KEY POINTS


•    Net 9,300 increase in construction businesses in past year
•    Small Businesses now account for 98.5% of construction market
•    Majority of construction businesses turn over less than $200,000 per year

New figures released by the ABS this week show that the number of construction businesses in Australia stood at 394,575 on 30th June 2019, an increase of 9,302 (+2.4%) on 12 months earlier. Construction now accounts for 16.6% of all businesses in Australia – accounting for more firms than any other industry or sector of the economy.

Small businesses make up the overwhelming proportion of the construction industry with 59% of construction businesses having no employees at all and a further 39% of firms engaging less than 20 employees. In this way, small businesses account for 98.5% of all firms in the construction industry.

The small-scale nature of most construction businesses can also be gauged through turnover statistics. The majority (56%) of construction firms earn less than $200,000 annually in turnover, with 15.5% of the total having turnover of less than $50,000 per year.

The small scale of the typical construction company is one of the reasons why the sector is more flexible and nimble than most, characteristics which are essential to negotiating the considerable fluctuations in the building and construction business cycle. The small size of firms also means that they lack the resources to deal with the burden of red tape and regulations, a reality that governments and regulators would do well to heed and take account of.

 

Shane Garrett

Chief Economist

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