Design and consultancy company Arcadis says Australia is falling behind developing nations on returns to its economy and performance of built assets, according to their recently released 2016 Global Built Asset Performance Index.
The index, developed in conjunction with the Centre for Economics and Business Research (Cebr) examined the income generated by buildings and infrastructure – homes, schools, roads, airports, power plants, malls, railways, ports and all other fixed assets – across 36 countries that collectively represent 78 percent of global GDP.
Australia is ranked 21st on total returns from built assets and is below the global average on built asset performance, behind emerging nations such as the Philippines and Thailand. In per-capita terms, Australia is ranked sixth overall.
According to the Index, Australia will fall to 23rd by 2026 on total returns.
“In resource and manufacturing focused areas of Australia the emphasis will be on driving operational efficiency from existing assets, and effectively dealing with the legacy environmental issues created by those industries," Arcadis Built Asset Consultancy Director Gareth Robbins said.
“Meanwhile in the cities the focus will be on creating sustainable and liveable urban centres, through the provision of high-quality transportation and housing assets, in order to create environments that can attract the jobs and people required to support economic growth.
“New South Wales and Victoria have a very strong pipeline of infrastructure projects planned for the next decade to address rapidly growing cities, however, more will need to be done to unlock the value and potential of built assets left over from the slowdown in mining, and replace the decline in manufacturing," Mr Robbins said.
The report reveals China’s economic growth is highly powered from its built assets – accounting for 52.9% of GDP returns this year – and is expected to peak as its economy gradually rebalances towards services and consumption, as opposed to manufacturing and investment.
This manufacturing intensity enables China to stand far ahead of the US, who are still experiencing a decline in the effectiveness of existing assets, reducing productivity, and pulling negatively against GDP’s return on assets at $5.4 trillion.
“By 2026, emerging markets will increase their dominance for high performing and sustainable built assets – India will overtake the US, Indonesia will leapfrog Mexico and Japan, and Brazil will edge ahead of Germany,” Robbins said.
“Mature economies will have to do more with less as ageing built assets cause depreciation to run faster than rebuilding in recent years.”