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8731.0 - Building Approvals, Australia, Feb 2004  
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Feature Article: Focus on the New South Wales Construction Industry


DEFINING THE CONSTRUCTION INDUSTRY

The construction industry consists of those businesses engaged mainly in the construction of residential and non-residential buildings (including alterations and additions), engineering structures and related trade services. This includes, for example, the construction of dwellings and recreational facilities, schools and hospitals, and infrastructure for transport, water and electricity supply and telecommunications.

Division E of the Australian and New Zealand Standard Industry Classification (ANZSIC) is devoted to the Construction industry and is subdivided into General construction and Construction trade services. General construction includes Building construction, which incorporates Residential building (houses, flats etc.), Non-residential building (offices, shops, hotels etc.) and Non-building or Engineering construction (roads, bridges etc.). Construction trade services includes Site preparation services and Building structure services (bricklaying, concreting etc.), Installation trade services (plumbing, electrical etc.), Building completion services (painting and decorating, glazing etc.) and Other construction services (landscaping etc.).


CONTRIBUTION TO GROSS STATE PRODUCT

In 2002-03 the Construction industry in New South Wales contributed 6.2% to the Gross State Product (GSP), making it the fourth largest industry behind Property and business services (13.6%), Manufacturing (11.7%) and Finance and insurance (9.7%).

Over the past five years this contribution has fluctuated from a high of 6.9% in 1999-2000 to a low of 5.7% in 2000-01. The impact on the Construction industry of the introduction of The New Taxation System in July 2000 can be seen in graph 1. There was a substantial increase in construction activity in 1999-2000 as work was brought forward prior to the introduction of The New Tax System, followed by a downturn in 2000-01. The introduction of the First Home Owner Grant (FHOG) and the Commonwealth Additional Grant (CAG) coincided with a recovery in construction activity in 2001-02.

In percentage terms, from 1998-99 to 2000-01 the New South Wales Construction industry contributed to GSP at a level similar to the contribution of the Australian Construction industry to Gross Domestic Product (GDP). However, in recent years there has been an increasing divergence between the two and in 2002-03 the Construction industry contributed 6.2% to GSP while nationally the Construction industry contributed 6.7% to GDP.

Graph 1. Contribution of Construction to GSP and GDP
Graph: Contribution of Construciton to GSP and GDP



ACTIVITY

The value of construction activity in New South Wales, in current price terms, rose from $19,593.1 million in 1998-99 to $22,098.0 million in 2002-03, an increase of 12.8% over the five year period. There was a rapid increase in construction activity from $15,178.3 million in 1996-97 to a peak of $21,719.9 million in 1999-2000 (+43.1%) which was mainly driven by Olympic Games development. Following this, the value of construction activity fell substantially from 1999-2000 to 2000-01(-20.1%), shown in graph 2. However, from 2001-02 to 2002-03 the growth (+20.2%) experienced in the value of construction activity regained the previous fall, and is comparable to the national percentage increase (+20.6%), over the same period. In 2002-03 the value of construction activity in New South Wales was $378.1 million higher than the pre-Olympic peak.


Graph 2. Total Construction Activity, Value of Work DoneNSW
Graph: Total Construction Activity Value of Work Done New South Wales



Movement in the value of construction activity in New South Wales over the five years from 1998-99 to 2002-03 was driven mainly by Residential building. The value of Residential building activity rose from $8,032.4 million in 1998-99 to $10,513.8 million in 2002-03, an increase of 30.9% ($2,481.4 million), compared to the Australian increase of 54.1%. Over this five year period, the value of work done on Houses in New South Wales increased 29.3% ($1,384.2 million), while the value of work done on other residential building rose 33.1% ($1,097.2 million). In 2002-03, Residential building activity accounted for 47.6% of total construction activity in New South Wales, higher than the Australian level of 44.5%.

After Residential building, Engineering construction experienced the next largest increase in value from 1998-99 to 2002-03. Over the five year period the value of Engineering construction activity rose from $5,597.2 million in 1998-99 to $6,503.2 million in 2002-03, an increase of 16.2%. This was just over half the increase experienced at the Australian level where it rose 29.1% over the same period. In 2002-03, Engineering construction activity contributed 29.4% of total construction activity in New South Wales, compared to 34.5% of total construction activity nationally.

In New South Wales the value of Non-residential building activity decreased from $5,963.5 million in 1998-99 to $5,081.1 million in 2002-03, a fall of 14.8%, while nationally Non-residential building activity increased 3.9% over the same period. The fall in the value of work done in Non-residential building was largely the result of a 33.3% decrease from 1999-2000 to 2000-01 with no corresponding rebound in following years. Consequently, in 2002-03 the value of Non-residential building activity was $882.4 million below the value five years earlier. Over the five years Non-residential building's share of total construction activity in New South Wales has progressively fallen from 30.4% in 1998-99 to 23.0% in 2002-03. A similar situation occurred nationally with the value contribution of Non-residential building to total construction activity falling from 26.7% in 1998-99 to 21.0% in 2002-03.

Over the five year period the largest increases, across all activities contributing to the value of construction, occurred from 2001-02 to 2002-03, with the value of Residential building activity increasing by 24.0%; Engineering construction activity by 16.2%; and Non-residential construction by 18.0%.


VALUE OF WORK DONE, Construction Industry—NSW

1998-99
1999-2000
2000-01
2001-02
2002-03
Type of activity
$m
$m
$m
$m
$m

Residential building
Houses
4,719.0
5,737.6
4,350.8
5,271.8
6,103.2
Other residential building
3,313.4
3,484.7
2,661.4
3,206.1
4,410.6
Total
8,032.4
9,222.3
7,012.2
8,477.9
10,513.8
Non-residential building
5,963.5
6,266.6
4,177.7
4,305.8
5,081.1
Engineering construction
5,597.2
6,231.0
6,156.5
5,597.6
6,503.2
Total construction
19,593.1
21,719.9
17,346.4
18,381.3
22,098.0

Source: Building Activity, Australia (cat. no. 8752.0); and Engineering Construction Activity, Australia (cat. no. 8762.0).


