Queensland Construction Sector Facing Uncertain Times

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Monday, February 2nd, 2015
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The property and construction sector in Queensland faces a period of significant policy uncertainty following the shock election result last weekend.

As the state digests the surprise result – which saw a 13 percent swing toward Labour on a two-party preferred basis – exactly what the outcome means for the sector remains unclear.

First, there is the uncertainty regarding the actual outcome itself and the ability or otherwise of either Labour to form a government in its own right or either party to form a minority government. Generally speaking, minority government situations create an environment of policy uncertainty and are thus harmful to confidence in the overall economy and investment in housing and commercial building.  Whilst some may argue that the generally business friendly nature of the LNP might mean even a minority government run by them may be better for the sector than one run by Labour, part of this argument appears to be offset by the fact that they would almost certainly need the co-operation of Bob Katter’s Australian Party, which remains opposed to the idea of the asset sales which are part of the LNP’s plan for public sector construction.

Even if Labour is able to form an outright government, questions remain surrounding the implications of this from the sector’s point of view.

To be sure, the party does seem to be making some effort toward promoting itself to be reasonably business friendly, promising an independent productivity commission, a rural infrastructure fund (to replace the current Royalties for Regions program), a significant expansion of solar facilities, a modest business development fund, a payroll tax rebate of 25 percent on the wages of all apprentices and trainees and reinstating the Skilling Queenslanders for Work program.

Against that, however, questions remain in a number of areas.

Start with the now cancelled privatisation of electricity assets, which along with reducing debt was set to help finance around $8.6 billion worth of road and rail infrastructure upgrades. With Labour promising not to sell off assets, such investments presumably will not occur. Moreover, whilst it has promised to beef up investment in public transport, specifics surrounding much of what it does plan to do in the infrastructure space remain uncertain.

Another area of uncertainty is planning, an area in which industry bodies have been pushing for change for several years. Under the previous government, the state was expecting a detailed framework for a major overhaul which would simplify planning schemes and streamline decision making in coming months. Apart from promises to reorientate the system with an emphasis on liveability and sustainability, specifics about what Labour will do in this space again remain unclear.

Then, there is the general economy and its flow on impact upon investment in housing and commercial building. With more than 1,900 participants in the Property Council of Australia’s latest Property Industry Confidence Survey rating the previous LNP government as the best state government in Australia at planning for and managing economic growth, this was definitely a plus for the LNP, and despite some announcements (see above), Labour’s plans do not appear to be as specific as the four-pillar plan put forward by the LNP.

Lastly, there is workplace relations. One of Labour’s core promises in this space revolves around the reversal of workers compensation changes which limited the ability of injured workers to undertake common law action with regard to their injuries – a development welcomed by unions (and, almost certainly, a win for injured workers) but which had been opposed by groups such as Master Builders Australia, who say premiums for employers dropped by 17.5 percent following the introduction of the changes. Apart from that, uncertainty now surrounds the Queensland Code of Practice for the Building and Construction Industry introduced by the LNP in response to similar codes in New South Wales and Victoria in an effort to rein in union influence on public sector construction projects – a similar code in Victoria was abolished shortly after Labour gained power in that state late last year. Questions also surround the future of other LNP era reforms as well, such as rules which tightened right of entry provisions and limited the ability of unions to claim use safety as a reason for unannounced visits.

Bottom line, whilst a Labour government would hardly be a disaster, a number of their policies concerning the sector appear to be less clear and potentially not quite as friendly to the sector compared with those of the LNP, and many within the sector will empathise with sentiments expressed by Master Builders Association of Queensland Executive Director Paul Bidwell that whilst life under the LNP was generally good for the sector, it was fair to say that during previous terms when Labour has been in power throughout the state, the sector ‘didn’t get much traction with them’.

Uncertain times lie ahead.

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