At the outset I would like to point out that I do not profess to be an expert on the FNQ construction industry.
I do have almost 30 years of experience working in the construction industry; 22 years working for the industry regulator and the balance with Helix.
Consequently, I can engage with a diverse range of parties on most industry issues.
I really enjoy listening to and learning from industry people.
My main job, I believe, in writing articles like this one is to present well researched information, that will hopefully assist readers in formulating positions on industry issues, developments or events.
I also highly value from readers any feedback or updated information on what I have written.
That said, let’s get started!
Economic Profile
Far North Queensland Regional Organisation of Councils (FNQROC) Gross Regional Product (GRP) was estimated at $16.65 billion in the year ending June 2022, growing 5.3% since the previous year.
The FNQROC has a strong construction industry, contributing 4.4% of Queensland’s employment and 4.3% of its value added.
Demographic Profile
The FNQROC has an estimated population of 285,510 as of 30 June 2022, a 1.45% growth from the previous year.
The FNQROC has 133,118 jobs as of 30 June 2022, of which 10,822 were construction industry jobs.
The residential sector is a concern
The region has seen a significant decline in building approvals in recent times. However, the decline in recent months has been very dramatic.
In an ABC article it states that North Queensland feels brunt of new home construction slump:
“Across Queensland prospective home owners are feeling the pinch of rising interest rates, higher building costs and labour shortages.
Nowhere has this been felt more acutely than in North Queensland, which has seen a 60 per cent drop in new home builds, according to recent data released by the Australian Bureau of Statistics.
Master Builders regional manager Emma Peters said the downturn was unsurprising given mounting financial costs for prospective builders and a 42 per cent jump in the cost of labour and materials since 2019.
“The inquiry levels on new builds are very much down as well as inquiry levels on new home loans for both existing properties and new builds,” she said.”’
The below MBA and ABS graph reflects building approval changes over two separate periods, 12 months and 3 months. The three-month period reveals the dramatic 60% decline in building approvals.
Graph 1: New dwellings approved over a 12-month period generated using data from the Master Builders Association (MBA) and Australian Bureau of Statistics (ABS) (Source: Queensland Master Builders Association)
In terms of dwellings approved in North Queensland, Queensland Master Builders Association (QMBA) provided me with the graph below for dwellings approved over a 12-month period.
Graph 2: Regional building approvals: number of new dwellings percentage change generated using data from the MBA and ABS (Source: ABC)
Engineering construction is on the rise!!
According to the ABS, for the March 2023 quarter:
“The value of total construction work done rose 1.8% in the March quarter, in seasonally adjusted terms. The increase was driven by engineering work, which rose 5.3% in the March quarter and is 14.9% higher than the same time last year. Building work done fell 1.1% and is 2.2% lower than the same time last year.”
“The trend estimate for total construction work done rose 1.9% in the March quarter.”
I should point out that this data reflects the entire industry and is not just FNQ focused. However, as I outline below in major projects information, which is Townsville focused and includes engineering construction, I think it is a reasonable conclusion that a lot of this engineering construction identified by the ABS will happen in the FNQ Construction Industry.
Graph 3: Value of construction word done, seasonally adjusted chain volume measures (Source: ABS)
Major projects looking good in FNQ Construction Industry?
I believe that a report compiled in 2022, which is presently featured on the Construction Skill (CSQ) website, still provides valuable industry insights.
The report titled ‘Queensland Major Projects Pipeline‘ states Townsville specific content in the regional pipeline section.
An overview of the major projects pipeline in the Townsville region is:
I only have general knowledge regarding the progressing, if at all, of these and other major projects. I would love to get some feedback concerning the current status of these projects.
CSQ Industry Dashboard- construction activity is up?
I have selected FNQ Construction industry projects where there is $2.6 billion committed $4.6 billion planned.
The planned projects are vast so I must assume that a number will not proceed.
Graph 4: Major Project Activity Outlook (Source: CSQ)
However, I would encourage readers to visit this dashboard. There are many more options.
Renewables. Great news!!
According to a CSQ publication – Queensland’s Renewable future:
“Queensland’s renewable energy requirements will drive a step-change in construction demand in Queensland. A substantial amount of capital will be allocated to the construction of renewable energy assets over the coming decades in Queensland.
We estimate that capital expenditure on renewables could range from $6.7 billion to $13.9 billion per annum out to 2050. This constitutes a significant addition to the demand for construction services in Queensland.
Renewables projects are classified as ‘engineering’ construction activity, a category that also includes infrastructure, heavy industry, and recreational projects.
Engineering construction activity has been running at around $20 billion per annum over recent years in Queensland. The renewables transition is therefore expected to add 34%-70% to Queensland’s baseline level of engineering construction.”
Elsewhere in this report it states:
“The mining boom provides an interesting point of comparison to put the renewables build-out into perspective. Queensland’s construction workforce reached 250,000 at the peak of the mining boom. We estimate this represented a 13% increase on the labour required to service the baseline construction needs of Queensland’s population. Looking forward, the renewables build-out will require a similar addition to the workforce – around 10% per annum under the Export + Domestic scenario.”
Building Industry Credit Bureau. Deteriorating contractors’ late payments trend
The Building Industry Credit Bureau (BICB) is Australia’s largest building industry trade bureau.
The BICB state on its website:
“Originating in the 1920’s, BICB is a not-for-profit subscriber-based organisation.
BICB supplies comprehensive, up to date, factual credit information about entities that receive the supply of goods & services on credit in the building & construction industry in Australia
Members have 24/7 online access to this information via a secure database
Strict security procedures are observed in relation to the storage of, and access to, members’ data, and confidentiality requirements are strictly enforced.
Subscribers provide BICB with their monthly debtors aged trial balance (showing commercial accounts only), which are then consolidated into the BICB database detailing trading histories of over 200,000 entities in Australia representing annual sales of over $36 billion
BICB offers members regular meetings, toolbox training sessions and training seminars.
BICB observes the Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Cth)
Members pay an annual subscription fee which is based on the size of the debtors aged trial balance.”
The following is a table that reveals members consolidated regional position in respect of debts greater than 60 days.
For March, North Queensland is slightly above the regional average for this category of data.
Outstanding debt above 60 days by region
Table 1: Outstanding debt above 60 days by region (Source: Building Industry Credit Bureau)
Final thoughts
The FNQ construction industry is a mixed bag. How parties view its strength is very much contingent on which sector they are in business, working in or financial exposed to.
I hope readers find this article informative and as previously stated, I always welcome feedback.
We want to meet you Townsville!
Come along Thursday 8 June 2023 for a night of ‘Constructive Conversations’.
Our industry experts will walk you through a conversation on the current challenges, opportunities and solutions in the construction industry.
Join us at the Rockpool Pavilion, 54 Howitt Street, North Ward from 5:00 pm.
We can’t wait to see you there!
Date: 8 June 2023
Time: Arrive from 5:30pm for a 6:00pm kick off
Location: Rockpool Pavilion, 54 Howitt Street North Ward, QLD 4810
🎟️To secure your spot, click here.
Not intended as legal advice. Read full disclaimer.
