Australia is set for a long-term boom in maintenance construction work, the latest forecast suggests.
Releasing the 2022 edition of its Maintenance in Australia report, BIS Oxford Economics says it expects overall maintenance expenditure to rise by 11 percent from an annual average of $48.2 billion over the five years to FY 2021 to an average of $53.6 billion over the five years to FY 2026 (constant prices).
According to the report:
- Industrial maintenance will lead the way as ongoing challenges in manufacturing are more than offset by a huge maintenance requirement from recently completed LNG facilities, strong growth in metal ore mining maintenance activity and an expected recovery in coal mining maintenance activity. All up industrial maintenance activity will grow by 19 percent to reach an annual average of $19.8 billion over the five years to FY2026
- Transport maintenance activity will be supported by higher activity across road, rail and ports. In the near-term, activity will be supported by flood damage repairs in NSW and Queensland. Beyond that, activity in roads will be supported by Commonwealth/state stimulus over the short to medium term whilst rail maintenance is expected to be boosted by a strong pipeline of publicly funded projects in both passenger and freight services and port maintenance activity will be supported by growing mining exports and greater volumes of freight which are entering and leaving Australia. Overall, transport maintenance expenditure will grow by 8 percent to reach an annual average over the five years to FY 26 of $12.1 billion.
- Building maintenance activity will grow by 7 percent to reach an annual average of $12.1 billion over the five years to FY26 amid stronger maintenance demand for health and education facilities, near-term public housing in WA and ACT being supported by stimulus spending and a strong maintenance backlog in defense Longer term, maintenance requirements will continue to grow as the asset base grows and continues to age.
- Growth in utility maintenance activity is expected to be slower as the transition to renewable energy generation will see coal and gas power stations replaced by wind and solar which have much lower maintenance requirements and NBN expansions continue to work toward replacing more of the copper network with fiber, which is also less costly to maintain.
Whilst activity in maintenance is beneficial for enterprises and workers in construction, BIS warns that the growth in maintenance spending will add further pressure to current shortages of resources in construction.
“Maintenance activity is set to continue growing strongly over the coming years,” the report says.
“This puts additional pressure on the construction industry’s ability to deliver on the upcoming wave of work, as maintenance activities tend to use similar materials and skillsets to the construction sector.
“Strong levels of residential building activity, a publicly funded transportation infrastructure boom, and rising maintenance requirements all increase the demand for material and labour, both of which have been constrained by the coronavirus pandemic.
“This in turn places pressure on costs, and delivery timelines.”