The October 2014 Construction Outlook report, which is based on a survey of 100 companies, has indicated that the winding down of resource-related project activity from historically high levels will have various impacts upon the construction industry.
It stated that falling investment levels were placing pressure on resource-related projects and would lead to a marked weakening of mining and heavy industrial construction and a decrease in non-residential building work from 2014 through to 2016.
Specifically, the total value of engineering and commercial construction work was expected to decrease by 3.9 per cent in 2014–15 and by 1.2 per cent in 2015–16, compared to the three per cent growth experienced in 2013–14.
The report found that decreased activity in these sectors, combined with the completion of a number of major projects, would lead to a downturn in employment through to June 2015.
Infrastructure plans could fill the ‘void’
It was suggested that these effects could be minimised by federal and state government infrastructure plans, with Australian Industry Group (Ai Group) chief executive Innes Willox saying there was a need for an acceleration of state-based infrastructure projects.
“These projects could take advantage of the capacity being released from mining-related activity, help build national productivity and improve the amenity of our cities and regions,” he said.
Australian Constructors Association (ACA) executive director Lindsay Le Compte agreed, stating, “The survey outcomes reinforce the need for governments to get on with undertaking announced infrastructure projects. They should not be diverted by the impact of the forthcoming electoral cycle, especially as the pipeline of projects will provide very significant employment and economic benefits across many communities and the supply chain in general over coming years.”
In addition to the realisation of government infrastructure plans, the report forecast that the “void” left by reduced mining-related construction would also be partially alleviated by an eventual recovery of the commercial construction sector, as well as continued growth in the apartment building sector and in telecommunications investment.
The Construction Outlook report was based on a survey conducted in August and September 2014 by Ai Group in association with the ACA. The full report is available at www.aigroup.com.au