‘Out-of-control’ building wages add $1bn to projects

Out-of-control wage rises for construction workers in Queensland threaten funding for hospitals, an industry report says.

Wage rises for construction workers in Queensland are “out of control” and will add more than $1.07 billion to the cost of the state’s infrastructure projects over the next four years, threatening funding for hospitals and schools, an industry report claims.

Above-inflation wage rises for builders — equal to the cost of building 15 schools — have resulted from collective agreements struck by builders and the Construction Forestry Mining and Energy Union, says the report by Deloitte Access Economics for the Master Builders Association published today.

The association warned yesterday that companies were being forced to sign enterprise bargaining agreements under threat of unlawful industrial action.

“Excess wage growth under the construction EBAs in Queensland compared with broader wage growth in the construction sector” will add 11.9 per cent a year to the government’s $10.7bn infrastructure budget, or $279 million a year from now to 2020, or $1.07bn over four years, the research states.

“In turn, the cost of doing business and the cost of living in Queensland also increase,” it says.

About $550 million of that $1.07bn could have been spent on hospital upgrades and expansions over the period, the report added.

The Queensland CFMEU collective agreement, finalised under the Palaszczuk government in April, gives workers a 5 per cent pay rise a year over five years. The rises and other allowances were not tied to productivity gains.

The agreement was signed by dozens of major contractors, including Brookfield Multiplex and Hutchison builders.

MBA construction policy director Corlia Roos said wages under the CFMEU EBA were “out of control because employers were negotiating with both hands tied behind their backs”.

“Despite the record high wages, there is now less flexibility, less productivity ... than ever before,” Ms Roos said. “Instead, we have more disputes, more illegal strikes and more unlawful behaviour on our construction sites.”

She called for the reinstatement of the Australian Building and Construction Commission.

Figures show Queensland’s construction industry made more applications to stop illegal industrial action than any other state

A spokesman for the state’s Industrial Relations Minister Grace Grace said industrial relations matters fell within the federal jurisdiction. “Wage negotiations in the private sector are not a matter for state governments to interfere in,” he said.

The MBA report follows concerns about CFMEU stop-work tactics on Commonwealth Games construction sites.

In November 2015, according to the latest Deloitte report, a carpenter earned $148,334 in Queensland and an entry-level labourer earned $133,359 for a 50- hour week, almost double the award wages of $74,996 and $70,253 respectively.

In similar modelling published last month by MBA Victoria, builders struck a deal for 5 per cent wage rises over three years.

However, the CFMEU commissioned research by University of Sydney economist Phillip Toner that rejected the wage comparisons in Deloitte’s Victorian research. Dr Toner found them based on “exaggerations” and “outlandish assumptions”.