The total work delivered by big contractors for government capital projects has fallen by nearly $1.5 billion, or 37 per cent, in the past two years, according to government figures. Winding up ... M80 is a $2.25 billion project, jointly funded by the Australian and Victorian governments. About 1300 people worked directly on the site, with others working off site in design and planning. As it nears completion it employs about 50 workers on site. Credit:Ken Irwin The jobs losses add to a record slump in the new housing sector that has contributed to the largest decline in construction jobs since the early 1990s. The decline in building puts thousands more Victorians in related fields under pressure, with suppliers of building materials such as Boral and leading design companies laying off hundreds of engineers, surveyors, workers and contractors. The Master Builders Association said there were about 254,100 Victorians employed in the industry in November 2012, but that was 12,200 fewer jobs than the year before, a drop that was more than double the national trend for the industry.

Executive director Brian Welch said the building and construction sector employed about 10 per cent of Victoria's full-time workers, making it the second-largest employment provider in the state. ''We face a challenging year ahead that will inevitably force many more building companies to continue to adapt or perish,'' Mr Welch said. A unanimous chorus of industry leaders - from lobby groups, peak bodies, unions and economists - say capital spending is the lifeblood of the Victorian economy, which is under increasing strain because of the building decline. They are calling for the state and federal governments to fast-track funding for the next round of big-ticket projects - including the East-West Tunnel and Melbourne Metro Rail tunnel - which are all a year or more away from building getting started. Engineers Australia's Victorian spokesman, John Wilson, said the Baillieu government put a raft of big projects on hold when it came to power, including a six-month delay for regional rail. The delay created a costly lag between the current jobs finishing up and a host of new projects getting started, he said.

''The major projects have been slowly drying up and there is nothing to replace them, the whole industry is waiting for the next set of projects,'' he said. ''We are at a critical time where the skills we have procured here in Victoria are migrating to other places and they won't necessarily come back. You can't just turn on the skills needed.'' The director of the Victorian branch of the Australian Industry Group, Timothy Piper, said it was one of the most significant economic issues for Victoria, and a lack of ''cranes on the skyline'' represented poor economic health. ''Since the Kennett Government and CityLink, we seem to have developed a pipeline that has ensured that those big infrastructure companies have continued to have work and provide employment,'' Mr Piper said. ''We have become very accustomed to having a pipeline of infrastructure projects, but beyond the regional rail link there's not a great deal going. ''We need to have momentum in the state for new employment and for the current companies to maintain their efficiency standards. It is a vital aspect of an economy that doesn't have a strong resource base.''

The executive director of the Victorian division of the Property Council of Australia, Jennifer Cunich, said the industry was increasingly worried about where the next building projects would come from and this uncertainty was resulting in a downsizing of the Victorian workforce. ''If Victoria continues to bleed skilled workers to its competitor states, our ability to manage a future economic resurgence will be severely constrained,'' she said. The chief executive of Infrastructure Partnerships Australia, Brendan Lyon, said Victoria could borrow only a few billion dollars before it would risk the loss of its AAA credit rating. ''When you look at the next three major projects that are needed - the East-West road link, the Melbourne Metro rail tunnel and the completion of the north-east section of the ring road - you're talking projects worth well over $20 billion,'' he said. ''Victoria cannot just print money to fund its infrastructure investment and that means immediate action on any of these projects will require the federal government to be at the table with their cheque book.''

The state secretary of the Victorian Branch of the Australian Workers' Union, Cesar Melhem, said there were lots of ''very grim'' construction workers looking for employment, but some were changing jobs or moving interstate. ''Even if the government starts stimulating new projects, there is still going to be a lag of at least 12 to 18 months where I'm anticipating there is going to be a disastrous drop in construction jobs in Victoria. It is not looking good at all.'' ''It's very grim, there are heaps of construction workers looking for work and not many projects so a lot them are changing jobs or going to other states.'' A spokeswoman for the Baillieu government said it was delivering a record $5.6 billion infrastructure program this year, which included the Victorian Comprehensive Cancer project, Melbourne Park redevelopment, Melbourne Fire Brigade Training Facility at Craigieburn and Shrine of Remembrance upgrade. ''This record infrastructure investment is a vital part of the Victorian Coalition government's economic strategy to generate jobs, boost productivity and grow Victoria's economy,'' she said.

The government, she said, was ''planning, building and delivering a significant infrastructure agenda to begin addressing Victoria's infrastructure backlog''. ''There are a number of major projects currently in construction, and construction will start on more Coalition government major projects this year.''