Engineering construction slumps as industry waits on infrastructure

The Chief Economist at Master Builders Australia is calling for the fast-tracked rollout of infrastructure projects following the June quarter slump in engineering construction activity.

The June quarter showed engineering construction activity to be at its lowest level in a decade.

Shane Garrett said although the volume of engineering construction activity across the country only fell by 1.1 per cent in the June quarter, it means the sector has now fallen to its lowest ebb since 2008.

“Even though we supposed to be on the cusp of an infrastructure boom, engineering construction activity has not been this weak since the GFC. It’s a clear sign that governments are not moving fast enough to advance infrastructure commitments to the construction phase,” Mr. Garrett said.

He suggested this will require all levels of government to urgently implement reforms to draw on the capacity of smaller and local construction contractors. He also said measures will have to be taken to ensure there is necessary skilled workforce.

“Today’s figures show that the other components of construction are also struggling. The downturn in residential building activity continued with another 5.1% reduction during the June 2019 quarter. This was eclipsed by the 6.6% drop in commercial building work done over the same period,” Mr. Garrett said.

“As the economy’s largest provider of full-time jobs, the new figures show that the building and construction industry is in real need of a lift. The quickest way to achieve this is by governments working together to get the infrastructure projects happening,” he said.

The recently released Master Builders forecasts indicate that engineering construction work is likely to be a crucial lifeline for the industry over the next few years.

“A visible expansion in the amount of construction projects taking place would lift morale in the industry and show everyone that our economy is on the up again,” Mr. Garrett said.

During the June 2019 quarter, Western Australia was the only state to see an increase in construction activity +1.4 per cent.

The largest reduction in construction work affected the ACT -13.1 per cent, followed by the Northern Territory -12.3 per cent and Queensland -6.0% per cent.

There were also declines in South Australia -4.8% per cent, Victoria -4.4% per cent, Tasmania -4.1% per cent and New South Wales -1.9% per cent.

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