8772.0 - Private Sector Construction Industry, Australia, 2002-03

ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 17/12/2004

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Explanatory Notes Glossary Abbreviations Estimation Methodology (Technical Note) Owner Builders Study (Technical Note) Data Source	INTRODUCTION 1 This publication presents results from a survey of construction services businesses for the reference year 2002-03. This is the fifth time the ABS has conducted this survey. Previous statistics were released for 1978-79, 1984-85, 1988-89, and 1996-97. 2 The estimates for Private Sector Construction Industry, Australia have been sourced from a combination of data directly collected by the ABS and business income tax data provided to the Australian Taxation Office (ATO). Under taxation law, data may be passed by the Commissioner for Taxation to the ABS for statistical purposes. Further information on the methodology can be found in Technical Note 1. SCOPE 3 The scope of the survey was all employing and non-employing private and public trading sector businesses on the ABS Business Register, classified to Division E - Construction - of the Australian and New Zealand Standard Industrial Classification (ANZSIC). ANZSIC Division E consists of businesses mainly engaged in: Residential building construction (ANZSIC Classes 4111 and 4112) - businesses mainly engaged in the construction of houses or other residential buildings, or in carrying out alterations, additions or renovations or general repairs to such buildings, or in organising or managing these activities. Non-residential building construction (ANZSIC Class 4113) - businesses mainly engaged in the construction of non-residential buildings such as hotels, motels, hostels, hospitals, prisons, or other institutional buildings, in carrying out alterations, additions or renovations or general repairs to such buildings, or in organising or managing their construction; Non-building construction (ANZSIC Classes 4121 and 4122) - businesses mainly engaged in the construction or general repair of roads, bridges, railways, dams, pipelines or other non-building construction projects, the on-site assembly of boilers, furnaces or heavy electrical machinery from pre-fabricated components, or organising or managing their construction or assembly. The quarrying of earth, soil or filling or other construction materials carried out in conjunction with road or bridge construction by the same unit is included in this industry. Construction trade services (ANZSIC Subdivision 42) - businesses mainly engaged in providing special building or construction trade services, such as structural steel erection, carpentry, bricklaying, concreting, plumbing, painting, plastering, tiling, carpeting and selected installation services, e.g. electrical wiring, heating and air-conditioning. 4 The scope excluded activity undertaken by private individuals for their own use. General government organisations were also excluded. STATISTICAL UNITS DEFINED ON THE ABS REGISTER 5 The ABS uses an economic statistics model on the ABS Business Register to describe the characteristics of businesses, and the structural relationships between related businesses. The units model is also used to break groups of related businesses into relatively homogeneous components that can provide data to the ABS. 6 In mid-2002, to better use the information available as a result of The New Tax System, the ABS changed its economic statistics units model. The new units model allocates businesses to one of two sub-populations. The vast majority of businesses are in what is called the Australian Taxation Office (ATO) Maintained Population, while the remaining businesses are in the ABS Maintained Population. Together, these two sub-populations make up the ABS Business Register population. ATO Maintained Population 7 Most businesses in Australia need to obtain an Australian Business Number (ABN), and are then included on the ATO Australian Business Register. Most of these businesses have simple structures; therefore the unit registered for an ABN satisfies ABS statistical requirements. For these businesses, the ABS has aligned its statistical units structure with the ABN unit. The businesses with simple structures constitute the ATO Maintained Population, and the ABN unit is used as the economic statistics unit for all economic collections. ABS Maintained Population 8 For the population of businesses where the ABN unit is not suitable for ABS statistical requirements, the ABS will maintain its own units structure through direct contact with the business. These businesses constitute the ABS Maintained Population. This population consists mainly of large, complex and diverse businesses. The new statistical units model described below has been introduced to cover such businesses: Enterprise Group: This is a unit covering all the operations in Australia of one or more legal entities under common ownership and/or control. It covers all the operations in Australia of legal entities which are related in terms of the current Corporations Law (as amended by the Corporations Legislation Amendment Act 1991), including legal entities such as companies, trusts, and partnerships. Majority ownership is not required for control to be exercised. Enterprise: The enterprise is an institutional unit comprising (i) a single legal entity or business entity, or (ii) more than one legal entity or business entity within the same Enterprise Group and in the same institutional subsector (i.e. they are all classified to a single Standard Institutional Sector Classification of Australia subsector). Type of Activity Unit (TAU): The TAU is comprised of one or more business entities, sub-entities or branches of a business entity within an Enterprise Group that can report production and employment data for similar activities. When a minimum set of data items are available, a TAU is created which covers all the operations within an industry subdivision (and the TAU is classified to the relevant subdivision of the ANZSIC). Where a business cannot supply adequate data for each industry, a TAU is formed which contains activity in more than one industry subdivision. 9 For more information on the impacts of the introduction of the new economic statistics units model, refer to Information Paper: Improvements in ABS Economic Statistics [Arising from the New Tax System] (cat. no. 1372.0). COVERAGE 10 The frame used for the direct collect component of the Construction Industry Survey, like most ABS economic surveys, was taken from the ABS Business Register. The ABS Business Register is primarily based on registrations to the Australian Taxation Office's Pay-As-You-Go-Withholding (PAYGW) scheme (and prior to 1 July 2000, the Group Employer (GE) scheme). The frame is updated quarterly to take account of new businesses and those which have ceased employing. 