Opinion piece by Jon Davies, CEO, Australian Constructors Association, published in The Australian, 9 February 2026, p.17
Australia’s productivity is stuck in the slow lane and it’s starting to hurt. Inflation bites, government budgets are under the microscope and households are feeling the squeeze. Lifting productivity is no longer a nice-to-have. It is essential to protect living standards and promote future growth.
Treasurer Jim Chalmers has promised the May budget will tackle rising prices and boost productivity. But if past budgets are any guide, it will likely lean on familiar themes – skills, digital transformation and cutting red tape – all worthwhile but slow moving.
What the economy urgently needs are practical reforms that lift productivity quickly. Ironically, one of the sectors most often criticised for poor productivity, construction, offers some of the fastest and most material gains available to government.
Construction underpins housing, transport, the energy transition and social infrastructure. Every dollar invested generates close to three dollars of economic activity and improves national competitiveness.
Yet despite its importance, construction productivity today is lower than it was three decades ago, lagging other industries by over 30 per cent. We are building more, but delivering less value for every dollar spent.
This is not just an industry problem. Poor construction productivity drives higher costs, slower housing and infrastructure delivery, and lower real wages. Closing the sector’s productivity gap could lift national productivity by almost 3 per cent, making it one of the government’s single biggest opportunities.
The question is how to realise this opportunity quickly?
There are seven reforms that would deliver immediate productivity gains if governments were prepared to act.
First, trade licensing must be harmonised nationally. It makes no economic sense that a licensed electrician in Melbourne can’t move to Brisbane and pick up tools straight away on one of the many upcoming Olympic projects that will require their skills. While progress is being made for electricians, the same problem affects other skilled trades. In a tight labour market, restricting workforce mobility is a self-inflicted wound.
Second, construction contracts need to be standardised. Every jurisdiction has their own suite of ‘standard’ contracts that they use to contract for delivery of projects in their State. In reality, the only thing standard about them is the contract name on the front cover. Adopting clear, fair and genuinely standard national contracts would significantly improve efficiency and reduce friction – to the benefit of taxpayers, if not the legal profession.
Third, procurement must move beyond lowest-price tendering. When contracts are awarded primarily on price, risk is pushed onto parties least able to manage it, margins are stripped to the bone and productivity suffers. If Governments awarded contracts based on value for money, capability and long-term outcomes, rather the lowest bid they could change industry’s race to the bottom into a race to the top.
Fourth, digital delivery must become the default, not the exception. While individual firms have invested heavily in digital tools, public sector processes remain fragmented and paper heavy. Mandating digital delivery standards across projects would lift productivity quickly by improving coordination, reducing rework and enabling better decision-making.
Fifth, the ‘better off overall test’ should be reframed to ensure enterprise agreements achieve improved outcomes for both employees and employers. Improved pay and conditions need to be matched by improved productivity or workforce flexibility.
Sixth, governments should prohibit enterprise agreement provisions that entrench inefficient work practices or restrict the adoption of productivity-enhancing technology. In recent times, terms in construction enterprise agreements have extended well beyond wages and conditions to include influence over subcontractor selection and work methods. These provisions reduce competition, increase costs and can facilitate unlawful or anti-competitive behaviour.
Finally, mechanisms to resolve industrial disputes must be faster and more effective. Delays cost millions, disrupt project delivery and undermine confidence in the system.
Many of these reforms sit outside direct Commonwealth jurisdiction. But the federal government has a powerful lever: funding. As recent health funding agreements demonstrate, national reform can be driven when Commonwealth funding is linked to agreed outcomes.
The National Construction Strategy being developed by governments and industry is a good start. But it must be finalised, implemented and tied directly to project funding. Likewise, the National Construction Industry Forum should fully involve the states so that groundbreaking initiatives like a proposed industry wide charter of behaviours are implemented seamlessly across the nation.
It’s now over to you Jim. Industry has a hard hat and fluoro vest with your name on it and team waiting to deliver the most important national building project in its history.