As resource work drops back roads, telecommunications and sports and recreation have emerged as the critical areas of growth in the civil engineering sector.
In a recent forecast, Australian Construction Industry Forum (ACIF) said while activity across most civil engineering sectors would ease back from relatively high levels, the dollar value of work done on highways and roads as well as telecommunications infrastructure will grow by more than a quarter over coming years, while that on ‘recreation and other’ facilities will experience two strong years.
Activity is expected to drop back in Western Australia and Victoria, while the value of work done on civil infrastructure facilities (excluding mining) is expected to rise in Queensland and South Australia and remain at elevated levels in New South Wales.
A number of sectors are expected to see a slowdown in work. Power utilities are pulling back a ramping up of investment in poles and wires over the last decade, as the work slated to be done was not matched by anticipated growth in electricity consumption. Renewable energy investment is winding back as the political climate for this sector becomes increasingly uncertain. Moreover, work on non-road forms of transport is easing off as the need for new rail and port infrastructure to cater for new mines has receded along with the pullback of resource construction activity.
As a result, ACIF expects the overall dollar value of work done on civil engineering projects (excluding mining) to edge back to $63.105 billion in the current financial year (down from a peak of $68.995 billion in 2012/13) and to drop below $60 billion by 2016/17 – albeit with activity levels remaining well above the $37.509 billion experienced during 2005/06 (not inflation adjusted).
All this – along with the slowdown in resource sector work – is impacting the demand for civil engineers and indeed, engineering professionals across all stripes who deal with the built asset environment.
Despite the nation having registered a shortfall of the magnitude of several thousand only a couple of years ago, human resources outfit Clarius says the nation now has a glut of engineering professionals to the tune of 4,100 (numbers not broken down according to types of engineers). Meanwhile, job search provider Seek says the number of engineering jobs posted on its site in January was down 18 per cent compared with the same month in 2014.
These forecasts were made before recent changes of government in Queensland and Victoria, and are thus subject to a materially changed policy environment in these states.
While the new Labor government in Queensland has yet to reveal its infrastructure policies and platform, it is generally thought their capital works program will be less extensive compared with that which had been planned by the previous government, as they are not intending to go ahead with planned privatisation of electricity assets which would have freed up funds for capital investment.
In Victoria, meanwhile, the new government there is not proceeding with the multi-billion dollar East West Link but is planning to spend money upgrading country roads, removing level crossings, widening the Tullamarine Freeway and – over the longer term – building a new rail link. As a result, it is possible that the amount of work contained in the forecasts will be subject to a degree of downside risk.
Key Growth Sectors
According to ACIF, key growth sectors will be as follows:
Thanks to a strong pipeline of projects including the WestConnex project in Sydney, the Gateway Upgrade in Brisbane, upgrades to various sections of the Pacific Highway in Queensland and New South Wales and various sections of South Road in Adelaide, the dollar value of work done on construction in roads and highways is set to rise from a modest level of $15.713 billion in 2014/15 to almost $20 billion by 2016/17. The dollar value of work done is set to more than double in South Australia, rise by 30 per cent in Queensland and remain at elevated levels in New South Wales.
Key upcoming projects (information provided by Cordell):
- WestConnex – Overall Project, $11 billion NSW, Motorway linking Parramatta to Sydney CBD and Sydney Airport, start: Jul-15, stage: early
- Pacific Highway - Woolgoolga to Ballina, NSW, $5billion, Bridges/aqueducts/viaducts/ road uprade, start: June 15, status: firm
- South Road Upgrade, SA, various stages.
As work continues to gear up on National Broadband networks around the country, the dollar value of work done on telecommunications infrastructure is set to rise from $5.676 billion in 2013/14 to more than $7 billion by 2017/18. Activity is expected to increase broadly across all states/territories.
Recreation and Other:
High levels of activity are also expected for the next two years in the ‘recreation and other’ category as work associated with Commonwealth Games facilities sees activity levels rise in Queensland, work on a number of smaller projects lifts workflow in South Australia and the redevelopment of Warwick Farm Racecourse as well as the second stage of the redevelopment of Melbourne Park keep activity at respectable levels in New South Wales and Victoria.
Significant upcoming projects (Cordell):
- Warrick Farm Racecourse Redevelopment, $285 million, June 2016, status: early planning
- Melbourne Park Redevelopment Stage 2, administration and media building/Batman Avenue Bridge/Rod Laver Arena Refurbishment, early 2015
- Pakenham Racing Club Tynong Stage 2, Vic, $50 million, Oct 2015, status: possible
While activity on water and sewerage facilities is not expected to be strong, media reports emerged last year of a short list of 30 sites upon which the federal government could potentially build new dams.
According to those reports, key projects under consideration include the Fitzroy River in north Queensland, the third stage of the Ord River Scheme in the Kimberley in north-western Australia, the central Queensland Nathan Dam and the Burdekin Dam in north Queensland are also under consideration the Chaffey Dam upgrade near Tamworth and the Menindee Lakes upgrade in New South Wales.