“The NSW Government is already building the roads, public transport and other hard infrastructure we need – now its time for a huge investment in the social infrastructure we need, including schools”.
So declared NSW Premier Gladys Berijiklian in 2017 when announcing a $4.2 billion dollar investment in building and upgrading 120 schools along with a $7.7 billion program over four year to construct new hospitals and healthcare facilities.
At the time, the investment represented a 61 percent jump in funding for new schools and the largest school building program in that state’s history. It was expected to enable 32,000 more student places and facilitate delivery of 1,500 new classrooms.
NSW is not alone in ramping up activity. In its Construction Market Report released last November, Australian Construction Industry Forum (ACIF) said that the dollar value of work done on the building of universities, schools and other education facilities throughout Australia rose from $4.421 billion in 2015-16 to $6.375 billion in 2017/18. By 2019/20, ACIF expects this to reach $7.471 billion.
All jurisdictions will benefit. In Victoria, activity is expected to rise from $1.263 billion in 2014/15 to $2.313 billion in 2019/20. In NSW, the value of work will increase from $1.071 billion in 2016/17 to $1.917 billion in 2018/19. Even debt-strapped Northern Territory will see output almost double from $75 million in 2017/18 to $143 million in 2019/20.
Approval data is encouraging. Over the first ten months of 2018, the dollar value of building work on educational facilities which were approved for construction came in at $5.382 billion. That’s less that the $5.985 billion approved on the first ten months of 2017 but well above the $4.089 billion and $4.230 billion in the corresponding periods in 2016 and 2015 respectively.
New projects continue to roll in. Between May and November last year, a major project database using information provided by Cordell which is available to subscribers of the ACIF report saw the addition of 92 projects. These include Murdoch University Eastern Precinct in Perth and the University of Canberra Bruce Campus development in the ACT.
ACIF lead forecaster Kerry Barwise says the forecasts reflect a range of educational buildings which are being rolled out. These cover higher education, vocational education and training, schools and institutions. They also involve support buildings such as student accommodation.
According to Barwise, this is being driven by several factors.
First, demand from foreign students remains strong. All up, Department of Education figures indicate that 475,278 new students enrolled in Australian schools, universities and TAFEs last year. That represents a 60.6 percent increase over five years. Institutions continue to invest in order to cater for this.
Transition within the Australian economy, meanwhile is underpinning demand for places in areas such as science and law. This is driving investment in facilities such as innovation hubs.
Next there is population growth. According to ABS estimates, Australia’s population expanded by 390,500 or 1.6 percent in 2017/18. This driving a need to educate not only children of migrants but also students now coming through following a mini baby boom which took place around a decade ago.
As well, changing geography is seeing a growing preference for inner urban living and thus demand for inner urban schools. This is driving not only new school demand but also a need to update and redevelop older schools – many of which were built half a century ago and were not designed to cater for numbers now coming through.
Finally, new schools are needed in growth areas.
All this, Barwise says, points to the current boom being driven by underlying market demand. This contrasts with the previous education building boom during the Building Education Revolution following the global financial crisis, which he says was driven by knee-jerk policy responses woes in the global and national economy.
The education building boom comes amid a broader shift in construction sector demand away from high-rise apartments toward commercial buildings. All up, ACIF expects the value of work done on residential construction to drop from $101.0 billion in 2016/17 to $94.581 billion in 2019/20. Simultaneously, that on commercial and non-residential buildings is expected to increase from $37.2 billion in 2016/17 to $45.0 billion in 2020/21.
For builders, this is important. As residential activity winds down, the growth in commercial building will help cushion the blow. This is especially critical in places like Victoria, where housing has been a strong driver of activity.
“I think it (the rise in commercial building) is going to be important for builders,” Barwise said.
“Instead of building apartments in two years’ time, it’s likely that there are going to be offices that they are getting on with as well as schools and universities.”