Australia can derive billions of dollars’ worth of greater value on infrastructure if it pursues better practices on infrastructure procurement, a Commonwealth Government inquiry has been told.

In a joint submission to the Inquiry into Procurement Practices for Government Funded Infrastructure being held by the House of Representatives Standing Committee on Infrastructure, Transport and Cities, fourteen industry groups have called for urgent reforms to improve industry culture and capability and to ensure that commercial frameworks are equitable and serve to align the interests of all parties.

The parties – who represent contractors, engineers, quantity surveyors and many others (see below) – say the infrastructure industry in Australia faces challenges across several areas:

These include:

• A high level of insolvency relative to other industries
• Sluggish productivity growth which has trailed other significant industries to the tune of 25 percent over the past 30 years
• A stubbornly low rate of female participation, which has remained stuck at about 12 percent of the overall construction workforce for decades
• Mental health challenges with workers in the sector six times more likely to die from suicide than to die from a workplace injury.

Many of the aforementioned issues are exacerbating challenges associated with the ongoing sustainability of the infrastructure sector and with attracting and retaining sufficient people to deliver upon a massive pipeline of future work.

Moreover, the groups say action to address challenges could deliver significant benefits.

“By just halving the productivity gap between the infrastructure industry and other major industries (see above), an extra $15 billion of infrastructure every year could be delivered for the same expenditure and create significant additional employment,” the group said.

“This will only be achieved by addressing issues of industry sustainability through reform of how projects are procured and delivered by both Federal, State and Territory Governments.

“Whilst a number of signatories to this letter will be making detailed submissions to the Inquiry, with respect to the key issues in the Terms of Reference (see below) that impact on the businesses they represent, we all agree on the urgent need for reforms that drive an improved industry culture, create increased capacity/capability, and ensure that project commercial frameworks are equitable and align the interests of all parties.”

The inquiry was established to look at procurement practices for government-funded infrastructure.

It is taking place at a time when the Commonwealth has a $110 billion pipeline of future infrastructure projects in which it is investing.

Under its terms of reference, the Committee is inquiring into procurement practices for government-funded infrastructure and the potential to enhance the sovereign capability of the Australian industry, with particular reference to:

• existing infrastructure pipelines and related supply requirements
• challenges and opportunities with existing procurement practices, including frameworks, standards, rules and norms, and intersections between tiers of government and the private sector
• challenges and opportunities to enhance Australia’s sovereign industry capability, including for Australian owned businesses
• lessons from other Australian jurisdictions and other portfolio areas, including Defence’s industry capability approaches
• how Australia can balance its international obligations with maximising local content, opportunities, including by leveraging foreign direct investment
• alternative procurement models, including reference to international examples:
• other relevant matters.

All up, the inquiry has received a total of 56 submissions.

The fourteen organisations referred to above include Australian Constructors Association, Ai Group, Australasian Railway Association, Australian Institute of Quantity Surveyors, Australian Owned Contractors, BuildingSMART Australasia, Consult Australia, Engineers Australia, Infrastructure Partnerships Australia, Infrastructure Sustainability Council of Australia, Lean Construction Australia and New Zealand, National Association of Women in Construction, Queensland Major Contractors Association and Roads Australia.

The groups stress the importance of collaboration across all levels of government to improve practices.

“Reform of this magnitude will only happen through greater collaboration across all levels of government and would benefit from greater leadership taken at the Federal level in consultation with industry,” the groups say.

“We acknowledge the first step taken by the Federal Parliament at a national level in asking the Committee to undertake this inquiry, but time is of the essence. We call on each member of the Federal Parliament to ensure that this inquiry is quickly followed by meaningful actions that create a more sustainable infrastructure industry for the benefit of all Australians.”

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