Feature Article - Focus on the Victorian construction Industry
DEFINING THE CONSTRUCTION INDUSTRY
The construction industry consists of those businesses engaged mainly in the construction of residential and non-residential buildings (including alterations and additions), engineering structures and related trade services. This includes, for example the construction of dwellings and recreational facilities, schools and hospitals, and infrastructure for transport, water and electricity supply and telecommunications.
Division E of the Australian and New Zealand Standard Industry Classification (ANZSIC) is devoted to the Construction industry and is subdivided into General construction and Construction trade services. General construction includes Building construction, which incorporates Residential building (houses, flats etc.), Non-residential building (offices, shops, hotels etc.) and Non-building or engineering construction (roads, bridges etc.). Construction trade services includes Site preparation services and Building structure services (bricklaying, concreting etc.), Installation trade services (plumbing, electrical etc.), Building completion services (painting and decorating, glazing etc.) and Other construction services (landscaping etc.).
CONTRIBUTION TO GROSS STATE PRODUCT
In 2002-03 the Construction industry in Victoria contributed 6.0% to Gross State Product (GSP), making it the sixth largest industry behind Manufacturing (14.5%), Property and business services (12.7%), Finance and insurance (8.8%), Health and community services (6.5%) and Wholesale trade (6.2%). Nationally, construction contributed an estimated 6.7% to Gross Domestic Product (GDP) in 2002-03.
In Victoria, over the past five years, this contribution has fluctuated from a low of 5.2% in 2000-01 to a high of 6.0% in 2002-03. The impact on the Construction industry of the introduction of The New Taxation System in July 2000 can be seen in graph 1. There was an increase in construction activity in 1999-2000 as work was brought forward prior to the introduction of The New Tax System, followed by a larger downturn in 2000-01 after its implementation. The First Home Owners Grant (FHOG) and the Commonwealth Additional Grant (CAG) coincided with a recovery in construction activity from 2000-01. In 2002-03 the Construction industry's contribution to GSP reached its highest level for the last five years.
Graph 1. Contribution of Construction to GSP and GDP
ACTIVITY
The value of construction activity in Victoria, in current price terms, rose from $12,768.2 million in 1998-99 to $18,305.9 million in 2002-03, an increase of 43.4% over the five year period. Growth in the value of the construction activity in Victoria during this period exceeded growth at the Australian level (up 31.9%). The Construction industry in Victoria did not demonstrate the level of volatility experienced nationally. From 1999-2000 to 2000-01 the value of the Victorian Construction industry fell 4.0%, a third the size of the national fall (-14.0%). However, the growth experienced in the Victorian Construction industry from 2000-01 to 2001-02 (15.3%) and from 2001-02 to 2002-03 (18.5%) kept pace with the national increases of 15.1% and 20.6%, respectively.
Graph 2. Total Construction Activity, Value of Work Done - Vic.
Growth in the value of construction activity in Victoria over the five years from 1998-99 to 2002-03 was driven mainly by Residential building. The value of Residential building activity rose from $5,312.2 million in 1998-99 to $9,350.3 million in 2002-03, an increase of 76.0%, compared to the Australian increase of 54.1%. Over this five year period, the value of work done on Houses in Victoria increased 68.4% ($2,854.4 million), similarly the value of work done on Other residential building rose 103.7% ($1,183.7 million). In 2002-03, Residential building activity accounted for over half (51.1%) of total construction activity in Victoria, higher than the Australian level of 44.5%.
After Residential building, Non-residential building experienced the next largest increase in value from $3,571.1 million in 1998-99 to $4,699.8 million in 2002-03, an increase of 31.6%. This was substantially larger than the increase experienced at the Australian level where it rose 3.9% over the same period. In 2002-03, Non-residential building activity contributed 25.7% of total construction activity in Victoria, compared to 21.0% nationally.
The value of Engineering construction activity in Victoria also increased over the five years, from $3,884.9 million in 1998-99 to $4,255.8 million in 2002-03, an increase of 9.5%, while nationally it rose 29.1%. The largest increase in the value of Engineering construction activity occurred from 2001-02 to 2002-03 with an increase of 25.6% ($866.8 million). In 2002-03 the Engineering construction activity accounted for 23.2% of total construction activity in Victoria, while nationally it contributed 34.5% to total national construction activity.
Value of Work Done, Construction Industry - Vic. |
|  |
| | 1998-99 | 1999-2000 | 2000-01 | 2001-02 | 2002-03 | |
| Type of activity | $m | $m | $m | $m | $m | |
| |
| Residential building | | | | | | |
| Houses | 4,170.5 | 5,501.3 | 4,844.4 | 6,083.6 | 7,024.9 | |
| Other residential building | 1,141.7 | 1,588.0 | 1,801.2 | 2,058.1 | 2,325.4 | |
| Total | 5,312.2 | 7,089.4 | 6,645.7 | 8,141.8 | 9,350.3 | |
| Non-residential building | 3,571.1 | 3,430.7 | 3,543.7 | 3,921.1 | 4,699.8 | |
| Engineering construction | 3,884.9 | 3,451.0 | 3,216.4 | 3,389.0 | 4,255.8 | |
| Total construction | 12,768.2 | 13,971.1 | 13,405.8 | 15,451.9 | 18,305.9 | |
| |
| Source: Building Activity, Australia (cat. no. 8752.0); and Engineering Construction Activity, Australia (cat. no. 8762.0). |
BUSINESS INVESTMENT
Over the five years from 1998-1999, private new capital expenditure in the Victorian Construction industry increased 44.9%, from $332 million in 1998-99 to $481 million in 2002-03, the highest level over this period. Nationally over the five year period, private new capital expenditure in the construction industry increased 10.6% to $1,980 million in 2002-03.
