AUSTRALIA
CHECK AGAINST nPELIVFRY EMPARGOED UNTTL DjfLTVE
SPEECH BY THE PRIME MINISTER
LAUNCH OF THE CONSTRUCTION INDUSTRY
REFORM STRATEGY
CANBERRA 3 DECEMBER 1991
Ladies and Gentlemen
This is a very significant day not just for the AusTralian
building and construction industry, but for Australia
generally. The Construction Industry Reform Strategy marks the
beginning of a co-operative effort to solve some of the most
intractable issues in this vital industry, and to nurture
its considerable strengths.
At the outset, I wish to sincerely congratulate my Ministers
Senator Peter Cook and David Beddall for the initiative and
hard work they have put into developing this strategy. Let
me also commend the cooperation of both sides of industry
and all levels of Government which have made it possible.
Over the past 12 months some 100 senior company executives,
union leaders, industry association personnel, Commnonwealth
and State ministers and officials have worked to develop a
reform agreement and a code of practice.
Today is the culmination of this preliminary work, and marks
the beginning of the next stage.
Australia's construction industry faces many problems.
Costs for major projects are estimated to be up to
higher than those of our major competitors.
The export performance by our construction companies is near
the bottom of the table of OECD countries, and R& D
expenditure by the industry is poor.
Our export orientation is also quite low by international
standards. Latest data indicates that our export/ turnover
ratio is about 2% compared with the OECD country average of
14%. This is deserving of closer attention, particularly
when one considers the excellent international reputation
held by our civil engineers and consultancy firms.
3552
R& D expenditure by the private sector is of the order of $ 13
million a year according to the ABS. For an industry which
has an output of S40 billion annually this is not good
enough. But the problems are not: confined to the industry. There
exists a maze of planning and building regulations, the
result of a hundred years of provincialism, and certain work
practices which have absolutely no place in an
internationally competit~ ive economy.
The construction industry is one of Australia's largest
currently employing more than 500,000 people it accounts for
some 60% of the nation's gross fixed capital expenditure.
The importance of reforn for the construction industry is
demonstrated by the Cent~ re for International Economics.
Their work indicates that a 10 per cent gain in efficiency
in construction would lead to a 2.5 per cent annual gain in
GDP. That is, reforms this industry could have twice the
impact on GDP of efficiency gains in other sectors of
similar size, such as health and education.
This is because the construction industry has important
links to the rest of the economy, in particular to mining,
transport and tourism.
The In-Principle Reform and Development Agreement signed
today, accepts these challenges and points the way ahead.
The Agreement, by actually specifying the areas for reform,
including restrictive work practices, ensures that these
problems can be seen anti dealt with out in the open.
The code of practice, to apply to tenderers to the
Commonwealth, State and Territory public works markets, is
the foundation for co-ordinated action to facilitate the
development of companies embracing " best practice."
The ratings system for companies, to operate in conjunction
with the code of practice, will give governments confidence
that taxpayers' dollars are wisely spent.
The ratings system is important for two reasons.
First, it will send strcng signals to companies as to where
their public sector clients expect improvement.
Second, the ratings will provide an objective, transparent
framework for decision-m~ akers within government. And the
efficiency of the tender process will be improved.
The Industry Development agenda of the Strategy will focus
mostly on lifting the export, R& D and quality assurance
aspects of the industry. As I indicated at the outset our
efforts in these areas are well below our major competitors. 3053
Labour market reform is an important element of the overall
reform agenda.
The key areas are identified in the In Principle Reform
Agreement. the implementation of more efficient and flexible work
practices the development of specific measures to reduce the
incidence of lost time
the implementation of award restructuring, the
introduction of new classifications and skill related
career paths and associated training
improvements in safety standards and working
environment
There is more to this program than holding out examples of
efficient practice as beacons in the wilderness for others
to follow and copy. This is not just a program about change
this is a program for change.
The only way to achieve Best Practice is by enlisting and
heeding and respecting all the skills and experience of all
the people involved.
The involvement and commitment of the entire workforce are
absolutely essential to reform in the workplace. Reform is
impossible without them and industry without reform is no
longer an option.
The reform agreement also refers to building regulation,
which involves a key group of people building inspectors,
local councillors, builders of all sizes, and legal
practitioners. The current system of building regulation is complex,
confusing and costly to laymen and industry practitioners
alike..
A little over two years ago, the Premiers' conference on
housing agreed to establish the Building Regulation Review
Task Force. Its charter essentially was to examine how
greater uniformity and " commonsense" could be introduced
into the current system.
The task force, led by Dr John Nutt, Chairman of Ove ( OVAY)
Arup, is today submitting its report.
The BRR report is significant in two respects. It: is a good
example of how the three tiers of government have been cooperating
to drive micro-economic reform, and it provides a
blueprint for future action by governments and industry.
There are three aspects then to the strategy industrial
relations, industry development and building regulation.
3554
The Strategy will have Commonwealth funding of Sl0.8 million
over three years.
There has been strong suoport from State and Territory
governments for the reform strategy.
South Australia, Victoria and the ACT will be signing the In
Principle Reform Agreement today. Tasmania and Western
Australia have indicated they will sign shortly, and
Queensland has given strong support for the Commonwealth's
initiatives.
A key element of the strategy the code of practice ver-y
much depends on state public works.
However, it is not just a one-way street. Companies will
have the opportunity to increase their business with
government. A comprehensive system for consultation and implementation
has been agreed by the major parties. The main elements are
the establishment of the Construction Industry Development
Council and the Construction Industry Reform Agency.
The Industry Council will have its inaugural meeting today,
chaired by Ministers Beddall and Cook, with membership drawn
from industry and unions and Governments.
The Reform Agency will be a small specialist group, drawn
mainly from the private sector. Its job is to implement the
key elements of the strategy.
I am pleased to announce today that the Chief Executive
officer of the Agency will be Emn MacDonald, the former
chairman of Civil and Civic.
Emn brings to the position years of experience, and the
universal support of the: industry. I sincerely thank you
for accepting this challenging position.
I am also pleased to anrounce that Paul White of Concrete
Constructions has accepted the position of Chairman of the
Board. Board members already approved include Mr Martin Albrecht
( Thiess Constructions), Mr David Chandler ( Fletcher
Construction), Mr Martin Ferguson ( ACTU), Mr Jack Ritch
( AMP), Mr Stan Sharkey ( BWIU), Mr Malcolm Kinnaird ( Kinhill
Group), Mr Robert Milne ( Hooker Cockram). Mr Malcolm Farrow
( DITAC), Mr Bob Marshman ( DIR).
A Member from the States; will also be appointed.
We may now look forward to all the parties working together
to transform this indust~ ry into an internationally
competitive and dynamic one. 3555
Ladies and gentlemen, today is the beginning of a new era
for the construction industry. We have a strategy which is
innovative, timely, based on good practice, has the support
of the major groups, and goes to the heart of the industry's
problems. It will change the way things are done in this
industry for the better.
3556
f