Since the Federal election in May, the Albanese Government has focused intensely on the need to improve productivity to drive economic growth and push up real wages.

There will be a summit held in August in no less than the Cabinet room of Parliament House – a reprise of Jim Chalmers’ Jobs and Skills summit held in September 2022.

But the big question being asked among the decision makers in the property and construction sector, relates to the willingness of the Albanese Government to take on the elephant in the room – the trade union movement.

There is no doubt that Jim Chalmers has been inspired by the Hawke – Keating Governments’ successful focus on productivity through the Prices and Wages Accord. But the big difference between those halcyon days of the 1980s and early 1990s, and today is the role and attitude of the trade union movement.

The 80’s and 90’s were days of big picture ideas and transformational reform.  The Australian dollar was floated. There was cautious deregulation of the banking sector.

Big business joined with the Government and the ACTU to reduce inflation, introduce a social wage to offset wage inflation (Medicare), link wage increases to productivity improvements, then later drive impressive industry policy to see the removal of tariff protection, the expansion of trade with Asia, the introduction of compulsory superannuation.

Meanwhile, Paul Keating held the Tax summit in 1984. While his preferred option of a GST did not get up on that occasion, it started a dramatic shift towards taxation and economic reform. The elimination of inefficient taxes, along with a focus on trade and areas of industry where Australia had a comparative advantage, were all the rage.

Back to today.  In the housing supply space, the Commonwealth Productivity Commission led the charge, releasing a damming report in February this year bluntly entitled Housing Construction Productivity – can we fix it?

It highlighted the disastrous productivity performance of the housing and commercial building construction sector over the past 30 years, noting productivity had actually fallen 41% behind the rest of the economy.

The Productivity Commission paper highlighted the industry constraints on productivity:

• Complex slow approvals, both at the planning stage and also at the building approvals stage (construction certificate) to allow construction to commence
• Lack of innovation – a clear reference to over-zealous building design rules like the Apartment Design Guidelines in NSW, along with heavy handed building regulators which together, have stifled innovation in this critical sector
• Lack of scale – too many under-skilled, undercapitalised firms who struggle with the ever-changing regulatory world of our industry
• Workforce issues – calling out the Commonwealth for failing to recognise the catastrophic impact of their immigration policy leaving skilled construction workers off the essential worker list for so long.

The Productivity Commission’s analysis correctly pointed to the sheer volume of regulation that allows three levels of government, NIMBY community groups and well-meaning but productivity killing bureaucrats to control the speed, cost and the amount of houses delivered.

Every new planning requirement increases the number and cost of consultant reports, the time taken by assessors and risk associated with property development.  Every new construction code change or regulatory impost also adds to both time and cost. These flow on to the cost of construction and the price paid for new homes. These are some of the key factors that have created a housing supply crisis.

Urban Taskforce Australia published a detailed comparative analysis in April 2025 entitled Urban Ideas: “What Makes Housing SO Expensive?”

The analysis looked the cost drivers in Sydney, Brisbane and Melbourne. This highlighted the extent to which over regulation of planning and building construction had driven up prices, particularly in Sydney.  The impact of fees, taxes and charges was also a key differentiating factor.

But one common factor for all jurisdictions is the cost of labour and the attitude of the union movement.

Back to the Wages and Prices Accord which has clearly inspired Dr Jim Chalmers, the big difference between then and now is the listless abrogation of leadership responsibility repeatedly shown by the ACTU and the union movement of today.  Unlike the days of Bill Kelty, Simon Crean, Martin Ferguson, Laurie Carmichael, John Halfpenny and Michael Easson, when the unions were at the forefront of driving economic reform and productivity growth; today the unions simply demand wage increases with zero consideration on how or who will pay for them.

The union movement once drove the growth of the pie with a view that they would then negotiate who gets what share of the growth.  Now they just eat the pie and observe from the side as it gets smaller and smaller. No doubt their declining membership are happy, but they are killing the productivity, and therefore future, of our economy.

Nowhere is this gross self-indulgence more evident that in the construction sector.

While the unions only represent a small proportion of the construction workforce, they set the price for everyone.

Worse, the newly elected Albanese government fell straight into a CFMEU trap by leaving construction workers off the essential worker migration list after the previously mentioned Jobs and Skills summit in 2022.  That worsened the shortages of construction labour and increased the power of the CFMEU.  It was an obvious plan that the ALP did nothing about till the CFMEU was placed into Administration after its corruption was exposed for all to see.

A lot has been done in every jurisdiction across Australia to improve planning rules and regulations.  There is much more to be done, but at least political leaders across Australia have gotten on board.

