The Productivity Commission’s latest report, “Housing construction productivity: Can we fix it?”, has revealed a stark decline in productivity within Australia’s residential construction sector over the past three decades.

The report, released on February 16, 2025, has been welcomed by industry leaders who see it as a confirmation of long-standing concerns.

According to the Commission’s findings, physical productivity in the housing construction sector has plummeted by 53 per cent over the last 30 years, while labour productivity has decreased by 12 per cent.

This decline stands in sharp contrast to the broader economy, where labour productivity has increased by 49 per cent during the same period.

The report identifies four key challenges facing the sector:

• Complex and slow approval processes

• Lack of innovation

• Limited industry scale

• Workforce issues

These factors have contributed to significant increases in construction costs and build times.

Over the past five years, construction costs have risen by 40 per cent, while residential build times have extended by up to 80 per cent in the last 15 years.

Denita Wawn, CEO of Master Builders Australia, emphasised the urgency of addressing these issues, stating: “Productivity is more than an economic buzzword.

“Every day we drag our heels on tackling the challenges faced in the industry, the longer we drag out the housing crisis.”

The Productivity Commission has put forward several recommendations to address these challenges:

• Streamlining planning and approval processes

• Reviewing the National Construction Code and its implementation

• Addressing barriers to innovation in the construction sector

• Reforming occupational licensing regimes to improve labour market flexibility

While industry leaders have welcomed these recommendations, some, including Master Builders Australia, are calling for further investigation into the impact of recent industrial relations reforms, particularly concerning independent contractors and enterprise bargaining agreements.

In response to the skills shortage highlighted in the report, Master Builders Australia has launched its “Construct Your Career Guide”, a comprehensive resource aimed at attracting new talent to the industry across various roles.

As the industry awaits government action on these recommendations, the report serves as a clear call to action for all stakeholders to address the productivity challenges in the housing construction sector.

Improving productivity in this vital industry is seen as crucial for addressing Australia’s ongoing housing affordability crisis and ensuring a sustainable future for the construction sector.

 

Source: Build Australia

 

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