Regional Economic Development

EY research says abolishing ABCC could cost Australian economy $47b by 2030

THE Australian Labor Party's (ALP) current policy to abolish the Australian Building and Construction Commission (ABCC) could result in a $47.5 billion hit to the economy, according to economic modelling by EY. 

EY’s modelling found that in the context of building Australia’s economic recovery from COVID-19 and acute supply-side pressures currently facing the industry, abolishing the ABCC could lead to significant economic losses.

The EY report identified the most likely losses as:

  • A fall in the output of the construction sector of around $18.4 billion by 2025 and $35.4 billion by 2030.
  • A decline in overall economic activity of $16.3 billion by 2025 and $47.5 billion by 2030.
  •  A fall in manufacturing output of $4.8 billion by 2025 and $13.1 billion by 2030.
  • A decline in services output of $5.9 billion by 2025 and $19.5 billion by 2030.
  • A fall in economic investment of $24.7 billion by 2025 and by $45.6 billion by 2030.

An EY spokesperson said these outcomes would have a detrimental impact not only on the building and construction industry but also the broader economy given the industry’s pivotal role in building productive capacity of the economy.

Analysis in the report highlighted that an efficient and well-functioning construction industry was crucial to the performance of the Australian economy given that $1 spent in public infrastructure -- that is, works that are conventionally within ABCC jurisdiction -- returns $4 into the economy.

The ABCC works to ensure the building and construction industry is lawful, productive and efficient, according to EY. The conclusion was the ABCC was critical in minimising unnecessary costs and project risks that arise from delays and unlawful industrial action.

Recognising such risk factors and the industry’s difficulties in absorbing the costs of industrial disputes, 89 percent of construction businesses surveyed for the report believed that the industry benefitted from an independent specialist regulator.

Nearly 70 percent of businesses surveyed stated that the ABCC had reduced levels of unlawful industrial action, while a similar proportion believed that the ABCC had made industrial action easier to manage.

 About 64 percent of businesses said the ABCC would be a more effective regulator if it had greater powers.

Importantly, according to EY, nearly 40 percent of businesses said the ABCC had helped to improve safety on construction sites.

The report found that the cost of construction for essential public services such as defence, aged care, health and public administration could face an upward pressure if the ABCC was abolished. Based on Australia’s public infrastructure investment pipeline, the cost to taxpayers from abolishing the ABCC could be in the order of $9.5 billion over the next decade.

Master Builders Australia’s CEO Denita Wawn said, “In releasing this report, Master Builders Australia reiterates its call to the Labor to set aside its policy to abolish the ABCC, which would endanger economic recovery and growth, and raise costs for taxpayers.

 “Abolishing the specialist construction regulator would especially imprudent as inflationary headwinds and supply challenges continue to build,” she said. 

 “The release of the report adds $47 billion more reasons why the ALP must reverse its decision to abolish the ABCC. As an agency formed to tackle an ingrained industry culture of lawlessness and ensure taxpayers receive value for money, the work of the ABCC is not yet done.

"This report shines a light on the risk to economic recovery and future growth if the ABCC, a proven and effective regulator, is dismantled,” Ms Wawn said.

Download EY Report: Costs of Labor Abolishing Australian Building & Construction Commission (ABCC) here.

 

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All Qld regions will grow on way to net zero – Deloitte report

QUEENSLANDERS will have more jobs to choose from, and live in a larger economy, if the state manages the transformation to a clean economy well, a new Deloitte Access Economics report has found.

People powering the future, commissioned by the Climate Council, found managing the transformation to a clean economy successfully will see the Queensland economy become 7 percent larger in 2050 than it would have been otherwise.

The report found demand for clean economy jobs will grow 2.5 percent each year over this decade, and clean jobs will make up three quarters of the fastest growing occupations by 2030.

According to the Deloitte-Climate Council report, South East Queensland will see massive growth in clean jobs by 2050. This includes 1300 jobs in hydrogen, 1350 in bioenergy and 4900 in clean electricity. 

