Senate Environment and Communications Legislation Committee, , 8:46:29 to 8:49:37
Analysis of how global inflation, labor costs, and supply chain pressures contributed approximately $2.5 billion to the project's cost escalation.
Topics: Government spending, Infrastructure
Speakers: Hon Sarah Henderson, Dennis Barnes, Hon Murray Watt, Unknown Speaker
Um following the so-called project reset in 2023, uh Snowy released its corporate plan for the financial years 24 to 28. Um at page 29 of that plan, it was stated that inflation had added to construction and labor costs. So arising from the reset, can you quantify by how much inflation has added to costs?
Is that from the reset forward? So the difference between 12 and 22.
>> Well, it's I'm referring to your for the financial years 2428 when you said at page 29 that inflation had added to construction and labor costs. So I'm trying trying to ask you arising from the reset, can you quantify how much inflation has added to costs?
Well, at the 24 corporate plan, we would have been referring to the escalation from 6 billion to 12 billion. And I don't have that figure to hand, but I think we published that at the time. The escalation from 12 to 22.2 billion in the order of 2.5 billion is associated with escalations we didn't predict at the time of the reset.
>> I'm asking you about the inflationary escalation. Are we talking 100 million, 500 million? What's
>> so since 2020 since the $12 billion target figure included in the 22 billion figure is $2.5 billion of inflationary
>> and
>> which is why we identify that risk in our annual reports and corporate plans.
>> I mean that's an extraordinary amount
construction activity
>> two and a half billion.
>> Sure. But what my point is that any construction activity in Australia or any other country around the world has experienced cost inflation in recent years. I experienced cost inflation when I renovated my home. This is obviously a bigger example of that, but that is a fact of life with construction right around the world.
>> Minister, I'm not interested in you renovating your home. I'm interested in the fact that >> Sorry, I'm trying to give you an analogy. $2.5 billion dollars >> is attributable to inflation costs alone.
>> And and any large project built anywhere around the world in recent years has experienced a high degree of cost inflation due partly to supply chain
Uh so are you able to detail um give us any other information in relation to those inflationary pressures Mr. Barnes?
>> I mean they uh they cover all sorts of things you know cost of transport, cost of uh diesel uh the steel that we've procured for the project uh labor costs. So it's it's a wide range of uh of various aspects.