Key Takeaway
- The terms of reference for the first inquiry of the Queensland Productivity Commission into the building and construction sector were endorsed on 24 April 2025
- The Commission is directed to focus its inquiry on reviewing factors influencing productivity in the construction sector to generate recommendations for reform to maximise productivity without compromising quality and safety considerations.
- The report resulting from the inquiry is due within 6 months of the date of the direction, reflective of the pressure to boost productivity in the Queensland construction sector ahead of the Brisbane 2032 Olympic Games.
Context and Background
Recently, the Queensland Government seized an opportunity to address the efficiency of the construction sector, through suspension of the Best Practice Industry Conditions (‘BPIC’) and re-establishment of the Queensland Productivity Commission (‘the Commission’). On 24 April 2025, a direction pursuant to sections 9(1)(a) and 38 of the Queensland Productivity Commission Act 2025 (Qld) was given for the Commission to undertake an inquiry into Queensland’s building and construction sector.
The terms of reference, central to the Commission’s inquiry, indicate the importance of construction industry productivity in maintaining a competitive and productive economy. As is well-known, the COVID-19 pandemic had severe impacts on the industry, which continue to linger. Following this, Queensland is now experiencing a challenging climate of housing shortages and intensified infrastructure goals, particularly ahead of the Brisbane 2032 Olympic Games. Therefore, it is imperative the root causes of prevailing issues such as contractor insolvency, surging construction prices and supply chain constraints are identified and regulated appropriately.
The Inquiry
The direction for the Commission to undertake an inquiry is extremely broad. The Commission is tasked with investigating the factors that drive productivity, to suggest reforms that enhance those factors without compromising safety and quality considerations.
At a high level, the Commission has been directed to investigate and report on a variety of factors, trends, impacts, conditions and barriers facing the industry which can be resolved through regulatory and systemic intervention by the Queensland Government. These are:
- the current industry conditions regarding housing supply and delivery and affordability;
- comparative trends regarding costs, competition, supply chain developments and productivity;
- productivity of construction sites across a range of typologies, to compare performance to other jurisdictions;
- factors impacting productivity performance including legislation, industrial relations considerations, procurement policies and labour force needs;
- opportunities to improve productivity – both regulatory and non-regulatory;
- priority areas for reform, addressing identified challenges;
- recommendations and themes relevant from other similar reviews;
- impacts on lower tier subcontractors in regional areas tendering to government;
- effects on wages and industry conditions of government regulations to compete for labour and resources;
- factors which limit the availability of labour for construction, skills development of the labour force and the equilibrium between labour supply and sector demand;
- the impact of government procurement and contracting arrangements (including BPIC) on productivity;
- barriers to entry, investment and innovation in the sector; and
- key issues to be considered to ensure the efficacy and prioritisation of the reforms in this area.
The inquiry will involve a wide public consultation, attempting to reach all stakeholders who are aggrieved by the current issues faced in the industry. Those stakeholders have been encouraged to make submissions to the inquiry to guide in the development of recommendations for reform.
Final Remarks
With the Commission’s report due within 6 months of the date of the direction, this emphasises the importance of boosting productivity in the Queensland building and construction sector, to resolve issues with housing and remediate the market environment ahead of imminent projects, such as for the Brisbane 2032 Olympic Games.
If you would like to discuss any of the above, please contact our Commercialisation, Supply and Projects experts.
