Forsius Advisory Services (Australia) – Australia’s New Federal Government – Emerging Business Opportunities for New Zealand Companies
Forsius Advisory Services assists Australian and international companies to identify and secure new business opportunities in Australia where an informed understanding of Federal and/or State Government policy, regulation, or spending decisions can be critical to their prospects for commercial success in the market. For more information on our services, please e-mail [email protected]
Australia’s new Liberal/National (“Coalition”) Federal Government has quickly embarked on an “open for business” policy agenda that Forsius believes should open up new commercial opportunities for New Zealand companies in the trans-Tasman market, specifically in government procurement and transport infrastructure projects. These are summarised below. With significant policy shifts promised by the Coalition in several key economic sectors, particularly resources and energy (including renewables), we also anticipate that new opportunities should emerge over time for New Zealand companies to invest in and/or export to Australia.
Australia’s new Coalition Government has reiterated that a major priority will be to reduce federal government debt through significant cutbacks in public expenditure. Notwithstanding this, we believe there are three specific areas of potential for NZ companies to promote their products or services in Canberra with a view to securing new procurement opportunities with government over the medium-longer term:
The Coalition Government has announced that it will commission a new Defence White Paper, despite the previous Labor Government having only recently completed this process itself. This will, in turn, generate a fresh Defence Capability Plan (DCP) that will prioritise a new list of defence projects over a specified timeframe (probably to 2030). The new Government has committed to increasing defence spending to ensure that all projects on this list will be fully funded within this timeframe (unlike the previous White Paper where there was no linkage between projects and fiscal commitment). It is expected that the new DCP will incorporate a major naval construction program, and this could offer promising opportunities for NZ companies in delivering components and systems for submarines, air warfare destroyers, frigates, and patrol boats.
Australia’s Federal Government is a substantial purchaser of IT services across its seventeen portfolio departments and their associated agencies in Canberra. The new Coalition Government has indicated that, while it will be actively searching for savings across this major expenditure item, a number of important procurement reforms will be introduced to that could open opportunities for new players in the market, including from New Zealand. We can expect to see greater adoption, for example, of IT outsourcing solutions across the Federal Government, as well as a new trend toward cluster or potentially even all-of-government IT solutions (covering for example in relation to data storage, human resource management, financial management, travel arrangements, and office equipment). These procurement modifications may challenge some existing local and international suppliers in the federal public sector market, potentially opening up fresh opportunities for NZ companies that can deliver in line with the expectations of the new Government in Canberra.
The previous Labor Government commenced a major infrastructure project to deliver high speed broadband across Australia. Known as the National Broadband Network (NBN), and funded by government debt, the project has experienced significant time delays and cost blow-outs. The new Coalition Government has indicated that it will continue to roll out the NBN project, albeit on more limited basis (ie. with fibre laid only to the node in the street rather than direct into every home). We believe there are excellent opportunities for New Zealand IT companies to promote innovative technologies and solutions to the new Coalition Government (as well as to state governments), particularly in regard to broadband applications that would allow Australian companies, households, and individuals to make the most effective use of the network. This might include applications that would enhance government service delivery across the health and aged care sectors (including for public hospitals and nursing homes), and in the education sector (primary, secondary, tertiary, and technical). Governments in Australia will also be looking for new broadband solutions to establish ‘smart grids’ to provide more efficient delivery of electricity, natural gas, water, and other utility services.
Transport Infrastructure Projects
The new Prime Minister, Tony Abbott, has declared that he wants to be remembered as the “Infrastructure Prime Minister”, and his Government has already moved on initiating a number of critical major projects. While the Federal Government has little direct involvement in constructing infrastructure projects (this primarily done by state governments), it plays a key role as the major funder and in regard to taxation incentives.
Major road projects across Australia that have already received firm funding commitments from the new Coalition Government, and which are expected to commence in the near term include:
- Improvements to the Bruce Highway linking Brisbane to north Queensland – $6.7 billion
- Completion of the Pacific Highway linking Sydney and Brisbane- $5.6 billion
- The East-West road project in Melbourne – $1.5 billion
- The WestConnex road project in Sydney – $1.5 billion
- The Gateway Motorway upgrade in Brisbane – $ 1 billion
- Other highway projects in Perth, Adelaide and Tasmania
Major transport projects that will also demand the attention of the new Coalition Government, and which are already in the initial planning stage include:
- The inland rail freight link between Melbourne and Brisbane
- A rail link between central Melbourne and Tullamarine Airport
And in the more visionary category for future Australian governments over the longer term:
- A High Speed Rail network along the eastern side of Australia linking Melbourne, Canberra, Sydney and Brisbane
- A second international/domestic airport for Sydney
These projects should be closely examined by NZ companies, not only for opportunities in engineering design, planning, and construction, but also by IT firms that can deliver technological solutions for road and rail traffic management systems, as well as road tolling mechanisms. While there is a significant competition with Australian and other international companies already operating in this market (including several new players from Europe), the number of new transport infrastructure projects – and the sizeable budgets attached to them – should warrant the close attention of New Zealand companies looking for new opportunities.
More detailed information on these issues/projects is available to clients of Forsius Advisory Services through our sectoral and project-specific reporting services. For more information contact [email protected]
FORSIUS ADVISORY SERVICES, AUSTRALIA
Political Risk and Government Strategy