8.1
A productive and sustainable workforce will be key to delivering Australia’s significant pipeline of infrastructure projects. Evidence presented to the committee highlighted the critical need for cultural reform to address challenges in the construction industry, particularly in productivity, mental health and wellbeing, and gender diversity. The culture is impeding the sector’s ability to attract and retain workers—especially women—and limiting productivity growth at a crucial time.
Current workplace standards
8.2
Broadly, the Fair Work Act 2009 provides the minimum terms and conditions for the majority of employees in Australia that are covered by the national workplace relations system, and is supplemented by other Commonwealth, state and territory laws. The Fair Work Act provides a safety net of minimum entitlements, such as the minimum wage, and sets out 11 National Employment Standards. Employees covered by the Fair Work Act have certain rights and entitlements depending on the industry they work in and their role.
8.3
Independent contractors—usually referred to as contractors or subcontractors—have different rights and obligations, as they are providing agreed services under a contract to a business, as distinct to being an employee of that business. For example, a subcontractor providing specified services to a client or head contractor on an infrastructure project. The Fair Work Act protects independent contractors from adverse action, coercion and abuses of freedom of association, and the Independent Contractors Act 2006 establishes a national unfair contracts remedy for contractors.
8.4
The workplace standards of conduct for Australian Government funded construction projects are set out in the Code for the Tendering and Performance of Building Work (the Code) and the Fair Work Act, which are enforced by the Australian Building and Construction Commission (ABCC).
8.5
The Code imposes a comprehensive range of requirements, including compliance with work, health and safety (WHS) legislation. The ABCC outlined that a failure to comply with the Fair Work Act, the Building and Construction Industry (Improving Productivity) Act 2016, the Independent Contractors Act 2006, state and territory WHS laws or Commonwealth industrial instruments constitutes a breach of the Code.
8.6
The Code also requires a Workplace Relations Management Plan for projects over a certain value. In these plans, head contractors must explain how their proposed systems, processes and procedures will promote a fair, lawful, efficient and productive workplace.
Productivity in the construction industry
8.7
Some groups questioned the construction industry’s ability to deliver the significant scale of infrastructure in the upcoming 10-year pipeline, suggesting that the industry ‘will struggle to meet the demand’ if there is no reform addressing culture and productivity and incentivising people to work in the industry. For many years the construction sector has exhibited lagging productivity, with growth of just 0.2 per cent per annum, compared to 0.5 per cent for manufacturing and 1 per cent for other industries, and productivity today standing at ‘levels seen in the late 1990’s’.
8.8
Addressing issues in the workplace that impede greater participation and retention is now more important than ever for an industry already under pressure and significant skills gaps projected to increase. Low productivity does not only impact financial performance, but intersects with work‑life balance, mental health, training and upskilling, and innovation—all of which are required for productivity growth.
Construction Industry Culture Taskforce
8.9
The Construction Industry Culture Taskforce (CICT) is a collaboration between the New South Wales (NSW) and Victorian public sectors, the Australian Constructors Association (representing the nation’s largest construction firms) and Australia’s leading workplace researchers. Established in August 2018, the CICT has been developing a Culture Standard through a consultative and evidence-based approach to leverage the procurement process, lift productivity and performance, and address major issues impacting the workforce.
8.10
The draft Culture Standard, as released in October 2021 for consultation, proposed placing culture standard requirements for clients and contractors in key areas of wellbeing, ‘time for life’ (work‑life balance) and diversity. Consultations on the draft Standard closed on 30 November 2021.
8.11
The Culture Standard will include a Culture Maturity Scorecard, involving the reporting on culture within organisations. The Scorecard comprises 20 elements grouped into eight categories (leadership, organisational goals, environment and support, communication, accountability, reporting systems and processes, innovation and learning, and engagement). The Scorecard enables organisations to understand their current performance against these elements, identify opportunities for improvement, and allow contractors to rate their organisation’s performance on the elements.
8.12
The CICT signalled that the cost of inaction on cultural reform, according to its recently commissioned research, is approximately $8 billion per year. Further, that while some work had been done over the years in the industry change has been minimal. The CICT explained that:
…these deficiencies in the culture of the industry are deeply embedded and inter-related in their cause and effect. Physical safety has rightly been an intense focus of the industry over many years, and that effort must continue and strengthen, but the same effort must go into addressing the risks posed by these other aspects of damaging workplace health and culture, which by comparison have been neglected.
