Sources of Products Used in Australian Construction

Changes in product shares suggest an increase in prefabrication

 

The Australian Bureau of Statistics publishes a set of supply-use tables every year. These are the ‘building blocks’ of gross domestic product, measured as gross value added for all industries [1]. National accounts estimates are benchmarked to the supply-use tables to maintain consistency within the system from year to year. Although the data goes back to 1994-95, the first publication of supply-use tables by the ABS was for 2016-17. 

The ABS explains the supply table shows the total supply of products from domestic and foreign producers, and the use table the amount of a product purchased by each industry as an intermediate input into the industry’s production process. These products are valued at purchasers’ prices, meaning that taxes, transport costs, and wholesale and retail trade margins are included in the total. A row in the table represents a product group and a column represents an industry group. 

There are 68 industry groups. Construction is divided into four industry groups: Residential building, Non-residential building, Heavy and civil engineering, and Construction services (the trades). There are 115 product groups, however, many have little or no use by construction. Because many product are used, no single group has a significant share of the total, with the exception of Construction services. Examples of product groups with zero use are Aircraft manufacturing, Water and Gas supply, Education, Library, and Social care services. Examples of very low use (under 1% of the total) are Dairy products, Wholesale and Retail trade, Sports, and Personal services. 

 The data in this post is from the use table. It first breaks down the shares of each of the Construction industry groups in total Construction and then their share of use of Construction services. This within industry supply is explained. The post next identifies the seven major product groups currently used in construction, using the most recent data for 2022-23, and details the major product groups in manufacturing and services. In these tables the four industry groups have been combined to get shares of total use of products by Construction. 

The post then looks at changes in the use of products, comparing the 2016-17, 2019-20 and 2022-23 data. Use table values are in current dollars, and the historical data is not adjusted for inflation. Therefore, the analysis uses the percentage shares of the industry and product groups in total construction, rather than the dollar values.

Structure of the Construction Industry

Table 1 shows the total use of products by the four industry groups, with Construction services accounting for 51% of the total value of products used. These shares are broadly in line with the shares of work done in 2022-23. 

Table 1. Value of use of products by Construction industry groups 2022-23

However, Construction services is also the largest single source of products for all Construction industry groups, because Construction services provide many intermediate inputs to a large number of tasks and processes, and the value of that input includes the wages and salaries of more than three quarters of a million workers employed in Construction services. As Table 2 shows, Construction services supplied 41% of the products used in construction, and between 35 and 50% of all intermediate inputs, including 41% to itself.  

Table 2. Construction services share of products used 2022-23

Intermediate Supply of Inputs in Construction

 Many industries are not just end producers but also consumers of their own output. In a supply-use table, when an industry supplies products to itself some of its output is being used internally, within the industry, as an intermediate input to produce more goods or services. This is easy to see with vertical integration, where different stages of production occur within the same firm, for example a steel manufacturer produces raw steel and uses it to make finished steel products, or a chemicals manufacturer uses its own basic products to make more complex ones [2]. 

In construction, a contractor may do demolition, steel fabrication or precast concrete inhouse, or directly employ trades like carpenters, electricians or form workers. Many large firms use a hybrid model, self-performing selected core tasks while subcontracting specialised work. Contractors will often supply many of the materials and components used in a project, even if placed or fixed by a subcontractor, and the value of those items is included in their industry group not Construction services. 

Subcontractors self-supply when they provide their own materials, tools, equipment, and expertise rather than relying on the head contractor. For example, a plumbing subcontractor can bring their own pipes, fittings, and fixtures, or a tiling subcontractor can supply tiles, grout, and adhesives. Subcontractors can use their own machinery and tools, and they self-supply skilled labour. Sometimes they provide design-build services like HVAC systems, custom cabinetry or engineered steel framing.

