For many Australians, the current economic climate may represent the peak of prosperity for the foreseeable future. Last week, the Reserve Bank of Australia (RBA) cut interest rates and issued economic forecasts predicting weaker consumer spending, smaller pay rises, and declining business profits in the coming years. This outlook suggests that falling productivity will hamper growth and living standards across the nation.
The federal government has responded by making productivity the central focus of its upcoming economic round table in Canberra. While unions advocate for a four-day workweek and flexible working arrangements, business groups are pushing for a 25 percent reduction in regulatory ‘red tape’ by 2030.
Challenges in Construction: A Call for Regulatory Harmony
According to Tony Lombardo, CEO of Lendlease, a major issue for construction companies is the inconsistency of regulations across Australian states and territories. “In some states, it’s a flexible RDO [rostered day off] regime, and in other states, it’s fixed,” he explained during an interview with The Business host Kirsten Aiken.
This disparity means that construction sites may remain operational in some regions while others must close entirely on fixed RDOs, affecting productivity. Lombardo advocates for “harmonisation” of building regulations, which he believes would significantly benefit the industry.
He also highlighted the challenges posed by Australia’s aging workforce and a shortage of skilled labor. “Post-COVID, we had a lot of people leave the industry, so I’d love to see initiatives around apprenticeships,” Lombardo said. He suggested that immigration could also be a solution to bolster the construction workforce.
Regulatory Burdens and Housing Costs
Andre Ransom, owner of Sydney-based Kestrel Building, pointed out that certain regulations are driving up costs for small builders, ultimately inflating property prices. One such regulation is the generous redundancy payouts for construction employees, which Ransom claims are unparalleled in other industries.
“If an employee who has worked for you for less than a year decides to resign and work for another building company, he’s entitled to redundancy unless he has engaged in gross malpractice,” Ransom noted.
This contrasts with other sectors where redundancy is typically reserved for involuntary terminations. The financial burden of these payouts, Ransom argues, makes it increasingly difficult for construction businesses to thrive.
Health and Productivity: A Different Perspective
Matthew Britland, a former nurse and consultant in the drug development industry, views the productivity debate through the lens of public health. He asserts that the nation’s health issues are significantly impacting workplace productivity, as individuals with preventable diseases often miss extended periods of work.
“Governments tend to approach healthcare as if it were a ‘cost’, as opposed to an ‘investment’, and often doesn’t see the long-term productivity gains,” Britland said.
He criticized the slow approval and reimbursement process for new treatments in Australia compared to regions like the United States and Europe. Britland highlighted a nearly two-year delay between the approval of new medicines by the Therapeutic Goods Administration (TGA) and their subsidization by the Pharmaceutical Benefits Advisory Committee (PBAC).
“Australia is one of the slowest jurisdictions to reimburse new medicines. There’s a gap of around 680 days between when the TGA approves something, and when the government decides to foot the bill for it,” he stated.
This delay forces patients to rely on older, less effective therapies, resulting in more time off work and reduced productivity.
Looking Ahead: Potential Solutions and Implications
The discussions at the economic round table in Canberra could set the stage for significant policy shifts aimed at boosting productivity and easing regulatory burdens. Business leaders like Lombardo and Ransom are hopeful that their concerns will lead to actionable changes, such as streamlined regulations and enhanced training programs.
Meanwhile, Britland’s call for a reevaluation of healthcare as a long-term investment could prompt a broader discussion on the intersection of health and economic productivity. As Australia grapples with these challenges, the outcomes of these discussions could shape the nation’s economic landscape for years to come.