North Queensland is expected to experience one of the highest overall average annual growth rates in employment. The clean electricity sector alone is anticipated to grow 8.6 percent every year until 2050.

Central Queensland has significant opportunities for jobs growth in clean electricity (7.8% per year), hydrogen (6.9% per year) and base metal mining (4.9% per year). 

South West Queensland’s traditional strengths will continue to grow its regional economy. Construction is expected to more than double between 2021 and 2050, from contributing $749 million now to $1.5 billion in 2050.

Agriculture will jump from contributing $4,167 million today to the Queensland economy to $7,723 million in 2050.

Climate councillor and economist, Nicki Hutley said planning and preparing for a lower-emissions future would create economic opportunities for Queenslanders and ensure prosperity for the state. 

“If we plan early for the economic transformation, all Queensland regions and workers will enjoy clean economic growth and job opportunities,” Ms Hutley said.

“Today, 80 percent of the tasks needed in Queensland’s future clean economy are already being performed. For example, an electrician working in a coal mine can relatively easily upskill to work in another industry, such as a hydroelectric plant.”

The report found Queensland workers impacted by the transition away from fossil fuels will have, on average, four alternative occupations they can immediately pursue – and that is with no additional formal training.

For example, drillers, miners and shot firers can work as a power generation plant operator. Heavy machine operators have skill sets that will be valuable across Queensland’s clean economy.

The report also concluded that fears decarbonisation would mean large job losses were unfounded, with the majority of Queenslanders’ jobs unaffected by the move to a clean economy.

Amanda Cahill, CEO of The Next Economy, a non-for profit aiming to create resilient regional economies, said the Queensland government should support regions and training providers to upskill Queensland’s workforce for the net zero economy. 

“The Queensland Government can make sure workers have access to training opportunities to not only develop skills across a range of clean industries, but also address current skills and labour shortages across regional Queensland,” Dr Cahill said.

“Planning well and planning early will result in better outcomes for workers, businesses and the broader state economy.

“In fact, if we plan early for the economic transformation every region in Queensland could enjoy clean economic growth and more job opportunities.”

www.climatecouncil.org.au

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McKell report warns allowing super for home deposits would ignite new housing boom

A GROUP of Australia's leading property economists is warning that allowing Australians to use their superannuation savings on a house deposit would reignite a price explosion. They said the "rampaging property market" was just starting to calm,

A new McKell Institute report, Mortgaging Our Future, has used sophisticated modelling to project the effect on the housing market should Australians be given access to their super to use on a home deposit, as advocated by a range of Federal Government MPs, including Tim Wilson.

The new report finds the Tim Wilson proposal would add nearly $69,000 to the price of the average house in Sydney, $108,000 in Melbourne, and an astounding $159,000 in Adelaide. (See table below).

The report also finds that Australians who chose to invest in a house deposit instead of keeping their money invested in super would retire worse off, because the average returns in a super fund are superior to the average growth in a home.  

The McKell Institute's executive director, Michael Buckland, said the report was a sobering reminder of what was at stake. 

“Homes have already become unaffordable for millions of Australians and allowing super balances to be spent on house deposits would make things so much worse," Mr Buckland said. 

"The Tim Wilson proposal would pour fuel on the fire of our housing market at exactly the time when we are desperate for a little calm. 

"Super-for-housing would mean first-home buyers handing their hard-earned retirement savings to existing property owners when they would be better off investing them in super," Mr Buckland said.

"Young Australians need their retirement savings quarantined and compounding. Using these savings to fuel yet another housing market feeding frenzy would be policy madness."