 The stages of a construction project are all intermediate inputs, from site preparation through structural work and concreting, followed by trades like electrical, plumbing, HVAC, roofing, and painting. Thus there is a large element of self-supply in construction, because contractors supply many of the materials and equipment used and the widespread use of subcontracting and pyramid contracting for specialised trades. This is why Construction services supply 41% of the services and products used within construction. 

 Current Data for 2022-23

 The seven largest categories of products and services used by the construction industry totalled $115.3 billion in value in 2022-23, over a quarter of total use value. These were: 

• Professional, scientific and technical Services, with $33 billion;
• Manufactured wood products (including sawmill products) with $22.4 billion;
• Structural metal products was third at $16.2 billion;
• Iron and steel manufacturing was $13.7 billion;
• Polymer products were $12.4 billion ;
• Electrical equipment was $11.6 billion; and
• Cement/lime/ready-mixed concrete was $11.4 billion 

The following tables have the percent share of product groups that accounted for over 45% of construction’s total use of products in that year. Adding Construction services share of 41%, this is over 85% of the goods and services used in construction. To get a clearer perspective of the importance of the products used in construction, the following tables have two columns, one showing product shares of total construction and the other their shares of the total when Construction services 41% share is excluded. 

Manufactured Inputs

Manufacturing product groups add up to 32% of the total, excluding food and beverages. Table 3 has the major manufacturing product groups supplying 1% or more to Construction, accounting for over 27% of the total and 45% of the adjusted total. After Construction services, these twelve manufacturing products make up the largest group of inputs to construction. 

Table 3. Manufacturing product groups with 1% or more use in total Construction

Services Inputs

 Table 4 has the eleven major service product groups. These contribute nearly 19% of the total, or 32% excluding Construction services. Finance includes banks, Regulatory services include regulation, licensing and inspection activities, Rental and Hiring Services (except Real Estate) includes motor vehicles and transport equipment, and hiring, leasing or renting heavy machinery and scaffolding without operators [3]. Computer systems design and related services is included in the table to emphasise the low level of expenditure on these services. Also of note is the high value and share of Public administration and regulatory services. 

Table 4. Service product groups

Industry Input Shares Since 2017

 Data from the three use tables for 2016-17, 2019-20 and 2022-23 are compared. Table 5 has the industry group shares of total construction in those years.

Table 5. Share of Construction industry groups in total

Table 6 has the share of Construction services in the inputs to the industry groups. This shows a gradual change in the structure of the industry, as the share of Construction services in total Construction declined by 2.7% between 2016-17 and 2022-23.

Table 6. Construction services share of products in Industry groups

 The share in total Construction of the major manufacturing product groups increased by 1.4% between 2016-17. However, as table 7 shows, there were some manufacturing products with a decreased share, like Cement, Plaster and Other wood products, some were stable, like Petroleum and coal and Polymer products, while the others like Sawmill products and Electrical equipment had increases. The big changes in shares were increases in Iron and steel, Structural metal and Other fabricated metal products, which strongly suggests there has been an increase in prefabrication and offsite manufacturing in construction. 

 Table 7. Manufacturing product groups percent of total construction

The was also an increase in the share of the eleven major services product groups. Again, there is a mixture, with decreases in Finance, Public administration and regulation and Non-residential property services and rental and hiring, some unchanged like Auxiliary finance and insurance and Computer systems design, and some with increases like Professional, scientific and technical services, Building cleaning, pest control other support, and Automotive repair and maintenance. 

 Table 8. Services product groups percent of total construction

Between 2016-17 and 2922-23 there was a decline in Construction services’ share of products used, from 44.1% to 41.4%, matched by a similar small and gradual increase in the shares of the major manufactured products from 25.8% to 27.3% and of services products from 18.3% to 18.9%. Although these shifts of one or two percent are too small to indicate serious structural change, they do suggest the industry is continuing to evolve and substitute offsite manufacture and design work for some of the onsite work done by subcontractors. 

Figure 1. Changes in product groups used in Construction

Source: ABS 5217, Table 2. 

