The building industry is a story that just keeps on giving.
These last few months, the story has been all about housing affordability and record rates of insolvency across the industry. If these reports are correct, the worst still to come.
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Rewind 12 months and we were at the peak of an “unexpected” property boom with supply chain and labour crunches caused by global Covid lockdowns. Three years ago, industry news was filled with stories of how our buildings were falling apart or burning.
Should we go back further? Why not! Eight years ago was the showdown between the Commonwealth government and construction unions in the shape of the “Royal Commission Enquiry into Trade Union Governance and Corruption.”
Imagine fast forwarding into 2024. With inflation dropping, pent-up demand bursting, I predict the headline will be the “perfect storm” of rising property prices and a gaping market capacity gap.
In this story the industry can’t service the number of civil, residential and commercial projects the country needs.
Staying on this trajectory and going to 2026 the story might be about why nothing has been done to lower the industry reliance on carbon-intensive practices when it is the biggest single contributor to global CO2 emissions (a whopping 39 per cent of global CO2 is attributable to buildings).
Isolated incidents or a larger pattern at work?
These stories won’t surprise industry insiders — the surprising part is that these stories are rarely seen as part of a wider, deeper, more diffuse, but not unpredictable, whole.
The incidents introduced above are the attention-grabbing aspects of our industry’s woes and they are underpinned by some larger, long-term, systemic issues that continue to hold back the industry.
These include: sharply rising building costs, stagnating productivity, a highly adversarial industrial relations climate, low adoption rates for new tech, poor sustainability credentials, negligible investment in R&D, aging workforces, and chronic skills shortages.
All of which would be more than enough to keep us worried were it not for the fact that these systemic issues come to bear at a time when we need to build more buildings than ever before in history, to a higher standard, in less time and for less money.
Right now the industry is not equal to these challenges, nor does it have a coherent plan to combat them.
Joining the Dots
If we combine the sibling construction and property sectors, “the industry” comprises 13 per cent of GDP and employs around 1.4 million Australians.
That’s big, right? Right! Compare agriculture (2.4 per cent) and mining (5.8 per cent).
Now think of how much attention these areas provoke in public discourse. Agriculture and mining are seen as core to our economic and cultural fabric, part of our national DNA.
It is also evident that both have been very adept at asserting their needs within all three tiers of government and have a viable and longstanding track record of policy and industrial advocacy.
And building? For an industry so central to our economy, whose products (buildings) occupy such a crucial position in our health, education, wellbeing, commerce, entertainment and culture, might we assume that there is a comprehensive future-oriented plan from government? A well-trodden path to innovation? A peak department or industry body that is capable of developing coherent and integrated policy?
No, we don’t have any of this.
It is not just the absence of a plan or bodies that might make a plan that is concerning. Nor is it the long-term, systemic issues raised earlier, that have also conspired to keep our industry firmly griped in status quo.
There are other structural issues that cannot be passed over: the fragmentation of the industry itself and its treatment in policy.
Firstly, I am surprised there is no federal ministry that has building or the built environment in its name.
There is a Minister for Infrastructure, a Minister for Housing, a Minister for Industrial Relations and the Minister for Industry chairs the “National Building Ministers” group, which is a collection of state government “building” ministers. But this last group deals with regulation only.
This brings us to the curious division of powers around building matters and to the role of the states. Similar to health and education, it is the states that largely control buildings in Australia – not that all states have a minister for building either.
But if these omissions don’t grab your attention — wait, there’s more.
As anyone who has ever been involved in a building project would know, most building approvals and certification happens at the local government level.
In summary, it’s like all three tiers of government in Australia control one pedal of the car but they can’t talk to one another — is it any wonder we can’t move forward?
That’s government. Let’s talk about the industry structure. Three years ago, we counted the number of peak industry bodies associated with the building industry.
It depends on where we draw the line but I counted between 50–60 substantial industry bodies, each dutifully representing their own members.
Finally, we also need to take into account the 350,000 registered SMEs (small to medium enterprises) that constitute the construction industry – the overwhelming majority of which are 1–2 person operations, many of whom are concerned with surviving project-to-project.
We have fragmentation at the government policy and regulatory level, we have fragmentation at the industry representative level, and we have fragmentation at the industry operational level.
Should we be surprised we do not have a coherent national plan for how our industry can meet current and future challenges?
Until we join the dots, until we can start to chart a course together on what has become the “white space” of building innovation policy in Australia, the building industry will continue to remain the story that just keeps on giving.
Building 4.0 CRC: creating the national plan
Building 4.0 CRC is working to join the dots, fill the white space of innovation policy and create a national plan. This $130 million industry-led research initiative – co-funded by industry and the Australian government – aims to transform business-as-usual and create the culture of innovation to allow the industry to address its fundamental challenges.
The CRC will host its second annual conference on Wednesday 11 October 2023 (9am–6pm), at Monash College Docklands in Melbourne This year featured speakers will include Mike Zorbas (Property Council of Australia), Romilly Madew (Engineers Australia), Selina Short (EY), Helen Bell (Green Building Council Australia) and Cameron Bruhn (Australian Institute of Architects) who will explore the big, bold ideas needed to disrupt the status quo. Also attending will be international disruptors – Philipp Erler (Gropyus, Germany), Helena Lidelöw (Volumetric Building Companies, Sweden), David Flynn (KOPE.ai, UK), Jaimie Johnston MBE (Bryden Wood, UK) and Sigrid Brell-Cokcan (Robots in Architecture, Austria).
