Regional outlook – substantial disparity and mixed fortunes

The overall Queensland outlook has improved since the previous year’s QMPPR, however, there continues to be substantial disparity between different regions in terms of activity size, growth and funding volatility.

50% of all funded work in the pipeline is focused in south east Queensland with Greater Brisbane expected to see the highest levels of work. Meanwhile, more of the riskier, unfunded projects lie in the central, northern and western regions of the state where investment in resources, large water projects (such as dams) and electricity generation projects are more prominent, however typically unfunded.

Chart B2.1: Funded Major Project Work over the next 5 years by Region

Funded Major Project Work over the next 5 years by Region

Source: BIS Oxford Economics, QMCA and IAQ member knowledge


Key findings


Greater Brisbane and Ipswich-Toowoomba-Logan account for 40% of funded major project work in the pipeline.

Greater Brisbane has the greatest concentration of funded work, making up 27% of all funded work in Queensland over the next five years. This is primarily driven by major transport projects such as Cross River Rail, Brisbane Metro and sections of the Pacific Motorway.

 

South East Queensland (SEQ) includes Greater Brisbane, the Sunshine Coast, Gold Coast and Ipswich-Toowoomba-Logan.

This region represents 71% of Queensland’s population (3.6 million) and accounts for 50% ($13.3bn) of the funded pipeline. Other regional and rural Queensland accounts for the remaining 50%% of the funded pipeline, reflecting the need for infrastructure (as well as industrial opportunity) in Australia’s second largest, and most decentralised, state.

 

South East Queensland, and adjacent regions such as Wide Bay and Darling Downs-Maranoa are also expected to experience the strongest project growth.

These areas are expected to see a doubling in average levels of funded activity over the next five years compared to 2014/15 to 2018/19. Ipswich, Toowoomba, Logan and Beaudesert region and Darling Downs, Maranoa region are the second largest regions for major project work, each make up 13% (approximately $3.5bn each) of funded work in the pipeline. Conversely, the slowest growing regions are Fitzroy and Outback, which are expected to see average funded work over next five years around 80% lower than the previous 5 years.

 

Unfunded work is more evenly spread among the regions, although more concentrated in central and northern Queensland.

In particular, two regions – Outback and Mackay-Isaac − have 52% of total unfunded work in the pipeline, equivalent to $11.6bn over the five years. Within these regions, 26% of the unfunded work is considered unlikely, 23% prospective and the remaining 51% credibly proposed.

 

Queensland and Australian Government spending on transport infrastructure is driving the improved outlook for many regions.

Publicly funded transport expenditure accounts for 65% of total funded project work in the pipeline – in fact, the Cairns and Gold Coast regions rely entirely on road and rail major project work in the next five years.

 

The outlook has become more favourable across some regions compared to last year, while other regions find themselves worse off.

The biggest ‘winners’ are Darling Downs-Maranoa and Townsville which are forecast to have $1.1bn and $517m more funded work in the next 5 years respectively, compared to last year’s outlook.

 

Chart B2.2: Funded Major Project Work over the next 5 years by Region, $b[1]

Funded Major Project Work over the next 5 years by Region, $Bn

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

Chart B2.3: Average Growth in Major Project Work over the next 5 years by Region[2]

Average Growth in Major Project Work

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

Chart B2.4: Annual Funded Major Project Work over the next 5 years by Region

Funded Major Projects by region

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

[1] Regions may not add to total Queensland due to Multi Regional Projects.
[2] Figures in this chart represent the ratio of average funded work over the next five years (2019/20 to 2023/24) compared to the estimated average of major project work in the region between 2014/15 and 2018/19 inclusive.


Greater Brisbane


The Greater Brisbane region includes Brisbane & the Moreton Bay statistical areas.

Population: 1,808,366[3].  Population growth has averaged 1.9% per annum over the last 10 years.

Engineering Construction Sectors Driving Growth: Transport infrastructure – Road and Rail

Key Funded Projects[4]: Cross River Rail ($5bn), Pacific Motorway M1 North Segments ($360m), Brisbane New Parallel Runway Phase 2 ($380m), Kingsford Smith Drive Upgrade ($440m), Brisbane Metro ($650m), Gateway Motorway Stage 3: Bracken Ridge to Pine River ($781m).

