The construction industry has a major impact and contribution towards the economy of a country or state. However, the effect is cyclic in nature given the reality that there are major economic factors that have an impact on the construction sector. In Australia, there have been major economic policy reforms; some geared towards improving the construction industry in different parts of the country (The Allen Consulting Group 2). Reforms in the construction sector have been focused on enhancing the productivity of the sector and augment its contribution towards the economy. The changes are revealed to have modelled the impact flow to the general economy of the country and the states within. The resultant productivity outperformance and its impact on the economy have been expected to come as an advantage to the consumer. Major industry reforms and macroeconomic policies have been expected to regulate and improve the sector, although the actual effects are not always as anticipated.
Australia is witnessing an increase in the issues of industrial militancy as well as the demand for an increase in recompense and comparative considerations when it comes to the analysis of the gains within the construction industry resulting from macroeconomic policy reforms. The construction industry has always had a major contribution towards the economy. The industrial contribution is two-folds: in its own right as an industry and as the designer and constructor of the infrastructural support for other services important to the economy (The Allen Consulting Group 2). Major economic activities in the country depend on the availability of affordable buildings. The reality is the primary reason for the continued concern by the government of Australia, and administration at the state level to continually implement macroeconomic policy reforms targeted towards the construction industry. Some the major macroeconomic policies have continued to have an impact on the industry in NSW, although not all of them have achieved positive impact.
The efforts to improve the construction industry in NSW are founded on the recognition of the detrimental impact on the economy based on decline in industrial relations. The Australian Government and the NSW Government, in particular, have engaged in major economic programs geared towards changing the productivity of the industry. Infrastructure development programs have emerged in the state following the support of the government in the sector. In 2012, for example, the state government initiated such a program at a cost of $61.8 billion to be in use for four years (The Allen Consulting Group 14). However, the impact of the policies on the industry in the state has not always been positive, given the decline in industrial relations within the sector. The state of the industry in NSW continues to deteriorate even as the government is implementing policies and committing funds to make it better. The industrial relations performance in the state is also not promising, although there is always the potential for things to turn around.
Particularly in NSW, there have been concerns about the construction industry failing to develop at the same rate with other sectors of the economy as well a construction in the rest of Australia. As a proportion of GSP, the state is lagging the rest of the country in terms of spending for construction. The same is happening in terms of the GSP’s growth rate. While there are other factors that are determinants of the GSP besides infrastructure, it is necessary for any region to optimise investment in productive infrastructure to perform better in terms of the economy (Kaspura v). There has been focus on the cost and productivity changes within the industry in NSW. Generally, the policies continue to be implemented with differing impacts on the industry even as the performance remains down since the 1980s and 1990s. The economic performance of the sector is an issue that remains a cause for concern for the government in NSW.
However, it would be misleading to suggest that there has not been any impact of the macroeconomic policies on the industry in NSW. The recent programs could be turning things around for the sector that deteriorated a few decades ago. There is a major program, the forward work program for the development of infrastructure, which could be having a more positive impact on the industry. Over the coming decade, it is estimated that there will be a major change in construction classes, by the public and private constructors, ranging between $20 billion and $25 billion each year (The Allen Consulting Group 14). The government of NSW has continued to take an active part in the construction industry to help in redeeming it. In fact, the government is evading the use of national funding sources to a place where the funds are coming from the NSW kitty. The results are being witnessed. While the construction industry has remained behind those of other regions in the country, there appears to be some hope emanating from the support of the government in economic policies and programs.
Past evidence is pointing to the reality of the cost of construction increasingly dropping. The evidence is mostly for the major infrastructure projects in the state. In fact, the situation is improving based on the major programs such as ABCC. Compared to the costs in the 1990s, there are indications of a drop in cost in the 2000s. By 2007, there was evidence of even greater changes in the cost of construction. Data on the same has indicated that the changes have played a role in helping the sector to evade costs with a considerable value ranging between 2% and 11% of the general cost of a particular project. Other major projects such as the Fair Work Building and Construction (FWBC) continue to have an impact on the costs within the industry (The Allen Consulting Group 16). With the reduction in cost, there is evidence of major savings made by the players within the industry. For any policy or project that has resulted in a cost reduction, there is accompanying savings by the government and even the private sector within the industry.
The construction industry is one of the most important industries in terms of the contribution to the economy. The industry is beneficial in its own right and by helping in the construction of the housing for other activities and services that contribute towards the economy. Hence, the government has always played an important role, through macroeconomic policies, to improve the performance and productivity of the sector. Regardless of the efforts, the construction industry in NSW has remained behind the other parts country. However, the policies in place in the last decade are making things better such as by reducing the construction cost and allowing a great deal of saving.
Kaspura, Andre. “Engineering Construction and Infrastructure in NSW.” Engineering Construction and Infrastructure in NSW (2015): v.
The Allen Consulting Group. Economic impact of construction industrial relations arrangements and investment in infrastructure: A New South Wales perspective, Report to the Business Council of Australia (6 March 2013): 1-85