Opinion: Time for some tough decisions in Queensland

By: Damian Long

Presented by
  • Earthmovers & Excavators

The Queensland government is facing a number of competing priorities at a difficult time – and it might be time for some tough decisions, Civil Contractors Federation Queensland CEO Damian Long says

Opinion: Time for some tough decisions in Queensland
Major projects will provide the infrastructure Queensland needs, but an enormous amount of work needs to be delivered through smaller packages

The civil construction industry is concerned that the government’s ability to provide the right policies to ensure the sustainability of the sector will be diminished over the coming years.

Currently the Queensland government is under great pressure to fund competing priorities such as health, energy, flood reconstruction and justice, while having sufficient funds to manage debt levels and deliver the infrastructure needed for both the Olympic Games and the growing population of Queensland. The existing and future budgets will need to balance these competing priorities. 

A large portion of regional Queensland has strong growth projections over the next 20 years; with those in south-east Queensland predicting an increase of 1.5 million people by 2041. I suspect these forecasts will change once post-COVID-19 population migration, the Olympic Games and the commencement of international immigration are all considered.

Queensland is the most regionally diverse state in Australia. The east coast is dotted with large towns, each about four hours’ drive apart. They are self-supported through distinct economic differences but rely heavily on interconnectivity between themselves, the whole south-east Queensland area and overseas. Land and housing are in short supply. Travel within the region is slow and inefficient. This will worsen with time if not addressed.

Dams will be needed to supply water for drinking and irrigation, as well as providing for flood mitigation. Well-planned dams will provide a reliable source of electricity, with the need for this becoming more urgent with time.

While the state government has indicated that infrastructure funding will increase over the coming years, the cost pressures both internally and externally will mean that there will be less infrastructure delivered, regardless of touted budget increases.

Delivering less infrastructure under higher funding is not a good outcome. It will slow the delivery pace of desperately needed infrastructure for Queensland. 

A dramatic consequence of delivering less infrastructure in Queensland is that a broad range of projects that match the regional capability of the market to help ensure sustainability will be missing. Delivering fewer projects will drive higher competition, resulting in fewer contractors delivering infrastructure at unsustainably low prices, and many contractors simply missing out. 

There is also a danger that the available funds will be earmarked for major projects at the expense of smaller projects. The tier two, tier three and below contractors could be disadvantaged again. 

The infrastructure Queensland needs will absolutely be delivered through major projects, but there is an enormous amount of work to be delivered through smaller packages.

In addition to competing funding priorities, the infrastructure budgets have been put under pressure by the extraordinary cost increases of materials such as steel, fuel and concrete. These have coupled with supply shortages, adding time and cost to projects. All are out of the industry’s control. The policy of governments does have an impact on the amount of infrastructure delivered and the cost of those projects. Policies such as the Best Practice Industry Conditions (BPIC) are having an unnecessarily negative cost impact.

It is time to abandon the BPIC. This state-based industrial pattern agreement is adding costs not only to the projects to which it is applied, but also to the wider industry. Due to current labour supply and demand, wages and conditions are improving independently of BPIC, but the pressure on contractors to meet or exceed BPIC is accelerating the wage increase, adding an estimated 30 per cent increase to the cost of projects, which is unnecessary. It is time for the government to provide policy that will address the pressures on costs in the construction industry. 

Industry accepts that workers should be paid properly and fairly for the work done. However, it is not necessary for governments to interfere in the enterprise bargaining process and overheat the labour market.

All governments should focus on: freeing up the supply chain; providing flexibility to prescriptive specifications and accepting alternative products; embracing collaborative contracting in order to drive cooperation and innovation; embracing policies that drive true productivity; nurturing the local construction industry by providing an opportunity to gain experience whilst being profitable; avoiding delivering social policy outcomes through contractors where it is better delivered by other means; and allowing contractors to freely operate their businesses.

As it now stands, the increasing costs and stagnant funding will not add jobs. It will be discriminatory by benefiting some companies and workers at the expense of others.

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