Key Unfunded Projects: Lindum, Beams Rd, Coopers Plain Level Crossing Removals ($150m).

Proportion Unfunded of Total Work: 1%

Chart B2.5: Funded Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Funded Major Project Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

[3] All population figures quoted in the Section represent calendar 2019 estimates.
[4] All project values will be construction estimates (as opposed to total spend)

 

 

Outlook: The Greater Brisbane region has a strong pipeline of publicly funded transport infrastructure projects over the next five years. Major project work is expected to average $1.4bn per annum with limited uncertainty because 99% of the work is funded. Activity will continue to ramp up in the following years to a peak in 2021/22, driven by increased activity on the Cross River Rail, Pacific Motorway, Brisbane Metro and Gateway Motorway projects. Activity eases beyond 2022/23 as these same projects began to wind down.


Gold Coast


Population: 639,418. Population growth has averaged 2.4% per annum over the last 10 years.

Engineering Construction Sectors Driving Growth: Transport infrastructure – Road and Rail

Key Funded Projects: Pacific Motorway M1 South Segments ($629m), Gold Coast Runway Upgrades ($100m), Gold Coast Light Rail Stage 3A – Broadbeach to Burleigh ($500m)

Key Unfunded Projects: Gold Coast Desalination Plant Expansion ($300m), Varsity Lakes to Elanora Rail Extension ($470m), Jabiru Island Bridges (Hope Island Road Oxley Drive) Road Duplication – Stage 4 ($102m)

Proportion Unfunded of Total Work: 42%

Chart: Funded Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

Outlook: The Gold Coast region will also benefit greatly from publicly funded transport infrastructure works – split fairly evenly with 53% road and 47% rail over the five-year pipeline. This focused transport expenditure is a response by the State Government to the growing population in the region, the fastest in Queensland. Funded major project activity is expected to average $212m per annum over the pipeline, underpinned by projects such as Gold Coast Light Rail and M1 South segments of the Pacific Motorway. Gold Coast has a relatively large proportion of unfunded work, indicating further upside potential to the outlook and improved from the 2019 QMPPR if the desalination plant expansion or Varsity Lakes to Elanora Rail Extension were to go ahead.


Sunshine Coast


Population: 385,011. Population growth has averaged 2.3% per annum over the last 10 years.

Engineering Construction Sectors Driving Growth: Transport Infrastructure – Road and Rail

Key Funded Projects: Bruce Highway; Caloundra Road to Sunshine Motorway ($442m), Bruce Highway; Caboolture to Steve Irwin Way Package 1&2 ($500m), Bruce Highway – Maroochydore Road Interchange Upgrade ($180m), Beerburrum to Nambour Rail Upgrade ($440m), Sunshine Coast Airport – New East-West Runway ($240m)

Key Unfunded Projects: N/A

Proportion Unfunded of Total Work: 0%

Chart: Funded Major Project Pipeline by Sector& Funded and Unfunded Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

 

Outlook:  The Sunshine Coast region is another area included in the belt of transport investment backed by strong population growth and increasing tourism. Major funded project work is expected to dip until 2021/22 before recovering in the later years of the pipeline, with an average spend of $314m per annum. The winding down of the Sunshine Coast Airport Runway and Bruce Highway: Caloundra Road to Sunshine Motorway projects in 2020/21 is not met with immediate replacement and therefore the new wave of activity isn’t realised until 2022/23, when projects such as the $440m Beerburrum to Nambour Rail Upgrade begins to ramp up.


