fy17 insights booklet

Cbus Super Fund presents the 2016-17 building business report, featuring insights and trends for the Australian construction industry.

Building the

picture

02

Welcome to the second edition of Building the Big Picture, covering insights and trends for the Australian construction industry for 2016-2017.

Cbus is privileged to work amongst the diverse building, construction and allied industries in Australia as the largest national provider of superannuation services. Cbus is also the owner of Cbus Property, a large national investor in commercial and residential property developments.

With more than one million Australians employed across the industry, Cbus is the custodian of over 732,000-member superannuation accounts and has relationships with more than 108,000 businesses.

Over the last financial year, Cbus performed strongly for its members. Cbus’ investment returns last year were amongst the top five for other comparative funds, and its annual average investment return since inception, on the default investment option Growth (Cbus MySuper), sits at a staggering 9.16%.

Last year Cbus also established an Employer Experience division, which I’m pleased to head up as Executive Manager, Employers and Corporate Development. This new division is focused on Cbus’ employers, ensuring its service offering meets their needs, with product innovation keeping the fund competitive into the future.

The Business Development team at Cbus are ready and willing to discuss your superannuation needs. The team has grown, with a presence now in every state across Australia, providing local support to meet your business needs, and would be happy to meet with your business and discuss why Cbus is the right fund for you.

This is an exciting time to be part of the growing building, construction and allied industries. Equally Cbus is innovating to ensure its service offer is superior within the market and meets the needs of the diverse sector it seeks to serve.

If we can help, please get in touch with one of our Business Development team members who’s details you’ll find on page 13.

Regards,

Jarrod Coysh

Executive Manager, Employers and Corporate Development

Cbus Super Fund

Foreword

03

Industry at a glance

$339,598m

330,210

1,043,600

9.6%

$369,480m

334,000

1,090,000

9.3%

Current revenue

Current enterprises

Current employment

Current EBIT

Projected revenue 2020-21

Projected enterprises 2020-21

Projected employment 2020-21

Projected EBIT 2020-21

Source: IBISWorld May 2016

04

Australian construction business locations

The Australian construction industry is diverse, with the top four construction enterprises operating in less than 10% of the market.These major players are expected to increase their market share slightly over the next five years but overall concentration is projected to remain low.

The vast majority of construction businesses employ less than 20 people (98.6%), of which more than half are sole proprietors or partners.

Source: IBISWorld May 2016

38.9% employ less than 20 people

only 1.4% employ more than 20 people

59.7% are sole proprietors

VIC WA

QLD

NSW

Total construction by state:

26.1%

22.3%

21.4%

18.3%

4.7%

4.6%

1.4%

1.2%

WA

QLD

NSW

VIC

NT

SA

ACT

TAS

The larger states: Western Australia, Queensland, New South Wales and Victoria dominate the spend on construction and remain on a modest growth trajectory.

05

Cbus members and employers

108Kemployers

Cbus services more than

across Australia and more than

members732K

MembersEmployers

WA 12% 9.35%

QLD 6.2% 6.3%

SA 5.4% 4.63%

ACT 1.8% 1.66%

NSW 34.2% 31.32%

VIC 37.1% 33.28%

TAS 1.7% 1.62%

NT 1% 0.74%

OTHER 0.6% 11.1%

Source: Cbus Business Insights DIP (30 April 2016)

National spread of members and employers:

Is based in New South Wales or Victoria

Our average

employer

Our average

mem

ber

Male 92%

years old39Has an account balance of

Manages super contributions for staff using SuperStream approved payment systems.

Employs

4.4 active Cbus members

$46,250

Total construction by state:

06

5 Martin Place, SydneyBreakfast Point, Sydney 88 Alfred Street, Sydney Langston Place, SydneyRandwick, Sydney1 Bligh Street, Sydney

447 Collins Street, MelbourneEstate One, Melbourne 35 Spring Street, Melbourne Capel Street, North Melbourne Dryburgh Street, West Melbourne Collingwood, Melbourne171 Collins Street, Melbourne313 Spencer Street, Melbourne720 Bourke Street, MelbourneClassic, East Melbourne

1 William Street, Brisbane443 Queen Street, Brisbane 185 Wharf Street, Brisbane

140 William Street, Perth

50 Flinders Street, Adelaide

NSW

VIC

QLD

WA

SA

Cbus Property

Cbus invests in property and infrastructure assets across Australia. As a large investor in commercial and residential property developments; neighbourhood and regional shopping centres; and infrastructure assets like airports, seaports and toll roads, Cbus is a significant contributor to the Australian economy.

