Reforming inefficient taxes, embracing innovation and overhauling contracting and procurement practices are among a range of areas which must be addressed if the construction industry in Queensland is to unleash its full potential over coming years and decades, a key industry leader in that state says.
As government and industry leaders in his state work toward a 30-year blueprint for the sector, Master Builders Association of Queensland deputy executive director Paul Bidwell said the industry faces a number of long-term challenges.
On the residential side, he says recent momentum in the state’s southeast cannot be taken for granted, and the challenge was to make housing more affordable by driving down costs and shifting demand from existing housing toward new housing.
Bidwell says taxes and charges make up 14 to 15 per cent of the cost of new residential building on infill sites and 17 to 22 per cent on greenfield sites. He would like to see a serious conversation about stamp duty on new housing and whether or not it could be abolished.
Failing that, he would like to see the current ‘double dip’ situation in which developers pay stamp duty on vacant land and eventual home buyers subsequently pay duty on the purchase of houses which are built on that land be addressed.
Beyond that, he says many builders are looking at ways to improve their systems and better manage projects from start to finish, but is frustrated with the slow take-up of innovative building methods such as prefabrication – a phenomenon he feels can be put down not only to the conservative nature of the industry but also to the fact that around 85 per cent of licensed contractors in that segment of the industry turn over less than half a million dollars annually and lack the scale needed to fully benefit from new innovations.
“There has been some research work with regard to offsite manufacturing,” Bidwell said. “But we haven’t had any traction. There is a view that we will shift toward more prefabricated building but it hasn’t happened yet.”
“Is it going to happen? We don’t get a strong sense, say from the UK, that it’s happening. They talk about it in Europe, I’m not sure why – I think it’s to do with economy of scale. And given the structure of our industry, it’s certainly not happening now.”
On the commercial side, meanwhile, Bidwell applauded the recent asset divesture program announced in the state budget, on the proviso and to the extent that proceeds are used to fund infrastructure.
He says, however, that current public infrastructure projects are somewhat sporadic and that the industry would like to see a more reliable and consistent pipeline of public work.
While innovation and prefabrication are just as imperative in the commercial sector as they are for housing, Bidwell says the productivity picture on commercial sites extends to considerations such as industrial relations and information tools such as Building Information Modelling (BIM) and collaboration using cloud based technologies.
With regard to industrial relations, he notes that union sites typically involve costs which are around 10 per cent higher than non-union ones.
Bidwell’s comments follow a May 29 forum in which 75 industry representatives met with state government officials to start work on a blueprint which both parties hope will deliver a 30-year plan for the sector’s future.
They also follow the replacement of the former Building Services Authority with the new Queensland Building and Construction Commission as part of a 10-point plan to reform industry regulation as well as a number of smaller changes in areas such as planning and infrastructure charges designed to reduce red tape.
Asked about the reform process so far, Bidwell said the QBCC reforms are progressing well and other changes to reduce the compliance burden on builders were welcome. The removal of a requirement for rainwater tanks and greenhouse efficient hot water systems, for example, has shaved around $10,000 off the cost of a new home.
Meanwhile, a pilot program for a new dispute resolution model which will start on July 1 will see disputed funds placed in trust accounts and will allow the QBCC to become involved in disputes before the end of a contract. That program, Bidwell says, will provide greater certainty to all parties and speed up dispute resolutions.
“From our experience, it’s very positive. We’ve still got some things that we are working on ... a lot of the QBCC work is ongoing,” he said. “But all the signs are positive and we expect to see more changes in place by the end of the year.”