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Davis Langdon\'s - An AECOM Company - Australia and New Zealand Research Manager delivered the following presentation for the Property Council of Australia on the 15th October 2010, tackling the 'Big Issues in Australia's Property and Construction Future'
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Global construction consultants
GLOBAL PROPERTY& CONSTRUCTIONCONSULTANTS
Global construction consultants
BIG ISSUESAUSTRALIA’S PROPERTY AND CONSTRUCTION FUTURE
Michael SkeltonAustralia & New Zealand Research Manager
Facts, Fiction and the Future
Population Growth
Infrastructure Investment Forecast
Labour Force Demand
Projected Cost Escalation
‘Competitive’ Immigration...
WHERE WE WERE...
WHERE WE ARE...
WHERE WE NEED TO BE...
HOW DO WE GET THERE?
The Population Debate
How much is enough?
Australia - Today
million22.5
Australia @ 2050
million30 ?
Australia @ 2050
million35 ?
Australia @ 2050
million40 ?
Australia @ 2050
More??
DECIPHERING THE POPULATION DEBATE
0
2
4
6
8
10
12
14
16
18
Under 15 y/o 15-65 y/o 65+
The Most Dangerous Idea! – A Static Population
Million
Today 2050 Projection
+146%
-40%
+5%
Minor Allowance of Growth from 22.5 million to 25 million
Population Projections
South Australia
20
22
24
26
28
30
32
34
36
38
40
2006
2010
2014
2018
2022
2026
2030
2034
2038
2042
2046
2050
Million
High Projection
Medium
Low Projection
Currently1.6 million
2.2 million
20
22
24
26
28
30
32
34
36
38
40
2006
2010
2014
2018
2022
2026
2030
2034
2038
2042
2046
2050
Million
High Projection
Medium
Low Projection
National
39.4m
33.9m
30.2m
High Projection Scenario75% Increase
High Projection Scenario38% Increase
The Irreversible Truth – Ageing Population
0%
5%
10%
15%
20%
25%
Australia UK US
% of GDP devoted to Age-Related Spending by 2050
0%
5%
10%
15%
20%
25%
1970 1990 2010 2030 2050
85 and over 65 to 84
Proportion of Population Aged 65+
New research was needed…
INFRASTRUCTURE AND LABOUR FORCE
Infrastructure Labour Force Growth - Historical
80
100
120
140
160
180
200
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
Index
Source: ABS 6291.0.55.003, Davis Langdon Research
Index = 100 at 1987
Infrastructure Labour Force
Total Labour Force
Index = 100 in 1987
Infrastructure Investment (per capita) - Historical
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
High Projection
Medium Projection
Low Projection
2050 – REQUIRED Infrastructure Labour Force
Population Projections
Low Medium High
Infrastructure InvestmentProjection Scenarios
Low Projection 907,000 1,021,000 1,191,000
Medium Projection 1,568,000 1,765,000 2,058,000
High Projection 2,229,000 2,508,000 2,925,000
Current infrastructure labour force: 738,000
Ratio of Infrastructure Labour Force to Total Population
2.50%
3.50%
4.50%
5.50%
6.50%
7.50%
8.50%
1984
1987
1989
1992
1994
1997
1999
2002
2004
2007
2009
2012
2014
2017
2019
2022
2024
2027
2029
2032
2034
2037
2039
2042
2044
2047
2049
RATIO OF INFRASTRUCTURE LABOUR FORCE : TOTAL POPULATION
High Projection
Low Projection
2050 – REQUIRED Infrastructure Labour Force
Infrastructure labour force contribution will grow to 7.5% of the total population from a long term average of 3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
1990 2007 2050
Construction Productivity
NSW VIC QLD SA WA Australia
Residential & Non-Residential Work Done
16.7 10.6 13.9 14.2 11.6 13.1
Total Work Done (Including Engineering)
8.3 7.3 6.3 6.8 3.5 6.3
Proportion of Engineering Work Done
50% 31% 55% 52% 70% 52%
Job Required per $1million
COST ESCALATION
Unemployment Rate
Rec
essio
n
Rec
essio
n
GFC
0%
2%
4%
6%
8%
10%
12%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Considerably less spare labour capacity this time around
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
1.3
1.4
1.5
1.6
(billion/month, LHS)(millions, RHS)
Hours WorkedTotal Jobs
Why did the Labour Force Remain Tight?
Employers chose to reduce hours rather than reduce staff
Hours Worked
(billion hours/Month)Total Jobs
(millions)
Comparative International Construction Costs
US $0
US $500
US $1,000
US $1,500
US $2,000
US $2,500
US $3,000
US $3,500
US $4,000
Kua
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US $0
US $500
US $1,000
US $1,500
US $2,000
US $2,500
US $3,000
US $3,500
US $4,000
US $4,500
US $5,000
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Prestige Of f ice
Standard Off ice
US $0
US $500
US $1,000
US $1,500
US $2,000
US $2,500
US $3,000
US $3,500
US $4,000
US $4,500
US $5,000
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5 Star Luxury
3 Star Budget
Office High-Rise Apartments Hotels
National Housing Deficit Worsening
1.00%
1.20%
1.40%
1.60%
1.80%
2.00%
2.20%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Australia Population Growth (annual) Australia New Dwellings Growth (annual)
Deficit
‘COMPETITIVE’ MIGRATION
Circular Migration – Competition for Skills
Circular Migration – Competition for Skills
Historical Net Migration
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (e)
2011 (f)
2012 (f)
This would achieve 42 million by 2050
Australia – Still one of the most ‘liveable’ countries?
In recent years Australia’s ranking as one of the world’s most liveable countries & its business investment ranking have fallen
A Prosperous and High Liveability ‘Big’ Australia
Never Been Employed in Any Capacity
Percentage of People in Prison that have...
Completed Secondary School or Trade
7%36%
Connectivity
Productivity ImprovementsHigh Speed Rail
High Speed InternetRemote Training and Education
Remote Health Care Treatment
Remote Workplaces
Australia is reaching the trigger points…
New Economically Viable Cities
Metro Rail Systems
Renewable Energy Leaders (not Laggards)
HOW DO WE GET THERE?
Migration policy to manage projected demand – not reactionary
Connectivity
in technology
in high speed rail
World class education
Renewable energy technology
A sustainable housing strategy
And lastly… more people…
Thank you
Michael SkeltonAustralia & New Zealand Research Managermskelton@davislangdon.com.au
Delivering solutions that enhance and sustain the world’s built, natural andsocial environments
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