ABCC improves construction productivity

A report released in late July said that the activities of the Australian Building and Construction Commission have dramatically improved the productivity of the building and construction industry.

Econtech, an independent economic consultancy, commissioned to study the impact of the ABCC on productivity and estimate the effects on the wider economy, examined data from quantity surveyor analysis, the Australian Bureau of Statistics, the Productivity Commission, case studies of selected projects and economic modelling.

The main findings were:

• Costs were on average 10.7% higher in commercial building compared to domestic residential building from 1994 to 2003. The cost gap fell to 1.7% in 2007;

• The gain in labour productivity, comparing the same periods, is estimated to be 9.4%; and

• Construction labour productivity by 2006, outperformed historical performance predictions, by 9.5%.

The study used sophisticated modelling to estimate the economic impacts of the ABCC. It compared economic outcomes with and without the ABCC. The modelling estimated:

• GDP is 1.5% higher than it otherwise would be;

• The CPI is 1.2% lower than it otherwise would be; and

• A gain in real consumption of 0.8%. Lower living costs lead to higher living standards.

ABC Commissioner John Lloyd, said he was reassured by the positive impact of the ABCC after such a short time.

“The productivity gains we are seeing now were predicted by Royal Commissioner Cole when he recommended the ABCC be established,” Lloyd said. “Unlawful conduct in the building and construction industry has decreased because the ABCC is an active regulator. It is important that not just the building industry is advantaged. This study shows that significant gains are flowing through to the wider Australian economy.

“Construction is fundamental to creating a competitive economy and it is vital that it continue to be undertaken in a highly efficient and productive manner.”

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