The road and bridge construction industry in Australia is a major employer of engineers, and a major driver of engineering activity.

Updated February 2018

The industry employs engineers both directly through the road authorities in each state and private specialised companies, and indirectly through the engagement of consulting firms. Employees in this sector are involved in the scoping, design, construction and maintenance of roads and bridges, ranging from small roads, to major arterials, bridges and tunnels. Road infrastructure typically provides a significant source of demand for engineering skills throughout Australia.

The sector is also heavily reliant on favourable government spending decisions at federal, state and local levels. Government efforts to cut spending can often harm the industry, while a focus on economic growth and jobs often requires investment in productivity enabling infrastructure such as roads. While much of the past five years has been marked by subdued investment, more recently the level of road work done has grown significantly.

Australia relies heavily on its road network for both passenger and freight transport. Road provides the primary means of transport for much of the population, while road freight dominates non-bulk freight markets.

Major road projects continue to dominate infrastructure investment across Australia, and are typically well supported by voters. As a result, investment in roads is strong, with engineering construction work on roads across Australia totalling $16.6 billion over the past 12 months[1]. Infrastructure spending overall has turned a corner over the past year, and investment in road projects has risen by 15.8% over the past year.

Despite an upturn in road investment, major economic loss from congestion continues throughout major capitals, supporting the need for a pipeline of new projects as works are completed. Proactive and well-planned investment will be the key to ongoing growth in infrastructure-reliant industries and the economy as a whole.

[1] ABS Catalogue 8762.0

Australia’s investment in road infrastructure has fluctuated significantly over the past decade. Governments have flipped between periods stimulus spending on infrastructure, and austerity-focused cuts to infrastructure spending, both largely in response to ongoing economic uncertainty in the Australian market. Stimulus spending saw the value of road work reach its peak in 2012, followed by a major decline, as governments turned their focus to balancing budgets. While governments maintained some investment in vital road projects, the decline led to increased congestion and economic drain. Political jostling over spending has placed a major strain on infrastructure budgets, with governments across the nation fighting economic weakness by cutting costs.

However, more recently, the inadequacy of the nation’s infrastructure stock has received greater media attention, and policy has returned infrastructure improvement to the fore. Over the past few years it has become increasingly apparent that budget cuts were doing more harm than good, costing the nation jobs and forgoing vital infrastructure improvements that would drive growth. In a bright sign for engineers, a number of major projects have come on line since 2015, and construction has risen as a result.

Value of engineering work in Australia

Source: ABS Catalogue 8762.0

Significantly, while work done has grown, the level of scheduled work yet to be done has risen rapidly, increasing by 165% since early 2015. This provides an excellent indication that the nation’s investment in road infrastructure has turned the corner, with an established pipeline of confirmed projects. While the rising level of work done has already delivered a raft of new employment opportunities for the nation’s engineers, the massive stock of planned engineering work that has yet to be completed will provide even larger growth. Overall, the results represent the best signs for growth that road infrastructure has seen in many years, and the engineering profession will be among the major benefactors.

Road investment has also fared well relative to other forms of transport infrastructure. During the global financial crisis, government fuelled a boom in infrastructure investment through stimulus spending. While all forms of infrastructure suffered in the years to follow, road investment has since returned to growth, with levels almost reaching those of 2012. By comparison, rail investment remains relatively subdued, with investment yet to show any major signs of growth. While investment across all forms of transport infrastructure is expected to rise to meet a growing population and a expanding freight task, engineers in road have particular cause for optimism.

Current projections of population growth – particularly around major capitals – will necessitate significant infrastructure improvements over the coming decades. The substantial lead time on major projects makes swift investment all the more important, as existing assets face the strain. The national freight task is also expected to grow, putting more trucks on the road and crowding networks. While road infrastructure will undoubtedly face significant challenges over the coming years, these challenges raise excellent opportunities for growth.

Governments at all levels have recognised the need to improve road networks, reduce bottlenecks and strengthen major arterials. This has encouraged a number of major projects, with more proposals in the pipeline. An upturn in scheduled work yet to be done provides the greatest indication that future infrastructure work is likely to increase, while poor economic growth figures will also encourage governments to bring forward growth-promoting infrastructure spending.

Value of engineering work in Australia

Source: ABS Catalogue 8762.0

The construction industry is of major importance to the Australian workforce—being the third-highest employing industry in the nation. According to IBISWorld data, the road and bridge construction directly employed 42,850 people during 2016-17[2]. However, this figure is likely to be much larger when considering the engagement of consulting services, and a wide range of other organisations and employees that are engaged in construction more generally. For the same period, the construction sector is expected to employ over one million people, representing approximately 9.0 per cent of total employment across. Investment in Australia’s road network is responsible for a significant portion of this employment.

Road and bridge construction employment in Australia

Source: IBISWorld Industry Report E3101

Road and bridge construction remains a major driver of engineering activity in Australia. While employment in 2016-17 currently sits at a similar level to five years ago, the recent upturn in investment has seen the overall number of professionals employed in road construction rise over the past year. This growth is expected to continue over the near term as more projects come online, before stabilising throughout the construction phase. The large backlog of road infrastructure projects across Australia is likely to establish a new base level of employment for the industry, as completed projects are quickly replaced with new road projects, absorbing the workforce and providing new opportunities for employment.

Career prospects for engineers are intrinsically linked to the performance and size of major engineering industries. Industries undergoing growth tend to invest to expand their operations, while major areas of employment such as road and bridge construction tend to maintain a large stock of engineers. Job vacancy statistics can provide key insights into the performance of an industry and whether employers expect demand to expand over the short to medium term.

