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CHAIN MAIL: Is it all gloom?

The mainstream media made much of the positive construction industry figures released yesterday by the ABS, primarily because it was a rare lifeline in a storm of what is at best uncertainty, and at worst, certain economic doom. The news went down well with the punters, but industry groups were quick to hose down any positivity, saying the growth in the December quarter was all very well, but we haven’t actually hit the eye of the storm yet. The Master Builders Association was one of those industry groups, and said the key to the outlook for the construction industry over the next two years will depend on whether an upswing in the residential sector can offset looming weakness in non-residential building and engineering activity, as the previously strong pipeline of work begins to fall away. But the ABS figures were backed up by the ANZ bank, which said today things were looking up for the construction game. ANZ senior economist Katie Dean said new capital expenditure growth accelerated to 6.0% in the fourth quarter when expectations were –3.0%. She said this was driven by a strong 11.5% rise in buildings and structures. “Spending on equipment, plant and machinery rose by a more subdued 1.0%, but again beat expectations for a fall,” Dean said. “Spending was robust across most major industries. With capital imports collapsing in the final months of 2008, today’s result again highlights the strong pipeline of business investment in Australia.” The small but undeniable amount of growth in the construction game does have inextricable links with other sectors, such as transport and logistics, and those working in these industries may well be able to draw some comfort. Of course the transport game has its own issues, such as fuel prices, driver fatigue and the increasing challenge of keeping machinery running and staff employed in the face of lower turnover and even-tighter margins. But with $29 billion of the federal government’s $42 billion going into the construction industry, the spin-off effect on the transport and logistics industry is likely to be substantial. The most obvious benefit to the transport industry is of course the planned improvement to Australia’s transport infrastructure, which was flagged for making up a substantial portion of the stimulus package. This is particularly significant given that, according to the Transport & Logistics Industry Skills Council, the amount of freight moved in Australia is set to double over the next 10 years. The Australian Transport Workers’ Union said the stimulus package can only bring good things for transport operators, with a planned $400-million spend on roads alone, as well as small-business tax breaks. But TWU national secretary Tony Sheldon said there was still work to be done on transport safety issues. He said that in addition to the federal government’s infrastructure funding and tax breaks for small business, it also needed to consider an urgent solution to road-transport safety. “In November, a federal government inquiry, conducted by Lance Wright QC and Professor Michael Quinlan, called for a national scheme establishing safe rates covering both employee and owner-drivers, including the establishment of client accountability,” Sheldon said. “The recommendations of the Wright-Quinlan review need to be implemented immediately as this affects everyone who uses the roads,” he said. “This would mean that drivers across Australia would not have to face the shocking and often deadly choice of having to do ‘just one more load’ to make a living for themselves and their families,” he said. Indeed, continued lobbying by industry groups should eventually bring governments to account on some of the issues that are unique to the transport industry and are not being addressed by the stimulus package. In the meantime, incremental growth in industries that are closely linked to our transport and logistics operators can only be good.

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