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Building Industry Bulletin - Issue 56, September quarter 2018

Welcome to the Building Industry Bulletin

In this issue

Queensland regional construction activity update

The Department of Housing and Public Works (HPW) engages economic research consulting firm, the National Institute of Economic and Industry Research (NIEIR) to provide independent, updated data and analysis on the profile of the Queensland building and construction industry using regional economic modelling and forecasting techniques.

The September quarter 2018 economic update from NIEIR shows that in 2017–18 Queensland construction activity (or total work done across the residential building (houses and units), non-residential building and engineering construction sectors) increased by 2.9% to $46.6 billion.

In 2018–19, Queensland construction activity is forecast to decline by 4.7% to $44.4 billion. This is due to decreases of just under $1.2 billion in non-residential building, $813 million in engineering construction and $206 million in residential building.

In 2019–20, Queensland construction activity is forecast to grow by 5.1% to $46.7 billion due to increases of $2.8 billion in engineering construction and $63 million in non-residential building.

Queensland engineering construction activity (e.g. roads, water, sewerage and mines) increased by 8.8% to $20.8 billion in 2017–18. Following a small decline of 3.9% to $19.9 billion in 2018–19, engineering construction activity is forecast to increase by 14.1% to $22.8 billion in 2019–20, due to the commencement or continuation of major highway (e.g. Southern Access Corridor Stage 4, Cairns), rail (e.g. Cross River, central Brisbane) and mining projects (e.g. Byerwen Coal Project, Bowen Basin).

Total non-residential building activity (e.g. offices, shops and hotels) increased by 7.6% to $7.5 billion in 2017–18. This is forecast to be followed by a decline of 15.8% to $6.3 billion in 2018–19 and a slight increase of 1.0% in expenditure in 2019–20.

In 2017–18, total residential building decreased by 4.6% to $18.4 billion with further small declines of 1.1% and 3.4% projected for 2018–19 and 2019–20 respectively. While new private dwelling construction is forecast to decline by an average of 6.6% over the 2 years to 2019–20 this is forecast to be offset by an average increase of 8.0% per annum in renovations expenditure over the same period.

The average number of people employed in the Queensland building and construction industry (residential dwelling, non-residential building and engineering sectors including contractors, trade contractors and consultants) for the year ending September 2018 was 239,000. The estimated unemployment rate for the construction industry for September quarter 2018 is 4.7%.

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Building Legislation and Policy Contractor and Consultant tracking survey

To help understand the state of the building and construction industry cycle in Queensland, HPW conducts quarterly research surveys with contractors and consultants registered with the department's prequalification (PQC) system. In the September quarter 2018, Kantar Public surveyed respondents across conditions including employment supply, workloads and labour costs.


Contractors indicated on average they were operating at 68% of capacity in the September quarter 2018, consistent with September quarter 2017 (67%). In the last 3 months 39% of all contractors reported their workload had increased, significantly higher than June and March quarter 2018 (20% and 25% respectively) but consistent with levels between September 2016 and December 2017. There was continued optimism regarding the forward view of work and planning, with 80% of contractors believing their workload would increase or stay the same over the next 3 months to December 2018 (68% in June 2018).

Just under half of all contractors (45%) in September quarter believed labour costs would increase over the next 3 months, down from 54% in June quarter but significantly higher than figures seen between March 2015 and December 2017. The perception that building material costs would increase, decreased to 54% in September 2018 from a high point of 71% in June 2018.

In the September quarter 2018, 19% of contractors reported difficulty employing subcontractors overall (down from 26% in June quarter 2018). In the same period, 34% of contractors reported having difficulty finding suitably experienced or qualified subcontractors (down from 46% in June 2018). Representing a continued increase since December 2017, 53% of all contractors suggested the difficulty employing subcontractors was across all trades.

The most mentioned trades for those experiencing difficulty employing subcontractors were carpentry (39%), electrical (37%) and painting (26%). Among those respondents who had experienced subcontractor shortages, 'increased project costs' and 'project delays' (34% and 16% respectively) were the most reported impacts mentioned by respondents.

On average, contractors estimated that 36% of their workload (down from 44% in June 2018 but consistent with September 2017) over the previous 3 months was on behalf of local, state or federal government.


Workload remained to stable levels in September quarter 2018 with consultants indicating on average they were operating at 71% of capacity (up from a decline over March and June quarter 2018 at 64% and 65% respectively). In the same period, 32% of consultants felt their workload had increased and 37% reported it had stayed the same over the previous 3 months (compared to 36% and 34% respectively in June 2018). Projected workload change over the next 3 months declined slightly in September quarter 2018 with 69% of consultants indicating their workload would either increase or remain consistent (compared to 75% in June quarter).

Difficulty in finding work remained steady in September 2018 quarter with 58% of consultants reporting they were experiencing difficulties (60% in June quarter 2018). These are the highest levels since September 2015 (62%) and up from 49% in March quarter 2018 and 28% in December quarter 2017.

