FOR PRESS: PM N! q. 27/ 1971
NON-DWELLING BUILDING-CONSTRUCTION
Statement by te Prime Minister Mr. John Gorton
The Treasurer and I met this morning for discussions about the growth
in the private non-dwelling building construction area which, as I indicated in my
address to the nation on 29th January last, is one of the matters we have under
examination in our attack on threatening inflationary growth.
The meeting was attended by Mr. 1. K. Campbell., Chief Executive, Hooker
Corporation Ltd., Sydney; Mr. W. M. Leavey, Managing Director, Lend Lease
Corporation Ltd., Sydney; Mr. R. C. T. Baker, Managing Director, Mainline Corporation
Ltd., Sydney; Mr. P. Strasser, Managing Director, Parkes Developments Pty. Ltd.,
Sydney; Mr. E. Graf, Managing Director, Stocks and Holdings Ltd., Sydney;
Mr. T. C. Whittle, Chairman and Managing Director, Whittle C. Holdings Ltd.,
Canberra, and Mr. J. D. Lewis, Managing Director, Concrete Constructions Pty. Ltd.,
Sydney. W~ e were informed that the value of office blocks on which construction
commenced in 1969/ 70 was $ 263 million.
This very high rate of commencement was still in evidence in the quarter
ended 30 September 1970 the figures for which even indicated a slight increase, namely
an annual rate of $ 271 million.
Office block construction of this value, we were advised this morning,
is capable of producing a gross area of office space of approximately 14 million sq. it.
Reduced to a lettable area this would be approximately 11. 2 million sq. ft.
Those representatives of developers and builders with whom we talked this
morning said that this area, 11. 2 million sq. ft., is significantly greater t ha n the annual
demand for new office space throughout Australia, and construction cannot continue
at this rate if a serious over supply situation is to be avoided. We were also told that
a responsible re-assessment of the estimated value of building construction commencements
in 1971 suggests that the lettable areas arising from these commencements in
1971 will be approximately 8 million sq. ft.
It was confidently felt by the developers and builders present this morning,
who would be in part responsible for these commencements, that this figure of
approximately 8 million sq. ft. of lettable space vo uld have to be significantly reduced
becau of the apparent levelling off which had already occurred in the market demnand
for office space. They said that their revised estimates cor~ irmed a most certain
over supply position if the rate of commencements indicated in 1970 continued into
1971 and 1972 / 2
In view of this advice we concluded that no direct action is required by
the Government at this time to reduce the rate of commencements of new office
buildings. However, the Treasurer and I agreed to arrange regular quarterly
meetings between the Treasury and representatives of those with whom we conferred
this morning so that the matter can be kept under examination. After the first
of these meetings, when the estimated value of new buildings commenced in the
December quarter 1970 become available, the Government will review again the
need for further action by it in this area, and will be prepared to take action if
the forecasts given to us this morning turn out to be not fulfilled.
CANBERRA March 1971