As coronavirus restrictions ease, business investment is expected to recover, although it will be shaped by how governments handle border restrictions and quarantine requirements.
The threat of snap-lockdowns also presents a challenging backdrop for new investment, Deloitte Access Economics says in its latest quarterly investment monitor.
Deloitte partner Stephen Smith says the COVID period has dramatically changed where, when and how people work too.
"This is likely to shape the types of investments required over the coming decades," he said.
"The proportion of people working from home is expected to remain permanently above pre-COVID levels, with flow-on effects for investment in transport networks and our CBDs."
Deloitte expects business investment to grow in 2021/22 before accelerating in 2022/23 - adding almost 1.5 percentage points to economic growth over this period.
Government investment has now reached a record high as a share of the economy, with projects underway reaching $202 billion in 2021 compared with a low of $131 billion in early 2015.
Deloitte expects this to grow to $285 billion in 2023.
"This will see the value of infrastructure investment surpass the peak in activity seen during the mining construction boom," Mr Smith said.
However outbreaks of the Delta variant have piled the pressure on an already stretched construction industry suffering a shortage of workers.
"Normally when this happens workers are recruited from other countries but COVID has put an end to this and the high level of global infrastructure investment means Australian contractors may not see immediate relief when international borders are reopened," Mr Smith said.
"To make matters worse, there have also been construction materials shortages, with prices increasing for key inputs ... and there may be further increases with supply chain issues set to extend into 2022."
He said with a record amount of infrastructure work to be completed, as well as a large pipeline of residential construction activity, it will be a stretch for contractors to deliver projects on time and on budget.
Overall, the value of investment projects rose $9.5 billion to a five-year high of $793.0 billion as of the September quarter, a 1.2 per cent increase from the previous quarter.
The value of definite projects - those under construction or committed - increased $7.9 billion over the quarter to $331.3 billion.
The value of planned projects - those under consideration or possible - increased $1.6 billion over the quarter to $461.7 billion.
Australian Associated Press
