More contractors won’t solve Queensland’s construction crisis, Civil Contractors Federation Queensland CEO Damian Long says
A new theory gaining traction in government circles suggests that increasing the number of contractors will drive competition and ultimately reduce prices. While this idea might appear sensible at first glance – more players, more competition, lower prices – it dangerously oversimplifies the real challenges facing the sector. It also risks exacerbating existing problems rather than solving them.
The core issue with this emerging theory is that it fails to acknowledge a fundamental truth: the construction workforce in Queensland is finite and currently operating under severe capacity constraints.
Whether there are 500 contractors or 5,000, they are all fishing from the same shrinking pool of skilled tradespeople. Without addressing the chronic labour shortage, simply adding more contracting firms does nothing to expand the industry’s actual productive capacity.
The notion that competition inherently leads to better outcomes is a principle borrowed from textbook economics. In theory, more firms competing for the same work should lower prices and improve efficiency. But the construction sector doesn’t operate like a perfectly competitive market. It is a complex, high-risk and resource-dependent industry. Reducing prices without increasing capacity is a recipe for failure.
In fact, we’ve already seen what happens when prices are driven too low in an industry without the resources to sustain it. Projects suffer from poor planning, underqualified workers, inadequate supervision and, eventually, costly defects and delays. Contractors go into survival mode, subcontractors stretch already thin workforces, and safety can be compromised. In extreme cases, insolvencies follow and projects stall or collapse altogether – leaving clients, subcontractors and communities to clean up the mess.
More contractors might mean more bids on tenders, but when every bid is underpinned by unrealistic pricing and unsustainable margins, it doesn’t lead to better outcomes. It leads to a race to the bottom. Competitive undercutting becomes the norm, and firms begin to sacrifice quality, timelines and even regulatory compliance in order to win work.
What’s particularly troubling is that this approach shifts attention away from the real structural issue: workforce capacity. Queensland’s construction industry has faced chronic skills shortages for years, a situation worsened by the COVID-19 pandemic and compounded by an aging workforce, fewer apprentices and trainees, and increased demand from public infrastructure projects. The pipeline of projects is growing, but the available workforce is not. Adding more contractors to compete over limited labour and materials only intensifies these pressures.
Instead of focusing on multiplying the number of firms, we need to focus on building a stronger, more sustainable industry. This means investing in skills training and traineeships, supporting existing contractors to scale sustainably, and ensuring that pricing reflects the true cost of delivering high-quality construction services. Government and industry leaders should prioritise workforce planning, incentives for upskilling, and more strategic procurement policies that reward value and reliability – not just the lowest bid.
Another overlooked consequence of this push for more contractors is the erosion of business viability. Smaller, newer firms entering the market in a highly competitive, low-margin environment are especially vulnerable. Without the experience, capital reserves, or workforce stability of more established players, they are more likely to struggle, fail and leave behind incomplete or poorly executed projects.
This churn undermines confidence in the industry and places unnecessary risk on clients and the wider economy.
There’s also the risk that this policy direction encourages the formation of ‘shell’ contractors – entities created to win work on paper, but that subcontract nearly all tasks downstream without sufficient oversight or responsibility. This fragments accountability and quality control, while doing nothing to alleviate labour constraints. It also makes enforcing safety, industrial relations and building standards more difficult.
In short, the belief that more contractors will lead to lower costs and better outcomes is not just naïve – it is dangerous. The real solution lies in addressing capacity head-on: by growing and upskilling the workforce, promoting stable and capable businesses, and fostering a culture of quality over cost-cutting. Anything less risks compounding the very problems we’re trying to solve.
Queensland’s construction sector is a vital engine of economic growth, and it deserves policy thinking that matches its complexity. We must resist simplistic fixes and instead pursue long-term strategies that build resilience, capacity and quality across the board. More isn’t always better – especially when it comes to contractors. Better is better.
- Subscribe to our free weekly newsletter to receive the latest news in the earthmoving industry
- Never miss a great deal and subscribe to our monthly magazine
- Download a free copy of our latest digital magazine to catch up on the biggest news and developments in the earthmoving industry