Although some large firms were not turned on by the first round of the federal government's infrastructure spending spree, major infrastructure projects on the way for 2009 may lift their spirits. Richard Szabo finds out what type of work will be in demand

Infrastructure and projects appear to be high on the Rudd government's agenda and law firms can soon expect a major increase in work. Government body Infrastructure Australia has allocated A$20bn in funds for major projects starting from February 2009.

Submissions are still being considered, but Mallesons Stephen Jaques partner Geoff Wood believes upcoming projects are likely to include social infrastructure and a freight railway line to transport coal from the Hunter region.

Blake Dawson partner Chris Mitchell agrees that rail links between natural resources and the sea are likely to be upcoming projects. He says they could also occur in Western Australia and Queensland, particularly the Gladstone region. "There is likely to be uranium mining work, since there is acquisition interest from China and India. It is something often pursued, although most mineral reserves have many types of ore. The deciding factor will be the projected price of that ore for the next 10-15 years. If it drops, production of that commodity could be unfeasible," Mitchell says.

Due to the ongoing drought in most parts of the country, there could also be water projects, including grey water and desalination plants, and dams.

Cash injection boosts hospital work

Wood believes there could very well be hospital and other health infrastructure work, pointing to his recent work on the Royal North Shore Hospital. "There is no doubt that this could go ahead. However, a difficulty remains that road and PPP projects are required to gain 100% financial commitment from institutions - this is quite difficult at the moment and the government will need to look into it," he added.

He was spot-on. The federal government recently agreed to provide public hospitals with A$6.5bn in funding over the next five years, including A$1.7bn in payments for meeting performance standards. Another A$800m will be allocated for indigenous health.

Thomson Playford Cutlers partner Tom Boyce says indigenous health projects would possibly involve setting up structures in the countryside. "Some indigenous projects are likely to be longer jobs, involving construction of health facilities and clinics for Aboriginal communities, and also longer-running programs," he says.

The government has budgeted for a A$1bn increase in funding for a range of agreements, including hospitals, housing and disabilities. The increase would boost confidence in the health sector, according to Boyce, and this could see reconsideration of major projects that had previously not proceeded due to a lack of funding. "There could also be an increase in privately financed infrastructure," he says, "and, some public infrastructure projects may need additional private capital, so we will probably see public and private partnerships forming."

Law firms that specialise in construction, corporate commercial, property and government are likely to observe increased work flows. Projects could begin in early 2009 and some capital projects might last up to two years, he states.

Dwindling funds bring mixed reaction

Although the global financial crisis has shrunk the federal government's Building Australia fund from the A$20bn expected initially to just A$12.6bn, firms still believe it will bring more work. Allens Arthur Robinson's Emma Warren is one partner who feels the outlook is positive for infrastructure work. "Even though the dollars have decreased, they are big projects. It certainly shows an incredible commitment," she says.

Some of the projects announced include the completion of Sydney's West Metro (A$8bn), the widening of the M5 motorway (A$3bn) and the quadruplication of the North Strathfield to Hornsby railway line (A$1.8bn). Freehills partner Bill Napier believes each of these projects would provide lawyers with work for about six to 18 months. However, although these proposals could offer good work for construction lawyers, banking lawyers would not have much involvement as little bank or private equity debt funding is anticipated. "It isn't much relief for banking lawyers in light of the credit crunch," he says. "We always expected the fund to bring in some work, but were modest in our expectation of its volume."

Napier said that because the West Metro might be financed only by public funding, external law firms may miss out on a significant amount of PPP work. "Now that the government has taken it from becoming a PPP and made it a public project, it will involve some external legal advice. But it's a smaller slice of the pie and likely to go to government-side legal advisers," he says.

To this end, Allens, a member of various government panels, believes the outlook is positive. Warren says construction, project and finance lawyers alike will benefit from a mix of publicly and privately funded projects.

Full speed ahead

Since the government has shown interest in fast-tracking projects, it is likely that lawyers will need to work more productively. "If the government wants projects done quickly, it's good as long as lawyers can handle them. It usually sets realistic and achievable timeframes," says Mitchell.

He believes areas of legal expertise such as construction, financing, planning and environment will be in greatest demand. ALB