 

S4H Price Effect (%)

Median Price (Sep 21)

Price Increase

Sydney

4.6

$1,499,000.00

$68,954.00

Melbourne

10.4

$1,038,000.00

$107,952.00

Brisbane

14.8

$702,455.00

$103,963.34

Adelaide

20

$667,000.00

$133,400.00

Perth

18.8

$598,601.00

$112,536.99

Hobart

22.8

$698,212.00

$159,192.34

Darwin

12.7

$640,068.00

$81,288.64

www.mckellinstitute.com.au

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Springfield shows how modern cities really should work

By Leon Gettler, Talking Business >>

THE MUR group of companies is developing a multi-award-winning smart city, Springfield, just outside of Brisbane.

It has been on this journey for 30 years and Springfield is today classified as a city, having started out as a 3000 hectare parcel of bush land. It has been converted from a timber and forestry operation with a population of one, the caretaker, to an emerging city on the edge of Brisbane with a population of almost 50,000 people.

This is an unusual project. Usually governments run these types of developments, but Springfield is the vision of, and is being managed by, a private developer whose figurehead is the visionary Maha Sinnathamby, MUR founder and chairman of Springfield City Group.

The first move was to build the residential component but Bob Sharpless, the managing director of the MUR Group and deputy chairman of the Springfield City Group said it was realised early on that things had to be done differently.

Springfield City aimed to create employment, with one job for every three people, and to do this, it had to identify the business themes that would create future employment. These included education with 11 schools, a university and a TAFE and lots of childcare centres for a young population with an average age of 29.

There are more than three children per household in Springfield. 

 

HEALTH PRECINCT AND TECHNOLOGY FOCUS

There is a focus on health at Springfield, with a component of the project called Health City involving public and private health provision. There is also the traditional shopping precinct called Orion Centre which includes Coles, Woolworths and K-mart.

The smart city has also developed strongly in the information technology (IT) space with the Polaris Data Centre and dark fibre connecting Springfield back into Brisbane.

“We’ve reticulated fibre through the community a long time before NBN was a requirement,” Mr Sharpless told Talking Business.

“And increasingly, we’ve started to play in the energy space where we are working with a French company, Engie, to achieve a zero net energy position by 2038.

“They are just a few of the themes we have identified,” Mr Sharpless said.

“What we’re trying to do is attract businesses that can be located in Springfield that will create the future jobs for the people that either live here or can commute here in a pretty efficient way.”

 

DESTINATION FOR CONSTRUCTION GIANTS

As part of the development, Springfield is also working with major corporations such as Mirvac and Lend Lease.

“We knew very early on that we couldn’t do everything and we didn’t have the expertise to do everything, so we’ve tended to adopt a model where we play the role of ‘master developer’ and we have a number of long-term partnerships with the organisations,” Mr Sharpless said.

“We work collaboratively with them for them to develop in accordance with out master plan.

“We give people the opportunity to develop our land under a sub-development arrangement and we share, sometimes, the provision of infrastructure which is required for the land that they’re developing together with other parts of the project that we’re developing.”

Springfield also enters into royalty arrangements in which it takes a percentage of the sale price of the development.

 

LONG-TERM FOCUS ON ENVIRONMENT

Springfield is also promoting environmental sustainability. A third of the total land area has been retained for open space and conservation.

Usually, in projects of this nature, that figure would be about 10 percent. So this is a city considering its local habitat along the way.

Springfield aims to be a lot more efficient than other city and suburban areas in terms of energy. It is, in fact, the suburb in Queensland with the highest penetration of solar panels.

“We tend to be ahead of the curve,” Mr Sharpless said. “We look at ways of creating more uniqueness within our project. Our green credentials, our ability to put in high quality energy and telecommunications infrastructure has certainly been something that set us apart from other large residential projects

“And we have been doing it for a long time. Over 20 years ago, we were working with Apple to put computers into a school here and then testing the levels of numeracy and literacy that the students were achieving as a result of having that type of technology in the school.

“You’d laugh at it now and thinks it’s rudimentary but back then it was the novel thing to do,” he said.

