Home' Future Building Australian Infrastructure Review : Volume 3 Number 2 Contents futurebuilding 85
Volume 3 Number 2
Graham Bradley AM
Now, I would like to address labour productivity.
The recent McKinsey Global Institute report on
Australia's productivity outlook reconfirmed and
quantified the cost of our low capital productivity.
It highlighted that low capital productivity was
a major drag on national GDP growth in recent
years, and estimated that from 2005 to 2011, it
cost us approximately $43 billion in lost value.
That's equal to the total cost of the National
Broadband Network, wasted.
Capital productivity is depressed by the combined
effects of low labour productivity, high labour costs,
and inef ciencies caused by the costs of delay and
uncertainty associated with project approvals.
Only one-quarter of that $43 billion could be
attributed to yield depletion, by which McKinsey
meant that lower-yielding resource projects were
coming onstream to replace higher-yielding projects.
The BCA's pipeline document also brought into
sharp focus the need to better understand what's
driving our high project costs. Ultimately, our concern
resulted -- along with the advocacy by Victorian
Premier Ted Baillieu -- in the announcement of the
wide-ranging inquiry into costs and productivity in
the construction industry by the Council of Australian
The BCA has, however, convened a special
taskforce of its member CEOs to prepare a major
submission to COAG on what's driving these
high costs and the underwhelming productivity
performance that we are achieving.
Clearly, the current situation is unsustainable.
Something's going to give. If we don't adjust our
policy settings -- and fast -- what will give will be the
delay, deferral, and cancellation of projects, and the
loss of future economic bene t.
If we want to stay competitive in a vastly more
competitive world, if we want to keep wages
growing, then we have to lift our productivity
performance. It's a given.
Let me talk about the important issue of workplace
relations. We know that workplace relations is only
one piece of the productivity puzzle, but it is one
that we must address. Working days lost due to
industrial disputes hit an eight-year high in 2011. The
full impact of Australia's deteriorating productivity
performance over the last decade has been masked
by our high terms of trade. But those days are over,
and Australia is now going to be part of a different
and more competitive global economic landscape.
The question for a workplace relations system
is whether it will support the creation of more
productive, successful, and rewarding workplaces
that can thrive in a competitive global environment.
We don't believe that the Workplace Act
Review Panel was even close to coming to grips
with this central question. The Review Panel
recommended some incremental improvements,
but even if these were adopted, the system would
remain overly complex and would not support
businesses and their workers to adapt quickly to
the competitive environment.
For example, the Panel hasn't provided businesses
with greater capacity to make decisions about the use
of contractors and labour hire rms to manage peaks
and troughs in their needs for specialist skills.
On green eld projects, while the Panel has
recommended that good faith bargaining is a
requirement in the development of green eld
site agreements, it hasn't provided the option for
employers to have an employer-only agreement,
which used to be available if negotiations took
We are also concerned that the Panel has
proposed that the FWA Tribunal will have powers to
arbitrate on deadlocked negotiations. This will inhibit
Also unhelpfully, the Panel has recommended
that green eld site employers are required to advise
all unions with possible coverage of the site, and this
ies in the face of concerns already raised by project
promoters about the excessive time it takes now to
negotiate and settle site agreements.
In short, the Review Panel's recommendations do
little to address the core concern of companies trying
to put workplace agreements in place for major
infrastructure projects. What ultimately matters, of
course, is how the Federal Government responds to
the Panel's report, and what the government chooses
to do in response to the damaging industrial relations
events and actions that we've seen in the streets of
It could not be clearer that we need to have a strong
umpire in the building and construction industry, and
the BCA fully supports Premier Baillieu's call for the
Australian Building and Construction Commissioner
(ABCC) to be reinstated.
If the operation of our workplace relations laws
does not prevent illegal union action, if it limits the
ability of businesses to innovate and adapt swiftly, if
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