8.13
The CICT stressed that the work on the Culture Standard is critical as ‘the industry alone has not been able to reform its culture’. The CICT believes that governments must require change as part of its procurement practices for major infrastructure projects if they want to see improvements in productivity and reduce the harm to many in the construction industry.
Mental health and wellbeing
8.14
During the inquiry, contributors highlighted concerns about mental health and wellbeing issues affecting the construction industry workforce. In particular, the relationship between the working conditions in the industry, workers’ quality of life and wellbeing, and incidents of mental health and suicide were discussed.
8.15
The CICT’s submission highlighted that the workforce disproportionately experiences wellbeing issues compared to broader society, impacting the industry’s ability to deliver the pipeline of work and attract and retain a healthy and productive workforce.
8.16
The CICT emphasised that ‘culture is one of the key reasons people choose to work in industries other than construction’. Various groups suggested that construction industry culture has long been marred by characteristics such as being adversarial, outdated, rigid, physically demanding, with harsh work schedules and long hours, and lacking inclusivity.
8.17
Statistics relating to the mental health and overall wellbeing of the construction workforce indicate substantial challenges that necessitate reform. The committee heard that the construction industry has the second highest suicide rate in any sector, with workers six times more likely to die from suicide than a workplace incident—costing the Australian economy an estimated $1.57 billion. Research also indicates that 25.1 per cent of workers in the construction industry have been shown to have a mental health condition and elevated rates of depression and anxiety.
8.18
Master Builders Australia pointed to the time-based nature of construction contracting as having an impact on mental health, citing studies that concluded that the unreasonable and tight deadlines often result in extreme stress and a pressure to complete projects to avoid delay costs being imposed. It was suggested that governments consider options to address programming pressures within procurement practices.
8.19
‘Fly-in-fly-out’ (FIFO) working arrangements and the impact it has on mental health and wellbeing was also brought to the attention of the committee. The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) told the committee that while FIFO is a ‘fact of life’ in some places due to the remoteness of some projects, the conditions of such an environment has a significant negative impact on mental health and wellbeing, especially in contributing to family stress:
We still see resource companies and construction companies demanding four-week-on, one-week-off rosters on remote projects for FIFO for construction. Out of the seven days off people have on that four-and-one roster…they are expected to travel home and come back, often to the East Coast, often to regional places where there is an extra flight. You could not design a system that would be more targeted to breaking up families and damaging communities than a four-and-one roster for FIFO workers…The resource companies don't want to address the question of the four-and-one rosters, which have demonstrated to cause family breakdown, community dysfunction and some pretty ordinary outcomes, including suicide, and worse.
8.20
There was also recognition of the range of mental health-focused organisations and initiatives currently active in the construction industry such as MATES in Construction, Beyond Blue, Black Dog, Incolink and the Building Trades Group. The CICT told the committee that the Culture Standard will include a more proactive and defined role for providers of these services that covers suicide prevention, support, and drug and alcohol rehabilitation. It was further emphasised that:
…the reason we feel that a cultural standard implemented via the procurement process…[and] having expertise at that procurement level to be able to implement this—that will enable a program of mental health support and wellbeing focus that will benefit the worker more so than an incident response could.
So having an approach which is programmed within the project schedule to support mental health and wellness, we feel at the CICT, would actually generate better outcomes than having one-off courses or training potentially rolled out on an ad hoc basis.
8.21
The draft Culture Standard includes the following proposed requirements to improve construction industry support for the mental health of its workforce:
1.1: Organisations should have programs in place to identify and prevent mental health illnesses and support good mental health in a stigma-free space, schedule these programs to enable effective workforce participation, and ensure mental health first aiders are available on project sites.
1.2: When assessing health risks on the project, organisations will include risk controls that reflect current leading practice.
1.3: When developing project schedules, organisations should consider health risk mitigations, managing workload pressures and ensuring sufficient recovery opportunities. Organisations will demonstrate the above for consideration by the client as part of tender documentation.
8.22
To better support worker wellbeing, the Culture Standard aims to foster a culture in the construction industry where workers have access to flexible work options and caps on working hours—noting the estimated $708 million productivity cost attributed to consistently working overtime in the industry. To improve ‘time for life’ for construction industry workers, the draft Culture Standard proposes that:
2.1: Organisations program projects to provide for working hours of 50 hours or less per week, ensure that workers do not work in excess of 55 hours per week, and only operate sites from Monday to Friday—unless for specific reasons they must operate on other days, in which case work should be structured so individual workers have a five day per week program.
2.2: Organisations will develop and provide a flexibility plan outlining how they will support and promote flexibility for the project (including office and site-based roles). This plan will be drafted at tender stage and finalised 30 days after contract execution. Organisations will report performance against this plan as a standard item in client meetings and organisational leadership meetings.
