Over the past two decades, Australia’s building industry has fallen into a decline which has led to a slew of damming reports and reviews on its conduct and performance.
The overall industry has been questioned from the top management down the scale to the labour, fixed price contracts, and the ever-increasing reliance on goods and services from China.
The recent election saw neither side focusing on building. Only after did elected Prime Minister Anthony Albanese call for the Jobs and Skills Sumi which was held in early September. In the meantime, many builders have succumbed to financial failure and inflation has taken off like a rocket.
The Summit: what did it produce?
It appears our Prime Minister was joined by mainly politicians and union representatives. Although major industry captains were present, their voices were not heard – apparently for fear of clashing with unions.
When asked, Albanese said the summit was a huge success as it was constructive and all came together in a spirit of goodwill.
At this stage, there appears to be a lot of rhetoric but little detail. Time will tell whether or not more detail will eventuate.
The announcement of 180,000 fee free TAFE positions sounds impressive. So too does the new legislation to broaden options for multi-employer bargaining despite business groups having concerns this path may lead to industry-wide strike action.
Albanese opened the summit by pledging a $1.1 billion training blitz in 2023 to assist with the workforce shortages while Tony Burke has amended the Fair Work Act to make it simpler, fairer and more flexible.
All sounds good and may deliver positive outcomes over the longer term. But none of the actions deal with timely and immediate matters.
We are facing serious times amid rising inflation, higher interest rates, and $1 trillion of national debt. Coupled together with a debate over wages and the tightest labour market on record, things can only escalate in the short term.
(Note: the official document outcome of the link can be seen here.)
Adding to this, the National Skills Commission annual update of the Skills Priority List released earlier this year shows a near doubling of occupations which are in a skills shortage from 153 in 2021 to 286 in 2022.
The heated industry over the past few years has created opportunities for many builders. As a result, a significant number have taken on too much work that has either been either delivered late and/or has reflected poor quality and contained serious defects. COVID has seen supply compromised as well as unprecedented material price escalation. This has had a direct and immediate impact on fixed price contracts.
While many builders have endeavoured to negotiate better outcomes with their clients, most consumers have been locked into their original budget and have been steadfast on the fact they signed a contract in good faith and want their project completed for the contracted price.
It appears we may have to wait for up to two years before significant benefits flow from the summit. This is the period that is of most concern for the building industry.
Secondly, there is the question of quotas whereby the latest being any company who tenders for government building work to be eligible must have 40 percent of women on the payroll.
This is a staggering figure considering that we haven’t reached 12 percent of women in the building industry at this time. To reach 40 percent will take decades.
Understandably, many support greater gender diversity in the workforce. Indeed, greater levels of female participation would deliver significant industry benefits. These include not only an expanded pool of available labour but also a more courteous and respectful manner on site.
Nevertheless, it should be acknowledged the greater physical capacity of men means that there will always be a tendency toward males in this industry – especially in roles that require highly physical tasks.
To work effectively, moreover, greater gender balance should be implemented in a considered and measured way.
While supply and cost escalation has eased to an extent, fixed price contracts remain under pressure and many builders suggest they are on the brink of failure. The period post-Christmas 2022 may see many financial failures throughout our industry.
There has been much speculation throughout that Australia may not be able to avoid a recession in light of inflation and rising interest rates on the local level and the Russia/Ukraine war. America is in a similar situation.
Then we have the budget detail offering saviour for the building industry as we are going to build one million homes!!!
One million homes to be delivered from 2024 over the next five years under arrangements between government, private enterprise, and the building industry!! We all know how well such arrangements have worked in the past.
Secondly such arrangements always appear to only support a few large builders within our industry. Despite representing the vast majority of the building registrar, smaller builders are left to fend for themselves.
Is this a pie in the sky initiative or is it genuine? With the Commonwealth contribution at this time appearing to be only $3,500.00 per house, this unfortunately leads us to believe it may never happen. Time will tell.
We have a precarious situation throughout the world that has not existed in the past. This makes it difficult to reliably predict an outcome. However, nothing alters the fact that we are facing uncharted waters.
We are an island nation and are often insulated from world events. In this case, however, we are unlikely to be able to avoid the obvious world issues not to mention our own domestic issues.
Enjoying Sourceable articles? Subscribe for Free and receive daily updates of all articles which are published on our site
Want to grow your sales, reach more new clients and expand your client base across Australia’s design and construction sector?
Advertise on Sourceable and have your business seen by the thousands of architects, engineers, builders/construction contractors, subcontractors/trade contractors, property developers and building industry suppliers who read our stories across the civil, commercial and residential construction sector