After the post-GFC resources boom we learned much from the plight of our friends in Queensland and Western Australia. Gladstone was not Double Bay, high-vis vests and the Qantas business lounge were a strange mix. Thankfully, Brisbane and Perth seem to be in recovery mode, but have we learnt anything?
At its height, the resources boom in Western Australia sucked all the engineering and construction resources out of Perth – the money to be made from highly skilled and relatively unskilled labour in the iron ore mines and gas fields made it almost impossible to get anything done.
It was not just labour, but primary resources too, which could command much higher prices.
How, we asked, could an A-grade building in Perth cost nearly 50 per cent more than Sydney’s premium Deutsche Bank Place? And how could house prices in Karratha or Townsville rival Killara?
But as quickly as it escalated, the booms in the West and Queensland came to a startling halt.
Could history repeat itself? NSW’s $75 billion-plus infrastructure boom is now well underway. We have the Sydney Light Rail Project, West Connex, North Connex, a new international airport, not to mention the Sydney Metro Project – which includes massive tunnelling, another harbour crossing and at least 12 integrated station developments.
Where will the advisory services, manpower, equipment, concrete, steel and other products required to resource these projects come from? And how soon will it be before shortages and bottlenecks appear, driving up prices?
When the resources boom was at its peak, the south eastern states were in the grip of the GFC, contributing to an unprecedented migration north and west of labour and materials. Maybe everyone coming back will save us, but don’t hold your breath, Brisbane and Melbourne have also let the infrastructure genie out of the bottle with Cross River Rail and Metro projects.
The next 3-5 years are going to be very interesting. Keep an eye on the statistics – capacity utilisation, concrete and steel prices, blue collar wage growth.
If you’re a steel-fixer, a crane driver, scaffolder or a general labourer, hide your law degree, there’s money to be made. This could be a golden era of nation building, it could also see the return of material and labour shortages, industrial unrest and inflation. I’m not saying that this is a certainty but keep an eye on the numbers, we may be in for a rough ride.
Michael Cook is the group executive at Investa Property Group