Mega-projects wind up

Onus on services sector as gas investments drop

THE size of the investment being poured into gas projects across Australia is dwindling rapidly, new research shows, putting the onus on the services sector to help fill the gap.

The value of gas projects has fallen from about half of all work in train two years ago to about a third, as mega-projects, including the $61 billion Gorgon liquefied natural gas operation off the West Australian coast, near or reach completion. According to Deloitte Access Economics, the research arm of the professional services group, there will be further falls to come as building wraps up at the $45 billion Ichthys and $34 billion Wheatstone projects, also in WA.

“As the last of these major gas investment projects nears completion, a big story over the last year has been the surge in company profits, which, before income tax, increased by almost one third over the year to March 2017,” Deloitte partner Stephen Smith said.

The challenge will be for cashed-up companies – mining profits have more than doubled – to divert the windfall into new works, Deloitte said.

“This is not expected to translate into additional largescale mining investment, as higher commodity prices have since moderated and new supply continues to enter the global market.”

Instead, it is hoped a surge in the profits of professional and administrative services – both are up more than 50 per cent in the year to March – will lead to more commercial construction work, Mr Smith said.

“There has been a solid lift in commercial approvals. And the better news was broadbased, with planned work rising in sectors such as retail, offices, accommodation, healthcare, and entertainment and recreation,” he said.

The total value of projects in Deloitte’s quarterly Investment Monitor – which captures works across the nation valued at $20 million or more – was down 5.9 per cent to $744.7 billion in the three months to June, a seven-year low.