Anyone claiming that the Australian resources economy is over had better think again.
There are about 90 committed resource projects across Australia – greater than the average number of such projects recorded over the past decade.
And the value of committed projects has hit new record highs. There is heaps of work to be done and most countries would give up quite a lot to be in Australia’s position.
There have been some changes to the nature of our resource economy, with more of the work now being concentrated into “mega” projects – i.e. projects that individually are worth more than $5 billion. Furthermore, the work is being concentrated on the type of project (largely LNG) and further focused by region (mainly WA, Qld, NSW and NT).
And whilst the resource regions benefit highly during the construction phase, these major centres (and the relevant state capital cities) also benefit from on-going income, direct and especially indirect employment and economic activity over the longer term.
More than the man on the moon
BREE – The Bureau of Resources and Energy Economics (yes there is such an animal in Canberra!) – recently highlighted the enormity of the Australian resource economy by stating that “the total commitment expenditure on Australia’s oil and gas projects is comparable to the total cost of the Apollo Moon Program in 2012 prices.”
There are currently $270 billion worth of committed resource projects across Australia, which is up from $70 billion just five years ago!
Things start to get even more mind-boggling when you look at all new development taking place across the country.
During 2012 for example, 1,120 new major developments were proposed across Australia.
A third of these new proposals involved civil engineering (roads, tunnels, bridges etc.), with a further 250 being new residential developments. One hundred and forty two new resource-related operations were introduced across Australia last year too.
Just 300 new major proposals were deferred, despite all the media talk to the contrary. Most of the deferred work – with 115 stops – was related to new apartment projects. Just 20 resource-related projects were deferred across Australia last year.
Some 200 projects were abandoned, with 75 of these being residential-related, last year. A third of the quit projects were in Victoria, followed by WA and then NSW. Just 40 new projects were abandoned across Qld during 2012.
Importantly, just over 1,000 (1,061) new major projects entered construction during 2012. Again, engineering related-projects dominated (310 new developments); followed by community projects – reflecting continued government-based spending initiatives; and then new residential projects – 175 developments. Not all new residential building stopped last year.
In terms of the actual dollars spent on this new construction; close to half was in WA, with NSW and Qld both attracting a 20% market share.
There is little wonder that WA, Qld, NSW (and NT) are set to outperform the other states/territories, when it comes to their residential property markets in coming years.
My two bobs worth:
- We need to get over our extremely short-term investment focus and concentrate instead on investment and production implications of our resource economy over the longer (ten-plus years) term.
- Readers should go direct to creditable information sources about such matters rather than relying on second-hand news and media regurgitation. Go to the Cordell website for starters.
- I don’t think we can continue to afford all these government departments and maybe any process of elimination should be based their ability or not to produce pithy commentary.
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Michael Matusik is the director of independent property advisory Matusik Property Insights and writes the Matusik Missive which is free, however, reprinting, republication or distribution of any portion of this material, or inclusion on any website, is strictly prohibited without the written permission of Matusik Property Insights and may incur a charge.