Restoring the ABCC

Ignoring the political machinations surrounding the Government's bills to restore the Australian Building and Construction Commission (ABCC), there is potentially an important economic reform at stake.

Building and construction is a vital component of our economy. It directly constitutes about 10% of Australian Gross Domestic Product and employment.

Importantly, however, is that this sector is critical to our economic performance as we transition from the mining boom. An efficient, flexible and innovative building and construction sector will allow us to redirect investment from large scale mining projects to the infrastructure and other private sector developments that are now required.

While it is difficult to assess how effective the former ABCC was in improving the efficiency of the building and construction sector, a number of reports have attempted to do so. For example, Master Builders Australia commissioned ongoing studies tracking the productivity of the sector over time (the latest of these reports can be found here while another report for the BCA looking at industrial relations issues in the sector can be found here).

Of course these reports are dated, but they do point to the potential economic benefits of improving the performance of this sector. Indeed, looking at the data on industrial disputes from the Australian Bureau of Statistics there has been an increase in industrial action across the building and construction sector since the abolition of the ABCC, against a broader trend.

Our own modelling shows that if the building and construction sector could increase its productivity by 5%, this would add an additional 0.7% to Australia's real Gross Domestic Product in 2020 (around $13.1 billion). This would be driven by additional investment that we estimate would increase by 3.5%, creating an additional 4,000 jobs.

While this is a ballpark estimate, it does highlight the importance of reforms to this sector, and the benefits that might flow to Australians.

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