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Construction & Infrastructure Industry in Australia::

AUSTRALIA – CONSTURCTION & INFRASTRUCTURE

 

OVERVIEW


The construction industry is a major driver of activity in the Australian economy. It is made up of residential buildings, non-residential buildings, and engineering construction. It includes architectural and engineering services and construction trades such as bricklaying, plumbing, electrical, etc. Construction in Australia is primarily focused on the domestic market and is extremely fragmented with around 200,000 businesses, which represents 20% of the total number of companies in Australia.

 

After much market turmoil, the Construction industry in Australia has begun to stabilize in 2009-10 in line with improvements to the domestic and global economy. Engineering construction has grown over the year on the back of improvements to company profits, easier access to finance and the growing demand for commodities. At the same time, the increasing demand for commercial and residential property over the year has strengthened commercial building activity.

 

The Road and Bridge Construction industry benefited from the injection of additional Commonwealth funds as fiscal stimulus to support the general economy in the late 2000s. Investment into transport infrastructure has far-reaching, multiplier effects on the local and general economy; it also delivers improved efficiency and safety for commuters and the trucking industry. Government investment into new roads and bridges can both stimulate economic growth and open regions for new residential or industrial development.

 

TRENDS

 

  • Decreased Public Infrastructure Funding, Increased Private: Since the mid 1990s, the decline in public sector investment in infrastructure has been more than offset by private sector investment. In Australia, total public sector investment in infrastructure has declined as a proportion of GDP, from just under 2.5% to just over 1.8% of GDP. This reduction is in line with the trend in other OECD countries. 

 

  • Demographic Factors: Increasing longevity and lower birth rates have had an important bearing on the level and pattern of public investment in infrastructure, with higher needs for aged care facilities and lower needs for schools. Population growth is also a source of increased demand on infrastructure; the development of new suburbs created complementary needs for roads, reticulated water, and distribution for schools, health and public facilities.  

 

  • Changing Preferences: Changing preferences, particularly for a cleaner environment, is a growing trend placing pressure on infrastructure. For example, there is more demand for better water quality and power generation with lower carbon emissions. 

 

KEY FORECASTS

 

Estimates indicate that revenue for the overall Construction industry in Australia will increase by around 2.1% to $28.5 billion by next year.

 

INDUSTRY DEVELOPMENTS

 

The Australian Government is committing $8.5 billion to 15 nationally significant infrastructure projects from 2008-09 to 2013-14.

 

MARKET SIZE

 

Australia’s key industry figures for the Construction market (2009) are as follows:

 

Key Industry Figures

2009

Industry Revenue

278,989.8 $ million

Revenue Growth

-2.6%

Industry Gross Product

75,332.2 $ million

Number of Establishments

388,534 Units

Number of Enterprises

355,324 Units

Employment

1,030,000 People

Exports

--

Imports

--

Total Wages

42,058.7 $ million

 

Australia’s key industry figures for the Road and Bridge Construction industry are as follows:

 

Key Industry Figures 

2009

Industry Revenue

15,900 $ million

Revenue Growth

21.4 %

Industry Gross Product

5,400 $ million

Number of Establishments

2,125 Units

Number of Enterprises

1,275 Units

Employment

41,000 Units

Exports

--

Imports

--

Total Wages   

3,125 $ million

             

KEY PLAYERS

 

Leighton Holdings Limited   

Brookfield Multiplex Group  

Downer EDI Limited

Roads and Traffic Authority of New South Wales   

Roads Corporation     

Leighton Holdings Limited   

Valemus Australia Pty Limited         

Downer EDI Limited            

Boral Limited

 

GROWTH FIGURES AND FDI FIGURES

 

Australia’s Construction industry continues to contract, with September marking the fourth consecutive month that construction activity has fallen. Construction in Australia continues to crumble in all sub-sectors according to the Australian Industry Group Australian Performance of Construction Index (Australian PCI) in conjunction with the Housing Industry Association. The Australian PCI fell 2.4 points in September to 40.8 (seasonally adjusted) remaining well below the critical 50-point level separating expansion from contraction.