Gender diversity
8.23
The construction industry is Australia’s most male-dominated industry. Women represent 12 per cent of the workforce and occupy approximately 2 per cent of on-site roles. Research by the University of New South Wales (UNSW) Australian Human Rights Institute showed that women are leaving engineering and construction 38 per cent faster than their male colleagues. While the construction industry is the third-largest employer in Australia, women’s participation has declined in the last decade from 17 per cent to 11 per cent despite the introduction of gender equality measures by large construction companies and governments. These poor figures reflect a significant challenge for the ongoing pipeline of workers.
8.24
The barriers to women's participation in the construction industry are multi-faceted. The committee heard about a range of issues that impact women's participation including access to amenities, safety on site, and access to proper fitting personal protection equipment, in addition to structural and cultural aspects of the working environment.
8.25
There is strong support for increasing female participation in construction, which is presented as one of the solutions for a more sustainable and productive construction industry. However, a substantial barrier imposed on attracting and retaining women is the rigidity of the industry’s working conditions and practices which are contributing factors.
8.26
In an industry characterised by adversarial relationships across the board—with sometimes contentious relations between contractors and clients, subcontractors and head contractors, tradespeople and subcontractors, or designers and contractors—the Australian Constructors Association’s Chief Executive Officer sees potential for greater female participation to help reduce the number of disputes in the industry, commenting that:
I think that if we had more women in our industry, we would get a far more balanced approach and far fewer disputes.
8.27
The National Association of Women in Construction (NAWIC) told the committee that if the industry does not start attracting more women in construction:
…the likelihood of delivering those 105,000 jobs on the current timeline will be tenuous. However, that talent will not be attracted and retained if the industry’s culture remains as it is and has always been—rigid, adversarial and inhospitable to a balanced lifestyle.
8.28
UNSW found that work practices in construction are ‘outdated’ and ‘rigid’ and were not working for men or women. It also found that ‘women were less willing and able to tolerate these work practices that do not allow them to combine work with care responsibilities’. Other factors influencing women to leave the sector included a tolerance of sexism, informal career paths and gender bias.
8.29
The proposed requirements set out in the draft Culture Standard relating to diversity are:
3.1: Organisations will provide workplaces that enable inclusive participation by a diverse workforce, especially women, through self‑assessing their current practices on the Culture Maturity Scorecard and developing a plan for achieving improvement on the project. They will be required to show evidence to support their results.
3.2: Organisations will provide workplaces that enable inclusive participation by the workforce through ensuring there is no pornography or offensive material in the workplace.
3.3: Organisations will provide workplaces that enable inclusive participation of a diverse workforce, particularly women, through ensuring appropriate amenities and personal protective equipment are provided on the project.
3.4: Organisations will target the appointment of women across critical workforce segments and strategic decision-making roles and develop a plan for the project to achieve these targets.
3.5: Organisations will target the appointment of women on their leadership and governing bodies or advisory boards and demonstrate commitment to this. Action is to include self-nominated targets, targets linked to industry average and specified targets.
3.6: Organisations are to identify and disclose gender pay gaps across job roles; and develop and implement a plan to reduce gender pay gaps.
3.7: Organisations are to create and implement professional standards for the interviewing, shortlisting and selection of people.
8.30
NAWIC outlined in its submission its core policy goal of achieving a minimum of 25 per cent female participation across all the construction industry by 2025. It recommended that the engagement of women should be a prerequisite to undertaking government contracts as reforming procurement practice is ‘one of the most significant ways in which the government can make an impactful and sustainable change to both the industry and women’s economic security’. NAWIC outlined that:
This would be achieved by either mandating female participation in the projects as evaluation criteria. A requirement of 30 per cent participation of women and/or demonstrated gender equality policies such as gender pay gap audits, flexible working arrangements and leadership programs for women.
8.31
In relation to establishing quotas or mandates NAWIC told the committee that the current approach to encouraging more women to work in the industry and retain them is not working. It stressed that the ‘softer target approach is not working’.
