Defence spending in the NT is expected to energise business for years

NT Master Builders have urged Territory businesses to enjoy the seasonal break ahead of a busy few years developing Defence projects. Read chief executive Ben Carter’s column.

Business people should enjoy a well earned break this Christmas and be ready to ramp up their efforts to take advantage of the $6.2bn opportunities coming their way in the New Year.

Forecast spending on infrastructure by the Australian and US Departments of Defence presents a golden opportunity to Territory business, particularly those in the construction supply chain to grow their success.

Master Builders NT chief executive Ben Carter

The opportunity is not pie in the sky.

Over the past six years the involvement of local firms in delivering defence projects has grown by 40 per cent.

According to the Industry Capability Network NT, that means 70 per cent of all the money spent on defence projects in the Territory since 2017 has gone to Territory firms.

This is testament to the overwhelming success of the long running procurement pilot project established by the Department of Defence which has seen the federal government benefiting from the capability of local firms delivering defence projects not just in the Territory but around the country.

Tens of millions have been spent developing a new fuel hub at Larrakeyah Barracks. Picture: Che Chorley

Master Builders’ advocacy underpinned the setting up of the local content procurement pilot with economic modelling commissioned by Master Builders providing a strong evidence base for its adoption.

Now, our Billion Dollar Partnership Report shows that the opportunity for local businesses from working on defence projects is well and truly amplified.

What does the opportunity look like?

There are three years between 2023-24 and 2025-26 when dollars being spent on defence infrastructure in the Territory is expected to exceed $1bn, with approximately $1.3bn being spent in 2024-25.

On the ground at Larrakeyah Barracks, Darwin.

To break it down even further, the top three largest work package categories over the report’s horizon until the end of 2026-27 for vertical construction are forecast to be $526 million for building and construction, $329 million for internal fit-out and $263 million for furniture and fixtures.

The top work packages for horizontal construction (civil works) are expected to be $943 million for aviation civil works, $937 million for utility infrastructure and $430 million for ammunition civil works.

This is a huge good news story for Territory business and households. A strong construction industry is a major driver of a strong economy, and the Territory economy is forecast to grow by a massive five per cent over the next three years.

Robertson Barracks’ accommodation upgrade is expected to begin this year.

When there is a strong construction sector, the wider economy also reaps the benefits.

The Master Builders commissioned research shows that in 2024-25 the construction of defence infrastructure will result in the property, manufacturing, health, retail and professional sectors benefiting by $133 million, $63 million, $40 million, $38 million and $34 million respectively.

However, while there is no escaping the reality that setting up your business to work on Defence projects comes with its challenges, seizing the opportunity comes with big rewards. There are many small Territory firms showing the way that have successfully grown their businesses as defence construction contractors.

An $8m joint US-Australian defence driver training range was completed at Robertson Barracks by AKJ in April 2023.

Master Builders NT is ready to assist others.

Alongside the opportunities documented by the Billion Dollar Partnership Report, there remain very substantial challenges that demand urgent solutions.

The Territory and federal governments must work together to tackle the chronic shortage of housing, accommodation, and workers.

Failure to do so will undermine the ability of the Territory government to consolidate the economic gains of the investment in Defence infrastructure in the Top End and the federal government’s ability to sustain its defence objectives in northern Australia.

In 2024 Master Builders NT will be working hard to make sure that these issues remain front of mind for Territory and federal politicians from both the major parties even as we enter election mode, potentially in both jurisdictions.

Bear Claw

Ben Hunter at Marlow Lagoon business Bear Claw

* Started with eight employees six years ago and now directly employs 100 people in addition to local subcontractors.

* Increased turnover from $1m to over than $30m over six years as defence construction contractor.

* Grown from concrete services businesses to include civil construction and precast.

* Invested approximately $6m in plant and equipment.

AKJ Services

Antal Reti, Keith Risk and Jessie Risk from AKJ Services

* Started with four employees five years ago and now directly employs 70 people in addition to local subcontractors.

* Increased turnover from defence work from $1m four years ago to more than $20m.

* Work as head contractors and subcontractors and across civil and vertical construction.