The Australian Bureau of Statistics (ABS) has confirmed the impact of fixed-price contracts, high inflation, supply chain disruptions and labour market shortages on the building and construction sector viability following the release of its Australian industry performance data 2021-22.

The release shows building and construction industry net profits dropping by 9.3% during 2021-22 despite a 10% increase in the industry’s total income during the year. However, the rise in income was eclipsed by a 14.1% jump in the industry’s total expense bill, with the biggest underlying impact stemming from soaring costs of goods and materials which increased by 20.4%.

“There needs to be a conversation around fixed-price contracts and appropriate risk-sharing between banks, developers and builders,” Master Builders Australia (MBA) chief executive officer Shaun Schmitke says.

“We have forecast the 2022-23 financial year will be particularly difficult for builders who have found themselves in a profitless boom off the back of unprecedented cost pressures due to the combination of fixed price contracts, materials, workforce and interest rate cost pressures as we rebuild from Covid.

“Governments need to look at what impact their regulations and policies have on the cost of building homes and on the cost of building social infrastructure which includes industrial relations laws, the cost of planning and the need for more titled land.”

The industry’s total wage bill has risen by 9.8% during 2021-22 as a result of higher hourly labour costs and the expansion in activity across the industry during the period.

It’s an increase Shaun believes should raise the question to why a “complex industrial relations legislation that will take away the rights of independent contractors and self-employed tradies” is being proposed by the government.

“The building and construction sector has consistently had wages growth exceed other industries, pay above award rates and have high levels of full-time employment. The upcoming tranche of industrial relations legislation must be considered with reference to the current national economic conditions,” Shaun says.

“The proposed ‘employee-like’ policy goes beyond the government’s purported original scope of supporting gig workers and leaves the door open to swallow industries across the economy. This includes well-established forms of work, including independent contractors and self-employed tradies.

“If the Government intends to limit this proposal to gig-workers only, then it should make it explicitly clear and give an undertaking to exclude industries outside the gig-economy before the legislation is introduced.”