Productivity
PRODUCTIVITY AN ALBATROSS AROUND INDUSTRY’S NECK
Source: Australian Constructors Association
Author: Taryn Paris Urban Developer
“We’re down to an average of three days a week onsite, I’m tearing my hair out.”
2024 with the level remaining just above the 2015–2019 average. “With the end of the Covid productivity bubble, labour productivity seems to have reverted to the stagnation we’ve seen for most of the past decade,” Robson said. Workforce follows the public money Australian Constructors Association chief executive Jon Davies says that significant real wage rises and stagnant productivity is forcing up construction costs, which is directly affecting the viability of projects big and small. “The disparity of wages between government and private sector projects has left the private sector unable to compete,” Davies says. “We can’t afford to continue with business as usual; project planning needs to be improved and construction costs need to be lowered to ensure the country can afford the infrastructure it needs.” Construction industry wage and productivity growth Arcadis executive director of cost and commercial management Matthew Mackey says the current industrial relations landscape is also weighing down the industry. “Amid the post-pandemic recovery, Australia’s construction sector continues to grapple with political turbulence and industrial strife, escalating costs and stifling productivity, which is threatening the very viability of projects and businesses,” Mackey says. “Risk allocations including those associated with the changing industrial relations environment are significant impediments to business viability.” Cost of construction ‘only going up’ The cost of construction looks like it will continue its upward trajectory with the CFMEU Victoria inking a deal for a 21 per cent pay rise in the next four years, while its NSW counterpart has one-
That was the lament of one developer, who did not wish to be identified, while many others just like them acknowledge the odds are stacked against them at the moment. Planning risk, productivity challenges and construction costs are proving a major stumbling block for many at the coal face. And these challenges are exacerbated by the nation’s $230-billion infrastructure pipeline and its ambitious 1.2 million houses national accord, all to be delivered in the next five years. While Infrastructure Australia’s 2023 Infrastructure Market Capacity report notes governments had taken actions to smooth the five-year pipeline, some significant capacity constraints remain, namely, skills shortages, non-labour supply challenges and the nation’s stagnating productivity. Infrastructure Australia forecast a deficit of 131,000 full-time trades and labour workers this year, and says that deficit is growing at its fastest pace, and labour cost escalations are rampant. But there is precious little developers can do to address that albatross around the construction industry’s neck. The Productivity Commission’s latest productivity bulletin paints a fairly dire picture. It shows labour productivity stagnated in the March quarter across the board, with the construction industry going backwards. Productivity Commission data shows construction industry productivity fell 1.8 per cent last year—and notes businesses are working harder for less output. This presents a major challenge for a nation facing a housing crisis and an uphill battle to accommodate people, while housing starts are not keeping pace with population growth. Productivity Commission deputy chair Dr Alex Robson said there was no labour productivity growth during the 12 months to March,
12 – July / August 2024
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