One of the favoured tropes of Australia’s business sector is the high cost of construction in Australia, and the government has seized on the idea of truculent unions like the CFMEU stealing from Australians to justify the re-establishment of the Australian Building and Construction Commission.
“The CFMEU’s actions rob the community by increasing the cost of building schools, hospitals and child care, and again that’s something that does resonate with many of the crossbenchers I have spoken to,’’ Industrial Relations Minister Michaelia Cash said about the ABCC bills, which the government may not now introduce until next year.
So what if the government had, ready to hand, without needing any Senate approval, a means of cutting nearly $2 billion a year out of the construction industry cost base in Australia — moreover, a $2 billion cost that looks like it could grow to more than $2.5 billion a year by the early 2020s? Strangely, not merely does the business lobby studiously ignore the cost, the government has committed to making the cost worse for construction, not better.
According to the Productivity Commission, the sector that bears the greatest cost of protectionism in Australia is construction. No other sector even comes close. In the PC’s most recent Trade Assistance Review, for 2014-15, which was published in July, it found that the construction sector bore $1.912 billion in costs in 2014-15 generated by trade assistance measures such as tariffs — and that had increased from $1.4 billion in 2009-10. This was offset by around $74 million in assistance in 2014-15. The next biggest victim of trade assistance measures is the property, professional and administrative services sector — and the cost for that sector was just $640 million.
[The cost in dead workers of the government’s construction ‘watchdog’]
Why does construction bear such a burden from trade assistance measures? Because construction relies heavily on foreign-sourced inputs of metal, plastic and wood, which are susceptible to trade measures. And engineering construction, in particular, relies heavily on steel — which is the target of a huge and growing focus in Australian protectionism via our anti-dumping regime.
The PC noted earlier this year the growing use of anti-dumping, especially against imported steel, which now makes up 60% of anti-dumping measures. Indeed, reliance on anti-dumping has now become part of the business model of Australia’s inefficient steel manufacturing sector. Construction and especially heavy construction is where the cost burden of trying to keep out the product of a global steel production glut is most felt, as construction firms face higher costs — an average of 17% tariff duties on allegedly “dumped” products, but in some cases much higher.
What’s the government doing about this massive and growing impost on the construction sector, one that is “increasing the cost of building schools, hospitals and child care”? Is it moving to cut the $2 billion a year in additional costs construction faces due to protectionism? That’s what the New Zealand government did — faced with the challenge of rebuilding Christchurch and a general lack of competition in housing construction in New Zealand, it moved in 2013 to limit the impact of anti-dumping provisions on construction inputs.
No way — our government has repeatedly promised to ramp up anti-dumping provisions, and isn’t exempting anyone. “We are a world leader in fighting the avoidance, or circumvention, of anti-dumping measures,” boasted then-industry minister Christopher Pyne in March. “The Australian government will continue to work to give Australia’s Anti-Dumping Commissioner the power and capabilities he needs to ensure that local producers are not injured by unfair competition.”
It’s like being a world leader in belting yourself in the face. Putting aside the stupidity of the idea of “unfair competition” in trade, Pyne could also have couched the announcement in terms of bravely increasing the cost of inputs for our construction sector — and far more than any outrageous wage claim or poor productivity performance from CFMEU workers.
Labor and unions, however, are much worse than the Liberals. Labor flirted with local content requirements for steel before the election, and recently the ACTU explicitly called for prohibitions on using imported products in major construction projects, which would increase costs even further.
With both sides of politics and trade unions seemingly committed to “increasing the cost of building schools, hospitals and child care” via anti-dumping, who will speak up for construction costs? Not the Business Council of Australia; BlueScope Steel is a member of the BCA and the latter has openly admitted the issue is the subject of internal disagreement among its members, meaning it can have no position.
Australian Industry Group, which wants a rapid passage of the ABCC bill in order “to deliver vital reforms to the building and construction industry and to reduce the costs that are ultimately borne by the entire community”, actively supports “a strong, effective and fair anti‐dumping system” that drives up construction costs by so much.
It’s all much easier for employers to blame unions, presumably. Although, oddly, no one ever attacks unions for the one thing they are responsible for: legitimising protectionism in Australia despite the massive costs if inflicts on us.