The Northern Territory’s (NT) construction industry increased by 7.2% in 2016‑17 to $2.8 billion, contributing 0.8 percentage points to the total 4.0% increase in the gross state product (GSP). Growth in the construction industry has moderated following rapid expansion over the past five years, which was driven by major projects, largely the Ichthys liquefied natural gas project (LNG) project, as well as construction of the Darwin Correctional Centre, the duplication of Tiger Brennan Drive, mineral and petroleum resource project expansions and record levels of residential construction (Chart 1). The construction sector is the NT’s third largest industry, accounting for 11.2% of total GSP in 2016-17, reflecting an increase from 10.7% in 2015‑16. In comparison, the value of the national construction industry decreased by 4.1% in 2016‑17, accounting for 7.5% of national gross domestic product (GDP) in the year.
In 2016-17, there were an estimated 14,020 Territorians employed in the construction industry, representing a decrease of 11.1% compared to the previous year. This was a result of lower residential and non-residential construction activity compared to the previous year. The construction industry accounted for 10.2% of the total resident workforce in the year, making it the third largest employing industry in the NT, behind public administration and safety, and health care and social assistance services. In comparison, the national construction industry accounted for 9.0% or 1,086,564 people of the total national workforce in the year.
Since then, current data on employment shows that the NT construction industry accounted for 10.5% or 14,441 people of the total resident workforce in 2017-18, remaining the third largest employing industry in the NT. This represents an increase of 2.9% in year on year terms. Nationally, the construction industry made up 9.4% of total national employment, accounting for 1,172,097 people in the industry (an increase of 7.9%) over the same period.
Engineering construction includes mining, oil and gas, and other heavy industry and utility‑related developments, as well as infrastructure including roads, highways, railways and bridges. The value of engineering construction work done decreased by 1.9% or $110 million to $5.6 billion in 2017-18, in inflation-adjusted terms (Chart 2). Despite the decline, the total value remains above the 10-year average of $4.6 billion. The decline in the value of engineering work done was driven by an 18.4% decrease in public sector activity ($354 million), which was partly offset by a 1.2% increase in private sector work ($5.4 billion).
The main driver for the year’s decline in public sector work done was telecommunications (detracting 25.7 percentage points). This result likely follows the completion of the National Broadband Network roll-out across the NT. Work done in the heavy industry, recreation and other, and electricity generation, transmission and pipelines sectors also detracted from the 2017-18 result.
The increase in private sector work done in 2017-18 was mainly driven by electricity generation, transmission and pipelines (contributing 8.1 percentage points to growth). This likely reflects the construction works of the Northern Gas Pipeline, the 622 kilometre pipeline between Tennant Creek and Mount Isa in Queensland.
For the latest data and analysis on engineering construction activity in the NT, see the Department of Treasury and Finance’s Engineering construction activity economic brief.
Non‑residential building includes hotels and other non‑residential accommodation facilities, shopping centres, factories, offices, warehouses, schools, medical centres, correctional facilities and other similar buildings. The value of non‑residential building construction work done decreased by 18.1% to $599 million in the year to March 2018, in inflation‑adjusted terms.
The decline was driven by a 25.8% fall in private sector non‑residential building construction to $269 million, well below the 10‑year average of $475 million. The decline largely reflects significant increases from previous years related to the construction of site offices and buildings for the Ichthys LNG project, the completion of new office buildings, as well as progress work on retail buildings, such as the Gateway and Coolalinga Shopping Precinct.
The value of non‑residential building construction done by the public sector decreased by 11.3% to $330 million over the same period, however remains well above the 10-year average of $244 million (Chart 3). This was the first decline since March 2016. This likely reflects completed building work done in the health sectors and related facilities, such as upgrades to the Royal Darwin Hospital and Alice Springs Hospital, as well as construction of Palmerston Regional Hospital.
For the latest data and analysis on non-residential construction activity in the NT, see the Department of Treasury and Finance’s Building activity economic brief.
Building approvals can be used as a leading indicator to determine the trend of construction-related activity, which measures the number and value of building work approved for both residential and non-residential buildings.
