By ABC reporter Gian De Poloni
Cost blowouts are a running thread in this budget. You just have to read between the lines.
Check out this sentence:
“The Budget includes a global smoothing provision to redistribute some AIP spending from 2023-24 and 2024-25 into the outyears to account for unforeseen and unavoidable delays that can affect project delivery and spending.”
But what does that mean?!
Basically, some of the government’s key projects have been delayed and become more expensive.
That’s pegged down to “unforeseen and unavoidable” factors — language that is used at least at times in the budget.
The government says that is because of a few things:
- Global and national supply chain volatility
- Geopolitical tensions (think Ukraine, Israel/Hamas)
- Scarcity of construction materials
- Population growth
Which projects are affected?
- Spending on public sector insurance policies has risen due to “unavoidable premium increase”
- Spending on regional health has been impacted by the “unavoidable cost of securing nurses at hard-to-staff locations” and “unavoidable cost pressures for the WA Country Health Service.”
- There have been “unavoidable cost increases” across a range of health projects, like the Sir Charles Gairdner Hospital ED and the Joondalup hospital redevelopment.
- “Unavoidable cost pressures” have impacted spending in the state’s firefighting effort.
- But the biggest one is a $707 million blowout to account for “unavoidable cost increases for labor, equipment and materials” as well tacking on a couple more minor projects.
So what can be done?
Well, the most effective thing the government can do is just slow down. That’s where that is smoothing language comes in.
A “smoothing provision” allows for projects to be staggered across future budgets to give things time to settle.
The government also says it will work with the construction industry to increase productivity and make their workload sustainable.
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