With one of the world’s largest infrastructure pipelines, the Australian government has an unprecedented opportunity to leverage its spending power to address disadvantage and inequity in the communities in which it will build.
Crossrail in the UK is Europe’s largest construction project and currently employs over 10,000 people across over 40 sites. It is a wonderful example of how major infrastructure projects can rejuvenate the communities which they touch. This project is anticipated to create 55,000 full-time equivalent jobs and over 600 apprenticeships during construction alone through direct and indirect employment opportunities with an emphasis on UK companies, small and medium enterprises (SMEs), local employment, re-employment of the unemployed, apprentices and long-term skills development.
With one of the world’s largest infrastructure and construction pipelines, the Australian government is in danger of missing an unprecedented opportunity to leverage its spending power to address persistent disadvantage and inequity in our community. While recent amendments to the Commonwealth Procurement Rules coming into effect on 1 March 2017, require those tendering for government work to comply with ‘relevant regulations and/or regulatory frameworks’ regarding labour relations and ethical employment practices, occupational health and safety and environmental impacts, they don’t go far enough.
Social procurement is one policy lever which governments could make more use of in ensuring that future Australian construction and infrastructure projects reflect the Crossrail outcomes. In simple terms, social procurement involves governments leveraging their purchasing power to require those tendering for government projects to give back to the communities in which they build. Social procurement can take many forms from the direct purchasing of products and services from social benefit organisations which specialise in employing disadvantaged groups such as Indigenous, disabled, ex-offenders, ethnic minorities, youth or the long-term unemployed, to the indirect use of contractual clauses to require existing supply chain partners to contribute to the communities in which they work, by employing disadvantaged people and local businesses etc. This in-turn translates to numerous longer-term benefits for the wider community such as increased wealth, better health and reduced crime, which can be measured using various emerging social impact measurement techniques.
The construction industry can do more than most to help Australia’s growing disadvantage. Not only does the Australian construction industry directly employ about 9% of Australia’s labour force, it is the largest youth employer in the country. Unlike most industries, it also operates in Australia’s most remote and disadvantaged communities and is often the first port of call for migrants due to its preponderance of low skilled jobs and its highly culturally diverse workforce (over 25% of construction workers speak a language other than English at home). It is a unique feature of the construction industry that for historical reasons different nationalities tend to congregate into certain trades (Italian concreters, Maori scaffolders, Croatian form workers, Korean and Afghani Tilers, Chinese and Vietnamese Gyprockers etc). Yet less than 2% of Australian social benefit organisations operate in construction (social enterprises, Indigenous businesses, disability enterprises, minority owned enterprises, enterprising not for profits, charities, social businesses, cooperatives, charities, local businesses etc). and those that do, tend to be micro-businesses working at the bottom of the supply chain, in low-margin high-risk trades such as cleaning, gardening and landscaping and grounds maintenance. Given the construction industry employs around 1 million people of which 43% are 15-23 years old, a mere 1% increase in work for social benefit organisations in the supply chain could potentially provide 43,000 new employment opportunities for disengaged youth alone and with the industry’s 4:1 multiplier effect into the wider economy, the total number of new jobs created could be as high as 172,000.
Knowing that the bulk of the construction industry responds to market drivers and regulation better than anything else, and is unlikely to voluntary change, some forward-thinking Australian governments and private clients with a social conscience and major construction program are developing social procurement regulations and policies to force the construction industry to give back to the communities in which it works. The Federal Government’s Indigenous Procurement Policy (2015), NSW Policy on Aboriginal Participation in Construction (2015), The Queensland Government’s Building and Construction Training Policy (2015) and its Charter for Local Content are all examples of how governments can use a range of soft and hard policy levers to do this. More recently, the Victorian Government has introduced a mandatory requirement into its major infrastructure works program of $25 billion that 2.5% of project hours be allocated to indigenous employment and 10% to apprentices and trainees. There are also requirements for the employment of disadvantaged people from local communities through direct employment and through leveraging existing supply chains. Encouragingly, NSW Premier and Cabinet have also set up a Steering Committee to explore social procurement opportunities for the new Western Sydney Airport.
However, apart from a few leading companies like Multiplex who have been experimenting successfully with social procurement on major projects for a number of years, the vast majority of the construction industry remain blissfully ignorant of this emerging trend, lacking the new skills to manage these new cross-sector partnerships and unaware of their potential role in building a more to equitable and sustainable society. While many will claim to have significant corporate social responsibility strategies, most are non-strategic and typically consist of a rather random selection of philanthropic initiatives which are largely disconnected from corporate objectives and real community needs around specific project locations. They fail to come anywhere near satisfying the social requirements which major governments will begin imposing on our industry, driven by new trends in public governance which emphasise partnership with the private sector in meeting increasingly ‘wicked’ social problems within an environment of declining welfare budgets.
The challenge for the construction industry in engaging with this new unstoppable agenda which is gathering pace around the world is in working collaboratively with a whole host of previously unknown third sector organisations, while balancing competiveness and productivity. Recent research into social enterprise in the construction industry shows that there are many barriers-to-entry for the growing numbers of social benefit organisations which work in the construction sector. This research also shows that most construction companies see the community as a risk rather than an opportunity, and currently lack the skills to engage them effectively.
Recent world events have vividly demonstrated that equity of opportunity and wealth distribution are the basis of a stable and prosperous society. It’s time the construction industry stood up to be counted and met its full responsibilities to society.