In the year to August 2018, the value of approvals related to non-residential buildings increased by 16.9% to $557 million, driven by a 67.9% increase to $322 million in the value of public sector approvals (mainly in approvals for education and transportation buildings and facilities). This was above the ten year average of $264 million.
Partly offsetting this was a fall of 17.5% in the private building approvals to $235 million (related to entertainment and recreation buildings, education, and aged care facilities). This was below the ten year average of $454 million (Chart 4).
For the latest data and analysis on non-residential building approvals in the NT, see the Department of Treasury and Finance’s Building approvals economic brief.
In the year to March 2018, the value of residential construction work done in the NT was $402 million, reflecting a 21.7% decrease, in inflation‑adjusted terms, continuing to decline since December 2014. The value of residential construction work remains below the 10-year average of $647 million for total residential building activity done in the NT. This downturn was mainly driven by a 27.7% decrease in construction activity by the private sector.
The value of the NT's new house construction work done declined by 22.9% to $224 million, which remains below the 10-year average of $307 million. This decline follows a slowing period of housing demand and weak residential property indicators in the NT. However, the value of house construction was the largest component of residential construction and is likely to remain so over the coming years (Chart 5).
The value of activity in other residential construction, which includes units and townhouses, has declined since September 2014, following the completion of a number of large multi‑unit developments, particularly in the Darwin CBD and in Palmerston. In the year to March 2018, the value of other residential construction declined by 41.5% to $69.0 million, now recording the lowest level of investment in other residential construction since December 1991 ($61.4 million).
In contrast, the value of residential construction work in relation to alterations and additions increased by 4.2% to $109 million, following a strong increase in 2016-17(up 21.5%). Continued growth was likely supported by the NT Government’s upgrades to public and government housing as well as home renovation grants as part of the Home Improvement Scheme.
For the latest data and analysis on residential construction activity in the NT, see the Department of Treasury and Finance’s Building activity economic brief.
In the year to August 2018, the number of residential building approvals in the NT declined by 16.3% to a total of 773 approvals, reflecting declines in both house approvals (down by 8.9% to 641) and other residential approvals (down by 45.3% to 110). This was partly offset by an increase in alterations, additions and conversions, up by 15.8% to 22 (Chart 6).
The value of total residential building approvals in the NT decreased by 6.9% to a total value of $382 million over this period, which was well below the 10‑year average of $611 million.
For the latest data and analysis on residential building approvals in the NT, see the Department of Treasury and Finance’s Building approvals economic brief.
This analysis is based on the most recent Australian Bureau of Statistics (ABS) quarterly data on engineering construction and building activity, and the monthly data from the building approvals surveys.
The ABS’s quarterly data on engineering construction and building activity is measured on a value of work done basis, compared to the GSP data. GSP data reflects the total gross value added to GSP by the industry, which includes wages paid to employees and value of construction work done. The engineering construction survey data excludes the cost of land, and repair and maintenance activities as well as the value of any transfers of existing assets.
The ABS building activity survey is compiled using building approval details and returns collected from builders and other individuals and organisations engaged in building activity. The estimates represent all approved public and private sector residential building jobs valued at $10,000 or more and non-residential building jobs valued at $50,000 or more. The statistics relate to building activity so construction activity not defined as building such as the construction of roads, bridges, railways and earthworks are found in other ABS publications.
The ABS’s building approvals survey is also used as a leading indicator to determine the trend of construction-related activity, which measures the number and value of building work approved for residential and non-residential buildings. This survey measures the number and value of building work approved for residential and non-residential buildings, including all approved residential buildings valued at $10,000 or more and all approved non-residential buildings valued at $50,000 or more.
The Department of Infrastructure, Planning and Logistics (DIPL) also publishes a Construction Snapshot on a quarterly basis. The DIPL’s Construction Snapshot provides an overview of construction activity for major works over $500,000, reflecting both current and potential future construction-related work for NT regions. To view the latest Construction Snapshot, refer to DIPL's publications on their website.