Courier Mail - 'Road building hits skids with slump to drag'
13 December 2010Road-building activity hits the skids
- Anthony Marx
http://www.couriermail.com.au/business/road-building-hits-skids/story-e6freqmx-1225969771316
ROAD construction activity across Australia fell by 7 per cent to $15 billion in the past financial year, signalling the start of a new period of decline, according to a leading forecaster.
In a report set for release today, BIS Shrapnel said the downturn was the first since 2001-02 and was brought on by a combination of falls in privately-funded activity and the global financial crisis.
The decline will gather pace through to the middle of the decade despite nominal growth in the current financial year. "Most sectors of road building are feeling the pinch, particularly privately funded works. In fact, if not for state and federal government road construction, the industry would record negative growth," the report said.
Analyst Damon Roast, who authored the report looking at trends to 2025, said publicly funded road activity eased only slightly last year. By contrast, privately backed work was the "overwhelming contributor" to the decline.
"Much of this was due to projects nearing completion, for example the Clem7 in Brisbane and several runways and new mine-related works. Construction of residential sub-divisions also suffered. This was a lagged effect of weaker housing starts," Mr Roast said.
Minor growth to mid-2012 will be driven by another round of state and federal government spending but "will mask weakness in most sectors of road building", he said.
Toll roads, runways and local road works are all expected to weaken, with the industry likely to be in a slump well into the mid-2010s. Queensland has seen a spike in activity over the past two years because of toll-road growth and a large increase in public works, but BIS Shrapnel believes activity will start to ease from record levels in 2010-11.