Ipswich, Toowoomba, Logan and Beaudesert


Population: 866,444. Population growth has averaged 2% per annum over the last 10 years

Engineering Construction Sectors Driving Growth: Transport Infrastructure – Road and Rail, Water

Key Funded Projects: Inland Mainline Freight Upgrade – Gowrie to Kagaru ($3bn), Inland Mainline Freight Upgrade; Kagaru to Acacia Ridge & Bromelton ($107m), Ipswich to Springfield Rail ($1.1bn), Warrego Highway upgrades between Ipswich and Toowoomba ($272m), Pacific Motorway Segments ($460m), Ipswich Motorway: Rocklea to Darra Stage 1 ($240m), Beaudesert Water Supply Zone Projects Stage 1 and 2 ($120m), Southern Sewerage Treatment Ipswich ($136m)

Key Unfunded Projects: Wyaralong Dam WTP Stage 1 ($150m), Somerset Dam Upgrade ($450m), Cunningham Highway – Yamanto Interchange to Ebenezer Creek ($241m), Centenary Hwy Bus and Bridge Projects ($340m)

Proportion Unfunded to Total Work: 34%

Chart: Funded Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

 

Outlook: Major project activity in the Ipswich, Toowoomba, Logan and Beaudesert region is in the midst of the fall that was forecast in the 2019 QMPPR, with annual funded work expected to stay below $400m until 2021/22. The outlook for the back end of the pipeline has substantially improved, with funded work continuing to ramp up until 2023/24. The average annual funded work expected in the final three years of the pipeline is $950m with growth almost completely driven by the $3.2bn Inland Rail Project.


Darling Downs – Maranoa


Population: 128,969. Population growth has averaged 0.6% per annum over the last 10 years.

Engineering Construction Sectors Driving Growth: Gas Development within Resources, Rail and Renewables

Key Funded Projects: Inland Mainline Freight Upgrade – NSW/QLD Border to Gowrie ($1.4bn), Bulli Creek Solar Farm ($525m), Roma East Gas Project (pipeline component, $113m), Arcadia Gas Project ($200m), GLNG Roma East project ($375m), Australia Pacific LNG Upstream Field Development (Sustaining), Arrow – Upstream Field Development (Sustaining), Gas Project Goog-a-binge ($400m), Surat Gas Expansion Projects ($1.5bn).

Key Unfunded Projects: Western Surat Gas Project ($1.2bn), New Acland Stage 3 Expansion ($210m), Wilkie Creek ($200m).

Proportion Unfunded to Total Work: 44%

Charts: Funded Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

 

Outlook: The Darling Downs – Maranoa region has the most improved outlook since the 2019 QMPPR, with $3.4bn and $2.7bn in funded and unfunded activity respectively. Funded activity could increase even further if the Western Surat Gas Project moves forward. In the latter years of the pipeline, activity is supported by substantial Inland Rail works.


Fitzroy


Population: 225,890. Population growth has averaged 0.8% per annum over the last 10 years

Engineering Construction Sectors Driving Growth: Defence, Road, Coal, Renewables and Water

Key Funded Projects: Rockhampton Ring Road ($750m), Singapore Force Posture Initiatives – Shoalwater Bay ($400m), Shoalwater Bay – Remediation ($120m), Lower Fitzroy River Infrastructure Project – New Weir at Rookwood ($195m), Rodds Bay Solar Farm ($123m), Port of Gladstone – RG Tanner Coal Terminal ($200m), Queensland Curtis LNG Upstream Field Development (Sustaining), Gladstone LNG Upstream Field Development (Sustaining)

Key Unfunded Projects: Comet Solar Farm ($172m), Styx’s Coal project ($270m), Gladstone Energy and Ammonia Project ($600m), Rolleston Expansion ($280m), Port of Gladstone – Second Shipping Lane ($196m)

Proportion Unfunded to Total Work: 32%

Chart: Funded Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

 

Outlook: The outlook for the Fitzroy region goes against most regional trends – major project work is expected to continue to fall over the pipeline, a decline which began in 2014/15. 2019/20 currently has the highest level of funded work in the pipeline ($1.04bn) but the average per annum funded work for the five years to 2023/24 sits at almost half that ($605m). Roads, mining, defence and water projects are expected to sustain this lower level of activity – with the most significant being the $750m Rockhampton Ring Road and the Defence Initiatives at Shoalwater Bay. There is potential upside to these figures, with $1.4bn in unfunded projects in the pipeline, 40% of which are credibly proposed.


