2 June 2016
By Canberra Business Chamber Chair, Glenn Keys
As a business owner, the signing of a contract is a commitment between my company and another for the delivery of goods or services as promised.
The signing of a contract is not the beginning of a business relationship, in fact a great deal of time can be spent on consultation and negotiation prior to this milestone being reached so each party is happy with their role.
What this means is that with the signing of a contract, all players have surety. They have examined the fine print, offered suggested amendments, and thought strategically about what clauses they can accept and what they cannot.
However a business chooses to manage their contractual dealings, all will likely have one thing in common – a belief that a signed contract is inviolable.
It is this certainty that allows them to plan. Once a contract is agreed, a business can confidently employ and invest as needed. To spend and grow without this guarantee creates risk and uncertainty.
If a contract could be easily dishonoured without recourse, it would simply be a piece of paper and have no value to a business in terms of informing their future.
While contracts can, and do, have clauses that lay out terms under which a signatory can terminate the agreement, these conditions are clear and agreed by all.
Many companies have long-term contracts with governments. These contracts can be for work that will take years or even decades to complete. It is based on this assured engagement that businesses are built up in order to meet their commitments.
Yet the political lifecycle is short, with it being possible a government will only be in power as little as three years. If government contracts were solely reliant on the government of the day being voted back in, businesses would think long and hard about getting involved in long-term projects, or change their pricing based on this risk.
The type of long-term projects the private sector usually partners with government on are major infrastructure projects. Infrastructure of all types – road, rail, convention centres, hospitals, schools etc. – are important to our economy. In 2012–13, 9.6 per cent of GDP was generated by Australian infrastructure industries.
Therefore, it is vitally important the private sector feels encouraged and confident about investing in infrastructure development.
Here in the ACT, we have a number of proposed major projects that will help invigorate our city, attract visitors and reinforce our role as the nation’s capital. These include City to the Lake, the Australia Forum, the Casino Canberra redevelopment, Manuka Green and West Belconnen.
Each of these will require the private sector to work with the ACT and/or Federal Government to achieve the best and most cost-effective outcomes for our region.
The projects we need to fund include transport infrastructure within our city and networks to connect Canberra to the world. Direct flights will begin shortly and we hope to see more links established with countries around the world as this will increase tourism and open up global markets for our businesses. In addition, we need to continue to push for an east-coast high-speed rail corridor that will bring the Canberra Region so much closer to Sydney, Melbourne and Brisbane. Transport infrastructure must be planned holistically.
The ACT population is projected to reach 500,000 by 2033. We need to already be asking ourselves how we will move that many people around our city so they can go to work, drop their children at school, visit their elderly parents or attend the gym or sport.
Infrastructure does not get built without investment by governments and the private sector and it needs to be encouraged.
One major infrastructure project is now underway here in the ACT, with the signing last week of the light rail contract between the ACT Government and the prime contractor.
Local businesses will win work associated with this project; an effective public transport system will help attract visitors to our city, visitors who will spend in our restaurants, shops and hotels; if it results in shorter commute times, this translates to increased productivity; and we expect new skills and capacity to be developed by those involved in the project. Light rail has the potential to make Canberra more connected and liveable – two key planks of Canberra Business Chamber’s Destination 2030.
Threats to tear up the light rail contract now it has been signed, have the potential to hurt the ACT’s ability to attract inward investment for other infrastructure projects.
When political parties, or indeed members of the community, form a view on a project, I urge them to think about what it can contribute to our city and its residents as a whole. A strategic view of what is best for the Canberra Region must be taken.
This is not to say that no questions should ever be raised about any infrastructure project – either before or after a contract has been signed. We have to work together to achieve the best outcomes for the ACT.
Once again light rail is a prime example, with concerns recently being raised regarding employment arrangements for this project. These must be considered further.
Competition for infrastructure investment is fierce, with all cities, towns and regions, nationally and internationally, constantly on the lookout for ways to build for the future.
The Canberra Region has to make sure it is an attractive place for companies to invest and do business. Key to this is making sure businesses know contracts will be upheld and that they can invest with minimal risk.