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Skip Navigation LinksDepartment of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 54, March Quarter 2018

Issue 54, March Quarter 2018

Welcome to the Building Industry Bulletin

The Queensland 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 Department of Housing and Public Works (HPW) engages economic research consulting firm, the National Institute of Economic and Industry Research (NIEIR) to provide independent, updated data and analysis on the profile of the Queensland building and construction industry using regional economic modelling and forecasting techniques. 

The March quarter 2018 economic update from NIEIR shows that in 2016-17 Queensland construction activity (or total work done across the residential building (houses and units), non-residential building and engineering construction sectors) was $45.4 billion.

Strong growth in Queensland construction activity is forecast for 2017-18. Total work done is forecast to grow by 5.0% to $47.7 billion due to increases of almost $1.6 billion in engineering construction, $407 million in residential building and $242 million in non-residential building. 

Continued strong growth in total Queensland construction activity is forecast for 2018-19 with growth of 8.1% to $51.5 billion due to increases of $4.6 billion in engineering construction and $312 million in non-residential building.

Queensland engineering construction activity (e.g. roads, water, sewerage and mines) increased by 2.9% to $19.1 billion in 2016-17. Further increases of 8.4% to $20.7 billion in 2017-18 and 22.0% to $25.3 billion in 2018-19 are forecast due to the recommencement of heavy industry projects (e.g. highways, bridges and tunnels) put on hold at the completion of the Liquified Natural Gas construction phase in 2015-16.

Total non-residential building activity (e.g. offices, shops and hotels) declined by 5.2% to $6.9 billion in 2016-17. With new projects moving into the construction phase, the short-term outlook is for non-residential building expenditure to increase by 3.5% to $7.1 billion in 2017-18 and 4.4% to $7.4 billion in 2018-19. 

In 2016-17 total residential building increased by 4.4% to $19.4 billion with a further increase of 2.1% to $19.8 billion projected for 2017-18. New private dwelling construction is forecast to decline by 4.6% in 2017-18 and 7.1% in 2018-19 due to falls in flat and apartment approvals. As a result of significant expenditure on repairs to damage from Cyclone Debbie, renovation expenditure is projected to increase by 20.3% in 2017-18, followed by a decline of 0.6% in 2018-19. Current building approvals indicate total residential building activity will decline by 5.1% to $18.8 billion in 2018-19 as dwelling expenditure returns to levels experienced prior to the March 2017 cyclone.

The average number of people employed in the Queensland building and construction industry (residential dwelling, non-residential building and engineering sectors including contractors, trade contractors and consultants) for the year ending March 2018 was 236,000. The estimated unemployment rate for the construction industry for March quarter 2018 was 4.6%.

Building Legislation and Policy Contractor and Consultant tracking survey

To help understand the state of the building and construction industry cycle in Queensland, the Department of Housing and Public Works conducts quarterly research surveys with contractors and consultants registered with the department’s prequalification (PQC) System. In the March quarter 2018, Kantar Public surveyed respondents across conditions including employment supply, workloads and labour costs.

Contractors

Contractors indicated on average they were operating at 60% of capacity in the March quarter 2018, representing a decrease of 8% from December quarter 2017. In the last three months over half of all contractors (53%) reported their workload had increased or stayed the same. There was continued optimism regarding the forward view of work and planning, with 70% of contractors believing their workload would increase or stay the same over the next three months to June 2018 (81% in December quarter 2017). 

In the March quarter 2018, 43% of contractors felt labour costs would increase and a further 42% felt they would stay the same over the next three months. Significantly more contractors believed labour costs would considerably decrease (10%) compared to the December quarter (2%). The perception that building material costs would increase remained high in March 2018 with 67% of contractors projecting they would increase in the next three months. 

In the March quarter, 19% of contractors reported difficulty employing subcontractors overall (down from 21% in December quarter). In the same period 35% of contractors reported having difficulty finding suitably experienced or qualified subcontractors (compared to 31% in December quarter). Consistent with figures since March 2017, over half of all contractors (53%), suggested the difficulty employing subcontractors was amongst a small number of specific trades.

