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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 46, December quarter 2015

 Issue 46, December quarter 2015

Welcome to the Building Industry Bulletin

The quarterly Building Industry Bulletin provides updates on the latest trends within the Queensland building industry as relevant to the activities of the Department of Housing and Public Works.

In this issue

Queensland regional construction activity update

The December quarter 2015 economic update from the National Institute of Economic and Industry Research (NIEIR) shows that in 2014-15 Queensland construction activity (or total work done across the dwelling, non-residential building and engineering sectors) fell by an estimated 21.9% to $50.6 billion. This was due to a $14.7 billion decrease in engineering construction, particularly in mining as the LNG project construction phase ends.

Total construction activity is forecast to fall by a further 10.2% in 2015-16, with dwelling construction expected to contribute over $2.3 billion to total construction growth. In addition, both non-residential and engineering construction are expected to have negative contributions of $501 million and $6.9 billion respectively, resulting in a decline of $5.1 billion for the total sector. This is forecast, however, to be followed by an increase of 7.9% in 2016-17 with growth in total construction activity anticipated across all three sectors comprising total construction activity.

The outlook for Queensland's dwelling construction is positive due to continued low interest rates. After increasing by 8.4% to $16.1 billion in 2014-15, total dwelling construction is projected to increase by 14.1% to $18.4 billion in 2015-16 and 7.0% to $19.7 billion in 2016-17. Growth in new private dwelling construction of 17.2% in 2015-16 and 7.1% in 2016-17 is projected. Renovation expenditure is forecast to increase by 8.1% in 2015-16 and 6.2% in 2016-17. A fall in confidence due to external factors such as declining coal prices combined with the winding down of the construction phase of the LNG projects has had a negative impact on non-residential construction. Total non- residential building activity declined by 9.7% to $6.4 billion in 2014-15 and a further decrease of 7.8% to $5.9 billion is forecast for 2015-16. Non-residential activity, is however, expected to increase by 4.6% to $6.2 billion in 2016-17.

Total Queensland engineering construction activity decreased by 34.5% to $28.1 billion in 2014-15. Although a further decline of 24.8% is forecast for 2015-16, a 9.7% increase in activity to $23.2 billion is forecast for 2016-17.

Department of Housing and Public Works - Contractor Survey

The majority of contractors surveyed (71%) did not report overall difficulties in employing subcontractors in the December quarter 2015 (84% in September quarter). In the same period 31% of contractors (up from 25% in September quarter) had difficulty finding suitably experienced or qualified subcontractors.

The most mentioned trade for those experiencing difficulty employing subcontractors was plastering. Among those respondents who experienced subcontractor shortages, ‘increased project costs due to an increase in subcontractor rates’ (47% of contractors) and ‘project delays’ (43% of contractors) were the most reported impacts mentioned by respondents.

On average, contractors estimated they were operating at 71% of total capacity in the December quarter (up from 63% in September quarter).

Almost half (49%) the respondents reported their workload had increased in the past three months, 28% thought it had decreased and 23% indicated it had stayed the same. Looking ahead to the March quarter, 41% of contractors expected their workload to stay the same (up from 35% in the September quarter), 38% expected an increase in their workload (down from 41%) and 18% expected it to decrease over the next three months (down from 19%).

Over half of the contractors surveyed (56%) expected labour costs to stay the same over the next three months. An increase in labour costs was expected by 30% of respondents and the remaining 8% expected them to decrease in the next three months.

Fifty eight per cent of contractors expected building materials to increase in the March quarter, 35% expected they would stay the same and 4% of respondents expected them to decrease in the same period.

On average, contractors estimated that 32% of their workload over the past three months was on behalf of government (local, state or federal).

Note: Percentages may not add due to rounding; Don’t know /Not sure percentages are not shown.

Department of Housing and Public Works - Consultant Survey

In the December quarter 2015 consultants estimated they were operating at 70% of their full capacity (up from 67% in September quarter). An increase in workload over the past three months was reported by 41% of respondents (up from 38%). One third of respondents (35%) thought their workload had remained the same, 19% reported their workload had slightly decreased and 5% indicated a considerable decrease in workload.

Looking ahead to the March quarter, 43% of consultants expected an increase in workload (up from 33%). Thirty five per cent of consultants anticipated their workload to stay the same (down from 38%) and the remaining 19% of consultants expected their workload to decrease in the next three months (down from 20% in the September quarter).

The majority of consultants surveyed (71%), stated they would maintain their current staff numbers (down from 77% in September quarter), 24% of respondents indicated their firm was looking to increase staff numbers (up from 22%) and 3% indicated a decrease in staff numbers (up from nil).

The survey found 57% of consultants were not currently experiencing difficulties finding work (up from 38%) and 43% of consultants were experiencing difficulties in finding work (down from 62%).

Of the consultants surveyed, 67% believed consultant fees would stay the same over the next three months (up from 62% in September quarter), while 17% expected them to decrease (up from 10%) and 14% anticipated an increase (down from 22%).

On average, 54% of consultants’ projects involved the use of online programs with the survey also finding 38% of consultants were satisfied and a further 2% were very satisfied with web collaboration systems.

Consultants estimated that 28% of their workload over the previous three months was for the government (58% for the state government, 33% for local government and 9% for federal government).

Note: Percentages may not add due to rounding; Don’t know /Not sure percentages are not shown.

PQC tender activity

Tender activity for Queensland Government building projects over $500,000 averaged 5.3 tenderers per project in the December quarter 2015, increasing from 4.7 per project in the September quarter and 3.3 per project in the June quarter 2015. Tender activity had not averaged over 5.3 tenderers per project since September quarter 2014 when 6.1 tenderers per project was reported.

