Queensland Productivity Commission interim report finds drop in productivity could have cost state 70,000 extra homes
The Queensland government has tasked the agency with probing the construction industry and finding ways to improve it.
In an interim report released today, the commission has estimated productivity in the industry has fallen by about 9 per cent since 2018.
It says if that 2018 level had been maintained and put towards housing construction, an extra 77,000 dwellings could have been built — enough to meet supply shortfalls.
"There is no evidence the recent productivity decline has been accompanied by improvements in other outcomes," the report says.
"For example, data indicates there has been no significant shift in safety outcomes since 2018."
The report describes productivity growth in the state's construction industry as "poor" and mostly "stagnant".
It says productivity in the industry is only about 5 per cent higher now than it was in 1994-95.
"In comparison, productivity in the market economy grew by 65 per cent," the report says.
The productivity commission has blamed government procurement practices for creating "unnecessary inefficiencies" in the way projects are built.
As an example, it points to the Best Practice Industry Conditions (BPIC) model — something the LNP has suspended since coming to government in October last year.
"These inefficiencies are being observed beyond government projects, with BPIC-like conditions now seemingly embedded in the broader industry through the EBAs of most Tier 1 firms and many sub-contractors," the commission's report says.
The interim report makes several preliminary recommendations, including a suggestion for BPIC to be permanently scrapped from the government's procurement strategy.
The commission says it wants to know more about BPIC, including if workplace and safety outcomes on BPIC sites are better than non-BPIC sites.
"Removing BPICs alone is unlikely to be sufficient to shift construction productivity to a growth path or improve behaviours on government construction sites," the report says.
"Given that BPIC-like conditions now seem to be embedded in industry practice, including in enterprise bargaining agreements that are not due to be re-negotiated until mid-2027, it is likely that a broader industry reset is required."
Treasurer David Janetzki suggested the government would await the productivity commission's final report before taking action.
"We have made it clear that we're not going to tolerate declining productivity," he said.
"A total productivity growth since the mid-90s of just 5 per cent — that can no longer be tolerated.
"There is no quick fix, but the first important step is being taken today with the release of this interim report."
The interim report also recommends the government undertake a review of its capital program to reduce pressure on the construction industry.
The productivity commission also wants the state government to set targets for councils to deliver homes and "construction-ready land".
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