The most mentioned trades for those experiencing difficulty employing subcontractors were carpentry (44%), plastering (39%) and plumbing (33%). Among those respondents who had experienced subcontractor shortages, ‘project delays’ and ‘increased project costs’ (both 69%) were the most reported impacts mentioned by respondents. 

On average, contractors estimated that 46% of their workload (up from 39%) over the previous three months was on behalf of government (local, state or federal). 

Consultants

Consultants indicated on average they were operating at 64% in the March quarter 2018 (down from 75% in the December quarter 2017). In the same period, 31% of consultants felt their workload had increased over the previous three months (compared to 38% in December 2017) and 29% reported no change. Projected workload change over the next three months was in line with December quarter 2017 with 74% of consultants indicating their workload would either increase or remain consistent. 

Returning to levels reported between March quarter 2015 and June quarter 2017, 52% of consultants in March quarter 2018 reported they were not experiencing any difficulty finding work (72% in December quarter 2017). 

The staffing projection in March quarter 2018 remained consistent with levels seen throughout 2017, with 63% of consultants planning to maintain current staffing and 31% indicating they would increase staff numbers over the next quarter.  Remaining unchanged from December quarter 2017, 45% of consultants believed they would have difficulty employing staff over the next three months.

Of the consultants surveyed, 75% believed fees would stay the same over the next three months (down from 76% in the December quarter), 7% expected them to increase (down from 17%) and 13% anticipated a decrease (up from 3%).

Prequalification (PQC) System tender activity

Tender activity for Queensland Government building projects over $1 million averaged 4.2 tenderers per project in the March quarter 2018, decreasing slightly from 4.3 in December quarter 2017. Looking at open tenders accepted in the March quarter 2018 (by value) compared to the December quarter 2017, the breakdown by project type was 68% for education-schools (up from 26%), 16% for residential (down from 54%), 7% for hospitals/health/welfare (down from 17%), 7% for authorities (e.g. police stations, court buildings, up from nil) and 2% for civic projects (up from 1%). There was nil activity for the administrative/offices (down from 2%), recreation, education-colleges and industrial/transport sectors (all previously nil).

The Brisbane and Mackay regions accounted for the largest proportions of all open tenders (by value) in the March quarter 2018 with 40% (no change compared to the December quarter 2017) and 18% (up from 15%) shares respectively. This was followed by the Moreton North/Sunshine Coast (11% up from 3%), Moreton South/Gold Coast (11% up from 2%), Darling Downs (10% up from 1%), Far North (4% down from 18%), Wide Bay Burnett (3% up from 7%) and Fitzroy (3% down from 6%). No activity was recorded in the South West (down from 1%), Northern (down from 7%), North West, (remained nil) and Central West regions (remained nil).

There was higher than average tender activity for projects within the civic sector and within the Far North region during the March quarter 2018.

Building material cost comparison

In the March quarter 2018, the only building materials monitored by the Department of Housing and Public Works that recorded a notable increase from the previous quarter were face brick clay (5%), mild steel sections – beams (4%) and 25mpa concrete (2%). No building materials recorded a decrease from the previous quarter. According to the Cordell Building Cost Guide, between March quarter 2017 and March quarter 2018 the most significant building cost increases were in float glass tinted – 25mpa concrete (9%), 4mm thick (8%), reinforcing steel mesh (5%), aluminum windows – fixed (4%) and F8 pine 90mm x 35mm (3%). During this period, no materials recorded a cost decrease.

Industry news

Non-Conforming Building Products Audit Taskforce Status Report

On 17 May 2018, the Non-Conforming Building Products Audit Taskforce Status Report (PDF, 3MB) was tabled in parliament.

The report was overseen by the Independent Chair of the Taskforce, the late Honourable Terry Mackenroth.

The report is the result of Taskforce investigations into the use of potentially combustible cladding on Queensland government and non-government (private) buildings in Queensland.  

