Governments need to think differently to spread the benefits of their post COVID 19 stimulus. Building a new “third” construction sector is an excellent place to start.
The NSW Government has prioritised 24 housing, school and industrial projects to undergo the fast-track assessment process, in the wake of the COVID-19 pandemic.
The hope is that this will create thousands of jobs and inject more than $7 billion into the state’s economy. But as the NSW government and other state governments fast-track construction projects to boost the economy, it’s critical that they think differently about the way they procure their projects to ensure they spread the benefits to most vulnerable in our communities.
There is plenty of evidence to show that Australia’s dysfunctional and privatised employment system is not up to the job. Both job seekers and potential employers complain that they find the system overly complex, which means that many unemployed people will miss out on a job opportunity.
Disadvantaged people (such as those from an Indigenous background, refugees, people with a disability, youth at risk, young people in general, women at risk), are further disadvantaged by this system, because competition between Jobactives and under-resourcing focus their efforts on those who they can most easily place into work. See these resources from:
- Brotherhood of St Laurence
- A review of developments in the Job Network, from the Australian Parliament
- Jobactive: failing those it in intended to serve
It is in everyone’s interests to ensure that the most disadvantaged in our communities share in the benefits of our post COVID 19 construction spending and new solutions are clearly required. To this end, Australia’s federal and state governments need to encourage more innovative solutions which require public, private and third sector organisations to work collaboratively to get people back to work.
Australia’s third sector is a mystery to most people in the construction industry and its power to assist our economy to recover through industries like construction is largely untapped.
The third sector comprises an eclectic array of organisations which includes a growing number of social enterprises, Indigenous businesses, disability enterprises, refugee and other minority owned enterprises, co-operatives, mutual organisations, and trading not-for-profits and charities.
Research shows that there are many barriers for third sector organisations working in the construction industry. Yet they are powerful tools to help those who suffer disadvantage in our communities and who are most affected by the COVID 19 crisis.
This is because they are set-up specifically to trade for a social and/or environmental purpose, they are closely integrated into their local communities and they can respond immediately to community needs.
Their potential social impact of engaging more with Australia’s third sector to our economic recovery from COVID 19 could be enormous. For example, this recent mapping of Victoria’s social enterprise sector in support of its highly progressive Social Enterprise Strategy shows that 43 per cent of social enterprises in Victoria are located in regional areas which are especially badly hit by this crisis and provide 12,000 jobs for people with a disability, 4000 jobs for the long-term unemployed and 985 jobs for Indigenous people
This report in Canada also shows the economic benefits of social procurement when directed at local businesses.
It shows that compared to procuring from multinationals, procuring from local businesses provides a 77 to 100 per cent economic advantage and an 80 to 100 per cent increase in jobs per million dollars spent. This increased impact occurs because local companies hire more local labour, give more money to local charities, distribute more of the profits from their operation locally, and buy more goods and services from local suppliers.
So how does the government harness the obvious untapped power of Australia’s Third Sector?
One way is to use social procurement to leverage the power of industries like construction to employ third sector businesses in their supply chains as a condition of being given lucrative government contracts.
Conditionality should be the new buzzword in government and the beauty of this approach is that the costs is virtually nothing other than a change in thinking!
Enshrined in growing numbers of federal, state and local government guidelines and policies such as the Federal Indigenous Procurement Policy (2015) and the Victorian Social Procurement Framework 2018, social procurement is a strategic approach to purchasing construction products and services which seeks to maximise an organisation’s positive economic, environmental and social impact in the communities in which it builds.
We have a huge infrastructure pipeline ($288 billion) to leverage in Australia and construction is one of our largest industries which employs about 1.2million directly (indirectly many more). It is our largest employer of youth (43 per cent compared to all industry 38 per cent), it builds in many of our most disadvantaged and remote communities and can be used to inject opportunity directly into the heart of a needy community.
Of all Indigenous businesses 27.5 per cent operate in the construction industry (more than any other sector) and there are twice as many refugee businesses in construction than any other industry. Money spent on construction multiplies into the wider economy at about 1:4 and the industry offers many unskilled jobs to those most affected by COVID 19.
Ironically, many industries like construction are likely to face a looming skills shortage as we emerge from the crisis.
Estimates suggest that 50 per cent of all construction occupations will be in shortage over the next five years, and that the construction industry needs an extra 13,000 to 15,000 new apprentices per year and an additional 300,000 skilled workers nationally over the next decade, a 30 per cent increase on the current workforce.
Finally, well-built and well-designed construction projects can have a transformative impact on local, regional and even national prosperity, community identity, wellbeing and resilience, regenerating lost and deprived communities into vibrant places, creating a sense of identity and pride and incubator zones for new business which can represent the heart of innovation, economic growth, inward investment, optimism, hope and national pride.
Experience from overseas on major projects like UK’s CrossRail shows how powerful industries like construction can be in regenerating deprived communities and it is surprising how creatively altruistic highly commercial industries like construction can become when money is on the line, although many of our leading companies like Multiplex have been doing it voluntarily for many years, well before social procurement became a new contractual requirement
It’s a No brainer! Through social procurement we can:
- Build our much-needed Infrastructure.
- Address a looming skills shortage for the construction industry.
- Address growing disadvantage and inequity in society.
Martin Loosemore is Professor of Construction Management, University of Technology Sydney