 

Conclusion

The supply-use tables from the ABS provide granular detail on the flow of goods and services between industries. The use table shows the amount of a product purchased by each industry as an intermediate input into the industry’s production process. There are 68 industry groups and 115 product groups in the table. The most recent data is for 2022-23. Construction is divided into four product groups and four industry groups.

The shares of the four Construction industry groups in the $444bn total of products used by Construction in 2022-23 was: Residential building 21%, Non-residential building 20%, Heavy and civil engineering 10%, and Construction services (the trades) 50%. A distinctive feature of Construction is the within industry supply of 41% of products used from Construction services. When an industry supplies products to itself, some of its output is being used as an intermediate input to produce more goods or services. 

 Contractors will often supply many of the materials and components used in a project, even if placed or fixed by a subcontractor, and the value of those items is included in their industry group not Construction services. Subcontractors self-supply when they provide their own materials, tools, equipment, and expertise rather than relying on the head contractor. Therefore, there is a large element of self-supply in construction, because contractors supply many of the materials and equipment used and the extent of subcontracting.

In this analysis the four industry groups have been combined to get shares of total use of products by construction. After Construction services, the seven major product groups currently used in construction accounted for another 26% of all products. The largest product or service used was Professional, scientific and technical services ($33bn), followed by Wood products ($22bn), Structural metal ($16bn) and Iron and steel products ($14bn).  The other three were Polymer products, Electrical equipment and Cement/lime/ready-mixed concrete, all around $12bn. These seven largest categories accounted for accounted for 26% of total inputs to construction activity. 

More broadly, the twelve major manufactured product groups were 27.2% of all use, and the eleven major service product groups were 18.9% of all products used. Looking at changes in the percentage shares of product groups in total construction, comparing the 2016-17, 2019-20 and 2022-23 use tables, there was a decline in Construction services’ share of products used, from 44.1% to 41.4%, matched by small increases in the shares of the major manufactured and services products, from 25.8% to 27.3% and from 18.3% to 18.9% respectively. 

 The big changes in product shares between 2016-17 and 2022-23 were increases in Professional, scientific and technical services, Iron and steel, Structural metal and Other fabricated metal products. These changes in product shares strongly suggest there has been an increase in prefabrication and the industry is continuing to substitute offsite manufacture and design work for onsite work done by subcontractors.

                                                             *

 [1] This is the production approach to measuring GDP, as the sum of gross value added by all  industries. This is the difference between an industry’s cost of inputs and its value of output. The supply-use tables align the income, expenditure and production approaches used to measure GDP.  

[2] Measuring industry self-supply accurately is important for understanding productivity, cost structures, and value-added in the national accounts.

 [3] These definitions are from the Australian and New Zealand Standard Industrial Classification (ANZSIC). 

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Queensland Report on Construction Productivity

 More recommendations and reform directions focused on regulation and planning

 

 

The Queensland Productivity Commission (QPC) released their interim report on Opportunities to Improve Productivity of the Construction Industry on 31^st July. Construction productivity has recently been the subject of two other reports, with this one following the NSW Productivity and Equality Commission report Housing Supply Challenges and Policy Options in August 2024 and the Productivity Commission report Housing Construction Productivity: Can We Fix It? in February 2025. 

 

The motivating force behind the three reports is a political requirement to be seen to be doing something to address the housing crisis, which is fundamentally due to a mismatch between a long-term lack of supply of new dwellings and the high level of demand, driven by a combination of increased immigration and decreased household size. The result has been rising house prices, falling affordability, particularly for first home buyers, increased rents and very low vacancy rates. Another factor is the high level of engineering construction, due to the size and number of transport and energy projects, many of which are for the public sector. Queensland also has the effects of additional demand from the 2032 Olympic Games projects, currently estimated at $7 billion (which based on other Olympic Games will be much more).