11 Businesses which have ceased employing are identified when the Australian Taxation Office cancels their PAYGW registration (or previously their GE registration). In addition, from July 1999 to the end of June 2000, businesses which did not remit under the GE scheme for the previous five quarters were removed from the frame. A similar process has recently been adopted to remove businesses which do not remit under the PAYGW scheme. 12 The introduction of The New Tax System has a number of significant implications for ABS business statistics, and these are discussed in Information Paper: ABS Statistics and The New Tax System (cat. no. 1358.0) and Information Paper: Improvements in ABS Economic Statistics [Arising from The New Tax System] (cat. no. 1372.0). IMPROVEMENTS TO COVERAGE 13 Estimates in this publication from the directly collected businesses have been adjusted to allow for lags in processing new businesses to the ABS Business Register, and the omission of some businesses from the register. The majority of businesses affected, and to which the adjustments apply, are small in size. 14 Adjustments have been made to include new businesses in the estimates in the periods in which they commenced operations, rather than when they were processed to the ABS Business Register. Adjustments of this type will continue to be applied in future periods. 15 For more information on these adjustments, please refer to the ABS publication Information Paper: Improvements to ABS Economic Statistics, 1997 (cat. no. 1357.0). COMPARISON WITH OTHER ABS STATISTICS 16 The ABS publications Building Activity, Australia (cat. no. 8752.0) and Engineering Construction Activity, Australia (cat. no. 8762.0) present information on the value of building and construction work done for buildings and for non-building construction work respectively. 17 The Private Sector Construction Industry publication presents a detailed examination of the structure and performance of businesses involved in construction for 2002-03. Detailed information was collected on the income generated by type of asset and nature of construction work done. 18 Differences in scope may be one reason why estimates for contracting income differ from estimates in other ABS publications for value of work done. The Construction Industry Survey used a sample drawn from construction businesses on the ABS Business Register. Activity undertaken by businesses coded to industries other than construction (for example, installation of plant and equipment by manufacturing businesses), were excluded as was any activity undertaken by owner builders or other individuals or businesses who were not represented on the ABS Business Register (for example, no ABN registration). 19 The Building Activity Survey used a sample drawn from building approvals. The sample was drawn from approvals for jobs of $10,000 or more for residential, and $50,000 or more for non-residential. Therefore, activity from jobs below these cutoffs, as well as activity in jobs where an approval was not obtained, were not included in the Building Activity publication. 20 The Building Activity Survey collects building activity which includes construction of new buildings and alterations and additions to existing buildings, excluding the value of land. Construction activity not defined as building (e.g. construction of roads, bridges, railways, landscaping, outdoor swimming pools, etc.) is compiled from the ABS Engineering Construction Survey. Results from the Building Activity Survey, together with estimates from the Engineering Construction Survey, provide a quarterly picture of building and construction. Neither of these surveys collects the value associated with land, plant and machinery not integral to the structure, expenses for relocation of utility services or the demolition of existing buildings. The Private Sector Construction Industry publication included any of these elements if they formed part of the contracting income paid to construction businesses. HISTORICAL COMPARISONS 21 Caution should be exercised when making comparisons to earlier iterations of the Construction Industry Survey. The survey was not designed to support accurate estimates of change. There were also scope differences since the conduct of the last survey in 1996-97. The scope of the 1996-97 survey excluded non-employers in the non-residential building and non-building construction industry, whereas these businesses were included in 2002-03. Non-employers within residential building construction and construction trade services industries were included in both 1996-97 and 2002-03. The methodology for the 2002-03 survey was different from that used for the 1996-97 survey. Refer to Technical Note 1 for more information. 22 A number of concepts, such as contracting, subcontracting, house, other residential building, non-residential building, road and bridge construction and other non-building construction were carefully defined on the survey form for the 2002-03 survey. These concepts were not defined on the survey form for the 1996-97 survey and hence the results would have reflected self-interpretation of these concepts by providers. 23 The quality of the 1996-97 survey results was affected by a relatively low response rate of 79% (i.e. percentage of operating businesses responding). The 2002-03 survey achieved a response rate of 91%, therefore, 2002-03 estimates can generally be considered to be of slightly higher quality than 1996-97 estimates. 24 Prior to the 2002-03 cycle, the survey used the management unit as the statistical unit. For issues of this publication relating to 2002-03 onwards, the statistical unit is the ABN unit for businesses with simple structures, and the TAU for businesses with complex structures. In most cases, ABN/TAU units concord with the management units used in previous cycles. RELIABILITY OF THE DATA 25 When interpreting the results of a survey it is important to take into account factors that may affect the reliability of estimates. Such factors can be classified as either sampling or non-sampling error. Sampling Error 26 The estimates are based on information obtained from a randomly selected stratified sample of construction businesses in the Australian business population, and an incomplete file of business income taxation data. Consequently, the estimates in this publication are subject to sampling variability, that is they may differ from the figures that would have been obtained if all units had been included in the survey and all business income tax data had been available (that is, if a census was conducted). One measure of the likely difference is given by the standard error (SE), which indicates the extent to which an estimate might have varied by chance because only a sample of units was included. 