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Building Industry BulletinCurrently selected
Department of Housing and Public Works > About us > Reports and publications > Newsletters > Building Industry Bulletin > Issue 55, June Quarter 2018
Welcome to the Building Industry Bulletin
This 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.
Queensland regional construction activity update
Contractor survey
Consultant survey
PQC tender activity
Building material cost comparison
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 June quarter 2018 economic update from NIEIR shows that in 2017-18 Queensland construction activity (or total work done across the residential building (houses and units), non-residential building and engineering construction sectors) increased by 2.1% to $46.2 billion.
In 2018-19 Queensland construction activity is forecast to decline by 4% to $44.4 billion. This is due to decreases of just over $1 billion in non-residential building, $579 million in engineering construction and $206 million in residential building.
In 2019-2020, Queensland construction activity is forecast to grow by 4.6% to $46.4 billion due to increases of $2.5 billion in engineering construction and $55 million in non-residential building.
Queensland engineering construction activity (e.g. roads, water, sewerage and mines) increased by 8.3% to $20.7 billion in 2017-18. Following a small decline of 2.8% to $20.1 billion in 2018-19, engineering construction activity is forecast to increase by 12.3% to $22.6 billion in 2019-20, due to the commencement or continuation of major highway (e.g. Smithfield Bypass, Cairns), rail (e.g. Cross River, central Brisbane) and harbour projects (Abbott Point, Bowen).
Total non-residential building activity (e.g. offices, shops and hotels) increased by 6.8% to $7.4 billion in 2017-18. This is forecast to be followed by a decline of 14% to $6.4 billion in 2018-19 and a slight increase of 1.0% in expenditure in 2019-20.
In 2017-18 total residential building decreased by 5.8% to $18.1 billion with further small declines of 1.1% and 2.7% projected for 2018-19 and 2019-20 respectively. While new private dwelling construction is forecast to decline by an average of 6.2% over the two years to 2019-20 this is forecast to be offset by an average increase of 8.0% per annum in renovations expenditure over the same period.
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) in the June quarter 2018 was 236,000. The estimated unemployment rate for the construction industry for June quarter 2018 was 4.7%.
View the NIEIR June quarter 2018 annual report (PDF, 5.1MB)
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 June quarter 2018, Kantar Public surveyed respondents across conditions including employment supply, workloads and labour costs.
Contractors indicated on average they were operating at 61% of capacity in the June quarter 2018, remaining stable compared to the March quarter 2018 (60%). In the last three months over half of all contractors (53%) reported their workload had increased or stayed the same representing no change from March quarter. There was continued optimism regarding the forward view of work and planning, with 68% of contractors believing their workload would increase or stay the same over the next three months to September 2018 (70% in March).
More than half (54%) of all contractors believed labour costs would increase in June quarter (up from 43% in March 2018 and 38% in December 2017). The perception that building material costs would increase also continues to remain high with 71% of contractors projecting they would increase in the next three months (67% in March).
In the June quarter, 26% of contractors reported difficulty employing subcontractors overall (up from 19% in March quarter). In the same period 46% of contractors reported having difficulty finding suitably experienced or qualified subcontractors (the highest percentage since September 2017 at 44% and up from 35% in March 2018). Consistent with figures since March 2017, half of all contractors (50%), suggested the difficulty employing subcontractors was amongst a small number of specific trades.
The most mentioned trades for those experiencing difficulty employing subcontractors were concreting (45%), carpentry (43%), plastering (40%) and bricklaying (33%). Among those respondents who had experienced subcontractor shortages, 'increased project costs' and 'project delays' (58% and 55% respectively were the most reported impacts mentioned by respondents.
On average, contractors estimated that 44% of their workload (46% in March) over the previous three months was on behalf of government (local, state or federal).
Consultants indicated on average they were operating at 65% of capacity in the June quarter 2018 (stable compared to 64% in March). In the same period, 36% of consultants felt their workload had increased and 34% reported it had stayed the same over the previous three months (compared to 31% and 29% respectively in March 2018). Projected workload change over the next three months was in line with March quarter 2018 with 75% of consultants indicating their workload would either increase or remain consistent.
Difficulty in finding work continued to rise in June quarter 2018 with 60% of consultants reporting they were experiencing difficulties. This is the highest level since September 2015 (62%) and up from 49% in March quarter 2018 and 28% in December quarter 2017.
The staffing projection in June quarter 2018 remained consistent with levels seen throughout 2017, with 63% of consultants planning to maintain current staffing and 32% indicating they would increase staff numbers over the next quarter. Remaining consistent with March quarter 2018, 46% of consultants believed they would have difficulty employing staff over the next three months (45% in March).
Of the consultants surveyed, 79% believed fees would stay the same over the next three months (75% in March), 9% expected them to increase (up from 7%) and 9% anticipated a decrease (down from 13%).
View the report (PDF, 950KB)
Tender activity for Queensland Government building projects over $1 million averaged 4.7 tenderers per project in the June quarter 2018, increasing from 4.2 in March quarter 2018. Looking at open tenders accepted in the June quarter 2018 (by value) compared to the March quarter 2018, the breakdown by project type was 38% for education-schools (down from 68%), 27% for residential (up from 16%), 19% for hospitals/health/welfare (up from 7%), 15% for recreational (up from nil) and 1% for administrative/offices (up from nil). There was nil activity for the authorities (e.g. police stations, court buildings, (down from 7%), civic (down from 2%), education-colleges and industrial/transport sectors (both previously nil).
