In the Northern Territory, the expansion of defence capabilities is intricately linked to the region’s construction industry. To provide the Australian Department of Defence the infrastructure it needs and wants, it must provide projects to keep construction workers consistently employed.
The strategic value of this sector lies in its ability to provide the workforce and expertise necessary to support and sustain defence operations. Several myths and concerns have arisen regarding the north’s capacity to manage and deliver construction to Defence’s requirements. Those myths are exactly that: myths. The real challenge is ensuring continued work for those who need to stay in the north.
The transition of the baby-boomer generation from full-time employment to retirement is profoundly impacting Australia’s private and public sector workforces. In response, the workforce policy for the north of Australia is rapidly shifting from unemployment figures to a pressing shortage of skilled workers. To explain this, instead of focusing on the causes of this easy-to-understand fact, a series of myths emerged.
The first myth posits that if finding workers is challenging in Australia’s larger markets, it must be even more difficult in the north. The second myth asserts that the northern construction sector is already at capacity and unable to accommodate new projects. This misconception is further compounded by an assumption that the difficulty in attracting resources serves as conclusive evidence for both myths.
To dispel the first myth, it only needs to be offered that the present Northern Territory construction workforce fluctuates annually. It can range from nearly 10,000 to over 18,000 workers throughout the year and comprises a transient group that moves across northern Queensland, the Northern Territory and northern Western Australia, seeking new opportunities.
Currently, it is unlikely that many of these workers will have a guaranteed project to rely on for next year; their employment horizon is notably short-term. Therefore, the primary challenge for construction businesses is to identify new opportunities to sustain employment year after year.
This ephemeral nature of construction work necessitates government and industry adopting a distinctive analytical approach when assessing the relevant issues.
The demand for construction workers should be viewed as fluid, reflecting the industry’s inherent dynamism. Each project involves a variety of trades, with some trades being involved only briefly, others intermittently and some throughout the entire project duration. This variability underscores the need for numerous concurrent projects to maintain industry activity.
This fluidity and dynamism are central to the industry’s resource planning and form the backdrop for economic analysis and modelling, such as the ‘Billion Dollar Partnership’ report by Master Builders NT. This report assesses the potential pipeline of construction projects against the context of the Top End’s construction workforce.
In contrast to much of the media coverage surrounding the NT construction industry, the sector is managing demand effectively. While acknowledging occasional skill gaps, they only occur during periods of project overlap. In discussions with subcontractors, it has become evident that they are experiencing spare capacity and are actively seeking information about future opportunities within the pipeline.
Why, then, are some projects experiencing difficulties with resource availability? Simple: preferred clients have no trouble sourcing a workforce, while smaller firms do. Preferred clients have often minimised problems that affect this workforce generally: the head contractor’s track record and competence, contract risks and penalties, program and payment certainty, design stability, commercial considerations, and established relationships.
Crucially, many of these decisions are not made directly by the workforce but by their employers. Consequently, due to these underlying complexities, it is entirely possible for a project to face resource shortages even in a stable market.
As such, major clients within the construction industry, including Defence, face three principal strategic options for delivering their initiatives in the north.
The first option is to design their programs around a fly-in-fly-out (FIFO) model, assuming that the north is too challenging and relying on already strained markets in major southern centres.
The second option involves placing their program into the market without preliminary engagement and resorting to FIFO if initial efforts do not yield the desired results.
As the industry advocates, the third (and preferred) option is to engage early, share information and design programs to become a client of choice. This approach is strongly supported by the ‘Billion Dollar Partnership’ report, which offers recommendations to simplify business operations for governments, industry and clients.
To dispel the second myth, we can use the two liquid natural gas facilities in Darwin as examples. These facilities are so large, they contribute to 10 percent of Japan’s electricity. These show the north’s ability to handle large-scale projects far beyond current program expectations. This capability is further demonstrated by the numerous ports, hospitals, commercial buildings, shopping centres, schools, roads, bridges and other infrastructure projects consistently delivered across the north.
The same narrative applies to northern Queensland and Western Australia, where completed projects highlight the region’s potential.
The current pressing challenge for the construction industry in northern Australia isn’t securing a workforce. The challenge is to secure new projects to ensure continued employment for the thousands of construction workers who need to plan for work in 2025 and beyond. Defence will play a crucial role in this endeavour, but it must evolve its strategy by engaging early, sharing information and designing programs that position it as a client of choice.