The Northern Territory’s (NT) construction industry increased by 1.4% in 2017-18 to $2.9 billion, contributing 0.2 percentage points to the total 1.7% economic growth. 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 record levels of residential construction (Chart 1).
The construction sector is one of the largest industries in the NT, accounting for 11.0% of the total gross state product (GSP) in 2017-18, slightly down from 11.3% in the previous year. This represents the highest share of GSP across all jurisdictions (Chart 2). In comparison, the value of the national construction industry increased by 5.1% in 2017-18, accounting for 7.5% of national gross domestic product (GDP) in the same year.
In 2017-18, the NT construction industry accounted for 10.5% or 14,487 people of the total resident workforce, remaining the third largest employing industry in the NT (Chart 3). This represents an increase of 2.4% in year on year terms. Nationally, the construction industry made up 9.4% of total national employment, accounting for 1,170,985 people in the industry (an increase of 7.9%) over the same period.
Since then, recent data reports that employment in the NT construction sector has declined by 14.9% to 12,364 persons in the year to February 2019. This now represents 9.2% of the total resident workforce, however remains the Territory’s third largest employing industry. Nationally, the construction workforce was relatively stable (up 0.5%) over the same period, representing 9.2% of national employment.
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 41.2% or $1.3 billion to $3.6 billion in 2018, in inflation-adjusted terms (Chart 4). The total value is in line with the 10-year average. The decline in the value of engineering work done was driven by a 35.5% decrease in public sector activity ($273 million) and a 40.6% decrease in private sector work ($3.4 billion).
The main driver for the year’s decline in public sector work done was telecommunications (detracting 28.8 percentage points). This result likely follows the completion of the National Broadband Network roll-out across the NT. With the exception of bridges, railways and harbours (contributing 5.0 percentage points), the value of work done across the other segments also detracted from the result.
The decline in private sector work done was mainly driven by heavy industry (detracting 38.8 percentage points), which was likely related to the near completion of the Ichthys liquefied natural gas project. Work done on electricity generation, transmission and pipelines also declined by 2.5 per cent in 2018, mainly reflecting the completion of the Northern Gas Pipeline
Considering that heavy industry makes up the majority of private engineering construction work done in the NT and thus significantly impacts the result, overall construction activity is still positive with growth reported across categories. Water storage and supply, sewerage and drainage works (such as cooperative works on the Leanyer Sanderson waste stabilisation ponds inlet works upgrade, Rapid Creek and Yarrawonga catchment flood mitigation works) contributed 0.7 percentage points, bridges, railways and harbours contributed 0.1 percentage points, and recreation and other (such as continued works on the Marrara Sporting Precinct and Katherine Motor Sports Complex) contributed 0.4 percentage points to the result.
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 4.6% to $604 million in the year to September 2018, in inflation‑adjusted terms.
Over the last two years, public sector investment in construction activity has overtaken activity by the private sector. This was particularly noticeable in investment for non-residential buildings related to infrastructure spending and defence activity as a result of increased NT and Commonwealth Government investment programs.
Private sector non‑residential building construction declined by 11.8% to $254 million, well below the 10‑year average of $463 million. The decline largely reflects significant levels of activity from previous years, related to the completed construction of site offices and buildings for the Ichthys LNG project, new office buildings across Darwin and Palmerston, as well as completion of commercial and retail buildings, such as the Boulevard Plaza, Gateway and Coolalinga Shopping Precinct.
The value of non‑residential building construction done by the public sector increased by 1.4% to $350 million over the same period, well above the 10-year average of $249 million (Chart 5). This result likely reflects completed building work done for commercial developments related to new offices and transport buildings, as well as entertainment and recreation facilities likely associated to upgrades to the Leanyer recreation park, Marrara sporting precinct, Netball complex, STEAM centre at Darwin High School as well as a new undercover sports and recreation area at O’Loughlin College.
In recent times, building activity on health developments largely contributed to growth in public sector activity, however is now moderating (detracting 11.0 percentage points from growth) following the completion of the new Palmerston Regional Hospital, upgrades to existing facilities and a new carpark at Royal Darwin 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 January 2019, the value of approvals related to non-residential buildings increased by 15.4% to $525 million, driven by a 52.5% increase to $316 million in the value of public sector approvals (mainly in approvals for education and other facilities). This was above the ten year average of $272 million.
Partly offsetting this was a decline of 15.5% in the private building approvals to $210 million (related to education and aged care facilities). This was below the ten year average of $447 million (Chart 6).
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 September 2018, the value of residential construction work done in the NT decreased by 1.9 per cent to $425 million in inflation‑adjusted terms, continuing a downward trend since December 2014. The value of residential construction work remains below the 10‑year average of $641 million for total residential building activity done in the NT. This downturn was mainly driven by an 8.0% decrease in construction activity by the private sector to $304 million, below the 10-year average of $499 million. Public sector construction activity increased by 17.5 per cent to $122 million.
The value of the NT’s new house construction work done declined by 13.6% to $214 million, which remains below the 10-year average of $308 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, with new residential land continuing to be released over the short to medium term (Chart 7).
The value of activity in other residential construction, which includes units and townhouses, has continued to moderate over the last four years, following the completion of a number of large multi‑unit developments, particularly in the Darwin CBD and in Palmerston. In the year to September 2018, the value of other residential construction increased by 3.5% to $84 million. This was the second consecutive quarter of growth, and the strongest level of investment since 2016-17.
The value of residential construction work in relation to alterations and additions increased by 21.5% to $128 million. 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 First Home Owner Discount incentive.
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 January 2019, the number of residential building approvals in the NT declined by 10.0% to a total of 694 approvals, reflecting declines in approvals for houses (down by 8.0% to 563),other residential approvals (down by 19.9% to 109), and alterations, additions and conversions (down by 4.3% to 22) (Chart 8).
The value of total residential building approvals in the NT decreased by 2.4% to a total value of $353 million over this period, which was well below the 10‑year average of $582 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.