Builders pin hopes on health sector Brookfield Multiplex chief John Flecker. Picture: Colin Murty Source: The Australian THE billion-dollar healthcare sector will be the next big source of work for the nation's troubled building industry, as mining softens and the ageing population demands higher living standards. Experts are divided over whether the federal government's DisabilityCare - which is set to increase the demand for private health services - will be a factor in this growth. Builders such as Lend Lease, Brookfield Multiplex, Watpac and Richard Crookes Constructions are pinning their hopes on hospital construction work - but not all of them expect it to last. Recent billion-dollar, built-from-scratch projects include Queensland's Children's Hospital and Sunshine Coast Hospital, South Australia's new Royal Adelaide Hospital and the redevelopment of the Queen Elizabeth II Hospital in Western Australia. Health now accounts for up to 50 per cent of Brookfields Multiplex's workbook, or $3 billion, compared with about 20 per cent in the past, according to chief executive John Flecker. Mr Flecker said, however, that large projects worth more than $1bn had been finished or were under construction. "We're expecting there to be a greater number of smaller projects that might be brownfield refurbishments or perhaps some privatised facilities, but not to the scale of the ones that have been in the market in the last couple of years," Mr Flecker said. However, KPMG's lead partner for real estate and construction, Steven Gatt, said most builders were placing their bets on the health sector. The nation's largest private health provider, Ramsay Health Care, which owns 67 hospitals, has been prevented by the Australian Competition & Consumer Commission from buying more hospitals. As a result Ramsay planned to spend $100 million a year extending and refurbishing facilities, deputy chairman Michael Siddle told The Weekend Australian. These expansions were occurring in most of Ramsay's hospitals, and were largely to add more beds, Mr Siddle said. "There is no shortage of demand," he said. Mr Siddle said Ramsay was also building state hospitals, in collaboration with governments, and hoped to manage them. We've done one in Western Australia and we're tendering for one at the northern beaches in Sydney. We already manage five public hospitals," he said. Ramsay is building the 200-bed Sunshine Coast University Hospital, with Queensland Health, which will be opened in December. Watpac chief executive Martin Monro said: "As a nation we're probably starting to realise that we need to spend more money on health infrastructure to service our ageing population." Mr Monro said Watpac was reallocating resources to prepare for more growth in health in the short and medium term. Health would be the biggest opportunity for the listed company, along with education-related work, he said. Watpac's work in the health sector increased from $80m in 2007-08 to $600m now. Watpac is building the $65m Port Macquarie Base Hospital expansion project in NSW and stage three of the $120m Queensland Institute of Medical Research adjacent to the Royal Brisbane Hospital. Mr Gatt said an ageing population and increasing standard of living had led most construction companies to believe the sector was a safe bet for strong and sustainable growth. DisabilityCare would be a factor in the growth due to the expected rise in private health services, Mr Gatt said. "Most people are saying that's where they're placing their bets, that's where they're investing their money, that's the sector where there will be the greatest growth," Mr Gatt said. They perceive that healthcare is going to be an area of ongoing spending and therefore they are trying to redirect their business development activities towards the sector. BIS Shrapnel associate director Kim Hawtrey said he expected construction in health infrastructure to ease by 2015 when the major projects would be completed. DisabilityCare would have a "mild' effect on the market. It would be unlikely to affect construction as the funding would be directed to recipients of the services rather than providers. However, Mr Hawtrey said health would be one of the strongest areas for construction growth in the medium term. "We are going to see over the next 10 to 15 years a greater proportion of expenditure on health as a proportion of GDP and that will reflect on construction," he said. It's going to certainly be in the top three sectors for construction, along with offices and retail.