Master Builders Australia has called on the government to “focus on laying the foundations for economic growth” by addressing issues plaguing the construction sector.

Lagging productivity in the construction sector is exacerbating the housing crisis, according to Master Builders Australia.

Denita Wawn, CEO of Master Builders, said: “Productivity is more than a buzzword. It is the key to lowering the cost and time it takes to build homes, roads, schools and hospitals.”

“Productivity gains are the central driver of improvements in living standards and industry capacity over time.

“The next Budget should expand the size of the National Productivity Fund to include other areas of regulatory reform including occupational licensing.”

Master Builders forecasts anticipate that 1.03 million homes will be built in the five years from 1 July 2024, a shortfall of 166,000 relative to the government’s 1.2 million target.

The shortfall is being exacerbated by factors including labour shortages, high material costs, delays in planning and building approvals, slow land release, delays in critical utilities and infrastructure and increased compliance costs, according to Master Builders.

Furthermore, a recent report by the Productivity Commission found that the industry is producing half as many homes per hour worked, compared to 30 years ago.

“The building and construction industry is central to resolving the housing crisis with the residential, commercial and civil sectors all playing a role to build the communities Australians need,”

“While governments are starting to make some inroads in planning reform and social housing investment, the very businesses that will be relied upon to deliver on the 1.2 million new homes target continue to be left in the lurch.”

In its budget submission, Master Builders suggested a number of reforms designed to lift productivity, including undertaking a productivity review and providing incentives for innovation in construction.

It also urged the government to boost the construction workforce by enhancing mentoring opportunities and incentives to attract talent to the industry, alongside incentives for employers to take on apprentices.

“Master Builders supports the Government’s new apprentice incentives of $10,000 but the Budget needs to go further with incentives for employers to offset the significant cost that comes with employing and training an apprentice,” Wawn said.

The submission also noted that elevated operational costs are slamming the construction sector. According to Master Builders, October 2024 was the worst month on record for construction insolvencies, with 353 businesses entering external administration.

The industry body’s numerous other recommendations included removing unnecessary regulatory burdens, adjusting workplace relations laws and investing in sustainability research to ensure infrastructure is climate-friendly and resilient to adverse weather events.

Master Builders urged governments to address the multifaceted challenges faced by the construction industry to address the housing crisis, which has seen housing-related inflation spiral upwards.