Thuggery on the part of building unions must be considered as part of the government’s review of infrastructure construction costs, a key building and construction industry lobby group says.

Wilhelm Harnisch

Master Builders CEO Wilhelm Harnisch

In a statement released on Wednesday, Master Builders Australia Chief Executive Officer Wilhelm Harnisch says costs associated with likely industrial relations difficulty was reflected in tender prices on major infrastructure projects, and that the terms of reference of a Productivity Commission inquiry announced by the government on Wednesday into the cost of infrastructure delivery should be read widely and extend to looking at ‘the virtual right of veto’ currently held by unions over the commencement of construction on greenfields sites.

“The reality is that contractors currently price in the industrial relations risks into their tender prices which add to the cost to the taxpayer” Harnisch says.

“Building unions industrial thuggery also contributes to cost blow outs in public and privately funded infrastructure projects and the return of the Australian Building and Construction Commission is vital to delivery of infrastructure for a reasonable price to taxpayers.”

Harnisch’s call follows the Abbott government’s announcement on Wednesday of the inquiry, which will look at current financing arrangements and the cost structure of infrastructure projects in Australia and will advise on possible alternatives.

The review comes as the government seeks to deliver on its promises regarding infrastructure investment whist simultaneously addressing the nation’s fiscal challenges and comes amid increasing levels of concern about taxpayer exposure to the spiralling cost of infrastructure.

Costs associated with building the National Broadband Network, for example (under current plans) could spiral from current estimates of $43 billion to $60-$70 billion, recent media reports suggest.

Harnisch broadly welcomes the inquiries efforts to pinpoint ‘real-world’ factors the influence financing and construction costs, and says that federal and state governments must ensure planned infrastructure projects are structured to be ‘’ asset class’

“A key priority for the inquiry must be an examination of barriers to improving productivity in the building and construction industry” he said.