Construction Sector Buckles Under $110bn Infrastructure Pipeline

Construction industry groups claim they cannot deliver a $110-billion national infrastructure pipeline and are calling on the federal government to introduce urgent reforms to fix the “industry crisis”.

Australian Constructors Association chief executive Jon Davies said the industry was at breaking point.

“The government is essentially relying on a broken industry to rebuild the economy,” Davies said.

“The building and construction industry has the highest rates of insolvencies in Australia and productivity growth over the last 30 years trails that of other significant industries by 25 per cent.”

In a joint letter to the parliamentary inquiry into procurement practices for government-funded infrastructure, key construction industry organisations have demanded urgent action from the federal government to lead reform and rescue the industry.

“The industry is struggling to attract and retain sufficient people to undertake the pipeline of work ahead of us.

“Women make up only 12 per cent of the industry’s workforce and our workers are six times more likely to die from suicide than a workplace incident.”

Up to 25 per cent of all insolvencies in Australia are companies within the construction industry, and leaders at the coalface are warning the sector is unsustainable.

One of the most recent casualties of Australia’s construction crisis is Perth-based Pindan Group—the head contractor for a number of WA government projects—which was placed in external administration in May owing creditors $80 million.

Consult Australia chief executive Nicola Grayson, a joint signatory, said the response from the industry demonstrated the seriousness of the failures in the construction sector that needed to be addressed urgently.

“We all agree on the urgent need for reforms that drive an improved industry culture, create increased capacity and capability, and ensure that project commercial frameworks are equitable and align the interests of all parties,” Grayson said.

“Reform of the magnitude required will only happen through greater collaboration across all levels of government and in consultation with industry.

“In particular, the federal government, as a direct procurer of major projects and as a significant source of funding for jurisdictionally led projects, can play a major role in resolving these issues and supporting the sustainability of the sector and its supply chain.”

In their letter to the inquiry the construction industry leaders said while the Covid-19 pandemic had exacerbated the existing challenges, it also offered an opportunity to address the “sustainability crisis” and ensure the industry can deliver the record-levels of infrastructure in the pipeline.

Committee chair of the House of Representatives Standing Committee on Infrastructure, Transport and Cities John Alexander said it was an important inquiry as the country focused on its economic recovery.

“The committee will examine challenges and opportunities to enhance Australia’s sovereign industry capability, including for Australian-owned businesses,” he said.

“We are keen to hear about what is working well here and internationally, opportunities to improve procurement practices, and how governments at all levels can better cooperate on infrastructure procurement.”

The inquiry is open for submissions.