Australia’s boom in maintenance construction work is set to roll on in coming years, new forecasts show.

Releasing its Maintenance in Australia Report 2023, Oxford Economics says that it expects the  dollar value of construction work done on maintenance activities across the nation to average $54.5 billion over the five years to 2026/27.

This is 9 percent higher compared with the five-year average to 2022 and represents elevated levels of activity by historic standards (see chart).

According to the report:

• The industrial super sector will be the most significant driver of maintenance activity. Elevated levels of work in this sector will be supported by an increasing maintenance load associated with recently completed LNG facilities along with high levels of activity in mining that will result from elevated prices along with the reopening of the Chinese economy.
• Healthy activity levels are also expected in road maintenance as governments continue to commit funding to this area. Activity levels have been elevated in this area recently on account of flooding rehabilitation work in NSW and Queensland.
• The outlook for building maintenance is also encouraging as a growing and aging asset base will underpin long-term asset maintenance requirements. Healthcare and education buildings will be a driver of growth whilst opportunities also exist in defence spending as a post-COVID backlog continues to be worked through. Meanwhile, increasing work in the accommodation sector will provide opportunities over the short-term with the return of international travel and migration.

Amy Regan – Senior Economist, Construction & Infrastructure, said the opportunities presented in maintenance work are significant.

Regan says many of these will be focused in oil and gas.

Meanwhile, long-term opportunities will be present on renewable energy projects notwithstanding an expectation of quieter conditions in the utilities sector over the near term as coal plants move toward closure.

“We expect those working on oil and gas maintenance projects will benefit in the near term,” Regan said.

“Conversely, those working on maintenance projects in the traditional electricity generation sector are likely to see a slowdown in activity as the sector transitions away from coal and gas fired power stations.

“Having said this, the transition provides opportunities for increased maintenance activity in the renewable electricity generation sector – as wind and solar infrastructure grows so too will the associated maintenance requirements.”

Whilst the outlook presents opportunities, it also raises challenges in terms of industry capacity to fulfil maintenance requirements whilst also delivering a record pipeline of new construction.

Already, Infrastructure Australia projects that the nation likely had a shortfall of 102,500 public sector infrastructure workers as at this month.

Meanwhile, job vacancy data from Jobs and Skills Australia indicates that skilled tradespeople and professionals across most categories of engineering and construction are in very short supply.

Regan says that concerns should not be underestimated.

“Industry capacity remains a major risk for both the maintenance and construction sector as both sectors compete for skills and material, which in turn places pressure on maintenance costs,” she said.

“Maintenance activity can be harder to delay, as concerns around asset failures and safety risks mean a base level of activity has to happen almost regardless of the cost. Adverse weather events can also lead to a surge in necessary maintenance activity, which in turn places further pressure on industry capacity for construction work – such as road maintenance activity following flooding.

“When there is strong demand for both construction and maintenance activity across the country there is less incentive for workers to look for jobs in alternative locations, and so areas facing labour shortages now may have to pay significantly more to entice the labour they require.”

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