Master Builders supports productivity-boosting reforms for construction industry
A new report by the Productivity Commission has found that stagnating productivity in the construction industry is slowing down national efforts to address the housing crisis.
The report found that slow and poorly co-ordinated regulatory processes, inconsistency across jurisdictions and other government policies have chilled innovation in the construction industry.
“Productivity is more than an economic buzzword. Every day we drag our heels on tackling the challenges faced in the industry, the longer we drag out the housing crisis,” Denita Wawn, chief executive of Master Builders Australia, said.
To address the housing crisis, Australian state and territory governments have agreed to implement the National Housing Accord goal of building 1.2 million homes over five years. This translated to a target of 240,000 homes per year, starting from July 2024.
However, modelling by the National Housing Supply and Affordability Council currently predicts that Australia will miss the National Housing Accord’s target by approximately 257,000 dwellings.
The Productivity Commission identified that the construction industry has seen a decline in both physical and labour productivity over the past few decades, hampering Australia’s ability to build enough houses for its growing population.
Physical productivity has fallen by 53 per cent, while labour productivity has declined by 12 per cent in the last 30 years.
Furthermore, construction costs have increased by 40 per cent in the last five years, and residential build times have increased by 80 per cent over the last 15 years.
“Just like the housing crisis, there is no silver bullet to solving woeful productivity in the industry, and it requires a coordinated and comprehensive approach by all levels of government,” Wawn said.
“The Commission has put forward sensible recommendations that should be strongly considered by governments.”
The report recommended that governments should make the planning and approvals process quicker and easier to navigate, reduce barriers to innovation in the construction sector, improve labour market flexibility and address regulations that impose unnecessarily high costs on construction.
Master Builders said it would like to see further investigation into the productivity impacts of recent industrial relations reforms regarding independent contractors and enterprise agreements.
“There is no single thing to blame for this poor productivity performance. But there are steps that governments could take to remove or ease regulatory bottlenecks and encourage innovation in an industry where the way we build homes has barely changed,” Julie Abramson, commissioner of the Productivity Commission, said.