27 There are about two chances in three that a sample estimate will differ by less than one SE from the figure that would have been obtained if a census was conducted and approximately 19 chances in 20 that the difference will be less than two SEs. 28 Sampling variability can also be measured by the relative standard error (RSE), which is obtained by expressing the SE as a percentage of the estimate to which it refers. The RSE is a useful measure in that it provides an immediate indication of the sampling error in percentage terms, and this avoids the need to refer also to the size of the estimate. 29 Estimates of total income and total expenditure have RSEs of approximately 1% for residential, non-residential and non-building, and approximately 0.5% for trade services and total construction. 30 There are about two chances in three that the difference between the estimate shown and the true value will be within one SE, and about 19 chances in 20 that the difference will be within two SEs. For example, an estimate of total income for residential building businesses in 2002-03 was $35.4b and the RSE was estimated to be 1%, giving a SE of approximately $354m. Therefore, there would be two chances in three that, if all units had been included in the survey, a figure in the range of $35b to $35.8b would have been obtained, and 19 chances in 20 (i.e. a confidence interval of 95%) that the figure would have been within the range of $34.7b to $36.1b. Reporting Error 31 While every care was taken in questionnaire design to specify concepts and definitions clearly, there were some known reporting errors. The main reporting errors identified during processing were: Some other residential structures were reported as houses. Some other non-building work was reported in other categories, e.g. installations of swimming pools reported under houses. New construction work was defined as construction of new buildings/structures, while alterations, additions, renovations and improvements was defined as improvements to existing buildings/structures. Some trades services businesses reported the installation of new electrical wiring, new heating or air conditioning equipment, or similar improvements as new work. Contracting income was defined as the income earned by a business that acted as head contractor for the entire construction project. However, many trade services businesses, in particular electrical services, air conditioning and heating services, and fire and security system services reported contracting income for projects where they were not the head contractor. Income from these businesses should have been reported as subcontracting. As this reporting error was found to have a significant impact on the estimates, a correction was applied to recode any contracting income from new work reported by trade services businesses to subcontracting income from new work. The distinction between working proprietors/partners of unincorporated businesses and employees was not always clearly understood, especially by small businesses. A working proprietor/partner of an unincorporated business is not classified as an employee, however they are employed within their own business. Reporting problems in this area were addressed by checking reported numbers of working proprietors/partners against the legal type of the business, and correcting inconsistencies. For example, unincorporated sole proprietor businesses were assigned one working proprietor if they were operating on 30 June 2003, or zero if not operating on that date. 32 The most significant examples of these errors, where identified, were corrected. The final estimates are suitable for most purposes, however they should be treated with caution if making detailed comparisons. Other Sources of Error 33 Estimates for components of income and expenditure are subject to both sampling error and errors introduced by the proration estimation (for more information on proration refer to Technical Note 1). In general, smaller income and expense items have larger relative sampling and estimation errors than larger income and expense items. 34 Estimates of counts of businesses and counts of employment at 30 June 2003 were generated by model-based estimation techniques. These counts were subject to a larger relative estimation error than most income and expense items. 35 Users of business count data should also note that these items are statistical counts of operating ABNs, or TAU units for large and complex businesses. A particular business trading name may be represented by multiple ABN or TAU units, so the number of businesses may appear to be higher than expected. 36 Users of employment count data should also be aware that total employment is the sum of employment of each operating ABN/TAU unit. An individual may have been employed by more than one ABN/TAU unit. Total employment counts an individual once for each business unit that they were employed by. This means that total employment was greater than the number of persons employed. ROUNDING 37 Where figures have been rounded, discrepancies may occur between the sum of component items and the total. Similar discrepancies may occur between a proportion or ratio, and the ratio of the separate components. REFERENCE PERIOD 38 Financial estimates and counts of businesses included the activity of any business that ceased or commenced operations during the year. Employment included only those persons working for a construction business during the last pay period ending in June 2003. ACKNOWLEDGMENT 39 ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated; without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905. 40 The ABS acknowledges the valuable contribution of a small number of industry associations in providing assistance with the testing of the survey forms. DATA AVAILABLE ON REQUEST 41 Inquiries about these statistics and more detailed statistics than those presented in this publication should be made by telephoning the contact shown on the front page. Document Selection These documents will be presented in a new window.