PRIVATE NEW CAPITAL EXPENDITURE, Construction Industry - Vic. |
| |
| 1998-99 | 1999-2000 | 2000-01 | 2001-02 | 2002-03 | |
| $m | $m | $m | $m | $m | |
| |
| Total construction | 332 | 417 | 383 | 474 | 481 | |
| |
| Source: ABS data available on request, Private New Captial Expenditure and Expected Expenditure, Australia. |
INDUSTRIAL DISPUTES
In the Victorian Construction industry, in the three years since 1998-99 the number of disputes rose steadily from 73 disputes in 1998-99 to 108 in 2000-01. However, in recent years the number of disputes appears to have plateaued with 130 disputes in 2001-02 and 131 in 2002-03. Although the number of disputes has remained relatively constant in recent years the number of employees involved has declined from 44,500 persons in 2001-02 to 27,300 persons in 2002-03, a fall of 38.7%. Correspondingly, the number of working days lost also dropped (34.3%) over the same period to 35,400 working days lost in 2002-03.
In 1998-99, the Victorian Construction industry recorded 291.6 working days lost per thousand employees due to industrial disputes. This increased substantially to 804.4 working days lost per thousand employees in 1999-2000, compared to the national level of 389.1. In 2002-03 the number of working days lost per thousand employees fell to 275.6, closer to the national rate of 234.8.
INDUSTRIAL DISPUTES, Construction Industry - Vic. |
| |
| 1998-99 | 1999-2000 | 2000-01 | 2001-02 | 2002-03 | |
| |
| Number of disputes (no.) | 73.0 | 82.0 | 108.0 | 130.0 | 131.0 | |
| Employees involved ('000) | 27.6 | 65.4 | 34.2 | 44.5 | 27.3 | |
| Working days lost ('000) | 28.8 | 83.0 | 34.2 | 53.9 | 35.4 | |
| Working days lost per '000 employees | 291.6 | 804.4 | 322.1 | 460.9 | 275.6 | |
| |
| Source: ABS data available on request, Industrial Disputes, Australia. |
EMPLOYMENT
NUMBER OF EMPLOYED PERSONS
The Construction industry is one of the largest employing industries in Victoria. In 2002-03 the Construction industry employed 7.7% of the State's total workforce, making it the fifth largest employing industry behind Retail trade (15.6%), Manufacturing (14.9%), Property and business services (11.8%) and Health and community services (9.7%). Over the five years to 2002-03, the number of persons employed in Construction increased 25.8% from 146,100 persons in 1998-99 to 183,800 persons in 2002-03. Nationally, employment in this sector increased 15.1%.
Of the 183,800 persons employed in the Construction industry in Victoria in 2002-03, 64.3% were employed in Construction trade services and 35.7% were employed in General construction. Between 1998-99 and 2002-03, the number of persons employed in Construction trade services increased by 24.1% and in General construction by 28.8%.
Over the five years from 1998-99 to 2002-03, all Construction industry classifications recorded increases in employment. The largest rise in the number of persons employed was in Building construction, increasing by 12,800 persons, followed by Installation trade services which increased by 7,800 persons.
NUMBER OF EMPLOYED PERSONS(a), Construction Industry - Vic. |
| |
| | 1998-99 | 1999-2000 | 2000-01 | 2001-02 | 2002-03 | |
| | ('000) | ('000) | ('000) | ('000) | ('000) | |
| |
| General construction | | | | | | |
| Building construction | 41.5 | 46.2 | 46.1 | 58.5 | 54.3 | |
| Non-building construction | 9.5 | 13.4 | 12.2 | 10.7 | 11.5 | |
| Total(b) | 51.0 | 59.6 | 58.3 | 69.3 | 65.7 | |
| Construction trade services | | | | | | |
| Site preparation services | 5.0 | 9.0 | 5.8 | 7.1 | 7.0 | |
| Building structure services | 15.8 | 15.4 | 16.5 | 17.0 | 20.2 | |
| Installation trade services | 36.7 | 32.3 | 35.3 | 40.4 | 44.5 | |
| Building completion services | 30.1 | 28.3 | 33.5 | 33.5 | 33.9 | |
| Other construction services | 7.5 | 10.8 | 11.6 | 13.5 | 12.6 | |
| Total(b) | 95.2 | 95.9 | 102.6 | 111.5 | 118.1 | |
| Construction(b) | 146.1 | 155.5 | 161.0 | 180.8 | 183.8 | |
| |
| (a) Average for year ending May. |
| (b) Discrepancies may occur between sums of industry components and totals due to rounding. |
| Source: ABS data available on request, Labour Force Survey, Australia. |
STATUS OF EMPLOYMENT
Of persons employed in the Construction industry in Victoria in 2002-03, 68.2% (127,200) were employees, compared to 65.5% nationally. The second highest percentage of workers were those engaged on an 'own account' basis and constituted 26.6% (49,500) of persons employed in Construction in Victoria in 2002-03. This is similar to the national level of 27.9% (graph 3). Employers and Contributing family workers accounted for 4.8% (9,000 persons) and 0.4% (800 persons) of the Victorian Construction industry respectively, similar to their share of the Australian Construction industry at 6.0% and 0.6%.
Graph 3. Own Account Workers as a Percentage of Industry Employment - 2002-03
HOURS WORKED
Persons employed in the Construction industry in Victoria worked an average of 37.4 hours per week in 2002-03, compared to 38.4 hours per week nationally. In Victoria, the average number of hours worked per week differed between General construction and Construction trade services in 2002-03. Persons employed in General construction worked an average of 38.9 hours per week, and those employed in Construction trade services working an average of 36.6 hours per week.
For further information on this article, contact Rachel Smith on (08) 8237 7324.
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