8.32
However, the CFMMEU raised the issue of the barriers imposed by the current Code for the Tendering and Performance of Building Work 2016 on establishing quotas. The CFMMEU explained that:
The construction unions—not just the CFMMEU, but also the ETU [Electrical Trades Union] and others—have, through bargaining, sought to reach agreement with employers to promote the proposition that there should be a minimum number of women engaged, and likewise apprentices and Indigenous Australians. That's currently prohibited by the federal government's Construction Code. You can't have any quotas set by workplace agreements under the procurement guidelines. Although it would be perfectly legal to do so under the general laws of the land, there's a particular set of requirements in that code that mean that any company that agreed to any quotas, including around women, would be in breach of the code…
8.33
An area of opportunity for government to address women’s participation in construction that was brought to the committee’s attention is enhancing education and training efforts, targeted at younger women prior to entering the workforce. While current government initiatives and programs were acknowledged, it was emphasised that more needed to be done to address the attractiveness of a career in construction for women.
8.34
NAWIC recommended establishing an ongoing and increasing pipeline of women by partnering with organisations focused on reaching women earlier in their careers. It recommended mandating requirements through contract for industry to engage with schools and tertiary institutions to engage female students, apprentices, and cadets to gain work experience, or via apprenticeships partly funded through the procurement by government.
8.35
The Business Council of Australia proposed that another option is for government to extend the eligibility for Additional Identified Skills Shortage incentive payments to women taking up apprenticeships in occupations with skill shortages and low participation by women, including construction.
Committee comments
8.36
The committee recognises that there are already overarching employment standards that cover the Australian workforce more broadly and the construction industry specifically. This includes the Fair Work Act 2009 and the Code for the Tendering and Performance of Building Work (the Code)—enforced by the Australian Building and Construction Commission—which set workplace standards that cover Australian Government funded construction projects. The Code imposes a comprehensive range of requirements, including compliance with work, health and safety legislation.
8.37
However, the committee believes that there needs to be a concentrated and coordinated effort to improve working conditions and culture in the construction industry. Improving these areas will enhance the industry’s ability to attract and retain workers, improve safety, improve mental health and wellbeing, and boost productivity.
8.38
The committee understands that culture is not easily reformed, however, the infrastructure pipeline of work requires a sustainable and productive workforce. For an industry that has such an important part to play in Australia’s economic recovery and future growth, the construction industry is significantly hampered by cultural challenges that must be urgently addressed if it is to progress.
8.39
Research indicates that a quarter of construction sector workers are affected by a mental health condition and are experiencing elevated rates of depression and anxiety. Further, the committee notes the disturbingly high suicide rate in the construction industry—the second highest in any sector—with workers six times more likely to die from suicide than a workplace incident. In addition to the tragic loss of life, the committee also heard that this is costing the Australian economy an estimated $1.57 billion.
8.40
The committee supports greater efforts to improve the diversity of the workforce, particularly gender diversity. It acknowledges that cultural issues are preventing a greater representation of women in the construction industry workforce—currently only 12 per cent—and that improving this will be beneficial for the entirety of the workforce, industry and indeed the wider economy.
8.41
There is strong support for increasing female participation in construction, not just as sound policy, but as one of the solutions for a more sustainable and productive construction industry. However, substantial barriers to attracting and retaining women are imposed by the rigidity of the industry’s working conditions and practices. The committee recognises that these barriers to women's participation are multi-faceted, with concerns including access to amenities, safety on site, and access to proper fitting personal protection equipment, in addition to the structural and cultural aspects of the working environment.
8.42
In evidence presented to the committee, particular ways put forward to encourage more women to enter the workforce included greater training and education efforts and utilising the procurement process to put the issue of gender diversity at the forefront.
8.43
The committee recognises the work of the Culture in Construction Taskforce (CICT) in developing a Culture Standard to lift the productivity and performance of the construction industry and address the major issues holding it back—such as excessive work hours and fatigue, poor mental health, and a failure to attract a diverse workforce. The work of the CICT reflects the widespread industry support for these changes. The committee looks forward to seeing the final draft of the Culture Standard and encourages governments at all levels and industry to adopt and implement it as a priority.
8.44
The committee agrees that the Culture Standard will offer a significant framework for clients and contractors to work together to reshape the construction industry into one that supports health, safety, wellbeing, diversity and productivity in its workforce, and that can deliver Australia’s infrastructure pipeline.
8.45
To deliver on Australia’s significant infrastructure pipeline of projects over the next decade, the committee acknowledges the importance of improving productivity in the construction industry and recommends that the Australian Government investigate how in the tender and delivery processes for government-funded infrastructure projects, firms can demonstrate their:
commitment to, and compliance with, modern workplace standards
support for sector cultural reform in areas including wellbeing, working hours and diversity of their workforces, and having regard to the Culture Standard for the Construction Industry being developed by the Construction Industry Culture Taskforce.
John Alexander OAM MP
Chair
25 March 2022