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Value of rail construction contracts fall in 2020

While governments have trumpeted major stimulus spending projects in rail to spur the economy out of COVID-19, the value of contracts awarded in 2020 has fallen significantly, according to analysis from Infrastructure Partnerships Australia (IPA).

In 2019, contracts to the value of $27.1 billion were awarded in the infrastructure sector. In the first eight months of 2020, only $6.7bn in contracts have been awarded, a quarter of the 2019 total.

Of the contracts awarded, rail has been overlooked, with roads, water, social infrastructure and other transport receiving more money.

According to IPA, as governments have turned to small-scale stimulus projects, approvals and signatures on contracts has fallen. In many cases, these projects were already funded and were brought forward to get money flowing into the economy and increase business activity to rebound after COVID-19.

“Over the last few months, governments have taken smart steps to accelerate small-scale quick to market projects to soften the COVID landing,” said IPA chief executive Adrian Dwyer, who noted that larger projects will sustain the economy for the long term.

“This data shows we now need to accelerate approvals of large-scale projects, add to the major infrastructure pipeline, and ensure we keep pace on delivery,” he said.

“As we governments prepare for the delayed budget season, this is the time to scale up for the long economic recovery ahead.”

With the third quarter of 2020 drawing to a close, contract values could pick up for 2020 in the final quarter, with the contract for the next stage of Sydney Metro expected to be announced. Other contracts, such as those for the Narrabri to North Star section of Inland Rail, could also contribute to the 2020 total.

While rail was the smallest infrastructure sector in 2020 by contract value, it was the largest in 2019, with $11.6bn committed to the sector. In 2018, $6.6bn of contracts were awarded to rail projects.

There is over $3bn of announced funding for rail as part of state and federal stimulus plans.

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