Business investment is falling away dramatically, a situation that could continue for another two years.
That's the warning from respected economists at Deloitte Access Economics, saying that while commercial construction activity has improved moderately over the past year, this has been dwarfed by the dramatic collapse underway in engineering work.
Furthermore, in its September quarter `Investment Monitor', Deloitte says given the strong connection between commodity prices and the pipeline of future business investment, the lower prices go, the worse the outlook will become.
That said, it believes most of the damage to the engineering construction sector has already been done.
Engineering activity has contracted in nine of the last ten quarters.
Overall, the value of investment projects fell by $6 billion during the September quarter to $814.3 billion, a 0.7 per cent decrease from the previous quarter and 11 per cent down on a year earlier.
The value of definite projects - those under construction or committed - dropped by $13 billion over the quarter or 3.1 per cent, and to the lowest level in four years.
The value of planned projects - those under consideration or possible - did rise $6.7 billion in the quarter, but they are still $48 billion lower than where they sat this time last year.
However, Deloitte believes the change of federal leadership could provide a new lease of life.
It says the new prime minister and treasurer have "rebooted" a number of important reform processes - tax, competition policy and the financial system - all of which have the potential to improve Australia's international competitiveness.
"This is vital to the long-term economic outlook, particularly as the nation grapples with the end of the mining investment boom and the wobbly outlook for the Chinese economy," it says in the new report released on Thursday.
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