As a fully owned subsidiary of Cbus, property development and investment company Cbus Property invests in construction projects across Australia to deliver returns for members, creating thousands of jobs in the industry along the way.

Cbus Property strives to achieve outstanding Green Star and NABERS ratings for its buildings, including a minimum of 5 Star Design ratings on new investments and a commitment to improving sustainability of existing investments. Over 65,000 direct plus more than

55,000 indirect jobs created since 2006.

21 development properties around Australia

The Fund invests

$1.7 billion

(net assets) through Cbus Property.

Cbus Property as a whole invests around

$3.2 billion

in the building and construction industry.

*Estimated jobs since inception in 2006 to June 2016 based on completed and committed developments.

65,000JOBS

(direct)

Northern Territory

1,500

Western Australia

2,700South Australia

1,500Victoria

28,000

New South Wales

27,000

Queensland

5,000

Over

07

Cbus Property

Property profile:1 William St, BrisbaneDue for practical completion in October 2016, 1 William Street will transform the parliamentary end of George and William Streets in Brisbane and be a major catalyst project for the entire George Street Government precinct redevelopment.

The office tower occupies a prominent location in Brisbane, comprising a 43 level A Grade commercial building with premium services including 1,100sqm of retail spaces and 318 car parks. It is the new home of the Queensland Government and public service.

The building tower is angled away from the Brisbane CBD towards the interior of Queensland. The splayed roof creates a striking profile which includes a unique sky garden to the atria levels.

A collaborative central core allows extraordinary daylight and 360 degree views, with floor plates ranging from around 1,900sqm to 2,100sqm. The sky garden and laneway connections through the core provide open spaces, circulation flows and dedicated areas for quiet working.

Rating: Targeting a minimum 5.0 Star Green Star Office Design and as built Rating (V3), and a 5.0 Star NABERS Energy Rating.

Ownership: 50% by Cbus Property and 50% by ISPT.

07

Building visually ‘lifted’ at ground level so it appears to float over a network of pedestrian and view corridors, connecting the site to its surroundings.

Sky gardens and roof terracing

500 bike parking spaces and 550 lockers

08

Industry forecasts

Residential forecasts Residential building work done is reaching an historic high point thanks to historically low interest rates. It increased to $82 billion dollars last year – a record level of building work done.

Non-residential forecasts

Retail/wholesale trade This large and volatile segment had a drop in spending by 2.3% in 2014-15 after a surge of 19% the previous year. The outlook is expected to continue to bounce around. This is factored into projections as a 4% increase in 2015-16 followed by 2% growth in 2017-18, but will still result in around $6 billion of activity.

New houses Approvals for new houses has now peaked, but a large construction pipeline still exists with work done this year expected to rise to $32 billion. Growth will moderate over the next two years and work is expected to decline from 2018-20.

Apartments and townhouses A rapidly growing sector with 60% growth over the past three years is now slowing or negative in some states like Victoria. Contraction in activity is foreshadowed from 2016-17 dropping by 10% in 2018-19 and 4% in 2019-20.

Offices Office construction surged by 8.8% last year against expectations. Some office space on the edge of major cities and outside of the CBD is being withdrawn for conversion to mixed use retail and residential, plus other services including health and education (especially international education).

Source: ACIF 2016

Net growth in employment is expected to continue until 2016-17, lifting construction industry employment to 1.07 million jobs.

09

What’s trending in construction

3D printing Digital manufacturing is sure to challenge the boundaries of the construction industry. Advances in the technology has already seen super-sized 3D printers use concrete-like materials to manufacture large structural components on demand.

As the technology evolves it has the potential to achieve a level of speed, accuracy and flexibility that would not be possible within the constraints of traditional methods of construction.

Prefabricated construction (Pre-fab) Pre-fab is gaining momentum and creating efficiencies in construction. With parts of the building process undertaken offsite in a controlled environment like a factory, there can be greater building precision in the outputs and minimal risk.

Pre-fab can significantly increase productivity to reduce the overall length of a construction project with Pre-fab happening in parallel to onsite activities, leading to time and cost savings.