Looking at open tenders accepted in the December quarter 2015 (by value) compared to the September quarter 2015, the breakdown by project type was 37% for education-schools (down from 41%), 23% for residential (up from 4%), 14% for industrial/transport (up from nil), 12% for hospitals/health/welfare (down from 13%) 12% for education-colleges (up from nil), 2% for civic (up from 1%) and nil for both authorities (down from 36%) and recreational (down from 5%).

The Brisbane region accounted for the largest proportion of all open tenders (by value) in the December quarter with a share of 64% (up from 21%). This was followed by the Far North (26% up from 12%), Darling Downs (8% up from 7%) and North West (2% up from nil) regions. The regions that recorded no tender activity in the December quarter compared to the previous quarter were Northern (down from 20%), Fitzroy (down from 18%), Moreton North/Sunshine Coast (down from 16%) and Wide Bay Burnett (down from 6%).

Building materials cost comparison

In the December quarter 2015, the only material monitored by the Department of Housing and Public Works that recorded a change from the previous quarter was face brick – settler range which increased by 2.1%.

According to the Cordell Building Cost Guide the most significant cost decreases in materials between December quarter 2014 and December quarter 2015 were face brick – settler range (6.9%), aluminum windows – fixed (6.6%), mild steel sections – beams (5.0%) and 25 mpa concrete (4.0%). 

Building news

Security of payment for subcontractors

The Queensland Government has released a Security of Payment discussion paper and is seeking feedback from industry and the community on how best to tackle this issue for subcontractors.

Security of payment is about making sure everyone in the contractual chain gets paid for work done or goods supplied by a subcontractor. Subcontractors are particularly vulnerable because they are generally further down the payment chain.

Security of payment is also important as it is about making sure subcontractors get paid in a timely manner. This is not just important for subcontractors and their families, it is important for Queensland’s economy and productivity.

The discussion paper has a series of options for the public to consider:

  • Option 1—Project Bank Accounts: A project bank account facilitates simultaneous payments of a project's head contractor and all participating subcontractors through a trust arrangement.
  • Option 2—Retention Trust Fund Scheme: This option requires subcontractors’ retention money to be held in a separate trust account.
  • Option 3—Insurance schemes: This option includes a range of insurance schemes to safeguard against defects, late completion and insolvency of contractors.
  • Option 4—Federal legislative changes: This option seeks to lobby the Commonwealth government for reform to Commonwealth legislation relating to security of payment.
  • Option 5—Education: This option proposes education for the building and construction industry stakeholders regarding matters such as financial management and business management.

Finally, the discussion paper seeks feedback on the 2014 amendments to the Building and Construction Industry Payments Act 2004, as well as the Subcontractors’ Charges Act 1974 and the Queensland Building and Construction Commission’s Minimum Financial Requirements Policy.

Have your say on security of payment

The department is seeking feedback from the building and construction industry.

We encourage you to let us know your feedback by reviewing the discussion paper and either completing a survey or making your own written submission.

You can complete the survey online on the Get Involved website or fill out a paper copy and send it to us.

Please note: the survey will take approximately 30 minutes to complete.

Written submissions

Please send written submissions by:

Security of Payment discussion paper (as email subject line)

  • Mail:

Security of Payment discussion paper

GPO Box 2457

Brisbane QLD 4001

Submissions close 5pm, Thursday 31 March 2016.  Submissions will not be accepted after this date.

State-wide consultation sessions

The department will be holding a series of consultation sessions across the State from 28 January 2016. Check out the details of your nearest location.

More information

If you have any questions regarding the discussion paper, please email securityofpayment@hpw.qld.gov.au.

Building and Construction Industry Licencing Review 

The Department of Housing and Public Works is conducting a review of all existing licences issued by the Queensland Building and Construction Commission. The review’s objectives are to:

  • simplify licence classes by removing duplication and redundant licence types (reduce red tape)
  • modernise the licensing regime to reflect current industry practice
  • increase mobility and employability across jurisdictions by removing unnecessary licencing requirements
  • save costs for both industry and householders whilst maintaining high standards of competence within the building and construction industry.

Industry consultation has commenced and will continue in 2016.  

Service Trades Council (STC)

As part of its commitment to restore high standards in the plumbing industry, the Government is re-establishing a dedicated plumbing industry regulatory body within the Queensland Building and Construction Commission (QBCC).

The Plumbing and Drainage and Other Legislation Amendment Bill 2016 (the Bill), which will establish the ‘Service Trades Council’ and restore a voice for plumbers and drainers, was introduced into Parliament on 1 December 2015. The Bill is currently being considered by the Utilities, Science and Innovation Committee of Parliament and a public hearing was held on 17 February 2016. Submissions are invited from all interested parties.

Additionally, while these legislative amendments are progressed, the Government has established an Interim Service Trades Council (ISTC) to advise the QBCC. The first meeting of the ISTC was held on 10 December 2015 and was opened by the Honourable Mick de Brenni, Minister for Housing and Public Works.

Review of the Plumbing and Drainage Act 2002

As part of the Government’s review of the state’s plumbing laws, regulations and codes, the Department of Housing and Public Works recently conducted a consultation workshop, whereby relevant stakeholders were invited to review Queensland’s proposed new plumbing laws.  The session was well attended and stakeholders were generally supportive of the proposed legislation.

When enacted, these laws will incorporate the first stage of reforms stemming from the review and will seek to reduce red tape and make the Act easier for plumbers and drainers to use.  It is anticipated that a draft version of the laws will also be released for public comment later this year.

The Government has also commenced work on the second stage of reforms. As these reforms seek to resolve more technical issues raised in the review, the Department intends to release a Regulatory Impact Statement later this year.

 

 



Last updated 28 July 2016    Creative Commons Attribution 4.0 International (CC BY 4.0)


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