“We also had Optus in there with an intranet and we were giving free computers to everyone who bought a block of land here to build a house.”

www.greaterspringfield.com.au

www.leongettler.com

 

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness.

https://play.acast.com/s/talkingbusiness/talking-business39-interview-with-bob-sharpless-the-deputy-c

Peak organisations release new design guide to support NSW building reforms

FOLLOWING UP on major NSW legislative and regulatory reforms to improve building quality and safety, three peak bodies have released a landmark guide for design practitioners and engineers.

Consult Australia, Engineers Australia and the Australian Institute of Architects have joined forces to develop the Guide for design practitioners and engineers to help their members tackle the recent NSW Building Confidence reforms.

The guide is a practical resource that highlights key issues relevant to contracts and professional indemnity (PI) insurance relating to the recent legislative and regulatory changes.

There are multiple new obligations on design practitioners, engineers and building practitioners throughout the life of a building under the NSW Design and Building Practitioners Act 2020 (the D&BP Act) and the Design and Building Practitioners Regulation 2021 (the D&BP Regulation). 

The three peak bodies have worked closely with the NSW Government and authorities on the reforms which aim to ensure better compliance with the Building Code of Australia underpinned by higher quality design documentation in a positive step towards rectifying issues that have had significant negative impacts on consumers and building industry practitioners.

Australian Institute of Architects NSW Chapter president, Laura Cockburn, urged architects and other design and construction professionals to take full advantage of the new guide.

“We are determined to continue driving quality and safety improvements in our built environment," Ms Cockburn said.

“This new legislative framework is an important step in that process that will also rebuild consumer confidence and augment the safeguards detailed design documentation brings to any project, but particularly projects at scale.”

Consult Australia CEO Nicola Grayson said, "The interplay between contractual obligations and PI insurance policies is a critical issue for our members that must be considered before signing any contract.

“This guide helps design practitioners and engineers understand this interplay in the context of the latest NSW reforms.”

Engineers Australia chief engineer Jane MacMaster said, “The building reform agenda in NSW encapsulated by the D&BP Act and Regulations will help to ensure buildings are built to the high standard expected by our communities. This guide will assist design practitioners and engineers with their role and obligations in the new regulatory environment.”

Office of the Building Commissioner director, Matt Press has supported the work by the industry bodies.

“The implementation of the Design and Building Practitioner Act creates new roles, responsibilities and liabilities for many players. It’s so important that these are reflected in contracts to make sure clients, designers and engineers are on the same page and we minimise disputes. The Australian Institute of Architects, Consult Australia and Engineers Australia have shown great industry leadership to produce a one stop shop for practice-focussed guidance.”

A copy of the Guide for design practitioners and engineers is available on the following websites: Consult Australia, Engineers Australia and Australian Institute of Architects.

 

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Deloitte research shows Melbourne CBD economy will bounce back

NEW RESEARCH by Deloitte Access Economics shows Melbourne’s CBD economy should grow by $6 billion in 2021 and would be on-track to return to pre-COVID levels by late 2024.

The research was produced for the City of Melbourne in May 2021 and includes comparative data on CBD economies in Melbourne, Sydney, Brisbane, Adelaide and Perth.

Despite the economic devastation caused by the pandemic, Melbourne’s CBD economy is predicted to bounce back strongly, growing by 16.9 percent or about $5.9 billion to total more than $41 billion by the end of the 2021 calendar year.

Lord Mayor Sally Capp said quickening the city’s economic recovery was her top priority. 

“Many Melbourne businesses have been through the toughest trading conditions in living memory and need our ongoing support to bounce back and thrive again,” Cr Capp said.

“The stronger our economic recovery is the more job opportunities there will be for Melburnians. A strong economy means Melbourne will continue to have growing finance and technology industries, vibrant cultural and hospitality industries and all the other experiences that make our city so marvellous.”

The recovery timeline for the CBD is forecast by Deloitte Access Economics to be four years, with the CBD returning to its pre-COVID-19 peak of approximately $74 billion in the second half of 2024.