 

The QPC report says ‘While many problems were identified, stakeholders were generally confident that better outcomes are possible. There is broad agreement amongst stakeholders, for many of the solutions identified, on how to address the problems facing the industry.’ Unfortunately, some 342 pages later, most of the problems discussed are about regulation and planning, onsite construction productivity barely gets a mention, there is no evidence stakeholders are in agreement on solutions and more information is requested for the recommendations, and how the problems will be addressed is not included because ‘Implementation issues, including prioritisation and sequencing, are not considered in this interim report but will be considered in the final report.’

 

This post starts with the QPC interim report’s terms of reference and Queensland construction productivity, then looks at the recommendations and reform directions in the report. Some of the report’s  key points on planning and approvals and regulation are covered, and other important industry issues and opportunities not addressed in the report are discussed. 

 

The Terms of Reference Were Extremely Broad

 

To understand how complex the issues surrounding  construction productivity are and why this report (and the others) are so unsatisfactory it is necessary to start with the terms of reference given to the QPC (heavily edited to key points) :

 

•        Conditions in Queensland’s housing market, residential development, and non-residential construction, including housing supply and affordability;

•        Key trends including input costs, prices, competition, and supply chain developments;

•        Factors shaping Queensland’s productivity including legislation and regulation, industrial relations, procurement policies and labour force needs;

•        Opportunities for improvement including regulatory and non-regulatory mechanisms;

•        Priority areas for reform in the short, medium and long term (including labour, skills and competition, suitability and availability of qualified head contractors and sub-contractors etc.);

•        Impact on small and medium scale subcontractors in regional areas and their ability to compete for government tenders due to regulatory requirements;

•        Availability of labour, skills development, and matching supply with demand;

•        How government procurement and contracting arrangements affect construction productivity, including Best Practice Industry Conditions (BPICs are wages and conditions on public projects introduced to encourage enlistment of workers);

•        Barriers to entry, investment and innovation in the sector.

 

Including issues around government procurement and contracting allowed the QPC to address some important productivity determinants that were not in the other recent reports. However, the problem is the breadth of these terms of reference, and the loose or long-term relationship many of the others have with onsite construction productivity, which is what is being measured by the statistics. 

 

The QPC report, and the NSW and Productivity Commission reports that preceded it, are not really about construction productivity, which is being used as a stalking horse for the long-term lack of supply of new housing. These reports are more concerned with the complex, cumbersome and sclerotic planning and approvals process that deters, delays and prevents residential construction, and the effects of regulation and the building code.

 

Queensland Construction Productivity

 

The QPC found Queensland construction productivity is only 5 per cent higher than it was in 1994-95, compared to a 65 per cent increase in labour productivity in the market economy. As Figure 1 shows, the variation in aggregate productivity is explained by compositional changes due to the rapid growth and subsequent decline in heavy and civil engineering activity in the LNG investment boom.

 

Figure 1. Queensland productivity

 

This is also what a previous post on construction productivity in the states and territories found. In 2014 the Australian mining boom peaked with the value of work done reaching $80 billion in Queensland, mainly due to construction of three LNG plants. The pro-cyclical nature of construction productivity is clearly seen in Figure 2 as gross value added (GVA) per hour worked followed the fall in the volume of work, which declined by around 30 percent in Queensland [1].

 

Figure 2. Gross value added per hour worked and construction work done

Sources: ABS 5220, ABS 6150, ABS 8755.

 

The quotes below on the causes of slow productivity growth have been taken from the QPC report.

 

‘Although empirical evidence on the causes of slow productivity growth is incomplete, it suggests that regulation is likely to have played a key role’:

·      Evidence from the United States and New Zealand suggests restrictive land use regulation may have made it more difficult and expensive to construct housing and other buildings [2].

·      Research suggests there have been significant increases in the complexity of building regulation, which has increased overheads and construction costs.

·      Regulatory design, including regional variations, have created incentives that keep the industry fragmented and dominated by smaller firms, who are less likely to innovate and have lower productivity.