BUSINESS INVESTMENT

Over the five years from 1998-99 to 2002-03, private new capital expenditure in the New South Wales Construction industry decreased 22.7%, from $788 million in 1998-99 to $609 million in 2002-03. In contrast, nationally over the five year period, private new capital expenditure in the construction industry increased 10.6% to $1,980 million in 2002-03.


PRIVATE NEW CAPITAL EXPENDITURE, Construction Industry—NSW

1998-99
1999-2000
2000-01
2001-02
2002-03
$m
$m
$m
$m
$m

Total construction
788
531
629
683
609

Source: ABS data available on request, Private New Capital Expenditure and Expected Expenditure, Australia.


INDUSTRIAL DISPUTES

Over the five years to 2002-03, industrial disputes in the Construction industry in New South Wales peaked in 1999-2000 at 53 disputes, declining to 29 disputes in 2001-02 and remaining at this level in 2002-03. In 2002-03 industrial disputes in the Construction industry involved 5,800 employees, just over half the number involved the previous year, and resulted in 11,800 working days lost.

In 1998-99, the New South Wales Construction industry recorded 22 working days lost per thousand employees due to industrial disputes. Over the next two years this increased substantially to peak at 269 working days lost per thousand employees in 2000-01, compared to the national level of 224. In 2002-03 the number of working days lost per thousand employees in New South Wales had fallen to 72, one third the national rate of 235.


INDUSTRIAL DISPUTES, Construction Industry—NSW

1998-99
1999-2000
2000-01
2001-02
2002-03

Number of disputes (no.)
26.0
53.0
49.0
29.0
29.0
Employees involved ('000)
3.3
27.0
22.0
9.1
5.8
Working days lost ('000)
3.2
37.3
43.4
12.6
11.8
Working days lost per '000 employees
22.0
219.6
269.4
79.8
72.4

Source: ABS data available on request, Industrial Disputes, Australia.


EMPLOYMENT

Number of employed persons

The Construction industry is one of the largest employing industries in New South Wales. In 2002-03, the Construction industry employed 7.8% of the state's total workforce, making it the fifth largest employing industry behind Retail trade (14.9%), Property and business services (12.6%), Manufacturing (11.7%) and Health and community services (9.9%). Over the five years to 2002-03, the number of persons employed in Construction increased 11.7% from 217,800 persons in 1998-99, to 243,200 persons in 2002-03. Nationally, employment increased 15.1%.

Of the 243,200 persons employed in the Construction industry in New South Wales in 2002-03, 67.3% were employed in Construction trade services and 32.7% were employed in General construction. Between 1998-99 and 2002-03, the number of persons employed in General construction increased by 2.4% and in Construction and trade services by 16.8%.

Over the five years from 1998-99 to 2002-03, the majority of Construction trade services recorded increases in employment. The largest rise in the number of persons employed occurred in Building completion services increasing by 10,700 persons, while the only fall occurred in Site preparation services, decreasing by 2,700 persons.


NUMBER OF EMPLOYED PERSONS(a), Construction Industry—NSW

1998-99
1999-2000
2000-01
2001-02
2002-03
('000)
('000)
('000)
('000)
('000)

General construction
Building construction
63
71
71
76
66
Non-building construction
15
14
12
15
14
Total(b)
78
85
82
92
80
Construction trade services
Site preparation services
13
12
11
10
10
Building structure services
21
25
21
22
22
Installation trade services
54
59
49
48
57
Building completion services
41
46
52
46
52
Other construction services
11
19
18
19
22
Total(b)
140
161
151
144
164
Construction(b)
218
246
233
236
243

(a) Average for year ending May.
(b) Discrepancies may occur between sums of industry components and totals due to rounding.
Source: ABS data available on request, Labour Force Survey, Australia.


Status of employment

Of persons employed in the Construction industry in New South Wales in 2002-03, 67.8% (177,200) were employees, compared to 65.5% nationally. The second highest percentage of workers were engaged on an 'own account' basis and constituted 26.3% (68,600) of persons employed in Construction in New South Wales in 2002-03. This is similar to the national level of 27.9% (graph 3). Employers and Contributing family workers accounted for 5.2% (13,500 persons) and 0.7% (1,900 persons) of the New South Wales Construction industry respectively, similar to their share of the Australian Construction industry at 6.0% and 0.6%.


Graph 3. Own Account Workers as a Percentage of Industry Employment(a): 2002-03
Graph: Own Account Workers as a Percentage of Industry Employment   2002-03



Hours worked

Persons employed in the Construction industry in New South Wales worked an average of 38.0 hours per week in 2002-03, compared to 38.4 hours per week nationally. In New South Wales, the average number of hours worked per week differed between General construction and Construction trade services in 2002-03, with persons employed in General construction working an average of 39.2 hours per week, and those employed in Construction trade services working an average of 37.4 hours per week.


AVERAGE HOURS WORKED PER WEEK, Construction Industry - NSW

1998-99
1999-2000
2000-01
2001-02
2002-03
hrs
hrs
hrs
hrs
hrs

Construction
39.0
39.7
39.2
37.9
38.0
General construction
40.6
41.3
41.3
39.4
39.2
Construction trade services
38.2
38.8
38.0
36.9
37.4

Labour Force Survey, Australia (cat. no. 6291.0.55.001)


For further information on this article, please contact Rachel Smith on (08) 8237 7324.

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