Delays to new infrastructure construction hits GDP with engineering construction at 11 year low

“Australia’s economy expanded by just 0.4% during the September 2019 quarter with growth hit by continued delays in the activation of new infrastructure projects,” Master Builders Australia’s Chief Economist Shane Garrett said.

“The three parts of the economy which shrank during the quarter were engineering construction, residential building and private business investment. Slow conditions in construction are not helpful from the point of view of encouraging businesses to invest,” he said.

“Clearly, the pace at the construction of new infrastructure is being commenced is holding back not just construction activity but the entire economy,” Shane Garrett said.

“The key ABS data released today show that the annual pace of GDP growth was 1.7% over the year to September, well short of the economy’s 3% trend rate of growth,” Shane Garrett said.

“At a time when infrastructure should be one of the economy’s highlights, the volume of engineering construction work done actually dipped to its lowest level since early 2008 – having shrunk by another 5.9% during the last quarter,” he said.

“The weakness of construction activity is clearly hurting growth in other areas of the economy too,” Shane Garrett said.

“With household spending having stagnated, growth in our economy is now almost completely reliant on day-to-day government spending and demand for our exports from overseas,” he said.

“Master Builders calls all levels of government to do more to accelerate the construction of infrastructure projects. While mega-projects take time to activate, there are many opportunities to fast track smaller projects outside Sydney and Melbourne, including in regional Australia. Many of these can be delivered by smaller and local construction contractors which helps to multiply the economic benefits,” Shane Garrett said.

“Construction activity is unique in its visibility and its capacity to restore confidence amongst consumers and businesses. We need to seize this opportunity,” Shane Garrett said.