CBD employment is forecast to bounce back, with 332,600 workers expected to be working in the city each day by 2025, only 5.5 percent (or 19,700 workers) fewer than in 2019.

The research comes shortly after City of Melbourne councillors endorsed a new Economic Development Strategy that sets a 10-year plan for the city's economic, social and cultural recovery from the impacts of COVID-19.

The strategy includes targets for economic growth across the municipality by 2031:

  • $150 billion Gross Local Product (GLP) (2019: GLP $104 billion);
  • $250,000 GLP contribution per job (2019 GLP contribution by job: $209,000);
  • 600,000 jobs (2019 employment: 497,000);
  • 270,000 residential population (June 2020 residential population: 183,000);
  • Less than 5 percent shopfront vacancy rate (May 2021 vacancy rate: 19 per cent).

Gross Regional Product (GRP) or Gross Local Product (GLP) typically measures the output of all firms based in a region or municipality. Council’s Economic Development Strategy and other documents such as the Census of Land Use and Employment (CLUE) use this methodology and cover the entire municipality.

In contrast, the Deloitte research is focused on Melbourne’s CBD only and it measures output based on where the employees are currently located, not where the firm is located, to account for the working from home phenomenon.

The Lord Mayor said while Melbourne was facing challenges such as work-from-home practices there were major economic opportunities on the horizon including the re-opening of Australia’s borders and international students returning.

“We’ve all made sacrifices during the pandemic and it’s time to be ambitious about a quick and strong recovery. I couldn’t disagree more with those who say the city will never recover. With the right support, the city can grow into a $150 billion economy over the next decade,” Cr Capp said.

City Activation Chair Roshena Campbell said the city’s economic recovery was the council’s key priority.

“With our Economic Development Strategy, the council has a strong plan for Melbourne to rebound from the pandemic. Avoiding lockdowns and ramping up vaccination rates will mean the city can recover faster than expected.” Cr Campbell said.

“Prior to COVID-19, rental vacancies in the city were at record lows but there has never been a better time to start and grow a business in the city than right now. Competitive rents provide a fantastic opportunity to secure a CBD location for both start-ups and businesses looking to grow.”

The Deloitte research did not take into account restrictions in Melbourne in June 2021 or restrictions in Sydney in June and July 2021.

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City of Kalgoorlie Boulder to stage SEGRA national economic growth conference

AUSTRALIA'S foremost regional economic development conference, Sustainable Economic Growth in Regional Australia (SEGRA) will be held in the City of Kalgoorlie Boulder from November 16-18 this year.

“SEGRA is widely recognised as Australia’s most credible, independent voice on issues affecting regional, rural and remote Australia,” SEGRA Conference convenor Kate Charters said. 

This annual event highlights  trends and opportunities affecting regional Australia as well as showcasing examples of successful regional initiatives from government, business, social ventures and the community.

SEGRA attracts more than 300 delegates from all levels of government, senior members of Parliament, policy advisers, industry players, academics and practitioners to develop and promote solutions to regional issues. 

Conference convenor Kate Charters said the organisers were delighted to bring SEGRA to the City of Kalgoorlie Boulder.

“In addition to profiling the Kalgoorlie Boulder region to delegates, the conference offers an excellent opportunity to showcase the success of the region’s economic development strategies and its capacity to create economic opportunities, through innovative business, strategic planning and a commitment to sustainable living” she said.

City of Kalgoorlie Boulder Mayor John Bowler said, “The successful SEGRA bid was testament to Kalgoorlie Boulder’s unique position as an important innovative, creative and technologically savvy hub in inland Australia as well as  the capacity for regions to progress and prosper on their own strengths."

SEGRA 2021 is hosted by The City of Kalgoorlie Boulder with event partners Regional Development Australia (Goldfields Esperance), Goldfields Esperance Development Commission and Kalgoorlie Boulder Chamber of Commerce and Industry.

www.segra.com.au

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