The nuts and bolts of the Australian Construction industry

The ABS has put the Construction industry under the microscope, giving the most detailed picture of the industry in over a decade. The Construction industry was responsible for 7.0% of Australia’s GDP in 2023-24, employing around 1.3 million people. The new data tells us about the structure and key trends in this critical industry.

For the first time since 2011-12, income and expenses have been analysed at a more granular classification, with details on contracting and subcontracting income, project types, funding sources and land. Over the past year (2023-24), Construction industry Total income grew to $633.6b. This included rises across all three Construction subdivisions: 

• Subdivision 30 Building construction ($235.2b) groups businesses that construct residential and non-residential buildings.
• Subdivision 31 Heavy and civil engineering construction ($122.4b) groups businesses engaged in the development of roads, rail, utilities and other large infrastructure projects.
• Subdivision 32 Construction services ($276.1b) groups businesses providing services largely to other construction businesses (commonly referred to as tradies).

The detailed Australian Industry construction data released today provides further insight into the size and composition of the Construction industry.

Australian Industry data shows the role tradies play in supporting the broader Construction industry. With widespread subcontracting arrangements, Construction services support primary contractors at every stage of a project’s lifecycle. These services include:

• Land development and site preparation services
• Building structure services
• Building installation services
• Building completion services
• Other construction services.

In 2023-24, tradies continued to support all types of construction. Residential projects provided the largest source of income for tradies, with $55.6b coming from House construction and $17.0b from Other residential building construction. This was followed by Non-residential building construction ($66.2b) and Non-building construction ($49.3b). 

The majority of income for the Construction services subdivision came from subcontracting arrangements ($116.6b), rather than from primary Contracting income ($71.4b). Total income from Building installation services ($94.2b) and Building completion services ($53.2b) groups accounted for 53.4% of Construction services revenue, showing the importance of core trades in supporting the broader Construction industry.

In 2023-24 Heavy and civil engineering construction, income was broken down by project type. These projects included:

• Road and bridge construction
• Railways, tramways and harbour construction
• Water storage and supply, sewerage and drainage construction
• Electricity generation, transmission and distribution construction
• Telecommunications construction
• Oil, gas, coal, pipelines (not water) and other heavy industry construction
• Other non-building construction
• Building construction.

Since 2011-12 Heavy and civil engineering construction Total income has grown from $68.0 to $122.4b. Government spending helped fuel this rise, contributing 55.5% ($47.2b) of Contracting income in 2023-24. This represents a significant increase on 2011-12 levels, where government contributions only represented 26.9% ($13.4b) of Contracting income. 

The largest contributors to Heavy and civil engineering construction income in 2023-24 were:

• Road and bridge construction ($37.5b)
• Railways, tramways and harbour construction ($17.3b)
• Electricity generation, transmission and distribution construction ($11.5b).

This reflects significant road, rail and renewable energy infrastructure projects underway in 2023-24.

Building construction represents businesses mainly engaged in primary contracting. This is reflected in Total income breakdowns for the Building construction subdivision, which generated $130.8b from Contracting income in 2023-24, compared to $21.5b in Subcontracting income. Building construction includes:

• Residential building construction (group 301)
• Non-residential building construction (group 302).

The composition of the Building construction subdivision has remained stable since 2011-12. Income growth in Non-residential building construction slightly outpaced residential projects (House construction and Other residential building construction) between 2011-12 and 2023-24 (114.4% and 105.2% respectively). Growth across both groups has been driven by a range of factors, with increasing demand and rising input prices contributing to higher volumes and output prices. There has been notable growth in income from Other residential building construction, rising 211.3% from $8.0b in 2011-12 to $24.8b in 2023-24. This highlights a growing prevalence for multi-story apartment block construction.

Expenses within the Construction industry have risen from $275.4b to $570.7b since 2011-12. Most of this rise ($172.6b) has occurred since 2020-21, placing pressure on industry profits. The largest expenses shown in 2023-24 Australian Industry data were:

• Purchases of goods and materials ($255.4b)
• Selected labour costs ($105.7b)
• Payments to other businesses for construction services, building and industrial cleaning services ($91.6b).

Through higher volumes and value of work done, some subdivisions were more effective at maintaining or increasing profits. Despite recording the largest growth in Total expenses compared to 2022-23 (16.5%), Heavy and civil engineering construction also reported the highest growth in Operating profit before tax (37.3%).

The Residential building construction group recorded the largest Total expenses in 2023-24 ($137.2b) of any Construction group. Within the Construction services subdivision, Building installation services reported the largest group level Total expenses ($84.8b). 

Total Employment within the Construction industry has grown steadily to 1,291,000 people in 2023-24. The majority of employees reside in Construction services, representing 68.4% of the entire construction workforce, comparable to 2011-12 (66.9%). This further highlights the long-term importance of tradies and subcontracting in supporting the industry. Within Construction services, the Construction groups with the largest Employment in 2023-24 were Building installation services (329,000 people) and Building completion services (223,000 people).

Following the COVID-19 pandemic, industry wide labour costs have rapidly increased. The Total labour cost growth rate since 2020-21 has outpaced Employment growth in the same period. This has seen increases in Wages and salaries per employee, with strong demand for skilled labour driving wage growth. The highest Wages and salaries per employee were reported by the Heavy and civil engineering construction subdivision ($132,900 per employee). This was followed by Building construction ($88,700 per employee) and Construction services ($74,800 per employee). 

The detailed Construction industry data for 2023-24 is available for download as part of Australian Industry.