ADJOURNMENT

Mr GREGG (Deakin) (13:02): Construction matters enormously to Australia. It employs more than 1.3 million Australians and is one of our largest industries. We also know that we're going to need a lot more building going forward.

There's going to be plenty of work ahead. We have a longstanding need for more housing. We have a great need to build more aged-care facilities as our population ages.

We have huge defence and energy infrastructure projects in the pipeline. We know that data centres are emerging as another substantial source of construction demand into the future. This represents an enormous opportunity, but only if we can increase the productive capacity of industry.

Because, if industry demand increases while capacity does not, the result won't be more construction. It will mean higher prices, longer delivery times and governments and private investors competing for the same constrained labour materials and equipment. That brings us to productivity.

Decade after decade, we've seen slow progress. We now know, based on the Productivity Commission's remarks, that productivity in the construction industry has been in the doldrums for 30-plus years. Between 1994-1995 and 2022-2023 the number of dwellings built per hour fell by 53 per cent.

Even after adjusting for larger and better-quality homes, productivity declined by about 12 per cent over that time. That history matters because the problem has been there for most of our lives, for over 30 years, and even in decades before that we saw similar trends. So this transcends different governments, different economic cycles, different technological developments and regulatory changes.

This is a persistent challenge. We've spent too much time trying to point the finger, getting angry and red faced, saying, 'It's their fault,' or, 'This policy is the cause.' The truth is that there are a lot of factors. So the real question is: what would an effective, efficient and highly productive Australian construction industry look like, and what's preventing us from creating it?

Construction is a system as a whole. It's made up of thousands of small businesses, extensive subcontracting arrangements and a lot of complex organisational dynamics. There are different risk allocations through contracting, and we've got a complex web of stakeholders, all of which have legitimate roles.

There's also the financial aspect; there are capital intensity and a lot of cash payments involved in the process. Lots of factors are at play. But government does have an important role.

We are influential in the setting of regulations across three levels of government, but we also fund a lot of construction projects, so there's a great need for strategy. What I want to talk about today is: what are the key areas that we can focus on that can help with the problem without proposing larger-scale investment or government control of the industry?

I would posit that that's not desirable either. And there are a few areas. The first one is apprenticeships.

We need apprentices to complete their apprenticeships and walk away with the skills necessary. There is a need to rethink the way we structure apprenticeships and how we assess skills, particularly when we're sending apprentices to an industry full of small players, often with specialised workflows. Can we have things like skills passports and other interventions to go in and support employers in ensuring they're able to deliver the comprehensive training apprentices need?

We really need to look at everything we're doing to make sure that we're helping rather than hindering success of our apprentices. We also need to look at the way we do approvals. It involves multiple levels of government, lots of complexity, lots of systems and lots of forms.

We need to look at ways that we can bring it all together and make regulatory compliance as simple as possible—almost foolproof—and where we have a code as well, where you can see not only the rules that apply to you but worked examples. It's about making compliance as simple as possible, harnessing technology to do regulation better. There's also the question of preventable losses.

Because there are so many small businesses out there, and the complex financial arrangements that they find themselves in make it incredibly difficult to maintain a successful business in this industry, it's making sure that we look at our competition rules and can support contracting and financing arrangements that set projects up for success rather than creating constant risk.

Where we have limited liability, that doesn't mean losses and costs disappear; it simply means that the losses are worn by someone else in the supply chain. Finally, we should be looking at the pipeline. We invest in a lot of infrastructure and projects, but we've got to make sure that that is compatible with maintaining a strong private sector as well.

It is tapering our projects but also providing a certainty of pipeline, which means that they can invest in capital investments like modular building and others, which really can't be done on a project-by-project level. We've got to look at our contributions as a whole and make sure that we're being facilitative, not preventative. We want to make sure that the construction industry is as productive as it can be and that we're setting Australia up for success in the long term.