"The Taskforce combines the expertise of the Department of Housing and Public Works (HPW), Queensland Fire and Emergency Services (QFES) and the Queensland Building and Construction Commission (QBCC) to investigate and audit the extent of the problem and determine possible solutions".

"At the heart of this problem is a thin layer of combustible thermoplastic material called polyethylene (PE) sandwiched between two sheets of aluminium.

Combustible material of this type when externally fitted to buildings can significantly contribute to the propagation of flame and facilitate rapid fire spread to other areas of a building". 

Taskforce investigations have resulted in six recommendations to address this issue which are supported by the Queensland Government. The recommendations cover:

Recommendation 1

That the Queensland Government take a strong regulatory role to ensure private building owners take necessary remediation actions to address the use of combustible cladding in existing buildings. 

Recommendation 2

That the proposed Non-Government Building Process be implemented as the model for assessment of non-government (private) buildings. 

Recommendation 3

That the Department of Housing and Public Works develop a central retention database to register key built asset information on Queensland Government buildings. 

Recommendation 4

That the Taskforce lead the development of education and guidance material for building industry professionals, owners and management bodies. 

Recommendation 5

That the Taskforce review options available for testing of composite cladding materials which can be used to assess the fire performance of such materials. It is further proposed that the Taskforce undertake product testing on commonly available external cladding products with subsequent development of a materials library which would allow a rapid assessment and product classification for samples taken from government buildings or provided by non-government building owners. 

Recommendation 6

That the Taskforce will lead the development of continuing education programs targeting key practitioners within the supply chain (including building certifiers and fire engineers) which significantly improves the consistency and application of the Building Code compliance requirements.

Building Ministers' Forum 

The Building Ministers’ Forum (BMF) comprises Commonwealth, State and Territory Building Ministers and is an important national dialogue to help address cross-jurisdictional building industry matters. The BMF, chaired by the Commonwealth, oversees the Australian Building Codes Board (ABCB) that administers the National Construction Code (NCC). 

The BMF convened on 27 April 2018 and the BMF Communique for the meeting is at www.industry.gov.au .  A key issue discussed was the Building Confidence – Improving the effectiveness of compliance and enforcement systems for the building and construction industry across Australia (PDF 4.4MB) ​report that presented 24 recommendations to improve the effectiveness of compliance and enforcement systems for the building and construction industry across Australia. The BMF provided in-principle support to this Report. All Ministers agreed to examine the Report’s findings and its 24 recommendations in detail, with discussion on future directions and next steps to occur at the next BMF meeting. 

Other key items of discussion at the BMF meeting included progress on jurisdictional cladding audits and approval of a Queensland-led discussion paper to investigate a permanent labelling system for aluminium composite panels. Consultation is currently occurring on this discussion paper​ and submissions are due by 5.00pm, Sunday 15 July 2018. The BMF will consider this at its next meeting. 

The ABCB is prioritising work on fire safety for vulnerable occupants in high rise buildings, including child care facilities. Any proposed changes to the NCC arising from the work will be brought to the BMF for consideration as soon as possible. The ABCB is also progressing work on energy efficiency measures for residential buildings and developing an options paper regarding potential inclusion of minimum accessibility standards for housing in the NCC. 

The national Review of Security of Payment Laws was also discussed. The next BMF meeting will consider how to respond to the Review’s recommendations.

Development reforms to benefit Queenslanders with disability 

On 8 March 2018 a media statement was released by the Minister for Housing and Public Works, Minister for Digital Technology and Minister for Sport, The Honourable Mick de Brenni stating the government would develop a Queensland Development Code mandating accessible adult change facilities in some public buildings.  

A process is currently underway to consider including new requirements for accessible adult facilities in the NCC in 2019. 

The state-based Queensland Development Code for adult change and sanitary facilities will address any gaps identified between the proposed changes to the NCC and the needs of the Queensland disabled community and their carers. 

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Last updated 03 September 2018    Creative Commons Attribution 4.0 International (CC BY 4.0)


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