The Grattan Institute’s latest report Megabang for megabucks finds Australia’s transport infrastructure is overpriced and suggests government should drive harder bargains and stop worrying about the profitability of the industry.
Australian Constructors Association (ACA) Chief Executive Officer Jon Davies said the report perpetuates the idea that construction is a zero-sum game.
“It is precisely this approach that has led us to the situation where project cost and time blow outs regularly make headlines and construction productivity has hardly grown in 30 years,” Mr Davies said.
“The cost of infrastructure will not be reduced by government getting tougher but rather through government and industry working collaboratively to create a more sustainable industry.
“We need to collaborate to ensure project objectives are clear, information provided is accurate and can be relied upon, the right delivery models are adopted, risk is appropriately managed, and waste is reduced through productivity enhancing processes and technology such as digital engineering.
“If we could just halve the gap in productivity growth between construction and other major industries, we could be constructing an extra $15 billion of projects every single year for the same investment.
“That is the equivalent of three new Western Sydney Airports every single year or enough money to pay for the additional investment in aged care over the forward estimates, announced in the recent Federal Budget.
“In a post COVID world we simply cannot afford to be wasting such large sums of money.”
Looking beyond the misrepresentation of industry, the Grattan Institute has identified a number of areas for reform that are supported by the ACA.
“We strongly support the recommendation for a systematic approach to procurement selection which is why we are advocating for the development of a Construction Playbook,” said Mr Davies.
“A Playbook is a compact between government and industry that sets out how the two will work together. It captures industry best practices and specific sector reforms that would see projects awarded on best value rather than lowest cost.
“Importantly, for a Playbook to be effective it needs to be developed in partnership between government and industry.”
The construction sector—Australia’s third largest industry employing 10 per cent of the working population—accounted for 20 per cent of all insolvencies last financial year. Construction needs collaboration—not conflict because Australia needs a sustainable construction industry.
A detailed response to Grattan recommendations can be found here.