Building Information Modelling (BIM) BIM technology is already widely adopted across the industry as an end-to-end process for collecting and managing information on a construction project from planning through to design and build.

BIM uses a set of related data such as manuals, specifications and photos to create a 3D digital model of a building or structure. This can be accessed and shared across multiple stakeholders to provide input in real time, speeding up collaboration and decision making.

10

Why Cbus?

More than 732,000 individuals working in the construction, building and allied industries of Australia are with Cbus to meet their superannuation, insurance and investment needs as a member.

For workers, it’s the fact that Cbus invests back into the industry via Cbus Property that really sets this super fund apart from its peers.

Easy administration

Free access to SuperStream approved payment systems

Reliable service and support nationwide

Cbus employer app

Super advice & education for employees

Over 108,000 businesses in the construction, building and allied industries already use Cbus as their super supplier.

It’s the national scale and strong technology platform that distinguishes Cbus from other funds.

Member benefits

Employer benefits

Competitive fees

Advice services

Strong long-term returns

Cbus member app

Insurance cover

11

Five key success factors

Understanding the key factors of success is critical to ensuring your business remains at the top of its game.

IBISWorld identifies 250 “Key success factors” for a business. The most important for businesses in the building and construction industry are:

Be flexible according to market demand – being able to upscale or downsize your labour force according to market demand is crucial. This will allow you to match the short-term cycles of the market with high-quality, productive workers.

Building relationships – making sure you have partnerships and alliances with building and construction companies is vital in the services segment.

Operator expertise – it is essential to have excellent project management skills, time management, financial planning and labour management skills as a business.

Great reputation – your reputation is only as good as your last job, which is why delivering on time, with quality and cost expectations met, will give access to repeat business and new markets.

Winning tenders – successful businesses have a track record of winning work through tenders, giving them a predictable pipeline and adequate profitability and cashflow.

Source: IBISWorld 2016

12

Business and superannuation

Pay super

The usual super rate payable to employees is 9.5% of ordinary time earnings, and it must be paid for employees from the day they start work.

Super does not have to be paid for:

• employees who earn less than $450 (before tax) per calendar month

• employees who are under 18 years old, or work 30 hours or less per week.

Choose a default fund

All businesses can select a default super fund to be the super fund best suited to take care of the superannuation needs of its employees, especially those who elect not to choose their own super fund.

Keep records

Businesses must keep the following records in English for five years:

• proof that the Standard Choice Form has been provided to all eligible employees

• documents issued by the super fund showing super contributions have been made

• records confirming the nominated default super fund is a complying fund.

SuperStream

SuperStream is a Government reform to improve the efficiency of super payment systems for businesses. All businesses must make super contributions online by submitting data and payments electronically on a ‘SuperStream’ approved system.

Cbus offers two options at no cost:

• Employer SuperSite

• Cbus Clearing House.

Tax File Numbers (TFN)

When an employee gives their TFN to their employer, by law the employer must provide it to the employee’s super fund within 14 days. If a TFN is not provided, the employee cannot make additional personal contributions and may pay more tax on their super.

Give choice

When a new employee is eligible to choose their own super fund, employers must give them a Standard Choice Form within 28 days from their start date. If the new employee doesn’t elect to choose a specific super fund, employers must pay their super contributions into the nominated ‘default’ super fund.

All Australian businesses have responsibilities when it comes to superannuation. Here are some of the key super obligations for employers.

13Read the Cbus Employer Handbook and other relevant documents to decide whether Cbus is right for you. Call 1300 361 784 or visit www.cbussuper.com.au for a copy. Cbus’ Trustee: United Super Pty Ltd ABN 46 006 261 623 AFSL 233792 Cbus ABN 75 493 363 262

Build a super future with CbusTogether we can plan the superannuation transition that works best for your company and we will support you every step of the way.

Talk to your local Cbus representative about how Cbus can add value to your business and help build a super future for both your business, and the people who work within it.

1300 361 784 cbussuper.com.au [email protected]

Tim Waterson, NSW/ACT0413 636 75002 8027 [email protected]

Glen Halkerston, QLD0447 113 28207 3638 [email protected]

James Moore, WA0437 688 53808 6430 [email protected]

Scott LaFerlita, VIC/SA/TAS0409 934 67403 9910 [email protected]

1212.2 08/16 ISS2

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