Innovation: It’s Not just the Hardware that Matters

Tuesday, January 5th, 2016
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Stephen is an 18-year-old with a background of family violence and abuse, homelessness, drug abuse and crime.

Without the opportunity to work provided through Brookfield Multiplex’s Linking Industry with the Needs of the Community (LINC) program, his future would have been bleak, filled with little hope or prospect of long-term secure employment.

The innovative program is designed to return value to the communities in which it builds by aligning training and employment opportunities and local business engagement with local government priorities. It involves collaboration between Brookfield Multiplex, its clients and a range of not-for-profit service providers such as BoysTown Enterprises.

The program gives young disadvantaged and unemployed people like Stephen a chance to get work experience, to build self-confidence and to restart their lives, helping the construction sector leave a positive living legacy in the communities in which they engage.

LINC is just one of many inspiring social innovations which are happening in the construction industry. For example, Thiess has established partnerships with social enterprises in their supply chain which provide land care, landscaping, mowing and garden maintenance services across its projects.

The reinvented Liberal government, under the leadership of Malcolm Turnbull, is on the road spruiking the benefits of innovation. Malcolm Turnbull’s victory speech was peppered with references to the need for Australia to embrace disruptive innovation and build an agile and smart economy. Certainly, innovation is crucial to our national prosperity, and in many ways we are at serious risk of falling behind in the innovation stakes. However, most of the talk and resources are being aimed at technical innovation as a future driver of economic growth, which is not surprising given Malcolm Turnbull’s personal interest and previous portfolios in the area.

Furthermore, the way in which international innovation league tables are constructed focusses on technological innovations, so it is also in the government’s political interests to improve our performance in this area.

However, technical innovation, while exciting, is only part of the story. We must not forget that as well as facing economic challenges, Australia is also facing many social challenges which are equally, if not more important to economic prosperity and indeed, national stability an security. This is where more social innovation and entrepreneurship is needed, and the construction industry should be at the forefront of addressing these critical future social challenges.

Take for example youth unemployment, which is a serious enduring problem in Australia – 13.9 per cent of 15-to-24-year-olds in the labour market are unemployed and another 17.4 per cent are underemployed. Indigenous youngsters suffer particularly badly, and in some regional areas, youth unemployment is as high as 21 per cent and under employment as high as 60 per cent. Nationally, this represents about around one in three young people in the labour market, the highest rate since statistics were first available in 1978. This is a tragic waste of human hope, talent and resources.

The construction industry can do more than most to help alleviate this insidious social problem. Not only does it directly employ about nine per cent of Australia’s labour force, but it is Australia’s largest employer of young people with 43 per cent of employees being aged 15 to 23 compared to 38 per cent across all other sectors.

The multiplier effect of construction activities into the wider economy are also significant; the Australian Bureau of Statistics states that for every $1 million spent on construction output, a possible $2.9 million in output would be generated in the wider economy, giving rise to nine jobs in the construction industry and 37 jobs elsewhere.

If one takes into account the high attrition rate of apprentices and trainees the increasing demand by employers to address skill shortages by importing labour from overseas and the general lack of innovation around employment options including the opportunity presented through social enterprises it must be concluded that the construction industry has huge untapped potential.

Apart from any moral imperative, there is a commercial imperative for the construction industry to engage with the crisis of youth unemployment because as welfare budgets become increasingly strained, governments at both state and Commonwealth levels are looking for new innovative solutions to meeting community needs. For example, new initiatives such as Commonwealth and State Governments Indigenous Procurement Policies (2015) are increasingly requiring firms tendering for public contracts to demonstrate that they can contribute jobs, training and Indigenous economic development opportunities into local economies as well as deliver efficient buildings and infrastructure.

As Australia’s working-age population decreases from 4.5 million today to 2.7 million by 2054-55, Australia cannot afford for a large proportion of its youth to be unemployed. There is a huge amount of research which shows that unemployment leaves long-lasting scarring effects, adversely affecting lifetime income, long-term employability, social participation, mental health and well-being and housing stability. The wider social and health impacts manifest in higher rates of family dislocation, crime, drug and alcohol addiction and suicide.

The economic costs of high youth unemployment are also extremely high, not only in terms of lower skills and education but in wasted productive capacity and tax revenue and in reduced innovation because of reduced incentives for firms to adopt labour-saving technologies.

The Commonwealth Government’s $310 million 2015 Youth Employment strategy recognises that “Young Australians need the right assistance and encouragement to learn new skills, become job ready, get a job, and stay in a job.” When considered alongside Australia’s planned infrastructure pipeline ($20 billion in NSW – plus the Federal government’s $50 billion) there is an unprecedented opportunity for the construction industry to work with visionary clients in the public and private sectors to better leverage public spending to address a range of social problems such as youth unemployment.

It is notable that, through new social procurement legislation and directives in the UK and EU, governments there have recognised this huge opportunity. In contrast, the Australia’s recent Productivity Commission Report into Public Infrastructure (2014) limited its analysis to the economic and productivity benefits of the planned infrastructure pipeline and ignored the potentially huge social dividend of utilising social procurement in the construction sector to address social challenges such as youth unemployment.

The construction industry is ready, willing and able  to help. All that is needed is for someone to see the potential and show some leadership in this area.

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