In September 2018, the majority (72%) of consultants were seeking to maintain their current staff numbers (up from 63% between December quarter 2017 and June quarter 2018). There was a slight increase in those consultants who believed they would not have difficulty employing staff over the next 3 months with 55% of consultants in the September quarter 2018 up from 46% in June quarter 2018 (45% in both March 2018 and December 2017).

Of the consultants surveyed, 75% believed fees would stay the same over the next 3 months (79% in June), 14% expected them to increase (up from 9%) and 9% anticipated a decrease (no change) from June quarter.

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PQC tender activity

Tender activity for Queensland Government building projects over $1 million averaged 5.1 tenderers per project in the September quarter 2018, increasing from 4.7 in June quarter 2018. Looking at open tenders accepted in the September quarter 2018 (by value) compared to the June quarter 2018, the breakdown by project type was 58% for education-schools (up from 38%), 17% for hospitals/health/welfare (down from 19%), 17% for authorities (up from nil), 4% for residential (down from 27%), 3% for administrative/offices (up from 1%) and 1% for civic (up from nil). There was nil activity for the recreation (down from 15%), education – colleges and industrial/transport sectors (both previously nil).

The Brisbane and Far North regions accounted for the largest proportions of all open tenders (by value) in the September quarter 2018 with 26% (down from 38% in the June quarter) and 21% (up from 19%) shares respectively. This was followed by the Fitzroy (17% up from 2%), Darling Downs (15% up from nil), Northern (9% up from 2%), Moreton North/Sunshine Coast (5% down from 9%), Wide Bay Burnett (4% down from 30%) and Moreton South /Gold Coast regions (3% up from nil). No activity was recorded in the Mackay, North West, South West and Central West regions (nil in the previous quarter).

There was higher than average tender activity for projects within the education-schools sector and within the Brisbane region during the September quarter 2018.

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Building material cost comparison

In September quarter 2018, building materials monitored by HPW that recorded an increase from the previous quarter were F8 pine 90mm X 35mm (5.3%), reinforcing steel mesh (4.7%), 25mpa concrete (1.9%) and mild steel sections - beams (0.4%). The only material to record a decrease was 200mm std concrete block (-3.8%). According to the Cordell Building Cost Guide, between September quarter 2017 and September quarter 2018 the most significant building cost increases were in reinforcing steel mesh (10%), 25mpa concrete (8%) and float glass tinted – 4mm thick (7.9%).

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Industry news

Faster and fairer payments and adjudication system – 17 December 2018

From 17 December 2018, new laws to help ensure timely payments in the building and construction sector and giving businesses more certainty around their cash flow apply.

These laws apply broadly to anyone who engages someone to do building or maintenance work, supply building materials or provide building services (excluding homeowners).

There is important information you need to know to make sure your business is ready for these changes that are designed to simplify and streamline systems and make the industry fairer.

Overview of the changes

From 17 December all payment claims (including invoices) will be given the protections of the BIF Act. This means you will no longer need to include specific wording on a payment claim or invoice indicating that they are made under the legislation in order to pursue your rights to recover monies. If a contract does not provide progress payment due dates, then the BIF Act will provide one for you, which is 10 business days after the claim is made.

Also, there will be a requirement that a payment schedule must be issued within 15 business days in response to every payment claim, unless the recipient intends to pay the full amount of the claim by the due date. This will give claimants certainty about the cash flow for their business. Penalties will apply where a payment schedule is not supplied, and the full amount not paid by the due date. The claimant can now choose to proceed directly to adjudication.

The ability to provide a 'second chance' payment schedule will also be removed, meaning that you will not need to give notice prior to pursuing your rights to recover monies through adjudication. There is now also a significant penalty for not paying money owed after an adjudication decision.

There are also changes to the QBCC Act that establish a statutory defects liability period of 12 months where none is provided in the contract, a requirement to notify of the end of the defects liability period and introduce a new penalty for withholding retentions without a reasonable excuse could result in imprisonment. This will provide subcontractors more certainty about the end of the defects liability period and the return of retention or security.

For more information visit payments in the building industry or contact the QBCC.

Building Industry Fairness Reforms Implementation and Evaluation Panel

The Building Industry Fairness Reforms Implementation and Evaluation Panel was established on 12 June 2018 to work with Government and the building industry to support the review of the operation and effectiveness of the 2017 suite of building and construction reforms.

The Panel is working with an Industry Reference Group and is conducting a range of evaluation and consultation activities including stakeholder engagement activities for each of the building reforms.

The Panel has released a Discussion Paper for public consultation with a closing date of February 2019.

For more information please refer to the Department of Housing and Public Works website.

Minimum Financial Requirements for licensing in the building and construction industry

Through the Queensland Building Plan, the Queensland Government committed to creating new laws that strengthen the Minimum Financial Requirements (MFR).

These reforms will enable the Queensland Building and Construction Commission (QBCC) to more effectively detect licensees in financial distress and minimise the impact of potential insolvencies and corporate collapses on industry.

A new regulation will strengthen reporting requirements by providing clarity about what can be included when calculating a licensee's assets and revenue, improve data quality and improve the ability for the A new regulation will strengthen reporting requirements by providing clarity about what can be included when calculating a licensee's assets and revenue, improve data quality and improve the ability for the QBCC to access the data.

