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Wind-down of mining investment a drag on construction: report

20 May, 2014

After more than a decade of sustained growth, the total value of engineering and commercial construction is expected to fall by 3.6 per cent p.a. in 2014 and a further 1.8 per cent p.a. in 2015 in nominal terms, according to a new report.

Commissioned by Australian Industry Group/Australian Constructors Association, the Construction Outlook survey found while engineering construction is expected to experience a downturn over the next two years, the total value of work will remain relatively high due to the sizeable project pipeline and a number of long-dated projects.

Notable declines are expected in mining-related construction, heavy industrial projects and other civil projects (including ports and terminals). However, a pick-up in transport infrastructure construction in 2015 and continued growth in telecommunications infrastructure is expected to help fill some of the gap.

Positive signs for commercial construction

In addition, commercial construction is expected to edge out of the doldrums over the next two years with some large projects finally getting the green light.

Australian Industry Group Chief Executive, Innes Willox, said: "The Construction Outlook confirms the Reserve Bank's recent suggestion that mining investment has started its anticipated decline.

"While this wind-down will weigh heavily on the construction sector, there are encouraging signs in the Outlook report that growth of transport and communication projects and a gradual pick-up in commercial construction will at least ease the decline in activity and help provide employment for many released from mining-related projects. 

"The Federal Budget infrastructure initiatives are clearly positive and with plenty of capacity for additional projects remaining, we face a unique opportunity over the next few years to address the infrastructure backlog."

Australian Constructors Association (ACA) Executive Director, Lindsay Le Compte, said: "The report is a further confirmation of the slowdown in resources sector construction. However, the downturn starts with activity at historically high levels and will be moderated as a result of positive activity flowing from the federal and state government announcements of increased investment in the infrastructure sector.

"Now is a good time for the industry to devote some effort to re-skilling its workforce to ensure it has adequate access to appropriately trained workers as the industry lifts in various sectors over coming years."

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