John Georgiou wants the federal government to give more support to Australian-owned contractors. Photo: Attila Csaszar

Local contractors in lead work bid

Friday, 5 April, 2019 - 14:44

A group of mid-tier contractors has banded together to lobby for the federal government to introduce tougher rules on the flow of work from infrastructure projects.

Nine businesses are forming the Australian Owned Contractors body, including five from Perth – Georgiou, Decmil, SRG Global, Ertech and MACA.

Research by the group analysed 20 federally funded major projects under construction, finding only 11 had Australian-owned businesses as lead contractors.

An estimated $11 billion of the $50 billion value of the projects would flow to Australian-owned lead contractors, the group said.

The numbers follow a period of major foreign investment into Australia’s contractor space, with John Holland (China), CPB (Spain), UGL (Spain) and Clough (South Africa) all bought by overseas interests.

Businesses such as John Holland, Clough and CPB are still headquartered in Australia, however.

One complication is that the data does not break down contracts awarded to local subcontractors.

For example, the largest project on the list, the $11 billion Melbourne Metro, has one of three lead contractors Australian owned, but will have a 88 per cent local content for design and construction activities, according to Victoria’s treasury.

AOC has called for 20 to 30 per cent of each major project to be delivered by an Australian-owned contractor, effectively a requirement for a local business to be included as a lead on every project.

Georgiou Group chief executive John Georgiou said that would help grow smaller contractors.

“If Lendlease was to sell its engineering business to a foreigner, 97 per cent, if you looked at the last 20 major jobs [they] would’ve been (led) by foreign corporations,” Mr Georgiou told Business News.

“(In) Spain, France, Italy and the UK it’s the total opposite.”

Last year, Mr Georgiou had called for the state government not to aggregate a contract to extend rail to Yanchep with a contract to link the Thornlie and Cockburn lines.

The government did link the projects to lure tier-one contractors to bid, but promised to split-off $60 million of early works.

“I very rarely see a client take two jobs that are so separated, they’re 60 kilometres apart, and bring the two together because they can’t get the (big) contractors to deliver it,” he said.

“If they had separated the two jobs … ourselves and one other medium-size company would have tackled one of the packages.

“(Then) you’d have more capability in the Perth market.”

Decmil chief executive Scott Criddle said a policy to strengthen smaller local contractors would promote competitive tension in the sector.

Bigger businesses had an oligopoly, with less transparency around tendering and delivery, he said.

Mr Criddle added changes such as those proposed would keep profits in Australia rather than flowing overseas.