Public building projects steam ahead, while private development declines

24 February 2010

Todays construction data shows that private sector building activity fell across Australia in the December quarter, with the overall increase building activity attributable to the boost provided by government projects, according to the Urban Taskforce.

The Australian Bureau of Statistics seasonally adjusted figures show a 6 per cent increase in the real value of building activity in the last quarter, but once government projects are excluded, this turns into a 2 per cent fall.


The Taskforces chief executive, Aaron Gadiel, said that, on a seasonally adjusted basis, there had been a 15 per cent decline in the real value of private sector building activity in the 15 months to December 2009.


Mr Gadiel said that when government projects were included, all states showed seasonally adjusted increases in the real value of building activity in the December quarter, although there were significant differences between them.


South Australia led the way with a 12 per cent increase, followed by Victoria at 9 per cent and Tasmania at 6 per cent, Mr Gadiel said.


Western Australia showed a 4 per cent increase and NSW was again the laggard with a very modest 3 per cent increase.


Mr Gadiel said that across Australia, on a seasonally adjusted basis, the level of private sector non-residential building activity was unchanged in the December quarter.


Again, however, there were significant differences between the states, with NSW seeing a 10 per cent decline, Victoria a 15 per cent increase, Queensland a 1 per cent fall, Western Australia experienced a 4 per cent fall and South Australia was level.


Mr Gadiel said the value of new residential construction (including public housing projects) fell by 4 per cent nationwide in the three months to December.


On a state basis, new residential construction fell by 5 per cent in both NSW and Victoria; it fell by 1 per cent in Queensland, it declined by 6 per cent in South Australia and 4 per cent in Western Australia.


Mr Gadiel said the strong economic stimulus spend was buttressing the headline construction figures.


But private sector developers are beginning to express concern about their ability to secure skilled labour with so many cashed government projects underway and in the pipeline, he said.


Theres a real prospect that some private sector developers may prefer to defer projects, rather than compete for labour and supplies with government.


Mr Gadiel said the figures continued to point to a poor performance by NSW.


The systematic problems with the NSW planning system and development levies continue to hold that state back. These issues have to be tackled if the private sector in NSW is to perform at the same level as other states.


Ironically, the NSW government has rolled out its economic stimulus construction program far more rapidly than other states, but this has only been achieved by virtually exempting their projects from normal planning processes and development levies.


The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.


For every $1 million in construction expenditure, 27 jobs are created throughout the broader economy.


The construction activity made possible by property developers contributes $78 billion to the national economy each year and creates 849,000 direct jobs.



Download PDF Version