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Queensland construction activity to slump

Queensland's engineering and construction workload is set to decline by 53 per cent from 2013/14 to 2016/17, according to a mid-term report by industry research company BIS Shrapnel.

That is a 13 per cent increase from the 40 per cent predicted earlier by the company.

The report, commissioned by the QLD Major Contractors Association (QMCA) and Construction Skills QLD (CSQ), updates the 2013 Major Projects Report: Queensland Engineering Construction Outlook released in February this year.

BIS Shrapnel Senior Economist Adrian Hart says economic conditions have worsened more than anticipated both at the global and local level since the 2013 Major Projects Report was released.

“Weaker commodities prices coupled with a high cost base has seen further project deferrals in the mining sector, resulting in a weaker major project forecast over the next two years than previously anticipated,” he says.

“Offsetting these forces somewhat is an improvement in the outlook for non-mining projects, particularly transport projects”.

“Following a peak of $17.9 billion in 2012/13 Major Project work done is anticipated to decline each year, with work done falling to $8.5 billion by 2016/17. This represents a 53 per cent decline from the 2013/14 peak.”

QMCA President Tony Hackett says the report confirmed serious challenges ahead for the industry.

“The sector is suffering the effects of both State and Federal governments cutting expenditure to bring budgets back to surplus along with the deferral of major private sector mining developments,” he says.

“While there has been some improvement in the outlook for transport infrastructure, overall activity is still set to fall substantially in the absence of further government and resource-related investment.”  

Hackett adds escalating costs, productivity concerns and fluctuating commodity prices; along with last year’s increase in coal mining royalties has impacted on the investment pipeline of major mining companies.

“This has resulted in flow-on effects in a civil construction sector facing diminishing opportunities, increasing job losses and, more importantly, the loss of skills developed over recent times.”

“With construction, a key pillar of the State’s economy sustaining thousands of Queensland jobs, sustainability of the industry is critical. A slow-down in civil and engineering construction will also impact an extensive supply network.”

Hackett says long term infrastructure deficits pose very significant issues for broader economy given the direct link between investment in infrastructure and economic growth.

“There is a need to smooth out the boom and bust cycle and deliver a pipeline of major new projects going beyond the next stage of the electoral cycle,” he says.

“A more consistent flow of work is key given slowing civil and engineering construction in an environment where we are also seeing rising input costs and an increasingly complex industrial relations landscape.”

CSQ CEO Brett Schimming says the report continues to signal the next big shift in skills development for the industry.

“The construction industry in Queensland has undergone significant workforce realignment in recent years, with the GFC and subsequent resource boom causing a simultaneous slowdown in traditional residential and commercial sectors, alongside a booming civil and heavy infrastructure market,” he says.

“Because what we build changes what we train, this has seen a distinct shift in our training pipelines from traditional trades to occupations such as plant operators, electricians and welders – trades in high demand on major projects.”

Schimming says making that shift has been difficult for the industry and now with the shift back from major infrastructure activity, training priorities will again realign.

“The real question, however, is the sustainability of this type of workforce planning. It’s just not efficient to keep shifting the construction workforce focus between sectors that are actually quite different in their skilling requirements,” he says.

“Construction is already a volatile industry; any steps that can be taken to smooth out the boom cycle for major project activity would have a profoundly positive effect on sustainable skilling strategies like apprenticeships and traineeships.”

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