The Brisbane and Wide Bay Burnett regions accounted for the largest proportions of all open tenders (by value) in the June quarter 2018 with 38% (down from 39% compared to the March quarter 2018) and 30% (up from 4%) shares respectively. This was followed by the Far North (19% up from 4%), Moreton North/Sunshine Coast (9% down from 11%), Fitzroy (2% down from 3%) and Northern regions (2% up from nil). No activity was recorded in the Mackay (down from 18%), Moreton South/Gold Coast (down from 11%), Darling Downs (down from 10%) and the South West, North West and Central West regions (all remained nil).
There was higher than average tender activity for projects within the administrative/office sector and within the Brisbane region during the June quarter 2018.
View tender activity table (PDF, 167KB)
View open tenders by region (PDF, 73KB)
View open tenders by project type (PDF, 79KB)
View Queensland regions map (PDF, 127KB)
In June quarter 2018, building materials monitored by the Department of Housing and Public Works that recorded an increase from the previous quarter were mild steel sections – beams, aluminium fixed windows and 25mpa concrete (approximately all 1%). No building materials recorded a decrease from the previous quarter. According to the Cordell Building Cost Guide, between June quarter 2017 and June quarter 2018 the most significant building cost increases were in 25mpa concrete (8%), float glass tinted - 4mm thick (8%), face brick clay (6%), mild steel sections -beams (5%) and reinforcing steel mesh (5%). During this period, no materials recorded a cost decrease.
View the table (PDF, 143KB)
Amendments to the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) and Queensland Building and Construction Commission Act 1991 (QBCC Act)
Amendments to the BIF Act and QBCC Act commenced on 11 September 2018 to clarify existing provisions.
Most of the amendments to the BIF Act relate to project bank accounts, including clarification of when amounts may be withdrawn from a trust account.
The timeframe for giving a payment schedule in response to a payment claim has been amended to the earlier of (1) the time in the contract or (2) 15 business days. An offence applies for failure to do so. However, there is no requirement to provide a payment schedule if payment of the full claimed amount is made by the due date for payment.
The provisions of the BIF Act concerning progress payments, adjudication and subcontractors' charges are expected to commence on 17 December 2018.
More information is available at the Department of Housing and Public Works website.
Minimum Financial Requirements for licensing in the building and construction industry
A key part of the Queensland Government's security of payment reforms is its commitment to create new laws that strengthen the Minimum Financial Requirements (MFR) for licensing.
Improving the MFR will benefit industry and the broader community by:
strengthening reporting requirements
providing greater transparency
better equipping the Queensland Building and Construction Commission to detect and mitigate the impact of potential insolvencies and corporate collapses.
From 12 September to 9 October 2018, the Queensland Government requested feedback from industry and the community on proposed new financial reporting laws.
The discussion paper included 18 potential reforms in the following key areas:
introducing risk-based, targeted annual reporting requirements
fostering improved accountancy practices that meet the objectives of the MFR
ensuring forms of assurance can provide financial security
ensuring funds from related entity loans can be readily accessed
clarifying definitions and requirements for the calculation of assets.
The Queensland Government is considering the results of consultation on the discussion paper.
If you have any questions, please email MFR@hpw.qld.gov.au.
Queensland Building and Construction Commission - Security of Payment Roadshows
The Queensland Building and Construction Commission (QBCC) are hosting short information sessions to give subcontractors tips on how to protect their payment rights on every job.
To register for an information session please visit the Queensland Building and Construction Commission website.
Plumbing and Drainage Act 2018
On 5 September 2018 the Plumbing and Drainage Bill 2018 (the Bill) was passed by the Queensland Parliament.
The Bill repeals the Plumbing and Drainage Act 2002 and establishes a new Plumbing and Drainage Act 2018 which is expected to commence in mid 2019. The new Plumbing and Drainage Act delivers a contemporary, streamlined and flexible legislative framework for plumbing and drainage that is clear and simple for the end user.
Most homeowners will be able to fast-track their applications for certain plumbing work and obtain a permit to start work in two days, reduced from the previous 20 days.
Standard application timeframes for developers and owners of more complex buildings, such as multi-unit residential and commercial buildings, will halve from 20 to 10 business days.
The Bill ensures consumers will no longer be placed in the position of buying a plumbing product from a retailer, only to find their plumber can't install it because it doesn't have the required WaterMark certification. Suppliers will be prevented from selling plumbing products to consumers unless those products are appropriately certified.
Importantly, the Bill also promotes safety and compliance by introducing a stronger penalty framework and amends the Queensland Building and Construction Commission Act 1991 to establish a new occupational mechanical services licence including medical gas to protect the health and safety of workers and the public in high risk buildings.
The department is currently working with the plumbing industry to finalise a new plumbing regulation and a revised Queensland Wastewater and Plumbing Code to support the new Plumbing and Drainage Act 2018.
New Queensland Building and Construction Commission Regulation 2018
The Queensland Building and Construction Commission Regulation 2018 came into effect on 1 September 2018. The new regulation replaces the Queensland Building and Construction Commission Regulation 2003, reflecting current drafting standards and removing obsolete provisions.
The 2018 Regulation does not make any substantive policy or operational changes to the 2003 Regulation. The provisions of the regulation have been restructured and renumbered (including schedules and sections).
If your business uses documents that reference the old Queensland Building and Construction Commission Regulation 2003, please refer to the new Regulation.
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Last updated 17 December 2018
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