·      Where regulators have poor incentives or are underfunded, results in unnecessary delays, high administrative costs and poor oversight, which can undermine productivity.

 

‘Recent changes to the National Construction Code (NCC) have been adopted without a case being established that they would provide a net benefit to the community. Similarly, Queensland introduced its trust accounts framework without undertaking a regulatory impact assessment.’

 

‘While regulatory issues seem to be a key driver of poor performance over longer time periods, more recent productivity declines seem to have been materially impacted by policy choices relating to Queensland Government procurement.’ 

 

‘Insufficient attention has been given to how procurement practices or new projects are impacting the market. This has been exacerbated by poor project selection.’

 

‘Government procurement practices, particularly BPICs, have created unnecessary inefficiencies’

 

The Report’s Recommendations and Reform Directions

 

The preliminary recommendations are ‘specific reforms that the Commission is seeking feedback on.’ There are 21 recommendations, of which six are on planning and approvals, and four on the NCC and regulation. The recommendations are:  

 

·     Government procurement - recommendations 1, 2 and 3;

·     BPICs removal –  recommendation 4;

·     Planning and approvals – recommendations 5, 6 (infrastructure charges), 7, 8, 9, and 10;

·     Regulation –  recommendations 11 (NCC), 12 (building codes), 13 (minimum financial requirements), and 14 (trust accounts);

·     Modern methods of construction (MMC) – recommendation 15;

·     Worker health and safety – recommendations 16 and 17;

·     Workforce – recommendations 18 and 19 (occupational licensing), and 20 (mobility);

·     Utility connections - recommendation 21.

 

The reform directions are ‘areas where there is a clear case for action, but the Commission is seeking further information to support the development of specific recommendations.’ There are 12 reform directions, of which

 

·    Government selection and staging of infrastructure – reform direction 1;

·    The pre-qualification system – reform direction 2;

·    Re-setting industry practices and increasing competition – reform direction 3;

·    Tendering and contracting, including building information modelling (BIM) and collaborative contracts - reform direction 4;

·    Planning and zoning reform – reform directions 5, 6 (community support);

·    Review of regulations – reform directions 7 and 8 (QBCC);

·    Worker health and safety - reform direction 9;

·    Workforce - reform directions 10 (training), 11 (migration), 12 (labour hire).

 

There are also two requests for information, on the 2024 Energy Queensland Union Collective Agreement, and on foreign investor taxes and housing construction. 

 

If the aim really is to improve construction productivity, recommendations would be focused on improving project management, logistics and supply chain efficiency, increasing investment in machinery, equipment and software, contractual relations and the structure of the industry. While the recommendations on procurement are important, and with those on workforce development and industrial relations relevant to productivity, the majority of the QPC’s recommendations are on legislation, regulation, and the planning and approvals process. 

 

A comparison with the 2024 NSW Productivity and Equality Commission report Review of Housing Supply Challenges and Policy Options for NSW is useful. That report found barriers to housing supply included high construction and borrowing costs, capacity constraints in the construction sector, and bottlenecks in the development process, with over half of the 32 recommendations on planning. It recommended reforming planning to streamline the development process and reduce approval times, and reviewing planning policy because ‘prescriptive rules’ on land block innovation. Other recommendations included education and skills, business regulations and tax, improving infrastructure and transport, replacing stamp duty with a land tax, establishing an Urban Development Program to report on the housing market and a housing supply council to advise on housing targets, and incentives for local government to meet targets. It argued for non-regulatory approaches wherever possible, and avoiding excessive regulation. While there are many overlapping recommendations, this is a more ambitious agenda than the one envisaged by the QPC. 

