Despite government investment in housing, a staggering 80 per cent of the additional new homes that could have been built will not materialise, according to Master Builders Australia CEO Denita Wawn.
This revelation comes as the organisation releases its report, The Cost of Letting Productivity Slip, which examines the cumulative impact of positive and negative changes in the construction industry over the next five years.
Wawn highlighted the erosion of new home gains due to a prolonged labour supply shortage, materials price growth, and industrial relations reforms.
She expressed concern that these challenges would worsen with the finalisation of industrial relations reforms and the current union-led pattern of EBA negotiations.
“The delivery of new homes and related infrastructure has been obstructed by ongoing challenges, including labour shortages, economic uncertainty, and material price escalations,” Wawn noted.
She emphasised the importance of productivity growth in achieving and maintaining high living standards.
While government housing policies were projected to result in 42,882 additional new home-building starts and a $19.6 billion gain in total construction output over five years, productivity barriers could lead to a reduction of 34,227 new home-building starts, a decrease of 54,968 jobs in the construction industry, and a hit of $27.9 billion to total construction output.
This would also result in a significant reduction in total economic activity across Australia over the next five years.
Ms Wawn called for action to address productivity constraints, stating: “For the building and construction sector to prosper and meet the ambition to deliver more housing, addressing productivity constraints is a must.
“We have heard a lot of talk from the government about lifting productivity, but it is now time for action.”
She also emphasised the need for a fairer approach to risk-sharing in the building and construction industry and urged the government to align its policies with the long-term objectives of the industry.