as source from baseraconstruction.com
Public Sector construction activity in Australia is falling back to normal levels as the effect of the federal government stimulus is fading.
Last year, the value of work done in construction on education facilities surged more than threefold to $13.785 billion as the full effect of the Building Education Revolution program (BER) kicked in
Now that BER is winding down, however, activity is falling back. The value of new education buildings approved in the first four months of this year ($1.063 billion) was less than half of that in the same period last year ($2.323 billion). Moreover, with the value of new buildings approved in the twelve months to April amounting to just $4.352 billion, existing work is being completed more than three times as fast as new work is coming in.
Not surprisingly, then, the Construction Forecasting Council (CFC) expects the value of work to fall back to $7.711 billion this year. By 2013/14, the council expects activity to return to normal levels ($4.772 billion).
Outside of education, the value of work done on other public sector buildings (mainly defence and detention/correctional facilities) came in at $3.017 billion last year, up from $2.692 billion in 2009.
(‘Other public sector buildings’, for this purpose, refers to projects such as defence infrastructure and correctional facilities. Other categories of public sector construction, such as healthcare or recreation facilities, are dealt with separately in other editorials.)
Going forward, weak approval data does not bode well for the near term future: in the past twelve months, the value of new buildings approved amounted to $1.680 billion. At this level, the volume of new work coming in would not seem to be enough to sustain current activity levels.
The CFC expects a modest increase in activity this year, with the value of work on other public sector buildings expected to come in at $3.194 billion. Longer term, the forecaster anticipates moderate growth levels only, with activity levels remaining below $3.5 billion until 2014/15.
On a statewide basis, all states and territories will be affected by the fallback in education.
Outside of education:
• New South Wales is set for good long term growth, courtesy of an $800 million RAAF Facilities Requirements For New Air Combat program scheduled for 2014 and a $527 million project to relocate all Defence assets from west of Moorebank Avenue to Holsworthy scheduled for July next year.
• In Victoria, too, activity should remain reasonably buoyant, courtesy of three projects on the immediate term horizon: the second phase of Project Single Leap ($700 million – defence); construction of a joint logistics unit at Bandiana Milpo near Woodonga ($300 million), and a $200 million correctional facility in Ararat.
• The other big area of interest is the Northern Territory, which has a bright long term future once work on a new prison and correction centre in Darwin ($300) million gets going early next year.