 

The structure of the QPC Interim  Report echoes the Productivity Commission’s February report, which had five issues and seven reform directions. The PC’s issues were: the complex and slow approvals process; fragmentation due to regulation; the lack of innovation; the regulatory burden; and workforce issues. The reform directions were: coordinated and transparent planning approvals and appropriately funded regulators; review building regulations and the NCC’s objectives; implement ratings systems on new and existing building quality; increase diffusion of technology; public research and development funding; reduce regulatory impediments to MCC; and improve workforce mobility and flexibility. The PC suggested states should consider establishing coordination bodies to speed up the process and address delays such as the Queensland State Assessment and Referral Agency, which got two mentions but no discussion in the QPC report [3]. 

 

The Planner Productivity Problem

 

Over 45 pages the QPC details regulation of land use that ‘can be complex, restrictive, inconsistent across local governments, inconsistent between regulatory instruments and impose costly and unnecessary requirements’, a planning system that ‘is complex, difficult to navigate, inefficient and lacks transparency and accountability’, and approvals processes that ‘create uncertainty, have high transaction costs, require expensive or unnecessary modifications to building design or cause excessive delays.’ 

 

The QPC recommends an alternative development pathway for significant developments [4], amending the Planning Regulation, and reviewing the Building and Planning Acts. The Government should ‘investigate digital planning and permitting technologies to improve the efficiency, accuracy and transparency of the approval process.’ To ‘build community support for housing development’ the QPC suggests improved consultation, citizen panels, independent hearing panels, and negotiable conditions. To improve zoning financial incentives for local government might be used. 

 

It is universally recognised that the time and cost of development approvals is a problem, but that is an issue of planner productivity not construction productivity. Research from YIMBY Melbourne found ‘In 1986, for every practicing planner, Australia built around 54 homes. Now, we build fewer than nine homes per planner. A planner 40 years ago was on average responsible for the development of six times the number of homes per year than a planner working today.’ 

 

Figure 3. Planner productivity

Source: There is no planner supply shortage, YIMBY Melbourne Research Note. 

 

The Research Note concluded ‘The demand for planners has mainly increased not through an increase in construction output and project delivery, but through an increase in regulatory process and complexity.’ This is QPC’s reform direction 4, and addresses 

the problem that development projects such as new housing estates and apartment complexes can take ten years or more to complete, with most of the time spent getting approvals. 

 

Regulation and the NCC

 

The QPC says ‘evidence suggests that several regulations affecting the construction industry are not effective or efficient, and are likely to be reducing productivity. Building regulations are becoming more complex with increased risk they are impeding productivity. Reduced levels of attention are being paid to the costs of new regulation, with regulatory best practice not being followed.’

 

Figure 4. The Queensland building regulation system

 

 

The outcome is the QPC’s view that recent changes to NCC 2022 for liveable housing and energy efficiency have increased construction costs, and ‘regulatory impact analysis undertaken showed these benefits were unlikely to justify the costs they impose.’ The recommendation is for Queensland to opt out of NCC 2022 and ‘only adopt future NCC changes in Queensland codes where these have been through robust regulatory impact analysis to demonstrate they provide net benefits to the community.’ 

Under Reform direction 8 ‘consideration should be given to whether the regulatory framework underpinning the QBCC provides the right incentives for ongoing

improvements to regulatory performance.’

 

Modern Methods of Construction and BIM

 

There is a short chapter in the interim report on MMC, included in the section on regulation. The QPC argues there is no market failure and no reason for government intervention to promote MMC. The report makes some general observations about regulatory barriers to MMC, none of which are new, and did not endorse MMC as an alternative to conventional building. There is no discussion on the cyclical boom-bust nature of residential building, which makes industrialisation of modular and prefabricated housing difficult, the reluctance of most banks to finance modular and prefabricated houses, and the lack of standards or an industry quality assurance accreditation system for modular and prefabricated buildings. 

 

The QPC acknowledges the existence of the MMC program that QBuild and the Office of the Queensland Government Architect have, which is a partnership with 12 industry suppliers to supply housing in regional and remote areas. In 2023 QBuild established a training and production facility at Eagle Farm in Brisbane, and two more production facilities have since opened in Zillmere in north Brisbane, and Cairns in Far North Queensland. 

