tender new Games infrastructure projects under public-private partnerships, the Arcadis head of cost and commercial management, Matthew Mackey, said.
“We’re going to start seeing those kinds of changes,” he said.
“For the [2028] LA Games, the majority, if not all, of the infrastructure is being delivered with private money. It’s using the private sector – which is usually best equipped to deliver these assets – and passes that risk to that consortium. They get something out of it, but it means you can get investment going and it’s not going out of the public purse.”
The infrastructure requirements for the Brisbane Games remain unclear. Although the former Labor government set out plans in March that included revamping the QEII stadium in Nathan – southeast of Brisbane – for athletics, and ruled out redeveloping the famous Gabba stadium, all decisions are back in play.
Arcadis is part of a group pushing a 60,000-seat stadium, an 18,000-seat aquatic centre and a 12,000-seat arena at the city’s Victoria Park. A separate consortium including consultancies Aurecon and Buchan has proposed a 60,000-seat Northshore waterfront stadium on the edge of the Brisbane River in Hamilton.
Last month, the LNP government appointed a seven-member board to the state’s renamed Games Independent Infrastructure and Co-ordination Authority, tasking it with a 100-day review of planning, competition venues, transport and infrastructure needs. It will issue its report in March.
State Development, Infrastructure and Planning Minister Jarrod Bleijie said the review would consider private-sector finance as an option.
“Leveraging private sector investment is an obvious opportunity that was never on the table under Labor’s failed plan,” Mr Bleijie said.
In its latest six-monthly forecasts, Arcadis has raised its estimate for building cost increases in Brisbane for each year to 2028. Its forecast for this year is 6 per cent – up from the previous 5.2 per cent, and reaches 7 per cent in 2028, up from the 6.2 per cent it expected in June.
Brisbane’s cost escalation will top that of Sydney, where inflation of 5.2 per cent this year will slow to 3.5 per cent by 2028, and Melbourne, where it will rise from 3.2 per cent this year to 4 per cent by 2028. The forecasts have cut inflation expectations for the two larger cities from six months ago.
Perth, meanwhile, has the greatest price growth over the forecast period, with cost inflation this year of 11.1 per cent (up from a forecast of 7 per cent six months ago) that will ease to 8 per cent by 2026 and 4.5 per cent by 2028.
“This demonstrates the highly volatile nature of the WA construction market, making it one of the most difficult to anticipate with any real level of accuracy,” the report says.
Brisbane 2032 had to consider procurement methods that would include private finance and encourage early-stage collaboration between different parties rather than competition, said Jon Davies, chief executive of the Australian Constructors Association, whose members include the country’s largest commercial and infrastructure contractors.
“Everyone is incentivised to work together to achieve the best project outcomes, whereas traditionally, everyone has competing interests and processes and is competing against each other to achieve the best outcome for themselves,” said Mr Davies.
The ACA will make a submission to the review for such a procurement process.