Civil engineering job vacancies by state

Source: Department of Employment – Internet Vacancies Index

According to data from the Department of Employment, civil engineering roles accounted for 58.0% of advertised engineering positions over the past year. Within the Australian market, civil engineering skills have the broadest range of applications, and comprise the majority of roles in road. While the level of road work done tends to fluctuate over the years, the overall volume necessitates a large number of engineers, providing opportunities for civil engineers. The number of advertised civil engineering roles has increased over the past 12 months, providing a raft of new opportunities for civil engineers. According to the latest data from the Department of Employment, the number of advertised civil engineering roles increased by 17.1% compared with the same period last year. This growth indicates that employment prospects for civil engineers are improving, and qualified candidates are likely to find suitable employment upon entering the market.

Civil engineering vacancies map

Source: Department of Employment – Internet Vacancies Index

While overall employment and job opportunities within road are increasing, it is disappointing to see that the trend is not reflected within the nation’s road authorities. Across Australia, a large portion of road construction, maintenance, project scoping and management is performed by the State-owned road authorities. However, over the past five years, the profession has seen large workforce reductions within these organisations, threatening the capacity to effectively manage the nation’s road networks.

Over the past year alone, five out of eight road authorities decreased the size of their workforce. Overall, this corresponds to a decline in their collective workforce by 0.5%, just as the level of work has increased. As a result, road authorities are tackling a larger number of projects, with a larger amount of taxpayers’ money, with fewer skilled employees.

Employment in Australian road authorities

Source: Road authorities’ annual reports

 

[2] IBISWorld, Industry Report E3101 – Road and Bridge Construction in Australia

In May 2017, Professionals Australia surveyed professional engineers across Australia regarding remuneration and conditions in their workplace. Engineers employed in the road sector reported a median base salary of $104,000 and a median total package of $122,354. This result places engineers in rail around the middle of the pack, with a median total package much higher than the $102,221 received by engineers in construction, but well short of the $152,950 received by engineers in the power sector.

Engineer remuneration and wage growth in the road sector – by responsibility level

Source: Professionals Australia, Professional Engineer Employment and Remuneration Report: 2017

From a growth perspective, engineers in road reported moderate results, with wage growth over the past year falling in line with the average for engineers more broadly. Growth in salaries across the engineering profession is closely linked to the performance and strength of each industry. Strong-performing industries with a rising revenue base and ongoing demand tend to deliver solid salary growth for their engineering employees, with staff recognised for their contribution to growth. Conversely, the weaker performance of other industries is reflected in relatively modest wage increases, as organisations seek to drive profit through cost controls rather than revenue growth.

Overall, engineers in road reported average wage growth of 2.5% year on year. This growth represents an outperformance of the Wage Price Index (WPI), which rose at 1.9%. Overall, this growth is a good sign for the engineers in road, as it points to rising demand for engineering skill and recognition of the importance of technical expertise. Salaries also outperformed the consumer price index (CPI) over the past year, which increased by a modest 2.1%. While the past year has been marked by weaker wage growth across many professions, this outperformance points to growth in real wages across the road sector.

Wage growth was highest among respondents in the middle levels of responsibility, with most of these employees covered by agreements that support steady wage growth. Engineers at level 1 reported only weak growth, while those as level 5 reported stagnant wages, with no growth recorded.

Project selection and funding

The way the nations selects and funds road infrastructure is changing, and both governments and the population is gradually accepting the new consensus. The topic of project selection is becoming increasingly important, with media coverage drawing additional attention to impartiality and a strong business case when projects are selected. Infrastructure Australia’s priority list and similar state-based strategies ensure that the politics in project selection is minimised, with parties likely to stick close to the list when selecting major projects.

The remaining challenge will be for governments will to ensure that money is available to fund these new impartially-selected projects. Given the significant level of investment required in order to address the nation’s infrastructure backlog, funding will need to come from a range of sources. The population has come to accept user-pays models, with tolls providing a major source of funding. Major road projects are unlikely to go ahead without some form of tolling in the years ahead.

However, governments will not be able to rely on tolls alone, and debt will play an important part in determining the future of Australia’s road and rail networks. Governments have access to the cheapest finance in history, however a questionable adherence to austerity risks derailing the nation’s infrastructure. A sensible approach from government will be needed, that combines greater efficiency of spending with additional funding, if the nation’s infrastructure woes are to be addressed.

Cities and growth

As Australia’s population expands, and as the economy moves into the future, capital cities are becoming increasingly the focal points of our society. The majority of population growth is occurring around major capitals, with the majority of jobs located in these areas. Additionally, the rural population is increasingly being forced to move towards major cities, as many of the traditional rural or regional industries slow down, and major services industries grow rapidly.

As a result, our cities are expanding, and the urban sprawl is growing. This is necessitating major new investment in infrastructure. While rail lines are being extended to meet the new fringe suburbs, road remains the primary means of servicing new areas. Growth corridors require major arterials, duplications of existing roads, local roads, and regular maintenance. They also necessitate the improvement of many roads leading towards the city in order to prevent the development of bottlenecks.

The trend towards urban living and the continuing urban sprawl show no sign of slowing, and it is likely to impact all capital cities over the coming five years. According to the ABS, Australia’s population reached almost 24.5 million at the end of 2016.[3] If Infrastructure Australia’s projects come to fruition, this figure will rise to 30.5 million by 2031, requiring massive new road investment.

Opportunities for engineers are likely to rise accordingly, as the profession grows to manage both major new investment, and the massive new stock of infrastructure requiring maintenance. Engineers with suitable qualifications are will likely find new employment opportunities easy to come by over the coming years.

[3] ABS Catalogue 3101.0