With major infrastructure projects underway all over the country, Roads & Infrastructure Australia looks at the factors behind the construction job boom and how sustainable it is.
The construction industry has been growing, with data from the Australian Bureau of Statistics revealing there were 1.13 million jobs in the industry in 2017.
With high profile infrastructure projects like Sydney’s $16.8 billion WestConnex tunnel, the $11 billion Melbourne Metro Tunnel Project and Perth’s $5.2 billion METRONET creating thousands of jobs around Australia, it’s no surprise the industry is booming. But is it sustainable?
Dr. Jago Dodson, Director of the Centre for Urban Research at RMIT University, says the construction industry’s job growth is due to a multitude of factors.
“Principally, we have seen very high rates of urban development and growth. The housing market has been buoyant and with a lot of infrastructure investment, this growth is not surprising,” Dr. Dodson says.
“There has been a noticeably high amount of population growth for a developed nation – about 2.2 to 2.5 per cent. Because of this, we can anticipate there will be at least a medium-term continuation of the Federal and State Governments’ focus on infrastructure.
“We’ve seen two major infrastructure booms in the past few decades and the major infrastructure projects have been contributing to the growth in the construction industry.”
Dr. Dodson says there are two main factors at play behind the infrastructure growth at the moment, especially in major cities like Sydney and Melbourne.
“The first is the perception that there have been deficits in investment into infrastructure in both Sydney and Melbourne, where it has lagged behind population growth. In the early 2000s, there was a debate around infrastructure going towards the Olympics in Sydney as opposed to longer term planning,” he says.
“Consequently, Sydney has had a few difficulties accommodating the increased population growth and transport infrastructure.”
The other factor according to Dr. Dodson is the fact that infrastructure projects provide jobs in the short to medium term, which is often used by politicians to gain votes.
“Another dimension to the infrastructure boom is the willingness of government to use infrastructure as a form of stimulus in the context of relatively weak overall economic growth. Since the global financial crisis from 2008 onwards, we’ve seen governments be very forthcoming on expenditure on infrastructure,” Dr. Dodson says.
He says there is also pressure placed on governments politically by the urban public about how cities are functioning.
“Governments have tended to be somewhat reactive to infrastructure demands, but this can be problematic for the long term. It can lead to adhoc and politicised decisions that are made on a project-by-project base for the short term.”
Dr. Dodson says that while economic conditions are strong, governments are also more likely to fund large infrastructure projects, but that could change if there is a downturn in the economy and tax revenue.
Prof. Kerry Brown, Professor of Employment and Industry for Edith Cowan University’s School of Business and Law, says Australia’s industry sectors are cyclical and dynamic.
“We’re coming through some cycles of construction as our apartments and residential construction is on the rise,” Prof. Brown says.
She says that construction is starting to pick up, not just in overall contribution to the economy, but wages are increasing as well.
Prof. Brown also says there is a skills shortage in the sector as it grows while Australia’s population ages.
“Older workers are staying in the industry for longer while there is also a shortage of young people, creating a huge gap. There’s also an institutional skills gap, which means workers trained in mining, for example, can’t just instantly transition into becoming builders.”
She says that initiatives like the Victorian Government’s recent announcement to make priority courses in TAFE free are very important but warns that this can often create a lag.
“This pattern in the workforce has been seen before in the legal and accounting professions, there’ll be a huge scarcity of skilled workers then a response from the market. Because new workers take time to train, it can lead to an oversupply in the long run. It’s hard to get a good balance,” Prof. Brown says.
“There have been some interesting funding pathways for regional areas in the 2018/19 Federal Budget to support regional hubs. It’s a good sign to see the Federal Government supporting training in rural areas, especially where construction happens in fits and starts.”
Where technology and globalisation of industries have had a significant impact on other industries, Prof. Brown says due to the nature of construction, humans will always be important.
“Software that helps create good designs will be a boon to the construction industry. It can take a lot of the guesswork out of construction and speed up how we build things. IT will help the industry create beautiful buildings, but there will always be a need for the personal interaction with smaller subcontractors,” she says.
“Automation also means we are able to improve safety, as we can do more things remotely, putting less people into possibly dangerous areas. What we’re bounded by is bandwidth and imagination.”