Billion Dollar Partnership, a major study commissioned by Master Builders NT and conducted by economics, policy and strategy advisory firm ACIL Allen, says Australian Defence and the United States Department of Defense will spend $6.23 billion on Territory projects over the next five years.
The report is the latest in a series of reports commissioned by Master Builders NT over the past seven years to provide the evidence base for its defence industry advocacy.
The reports are produced in cooperation with the Australian Department of Defence and are funded by Master Builders Defence Contractors Group.
About $4.76 billion will be spent in the NT on labour and materials – $952 million a year.
This is forecast to create 7640 jobs – mostly in the construction sector but also across the wider economy, which is as a result predicted to grow by a massive 5 percent.
Workers will have an extra $840 million a year overall to spend.
Only Suncable’s Australia-Asia Powerlink would rival the size of the combined Australian and US Government investment in the Territory.
It is expected that spending on defence infrastructure will peak at $1.3 billion in 2024-25.
The greatest demands will be in building construction ($526 million or 40 percent), internal fit-outs ($329 million, 25 percent) and furniture, fixtures and equipment ($263 million, 20 percent).
“The opportunity for Territory businesses to generate substantial growth as defence industry contractors is massive,” says Master Builders NT Chief Executive Ben Carter.
He says the multibillion-dollar INPEX project, which at its peak employed more than 9000 workers at Bladin Point, showed that the Territory’s construction sector can meet the forecast surge in demand.
“Our industry has a track record of success over decades in ramping up to meet jumps in demand driven mainly by resources projects. We have the runs on the board.”
The ACIL Allen report backs this up by saying the construction industry learnt from the INPEX project.
“The experience has demonstrated the capacity and capability of the local construction industry to be able to support the development of such a large, complex and transformational project.”
Long-term Defence contracts give Territory businesses the certainty to invest in upgrading the skills of their workforce and, in turn, improve retention of workers.
Mr Carter strongly supports the key findings of the report, which include recommendations that:
• Market signalling is improved – more notice should be given about projects so that Territory companies can prepare to put in competitive tenders
• A more “programmed approach” is taken to the release of work so that NT companies can get a better and broader understanding of what is needed
• The shortage of housing is addressed, especially in regional towns such as Katherine
• The number of workers coming to the Territory from interstate and overseas is increased
“We need the right policy decisions so that the Territory Government can work with the Federal Government and the construction industry to grow the economy,” Mr Carter says.
“We need more people from interstate and overseas, from the Philippines and India. And we must then give them a stake in the Territory so that they stay with their families.
“If we get the policy solutions right we can harness the defence investment to grow a stronger Territory economy over the longer term.
“With national security now firmly oriented in Northern Australia, the Federal Government needs a strong and prosperous Top End to support national security objectives.”
The report lists 25 major Defence projects in the Territory.
Many are underway, providing what can be company-making contracts for Territory businesses.
Other projects are in the pipeline, including massive developments at Robertson Barracks, HMAS Coonawarra, RAAF Base Darwin and the Top End’s military training bases, such as Bradshaw, near Timber Creek.
United States Defense spending is supplementing Australian expenditure; for instance, the US is building a $270 million bulk fuel storage base at East Arm.
Just over 10,000 people are employed in the NT construction industry.
The industry is growing – it has passed the pre-covid $3 billion-a-year level – which means unemployment in the industry is extremely low.
The report says construction is experiencing the tightest labour market on record, but stresses that it has shown it can source skilled workers from other parts of Australia and overseas.
The industry’s unemployment rate is only 2.7 percent, the lowest since 1993. There are more than 2000 job vacancies for construction and engineering managers and more than 6000 for tradies, such as carpenters and plumbers.
Many other professions, such as mobile plant operators, electricians, IT technicians and machine operators, are also in critical demand.
The ACIL Allen report says the Territory has an overall low unemployment rate of about 3.4 percent and “acute skills shortages” in some key occupations.
There are more job vacancies than unemployed, which shows that there is an “imbalance” between the skills possessed by people looking for work and the skills demanded by industry.
The ACIL Allen report comes out strongly in favour of training apprentices and upskilling workers and independent contractors because it helps “shape a highly-skilled team and secure long-term” workers.
“Strong apprenticeship and trainee numbers, both with respect to commencement and completions, are vital for economic growth in the Northern Territory.”
About 1300 Territorians are in construction apprenticeships.
There are nearly 3000 construction industry businesses in the NT, more than half of them sole traders.
About 11.7 percent of the businesses enjoy a turnover of more than $2 million a year.
Data shows that the capacity of the Territory’s construction industry has strengthened over the past three years.
Companies must comply with rigorous Federal rules and processes to win Defence contracts.
Industry experts warn that the Territory companies won’t win contracts simply because they are based in the NT – they must win on merit.
Despite this high bar, the local participation rate in Defence infrastructure projects is 82 percent, much higher than the national figure.
The Federal Government is strengthening the military presence in Northern Australia because the Territory has a “central role” in the country’s defence and regional stability.
“The Northern Territory is strategically located at the hinge of the Indo-Pacific Region,” the ACIL Allen report says.
There are few other places in the Indo-Pacific with the NT’s space, training facilities and geography.
The Federal Defence Strategic Review says the Defence Force’s ability to operate from Australia’s northern bases is a priority.
About 5000 Defence personnel are stationed in the NT – about 7 percent of the country’s Defence Force – although the figure rises to 9000 when families are taken into account.
The Territory Government has targets of a $40 billion economy, up from $26 billion today, and a population of 300,000, up from 251,000, by 2030.