This study presents a high-level analysis of the evidence on Australian and international infrastructure construction costs. Available data was examined to see if the increase in infrastructure construction costs is higher than the general level of inflation and, if so, whether a similar trend has occurred in comparable countries.
- The analysis found that increases in infrastructure construction costs have not consistently exceeded increases in the general rate of inflation over the long run.
- The analysis also sought to isolate key drivers of infrastructure costs so that policy solutions can be developed to improve the efficiency of the Australian infrastructure construction sector.
- It found that world oil prices are the main cost drivers in Australian infrastructure construction costs. Given projections for substantial and sustained increases in oil price, that there will be real increases in infrastructure costs in the future.
- There is therefore a need for governments to apply greater scrutiny to infrastructure projects in the future where proponents seek government funding.