 

Although QBuild has the best developed MMC program in Australia that has produced over 500 houses, the QPC does not discuss or make any recommendation on the program. The QPC did not use the opportunity to report data from QBuild on MMC productivity, costs and time performance, or provide feedback from occupants on the build quality and  liveability of their houses, or from users of modular or prefabricated public buildings like schools and hospitals. 

 

Another oversight is the lack of discussion on the use of Building Information Modelling (BIM) or other digital tools like design for manufacture and assembly (DfMA). These are making offsite manufacturing of building modules and components more efficient and have been used for over a decade. At the end of the section on Contracting for Efficiency the QPC asks for information on ‘the key barriers to increased adoption of digital technologies, such as BIM, and the policies or practices that would allow the opportunities for digital technologies to be fully leveraged.’

 

Queensland has had a BIM mandate for public projects over $50 million since 2019, however the QPC does not think this worth mentioning or, worse, investigating. This was another missed opportunity to assess the costs and benefits of their BIM mandate, and the failure to recommend its retention and/or extension a mystery. Also, the BIM mandate is under the Queensland Department of State Development and Infrastructure, which has a 2024 Infrastructure and Workforce Productivity Plan with details on current and planned initiatives, The QPC does not refer to this plan or its effectiveness [5]. 

 

Industry Issues

 

There are other important industry issues not discussed, starting with construction costs and the volatility of the building cycle. Improving productivity through better project management and reform of the VET system are also overlooked. There is no discussion of digitisation and automation, digital tools and platforms, AI enhanced systems, and automated planning and code compliance checks. Also, industry contractual relationships and risk allocation are not considered. Subcontracting is flexible and a method to manage costs and risk, but direct employment has a smaller span of control and is more efficient. 

 

Although there is extensive coverage of building regulation and the NCC, the QPC does not discuss building defects and the lack of implementation of the 2018 report Building Confidence: Improving the Effectiveness of Compliance and Enforcement Systems for the Building and Construction Industry Across Australia recommendations on mandatory inspections and fire safety. Nor is the problem of flammable cladding in Queensland in the report, where from 2019 to 2023 there was a Safer Buildings Taskforce to advise the government on policies and actions and how to rectify combustible cladding. In August 2025 three public buildings still needed rectification and some unknown number have been rectified and removed from the online list on The Department of Housing and Public Works page, which says: ‘As of 31 May 2024:

·       976 private buildings require a solution to address cladding risk;

·       308 are potentially at risk and need to complete the checklist process;

·       345 have notified of removal or rectification.

 

Although the terms of reference were to look at other jurisdictions, there is no discussion of the NSW iCIRTsystem, developed by ratings agency Equifax, for assessing contractor and consultant capability and performance, despite clear evidence of the effectiveness of the system in NSW in improving building quality and addressing the problems of building defects and phoenixing by developers and contractors. Discussion of the 10 year latent defects insurance scheme that has started in NSW is also missing. 

 

Conclusion

 

The QPC has focused on regulation and planning as the main issues, but these are just two of the factors that affect onsite productivity, and arguably skills, technology and project management are more important. Also, while no-one disputes the importance of issues like costs, prices, competition, the supply chain, labour, skills, occupational licensing, procurement and contracting, these have been discussed and dissected over and over again. The QPC makes no new contribution to these issues.

 

The QPC’s 21 recommendations and seven reform directions are in four key areas. The first is improving government procurement policies, where well-known ideas on collaborative contracting, and selecting, sequencing, and sizing of public projects are recycled. These would all make the Queensland Government a better client and would probably increase productivity on public projects, but that can only have a small effect on the overall level of construction productivity in the state because most of the work done is for the private sector. The Queensland Government (and the other Australian Governments) have received these recommendations many times over the years. 

