Western Australia’s top building industry lobby group has given a lukewarm response to the capital works commitment in last week’s state budget, saying the reduction in spending will only create more competition among builders already operating on thin margins.
The state government committed $6.7 billion to capital works projects in 2014, part of a four-year, $23.7 billion infrastructure program.
The commitment is a reduction of about 6 per cent from last year’s budget, where $7.1 billion was spent on major capital works.
Major projects touted by the government include the $2 billion Forrestfield Airport Link, the $1.24 billion Perth Stadium, the $1.2 billion Perth Children’s Hospital, as well as the $441 million Elizabeth Quay and the $428 million new facility for the Museum of Western Australia.
Education Minister Peter Collier yesterday spruiked the government’s commitment to construction in the education sector, unveiling plans to build 16 new primary schools and three new high schools over the next four years, at a cost of $1.16 billion.
New primary schools were announced for Alkimos, Baldivis, Caversham, Ellenbrook, East Landsdale and Harrisdale, while new high schools will be built at Banksia Grove, Harrisdale and Ellenbrook North.
An additional $230 million will be spent on constructing year seven facilities at high schools, ready to open in 2015.
The state government is also committing $45 million to redevelop Kalgoorlie-Boulder Community High School through the Royalties for Regions program.
However, Master Builders Association director of housing and business development Geoff Cooper said the capital works commitments would create mixed feelings in the industry.
“There seems to be quite a lot of major projects, which will keep the top-tier builders very busy,” Mr Cooper told Business News.
“The news isn’t so good for smaller builders who will be competing in a decreasing pool of government-funded works.
“It will intensify competition among smaller builders who are already operating on very thin margins.”
Mr Cooper said small and mid-tier builders that had relied on government works would have to look to other construction sectors to keep their order books ticking over.
“Builders will look at retail, there is some ongoing activity in that field and we are hoping for some growth with retail centre expansions,” he said.
“There is also continuing activity in the industrial sector, despite the pullback in resources investment, supply companies and retail warehouse demand continues to be there.”