 

Stock of Foreign Direct Investment in Australia by Industry:


Industry  

$ million

% share of total

Agriculture, forestry and fishing

700

0.2

Mining

99,659

25.4

Manufacturing

73,848

18.8

Electricity, gas and water

16,105

4.1

Construction  

13,037

3.3

Wholesale and retail trade

57,093

14.5

Accommodation, cafes and restaurants  

914

0.2

Transport and communication

25,929

6.6

Finance and insurance

53,143

13.5

Property and business services

33,830

8.6

Other services

6,105

1.6

Unallocated

12,500

3.2

Total

392,862

100

 

RECENT DEALS

 

The Australian Government's December 2008 and February 2009 announcements were designed to provide strong and decisive action to support jobs and insulate the Australian economy from the worst of the global downturn. These announcements, collectively known as The Nation Building - Economic Stimulus Plan (NB-ESP), make an unprecedented investment in Australia's long-term infrastructure needs and provide the jobs and capital funding to keep Australia's economy running. The Nation Building - Economic Stimulus Plan will help Australia's economic growth by providing major new funding for individual initiatives such as first home owners grants and solar hot water rebates; capital works programs including new science and language centers in 500 Australian schools; and significant infrastructure projects such as road and rail upgrades.

 

INVESTMENT OPPORTUNITIES

 

Recently, the Government established Infrastructure Australia to coordinate a national approach to Australia’s future infrastructure needs. The agency has completed an audit of the nation’s economic assets and identified key themes to drive development of Australia’s infrastructure. These include: broadband; energy grids: port productivity and land transport; public transport; and water supply. Continued strong demand, and an inability to meet all demand domestically, means the Government is keen for more foreign companies to enter the infrastructure development market, both to increase competition and relieve construction bottlenecks.

 

RESOURCES: INDUSTRY GROUPS AND ORGANIZATIONS

 

The Australian Constructors Association (ACA) is dedicated to making the construction industry safer, more efficient, more competitive and better able to contribute to the development of Australia, http://www.constructors.com.au.

 

The Housing Industry Association of Australia (HIAA) is the voice of Australia’s homebuilding industry, http://hia.com.au.

 

The Roadmaking Industry Association of Australia actively promotes awareness and professionalism throughout all levels of the Australian pavement delineation by advocating the benefits of professionally applied and maintained quality pavement delineation products and systems, http://www.riaa.com.au.

 

 

 

Current Investment Opportunities in Australia:

 

For current investment opportunities in Australia, please click here  :   http://investinaustralia.com/current-opportunities

 

 

 

 

 

REFERENCES

  1. Editors, “New Report Examines the Construction Industry in Australia”, Highbeam/Business Wire, July 2007, http://www.highbeam.com/doc/1G1-166335843.html.
  2. Editors, "Construction in Australia”, IbisWorld, July 2010, http://www.ibisworld.com.au/industry/default.aspx?indid=306.
  3. Editors, “Road and Bridge Construction in Australia”, IbisWorld, September 2010, http://www.ibisworld.com.au/industry/default.aspx?indid=313.
  4. Coombs, Greg and Roberts, Chris, “Trends in Infrastructure”, Australian Government, 2010, www.treasury.gov.au/documents/.../01_public_infra.pdf.
  5. Coombs, Greg and Roberts, Chris, “Trends in Infrastructure”, Australian Government, 2010, www.treasury.gov.au/documents/.../01_public_infra.pdf.
  6. Coombs, Greg and Roberts, Chris, “Trends in Infrastructure”, Austrlian Government, 2010, www.treasury.gov.au/documents/.../01_public_infra.pdf.
  7. Editors, "Construction in Australia”, IbisWorld, July 2010, http://www.ibisworld.com.au/industry/default.aspx?indid=306.
  8. Unknown, “Major Infrastructure Projects”, Australian Government, 2010, http://www.infrastructure.gov.au/infrastructure/baf/index.aspx.
  9. Editors, "Construction in Australia”, IbisWorld, July 2010, http://www.ibisworld.com.au/industry/default.aspx?indid=306.
  10. Editors, “Road and Bridge Construction in Australia”, IbisWorld, September 2010, http://www.ibisworld.com.au/industry/default.aspx?indid=313.
  11. Olsen, David, “Australian construction industry crumbles”, Dynamic Business, October 2010, http://www.dynamicbusiness.com.au/articles/articles-news/australias-construction-industry-crumbles-hia-2070.html.
  12. Unknown, “Nation Building Economic Stimulus Plan”, Australian Government, 2010, http://www.infrastructure.gov.au/infrastructure/esp/index.aspx.
  13. Unknown, “High levels of infrastructure activity”, Australian Government, 2010, http://www.austrade.gov.au/Invest/Opportunities-by-Sector/Infrastructure/Infrastructure/default.aspx.