Taxes, fees and charges are more problematic in the post pandemic era and the fiscal constraints that afflict state governments.  That’s where the Commonwealth can get on board and help.

Assisting the states with funding for connecting new housing developments to trunk infrastructure is an area where the Commonwealth must play a more active role. The appointment of Clare O’Neil as both the Housing Minister and Minister for Cities is a positive post-election change.

The Productivity Commission also called out the weighty and ever-changing National Construction Code (NCC) that, for all its good intentions, is yet another factor that drives up the already high construction costs.

The Commonwealth and State Treasuries must be more vigilant.

What happened to the days of Senator Peter Walsh where, as Finance Minister, no regulation was ever passed without a thorough and rigorous assessment of its short, medium and long term impact on the economy?

The once mandatory cost-benefit analysis that used to be applied at both National and State levels needs to be brought back so these “like-to-have” utopian changes can be costed and decisions on their implementation made accordingly. That change alone would have a massive impact on productivity.

Further, regulations used to be time limited.  They would expire if a case could not be made for their extension.  Treasuries were the gatekeepers.  Now, Treasuries around the nation are the hapless victims.

The words of Peter Walsh should be pinned on every Treasury bureaucrat’s wall and handed to every participant invited to sit in the Cabinet room at this august, August summit.

“There is a small but very noisy group which says that many things are more important than economic growth. Almost inevitably, these people display the following attributes: they have jobs – usually well paid; they are either on the public tit or have secure jobs in the semi-public sector; they are vociferous demanders of more government services and handouts to their own pet causes and they are opponents of higher taxes, or at least higher taxes on themselves and their cronies.

Their stars often appear on television. One recently asserted that, if we do not have enough money for all the worthy causes, then we just have to find it. “Oh, for a magic pudding”. Another participated in a recent Dateline discussion with Australia’s destiny and place in the world. Geoffrey Blainey observed that unless we fairly quickly overcame our economic problems, Australia was destined for mediocrity and insignificance. The reply was “I could not disagree with that more”. Obviously to such people long-term economic decline is not regarded as a problem.

The million or so Australians who do not have a job and who, a bit of churning aside, have no chance of getting one unless growth is high, disagree. But who cares about them? Certainly not those in comfortable public sector sinecures.

I feel that Ben Chifley’s Labor Party, to which I made a personal commitment more than 40 years ago, has lost its way and mouthing Chifley rhetoric is a poor substitute for sharing his beliefs, especially his belief that economic growth, or development as he would have called it, has a paramount role in improving the life of ordinary Australians.

Does anyone believe that Ben Chifley would have closed down mines and banned exploration in a sequence of highly prospective mineral provinces, not for any serious environmental reason but to appease the secular religious sanctimony of Balmain basket weavers? Would Chifley have allowed the long-footed poteroo, or whatever fad was in vogue with the chattering classes, to take priority over a million unemployed?”

(Extract from Peter Walsh’s “Last Blast”, Personal Newsletter, Council for the National Interest, Vol 6, No 23, 25 June 1993, pp 1-2)

Too many in the union movement today eschew the tough economic questions that Walsh dealt with.

The Albanese government appears to have embraced the need for greater balance between the benefits of regulation and the effect on cost of construction, and thus on the supply of housing development and construction. But what will they do about it?

Over the last 30 years, the property development sector has regressed into the very protectionism that the Hawke-Keating governments, along with the support of the unions of the day, opposed with such vigour.

The Productivity Commission has called out the property construction sector as being marked by regulatory barriers, market access restrictions, heightened consumer protection, labour intensive, and going backwards on productivity.  It is staggering that more explicit links to the current supply and affordability crisis have not been drawn – but perhaps now is the time for a reckoning.

There is a universal view among economists that stamp duty is a significant hinderance to the efficient working of the property market. Shift towards a broad based land tax (which automatically captures uplift arising from nearby infrastructure investment), can only happen with the Commonwealth’s support as part of a larger reform package.

Further, the broadening, and increasing the rate, of the GST must be considered.  A GST is not regressive if the funds raised are used progressively.  The GST is simple and well understood. Our reliance on income tax and company tax makes Australia less attractive for the investment and talent we crave. It makes us less productive – and that, after all, is the point of this summit.

In the housing space, Urban Taskforce Australia supports policy reform focussed on supply-side incentives and reductions in the cost of supply.

If the National Productivity summit is serious, it will start by considering all taxation reform options and place the housing supply crisis at the centre of its deliberations.  It will resolve to seriously review the CFMEU EBAs and restore a focus on wage increases being funded by productivity improvements.

In the absence of this, it’ll be just another fancy talkfest.

Tom Forrest

CEO, Urban Taskforce Australia

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