Outback


Population: 82,513. Population growth has averaged -0.1% per annum over the last 10 years

Engineering Construction Sectors Driving Growth: Road and Renewables

Key Funded Projects: Mt Isa to Rockhampton Corridor Upgrade ($238m), Aldoga Solar Farm ($120m)

Key Unfunded Projects: Aldoga Rail Yard ($280m), Wiggin’s Island Coal Rail Stages 2 and 3 ($815m), Mt Isa to Townsville Rail ($320m), Minyango Coal Project Stage 1 ($600m), Belvedere Coal Project ($500m), Cannington Expansion ($120m). Kidston Solar Project – Stage 2 ($140m), Kidston Transmission Project ($100m), Kidston Pumped Hydro Storage Project ($200m), Oaky Creek Longwall Stage 2 ($455m), Merlin Molybdenum-Rhenium Phase 2 ($250m), Baralaba South Open Cut ($160m), Curtis LNG Project (Salt Concentrator) ($150m), Australia Pacific LNG Salt Handling Facility ($160m), Copperstring Transmission Line ($1.5bn)

Proportion Unfunded to Total Work: 93%

Chart: Funded Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

 

Outlook: The regional profile for the Outback – an area that covers approximately two-thirds of Queensland – is distinct from the other regions due to its low population and historical reliance on resource related activity. In 2019/20 there is only $70m in funded activity, while $225m remains unfunded. Funded activity only peaks at $82m in 2022/23, supported by a section of the $238m Mt Isa to Rockhampton Corridor Upgrade and the $120m Aldoga Solar Farm.

The outback region has the lowest ratio of funded to unfunded major project work. 94% of activity in the pipeline is currently unfunded, comprising a host of resource projects spread across minerals, coal and gas. This includes $1.7bn in unfunded major coal projects, the largest being the Minyango Coal Project worth $600m. The negative outlook for this region is further highlighted by the proportion of unfunded project activity which is considered ‘unlikely’ – more than 50% of the $3bn unfunded total.


Townsville


Population: 237,258. Population growth has averaged 1% per annum over the last 10 years.

Engineering Construction Sectors Driving Growth: Water, Roads, Minerals, Defence and Harbours

Key Funded Projects: Burdekin Falls Dam – Saddle Dam and Monolith Improvement ($210m), Gorge Weir to Byerwen ($180m), Bruce Highway – Haughton River & Pink Lily Lagoon Upgrade ($298m), Tennant Creek to Townsville Corridor Upgrade ($180m), North Queensland Bio Energy – Ethanol Plant ($200m).

Key Unfunded Projects: SCONI Scandium Project ($304m), Burdekin Falls – Hydro Electric Power Station ($120m), Majors Creek Solar Project ($224m), North Queensland Power Station ($600m), Hells Gate Dam – Upper Burdekin ($250m), Townsville Port Expansion Project – Outer Harbour Expansion ($150m), Bruce Highway – Ingham to Cardwell Range Deviation ($345m).

Proportion Unfunded to Total Work: 53%

Chart: Funded Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

 

Outlook: Funded activity in the Townsville region is more diverse than other regions, with major projects spread across utilities, defence, road, rail and resource sectors.  Funded work is expected to peak this financial year (2019/20 – $595m) -– driven by the Haughton River & Pink Lily Lagoon Upgrade segment of the Bruce Highway and the Gorge Weir to Byerwen Water Pipeline. Similar levels of funded work are expected in 2020/21 before a sharp fall in subsequent years as supporting projects conclude. 53% of the pipeline is currently unfunded – including $600m for a North Queensland Power Station – leaving open the possibility of a large upside to the outlook if the major unfunded projects in electricity and water were to go ahead.


Wide Bay


Population: 299,655, population growth has averaged 1% per annum over the last 10 years

Engineering Construction Sectors Driving Growth: Roads and Water

Key Funded Projects: Cooroy to Curra: (Section D) – Southern D1 ($422mn), Cooroy to Curra: (Section D) – Northern D2 ($326m).