Informed by feedback from the industry and the community, the reforms will be advanced in phases. Phase 1 is to commence on 1 January 2019 and will re-introduce mandatory annual reporting; require larger, higher risk licensees to report decreases in Net Tangible Assets of 20% or more and provide clarity about calculating a licensee's assets, such as the exclusion of recreational vehicles and when to include Project Bank Account funds.

Phase 2 will commence on 1 April 2019 and will implement the remaining reforms and strengthen reporting requirements, particularly for larger, higher risk licensees. By Phase 2 industry will have sufficient time to prepare for the changes. This phase will also provide stronger enforcement provisions under the Queensland Building and Construction Act 1991.

For more information please refer to the Minister's statement, Building and Plumbing Newsflash 561 (PDF, 122KB) and the department's website which also includes a link to the MFR Framework document (PDF, 181KB).

New cladding laws

Results of Non-Conforming Building Products Audit Taskforce (the Taskforce) investigations into the use of potentially combustible cladding on Queensland government and private buildings were published in the Non-Conforming Building Products Audit Taskforce's Status Report which was tabled in Parliament in May 2018. The Report included 6 recommendations which have been supported by the Queensland Government and implementation has begun.

In response to one of the recommendations, the Queensland Government has recently amended the Building Regulation 2006 with changes effective 1 October 2018.

The new laws apply to private buildings that meet all of the following elements:

  • are a class 2–9; and
  • are of a type A or B construction; and
  • were built or have had the cladding altered after 1 January 1994 but before 1 October 2018.

These building owners are required to:

  • register on the Safer Buildings website and complete a checklist of the building
  • engage a building industry professional and/or fire engineer where it is believed potentially combustible cladding is used on a building
  • have a building fire safety risk assessment prepared by a fire engineer to assess the potentially combustible cladding on a building.

The Safer Buildings website has been established to help identify buildings in Queensland that may have potentially combustible cladding. Owners of buildings in Queensland may be required to register their building and complete the combustible cladding checklist. Owners of houses or townhouses or buildings that do not meet all three elements do not need to register.

Key dates
  • 1 October 2018 – The new cladding laws came into effect
  • 29 March 2019 – Register buildings and complete the combustible cladding checklist (Part 1)
  • 29 May 2019* – Complete the building industry professional statement and complete the combustible cladding checklist (Part 2)
  • 27 August 2019* – Engage fire engineer and register their details on the combustible cladding checklist (Part 3) 3
  • May 2021* – Complete the building fire safety risk assessment, fire engineer statement and the combustible cladding checklist (Part 3)

* Upon completing each part of the checklist, the website will indicate whether further steps are required. It is expected that the majority of buildings will not have combustible cladding and will not require further assessment by a building industry professional and/or a fire engineer.

As at 30 November 2018, 10,410 letters have been mailed out to private building owners and 991 users have registered on the Safer Buildings website. 1,248 properties have been registered and 1,115 building assessments have commenced. The QBCC call centre has received 1,112 calls since go-live and 7,633 unique visitors have been to the website.

To help in the assessment of buildings, the department has worked with the University of Queensland (UQ) to develop intensive and targeted Continued Professional Development (CPD) courses for fire engineers. A comprehensive materials library has also been developed to assist fire engineers with identifying fire behaviour in cladding products and developing solutions to ensure the safety of buildings. CPD training for Building Certifiers and other design professionals is also available with the first two-day session held in October. Further sessions will be scheduled in 2019.

Building Ministers' Forum

The Building Ministers' Forum (BMF) comprises Commonwealth, State and Territory Building Ministers and is an important forum to help address cross-jurisdictional building industry matters. The BMF, chaired by the Commonwealth, oversees the Australian Building Codes Board (ABCB) that administers the National Construction Code (NCC).

The BMF convened on 10 August 2018 in South Australia and the BMF Communique for the meeting is at The Building Confidence – Improving the effectiveness of compliance and enforcement systems for the building and construction industry across Australia (PDF, 4.4MB) report continues to be a priority for the BMF and has tasked the Senior Officers Group (SOG) to coordinate the implementation of the 24 recommendations made in the report.

Other items considered and discussed at the BMF meeting included:

  • an update from the ABCB on the development of the 2019 version of the NCC, to be adopted by jurisdictions from 1 May 2019
  • agreement to use the ABCB's Accessible Housing Options paper for broad stakeholder consultations about options for the inclusion of minimum accessibility standards for housing in the NCC
  • a report on the feasibility of point of sale regulation of the WaterMark Certification Scheme
  • outcomes of public consultation on the discussion paper on a permanent labelling system for Aluminium Composite Panel (ACP) products – which Ministers agreed is critical
  • a Building Regulators' Forum update on significant work being undertaken by jurisdictions to identify and address non-compliant cladding
  • an Australia wide approach for professional indemnity insurance for building practitioners, in particular for building surveyors and certifiers.
Ministerial Construction Council

The Ministerial Construction Council (MCC) met in Brisbane on 28 November 2018 to further discuss industry consultation on building and construction industry reforms.

Read the MCC Communique.


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