Wages up, productivity down: New policy to whack construction sector

Construction industry wages will increase by as much as 30 per cent in Queensland over the next five years while productivity will simultaneously plummet.

Brisbane construction activity could plummet. (File picture)

Construction industry wages will increase by as much as 30 per cent in Queensland over the next five years while productivity will simultaneously plummet – both as a direct result of a new state government policy, a new major report into the industry reveals.

The 2023 Queensland Major Projects Pipeline Report – complied by the Queensland Major Contractors Association, Construction Skills Queensland and Oxford Economics – has revealed the state’s five-year pipeline of projects has rocketed to a record $92bn.

Highlighting the “complexities” the projects will bring to the sector, the report was also scathing of the widespreading impact of the state government’s controversial Best Practice Industry Conditions policy.

The report said the policy – spearheaded by Public Works Minister Mick de Brenni and dubbed by industry insiders as the CFMEU tax – was having a massive impact on the construction sector.

The report stated: “With the Queensland government’s intrusion into Industrial Relations arrangements via the (BPIC) policy, construction wages are set to increase by 20-30 per cent.

“In contrast, productivity is expected to decrease by a similar amount if the conditions included in BPIC are implemented. This will result in a substantial reduction in the value for money equation.”

The impact of the policy on the “positive working relationship” between employers, employees and unions a result of the policy was also highlighted.

“The introduction of BPIC policy by the Queensland government has disrupted this harmonious working relationship,” the report stated.

“The BPIC policy and ‘guidance information’ has set a new ‘high floor’ for construction rates, extending across the entire sector during times where companies are competing for labour.

“Additionally, the BPIC policy outlines the conditions upon which work will be undertaken – conditions that have already impacted productivity – with projected times for work being affected a BPIC does not benefit productivity, effectively widening the gap between wage and productivity growth.

“It has resulted in the industry delivering less for more money, over longer time periods and has removed the workable nexus between employees, employers and their representatives.”

Queensland Major Contractors Association chief executive Andrew Chapman said government and industry had a dual role to play in “getting the settings right to deliver the pipeline efficiently and effectively”.

“At the present time, there is work to do to address this,” he said.

“The public sector continues to play a significant role, funding over half of the total pipeline activity and while we are seeing increased investment from the private sector in renewables, energy and resources projects, we still believe more can be done in the planning and approval process to boost private sector investment in Queensland further.”

Originally published as Wages up, productivity down: New policy to whack construction sector