Key Unfunded Projects: Mooloolah River Interchange ($250m), Urangan Boat Harbour ($200m), Paradise Dam Primary Spillway Improvement Project ($658m), Maryborough Coal ($180m), South Burnett Coal Project incl. Transport Corridor ($500m)

Proportion Unfunded to Total Work: 63%

Chart: Funded Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

 

Outlook: Major project activity in the Wide Bay region has a similar issue to many other regions – a large proportion (63%) of work in the pipeline is unfunded. Having said that, this year’s pipeline represents an improvement due to an increase in funded transport infrastructure. Overall, funded major project work in the pipeline is equal to $960m, equivalent to an average per annum spend of $192m. Unfunded projects in water – including the Paradise Dam Primary Spillway Improvement Project ($658m) or a potential complete dam rebuild given structural failures – could add further diversity to the mix of funded activity if they went ahead. The Hinkler Regional Deal Implementation Plan, signed off by the Australian Government and the Bundaberg and Fraser Coast Regional Councils in January 2020, includes a further $252 million in funding for regional projects, however none are individually more than $50 million in value and are not included in this analysis.


Cairns


Population: 254,420. Population growth has averaged 1.3% per annum over the last 10 years

Engineering Construction Sectors Driving Growth: Roads, Rail and Harbours

Key Funded Projects: Cairns Southern Access Corridor Stage 3 – Edmonton to Gordonvale ($300m), Cairns Southern Access Corridor Stage 5 – Foster Road intersection ($162m), Smithfield Bypass ($106m), Cairns Ring Road ($251m), Mt Emerald Wind Farm ($133m), Port of Cairns – Cruise Terminal Expansion – Trinity Inlet Dredging ($86m).

Key Unfunded Projects: Red Dome Mungana ($215m), Powering North Queensland Transmission Line ($128m)

Proportion Unfunded to Total Work: 30%

Chart: Funded Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

 

Outlook: The outlook for funded activity in Cairns entirely depends on transport infrastructure, with road projects driving activity from 2021/22. The average spend per annum is forecast to be $157m, underpinned by road projects such as the $251m Cairns Ring Road and Stages 3 & 5 of the Cairns Southern Access Corridor (combined value of $462m).


Mackay – Isaac


Population: 173,119. Population growth has averaged 0.6% per annum over the last 10 years

Engineering Construction Sectors Driving Growth: Coal, Rail and Renewables

Key Funded Projects: Clarke Creek Wind ($525m), Bruce Highway – Sarina to Cairns – Mackay Ring Road / Bypass – Stage 1 ($215m), Bruce Highway – Mackay Ring Road Stage 2 – Mackay Port Access Road ($228m), North Galilee Basin Rail ($900m), Peak Downs Hwy Improvements – Eton Range ($120m), Carmichael Coal Mine Project ($978m),

Key Unfunded Projects: Bruce Highway – Goorganga Plains Upgrade ($248m), Arrow Bowen Pipeline ($360m), Eagle Downs Coking Coal ($600m), Grosvenor Underground Stage 2 ($350m), Peak Downs Expansion ($345m), Hail Creek Extension – Underground ($660m), Olive Downs ($600m), Middlemount Coking Coal Mine Stage 2 ($284m), Eaglefield Coal Mine Expansion ($1.2bn), Ironbark No. 1 Coal Project ($280m), Drake Coal ($280m), Millennium Expansion ($320m), Winchester South ($900m), Moranbah North ($400m)

Proportion Unfunded to Total Work: 71%

Chart: Funded Major Project Pipeline by Sector & Funded and Unfunded Pipeline

Source: BIS Oxford Economics, QMCA and IAQ member knowledge

 

Outlook: The Mackay-Isaac outlook has historically, and will continue to be, supported by large resource projects such as Adani’s ‘scaled down’ Carmichael coal mine. However, we expect renewable energy projects such as Clark Creek Wind ($525m) to support activity during the next few years of the pipeline. Funded work is expected to peak at $1.1bn in 2020/21, before easing to $295m in 2022/23, with no currently funded projects in 2023/24. However, there is $7.3bn in unfunded major project activity in Mackay-Isaac – the largest of any region. The funding issues for the region are focused on coal projects such as the $400m Moranbah North, $900m Winchester South, $600m Olive Downs and $1.2bn Eaglefield Coal Mine Expansion. These particular coal projects are more likely to proceed given the product is metallurgical coal – presenting a potential upside to the outlook.