Construction Industry Update for Western Australia

HomeConstructionConstruction Industry Update for Western Australia

CONSTRUCTION INDUSTRY IN WA

Will the end of the Row 8 project affect the industry?

 
21 April, 2017

Richard ShillingtonRichard Shillington

+61 402 260 300

LINKEDIN

 

Following Labor’s win in the Western Australian election on March 11, new Premier Mark McGowan immediately halted work on the Roe 8 highway extension, as well as Roe 9 – a 3km tunnel beneath Fremantle.

The 5km Roe 8 route is part of the $1.9 billion Perth Freight Link to provide a better link between eastern industrial areas and Fremantle Port. $1.2 billion of the funding is coming from the federal government.

Labor flagged environmental and logistical concerns over Roe 8, despite the previous state government green-lighting the project.

Roe 8 opponents argued that it cut a swathe through the Beeliar Wetlands, and that the highway link will not offer a solution to freight vehicle congestion in the city.

There’s no doubt the Roe 8 cancellation will impact on WA’s construction industry – we take a look at some of the fallout from the new Labor government’s decision.

The $450 million ‘Roe 8 Alliance’

The Roe 8 Alliance is made up of six contractors: CIMIC Group’s construction company CPB Contractors, Georgiou Group, WA Limestone, GHD, AECOM and BG&E.

Two contracts worth $450 million were awarded to the Alliance in October 2016. Work on the project began with the relocation of local fauna and site investigations in early December 2016.

However, from the start, a dispute over the environmental impact of Roe 8 caused stoppages of work as protesters preventing workers from clearing bushland.

A $158 million loss to Western Australia

The Civil Contractors Association of WA (CCF WA) estimates that the final cost to the WA Government for not building Roe 8 and Roe 9 could top $158 million – more than it would spend on completing the two stages.

Before the change of government, the CCF WA warned against the cancellation of the Roe 8 project.

CCF WA CEO Jeff Miller said talk about tearing up the contract was “irresponsible”.

“The project will support 400-500 direct jobs and many more indirectly,” Miller said.

“And let me make this clear – if Roe 8 doesn’t go ahead, those workers will not have jobs. There’s no plan B – the arrangements with the federal government mean that if Roe 8 doesn’t go ahead, the state simply loses the funding.”

Compromise urged by Civil Contractors Federation

Although Labor plans to spend the $1.2 billion for the Perth Freight Link on an alternative solution to freight transport, the ABC reports that the federal government has said the funds cannot be allocated elsewhere.

CCF WA is now urging the federal and state governments to compromise on Roe 8. Rather than lose all the federal $1.2 billion allocation to the Perth Freight Link (Roe 8 and Roe 9), it’s asking the federal government to release the Roe 8 portion of the funding – $432 million – from the overall allocation.

CCF WA is asking the state government to then resume construction and complete the Roe 8 section of the Perth Freight Link.

“In other words, it will cost the WA government significantly less to build Roe 8 than it would to terminate the Roe 8 and Roe 9 contracts,” Miller said in a LinkedIn post.

“Building Roe 8 also protects up to 3,000 jobs that will be lost if the project is scrapped.”

The future of Roe 8 – and Labor’s alternative

Before the election, WA Labor described the Perth Freight Link as “deeply flawed”, criticising the plan for its failure to reach all the way to Fremantle Port.

Instead, in a policy document on freight and trade, WA Labour pledged $20 million to develop plans for a new Outer Harbour at Kwinana, some 30km south of Fremantle.

“Our plan will deliver to the people of Western Australia a modern port in Kwinana which will be built as an integrated rail, road and port development,” the document stated.

“This will ensure that it is a modern efficient system that will shift cargo to and from our ports to our suburbs and towns in the most efficient manner possible.”

By pledging for long-term development of a new port, Labor is no doubt attempting to deflect criticism from its cancellation of the Perth Freight Link – and gambling that its support base of industry workers and contractors will go along for the ride.

Labor quoted figures provided by the City of Kwinana estimating that construction of the Outer Harbour would provide direct employment to almost 37,383 employees and generate indirect employment for a further 49,657.

However, if the federal government refuses to allow the $1.2 billion Perth Freight Link funds to be used for the Labor initiative, a political battle for the future of WA’s freight industry seems certain.

Contact us for further information.

Richard Shillington National Manager, Construction

Richard Shillington

National Manager, Construction
Direct Line: +61 8 9217 0808
Years Experience
Qualifications
ANZIIF (Snr Assoc), CIP, Dip. Fin. Serv. (Broking), QPIB
Experience & Expertise
With over 30 years’ experience, Richard specialises in Construction and Casualty risks. He has secured, developed and managed insurance programs for a number of prominent Australian companies, including high profile corporate, engineering and construction accounts. Richard’s experience enables him to offer prompt and accurate advice regarding risk management and reduction strategies for a range of Project Risks.

Select Language