Construct model to lift the industry

A tougher line in driving industry reform could spark billions of dollars in project savings and help spur economic recovery, says industry body.

Top industry leaders say ‘we have an inherently broken model that needs to be fixed’. Picture: David Crosling

The powerful construction industry is calling for the federal government to take a tougher line in driving industry reform, saying this could spark billions of dollars in project savings and help spur economic recovery.

The industry has been blighted by cost overruns and long-running disputes on mega-projects in major cities that have dragged on the productivity of whole industry sectors.

Disputes such as the construction of Victoria’s $6.7bn West Gate Tunnel and the Lendlease-led Melbourne Metro Rail consortium, which has been locked in talks about the $12bn project, have blighted the sector.

The Australian Constructors Association has laid out plans to bolster the industry, including federal agency Infrastructure Australia taking on a more hands-on role in ensuring projects were delivered efficiently.

The ACA represents the country’s major construction contractors, including Multiplex, Probuild, Lendlease, John Holland and CPB. The industry employs about one in 10 workers and has been billed as critical to a recovery.

ACA chief executive Jon Davies said the industry was being called on to lead Australia out of recession, through the multiplier of stimulus spending, but he warned “it’s not in a good state to do that”.

“We have the situation where we have an inherently broken model that needs to be fixed,” Mr Davies said. The move comes as the industry prepares for “significantly increased” stimulus spending.

On Mr Davies’s account, the pandemic presents a “once-in-a-generation” opportunity for reform and to try to get “more bang for our buck”.

He warned that as governments became more “fiscally constrained”, builders would have to become more efficient.

The group is pushing to forge a more sustainable procurement model in the wake of hefty cost overruns.

“There is now a real impetus to fix the underlying issues and stretch taxpayers’ dollars further on job-creating projects,” Mr Davies said.

Mr Davies is urging federal intervention to lift lagging levels of productivity growth in the construction industry compared with other sectors.

“We are calling for the federal government to take a more active role in this,” he said.

“There is a concern that the industry doesn’t have the capability, capacity and skills to deliver the stimulus spending that they have planned. So they have asked Infrastructure Australia, particularly, to look into this and to see what can be done.”

Even halving the productivity gap between construction and other industries could net a $10bn gain, resulting in significantly more jobs.