Queensland’s Water

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Is the reservoir or great new hybrid investment vehicle ideas drying up? Could be, but the real question is which will run dry first… the portfolio of new financial products from the money shufflers… or Queensland’s water?

“Most major projects in Brisbane are facing delays,” we read in today’s Australia “and the prospect of meeting tight deadlines for water infrastructure as part of the government’s $66 billion capital works program are slim… stage one of the $1.7 billion western corridor recycling pipeline and the $800 million desalination plant on the Gold Coast-were behind schedule.”

Now here is a problem that requires real investment. And just at the right time, too. With housing slowing down (and leading, as it always does, to lower consumer spending), and with business investment off its peaks, who will pick up the spending baton in the Australian government? The logical answer is state governments flush with tax and royalty surpluses, and yes Queensland and West Australia, we mean you.

Queensland is engaged in an ambitious project to create a water grid by 2008. But it may be too ambitious. The AFR reports that, “Industry has already expressed concern about the tight deadline of mid-2008, when the region’s water supplies are due to run out unless there is significant rainfall. Brisbane’s dams are already below 25 per cent.”

Uh, the regions supplies are due to run out in mid-2008? Isn’t that just a few years from now? Hadn’t they better get those construction projects moving… or hire a massive armada of rain dancers?

We spent some time this morning investigating which firms have been contracted to do the work on Queensland’s water grid. We came up with three. McConnell Dowell ConstructorsKBR Inc. (NYSE: KBR), and the massive German firm Bilfinger Berger AG (FRA:GBF). The more we dug, the more we realized GBF has its fingers in a lot of Australian infrastructure pies (from a fuel depot project in Darwin to a water project in the Yarra Valley right here in Victoria.)

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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