ACA: National approaches required to address major productivity problem

Written by Jon Davies, CEO Australian Constructors Association.

Lifting Australia’s productivity will require the new Federal Government to lock in a range of productivity-enhancing reforms. In its latest review to identify productivity opportunities, the Productivity Commission is considering how the pandemic shaped Australia’s productivity challenges. Arguably, it does not have to look far to see the opportunities.

The construction industry presents one of the greatest opportunities to improve Australia’s productivity performance. The construction industry has been called upon to rebuild Australia’s economy in response to COVID. It has seen record investment in the construction of new infrastructure on the basis that every dollar invested in infrastructure has a $3 kick on to the wider economy. Yet the industry, the nation’s third largest, remains the second worst performing for digital adoption and continues to suffer from some of the highest rates of insolvencies in Australia.

The Australian Constructors Association’s proposed major policy reform is the Future Australian Infrastructure Rating—FAIR. FAIR pinpoints the Federal Government, in its role as infrastructure banker, as the ultimate influence over reform implementation. FAIR is simply the mechanism for government. FAIR proposes to rate Federally funded projects against key reform areas to bring about consistent and widespread change. It could be included in the next iteration of the National Partnership Agreement as a requirement for all federally funded projects and to further incentivise quality outcomes, high ratings could unlock access to new funding pools like the previous Asset Recycling Scheme.

There are several other opportunities beyond FAIR to improve productivity. One such opportunity is how existing utilities are managed on projects. The creation of a freely available national digital twin of utilities would enable asset owners and constructors to efficiently design projects based on known locations of services. Further, federal laws should be implemented to oblige utility providers to cooperate with industry at all stages in a project’s development but particularly in providing information and organising timely relocation of services where necessary.

Another opportunity is the establishment of a national standard for data management to increase the effectiveness of data collected. For example, the Rail Industry Safety and Standards Board (RISSB) has developed a draft Australian Standard (AS7739) Digital Engineering for Rail. This document aims to provide digital engineering guidance and an overarching digital framework for successful digital engineering project implementation. A similar concept could be developed for other forms of infrastructure.

National harmonisation of regulations also presents an opportunity to improve productivity. Further work is needed to effectively harmonise the various regulations including licensing, safety, industrial relations and skills. National standard contractual forms with fair risk allocations and standard specifications would also produce significant productivity benefits.

Finally, an enterprise approach to delivery would bring together the entire construction network including asset owners, constructors, consultants and suppliers, to work in a more integrated and collaborative way. The approach is underpinned by longer term relationships and a program approach. Participants are incentivised to deliver better outcomes, and a step-change in innovation and productivity can be realised. Whilst not suitable for all types of projects, there is significant opportunity for this model to be more widely adopted through more careful planning of projects that are able to be consolidated into programs of work.

There has never been a better time for a new government to make its mark and implement reform. Industry is ready for the transformation so let’s get on with implementation.