 

The second key area is improving land use regulations, including approvals and zoning, which are a third of the recommendations. The QPC does not directly address the reality that local government opposes new housing, although it does recommend an alternative development pathway for significant developments and reviewing the Building and Planning Acts. The issue here is planner productivity, which has fallen as regulatory complexity has increased, not construction productivity. Planning and zoning decisions have no effect on supply side issues such as the cost of construction materials and mortgage finance for new housing, providing the infrastructure needed for new developments, and the rate of conversion of approvals into commencements by developers.

 

The third key area is the regulation of building activity. The QPC recommends opting out of the 2022 NCC updates on building accessibility and thermal performance because of their cost effects, reviewing the regulatory framework and performance of the QBCC, and pausing rollout of trust accounts while investigating their costs and benefits. The QPC argues no government support for MMC is required, but regulatory barriers should be addressed. 

 

The fourth key area is improving labour market operation, mainly through reform of apprenticeship and training pathways, occupational licencing, skilled overseas migration, labour hire licensing, and allowing recognition of qualifications from interstate. These issues were recognised and had similar recommendations in the NSW and Productivity Commission reports. 

 

What the QPC report shows is that construction productivity in general, and residential productivity in particular, is being used as a stalking horse for the lack of supply of new housing. As in the previous reports from the NSW Productivity and Equality Commission and the Productivity Commission, the main focus is on a sclerotic planning and approvals process that delays and often prevents new housing. The real issue there is local government opposition to new housing and planner productivity, not construction productivity. 

 

Houses are larger and apartments smaller than a few decades ago, but how they are procured and built, and what they are made of, has not substantially changed in decades. Fundamentally, that is also why the level of productivity has not changed. While there are more electrical appliances and offsite manufacturing of trusses, windows, doors and cabinetry, the building structure and services like electricity, water and plumbing in a 1960s dwelling are those found in a new build today.

 

Construction in general and housing in particular has a well-established system of production that is efficient and flexible. It will only change if and when there is a clearly superior method of delivery that is also profitable. Tinkering with regulations, the NCC, planning and approvals processes, and occupational licensing might make a difference at the margin, but will not deliver the big improvement in productivity that is required. For that a commitment to increased digitisation and automation is necessary, with government policies, procurement and finance aligned. 

 

There are some glaring omissions in the report. The QBuild MMC has produced over 500 houses, but the QPC does not discuss or make any recommendation on the program. Queensland has had a BIM mandate for public projects over $50 million since 2019, however the QPC does not think this worth mentioning or, worse, investigating. There is almost no discussion on the use of BIM or other digital tools like design for manufacture and assembly. Construction costs and the volatility of the building cycle, improving productivity through better project management and reform of the VET system are also overlooked. Although there is extensive coverage of building regulation and the NCC, the QPC does not discuss building defects and the lack of implementation of the 2018 Building Confidence report. 

 

The productivity issues in the QPC report are not new and can be found in many other reports on the industry, although there are some that are specific to Queensland. The interim report’s recommendations are limited and most would be little more than modifications to the current system. While those may be worthwhile, because the current system can clearly be improved, there is no suggestion that a more radical approach might be needed or taken.

 

                                                            *

 

[1] The effect of the mining boom was the subject of a 2023 post on The Long Cycle in Australian Construction Productivity using GVA per person employed.

 

[2] The US research was discussed in an October 2024 post Recent Research on Construction Productivity.

 

[3] Discussed in the post Housing Productivity Report a Missed Opportunity on the  Productivity Commission’s report Housing Construction Productivity: Can We Fix It? 

 

[4] The QPC does not refer to the NSW Housing Development Authority, established in January 2025 to approve State Significant Developments and rezonings. By August it had approved 187 projects with over 70,000 dwellings. NSW has introduced a Pattern Book of six low and mid-rise housing designs with a 10 day approval pathway. Also in August, Victoria introduced a Single Home Code for deemed-to-satisfy houses that need no further approvals. This follows the Townhouse and Low-Rise Code introduced earlier in 2025.

 

[5] A 2021post was on BIM Mandates and  Construction Industry Policy

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