Deloitte Access Economics has released a new report into Queensland’s construction sector, looking at the outlook, labour costs and productivity.

The report, which was commissioned by Master Builders, found that “excess wage growth” under construction EBAs in Queensland is ramping up building costs that could have helped pay for 15 new schools or contributed $544 million to hospitals over the next four years.

Master Builders' construction policy director Corlia Roos said the wage growth under the CFMEU EBA was out of control.

“The Deloitte report confirms what many in the industry already know – that despite the record high wages, there is now less flexibility, less productivity and less efficiencies in the sector than ever before,” Roos said.

“Instead, we have more disputes, more illegal strikes and more unlawful behaviour on our construction sites.

“The industry needs this mess cleaned up and needs a strong set of rules. The introduction of the Australian Building and Construction Commission (ABCC) will stop the CFMEU’s unlawful behaviour.”

The report shows that carpenters under the EBA earned more than one-and-a-half times average earnings across all occupations in Queensland in 2014. Entry-level construction labourers under the EBA earned almost one-and-a-half times the average, said the report.

“It is particularly striking that only medical practitioners earned more than entry-level construction labourers. Carpenters and entry-level construction labourers under the EBA earn more than accountants and auditors,” the report said.

The report also warned that rising labour costs would have adverse effects on the Queensland Government. For instance, the increased cost to the government for paying the 11.9% EBA wage rises from 2007-2015 could have funded much-needed infrastructure.

“A rise in labour costs (ahead of productivity gains) will mean that the cost of construction will rise for a range of buildings, including offices, hotels, shops, schools, apartments and hospitals,” the report said.

“In turn, the cost of doing business and the cost of living in Queensland will also increase,” said the report.

Roos said the CFMEU does not play by the rules and their disputes and illegal strikes were hampering workers in the building and construction industry who were doing an outstanding job.

“With the Deloitte report finding that the average profit margins of Queensland’s non-residential builders are the lowest in the country, builders cannot afford illegal stoppages on their sites,” Roos said.

“Labour costs are spiralling out of control and businesses have to weigh up if it is better to just put their money in the bank and earn three% interest, rather than building a hospital or school.”

The report said that agreements for higher wage levels involved real trade-offs for taxpayer funds.

“If the [State Government] projects do proceed, then taxes would need to be higher (or other public spending reduced), meaning that the broader public was partly funding the higher wages in the construction sector.

“Private projects involving a wide range of buildings essential for Queensland may also be shelved as uneconomic in the face of unsustainably strong rises in labour costs,” said the report.

See also:

Victorian tradies offer best value in the country

Master Builders Qld calls on senate to back ABCC

ABCC legislation will provide productivity boost