Posted: 2024-07-17 22:21:12

A swathe of allegations: intimidation, coercion, brown paper bags filled with cash.

The construction sector of the CFMEU has been exposed by recent media reports over allegations of criminal and offensive behaviour.

The union's issues have been raked over by regulators and widely understood by people in the orbit of construction and politics.

But what's the impact on the everyday consumer or worker? 

Does it have any impact on the cost of housing, as the sector slumps despite hot demand for homes?

The answer is more complex than you might think.

And it's not all one way: many have experienced an upside to the union's dominance in the sector.

Costs? Up

The union largely operates on the sites of mega-projects like skyscrapers, train tunnels and freeways.

Instead of having people bargain individually about their pay with big developers or the government, the union's collective agreements have brought high wages and strong conditions to construction workers.

apprenticeship crane (Tom via Pixabay)

The Home Builders Association says prolonged construction labour shortages are expected to cost Australia billions.(Supplied: Tom via Pixabay)

So, has the union made building apartments and houses in the suburbs more expensive, despite not being involved in small-scale construction?

"Yes," said Phil Dwyer, national president of the Builders Collective of Australia, which represents small builders.

"It certainly has driven up costs," said Denita Wawn, chief executive of Master Builders Australia.

"Ultimately, anything that occurs that costs money in our sector is passed on to the client.

"We have always said that up to 30 per cent increases occur on construction sites, because of the activities of the CFMEU.

"We have been ridiculed in the past for that figure. But nevertheless, it just reinforces I think, the impact this has on the industry and on the community at large."

Given labour is a key cost of construction and the margin (profit) on commercial projects is far less than 30 per cent, if the Master Builders assertion was correct then every site with a CFMEU workplace agreement would lose money.

Producer price indexes from the Australian Bureau of Statistics measure the cost to industry of products and services. 

This index lifted 5.9 per cent annually for the year to March for the construction industry (slightly less for the residential sector, slightly more for non-residential).

Labour costs and shortages are most of it, but so are price increases for "concrete based structural components due to high demand" as well as "high manufacturing costs".

"The ongoing activity in the non-residential market, coupled with pressure from the residential and infrastructure sectors, continued to drive competition for limited resources."

So it's likely not allegations of criminal behaviour that are costing the big bucks. 

It's the rising wages of even junior workers, where the CFMEU's collective bargaining has allowed them to earn substantial pay packets. 

Denita Wawn, Master Builders Australia CEO

Denita Wawn says unions have inflated construction costs.(ABC News: John Gunn)

Demand side

This cost is almost impossible to untangle from a broader issue: demand.

After decades of under-investment, Victoria, New South Wales and future Olympics host Queensland have gone on a taxpayer-funded infrastructure binge that has super-charged the construction sector. 

That's soaked up a lot of workers.

Victoria's so-called 'Big Build' of tunnels, rail links, freeways and level crossing removals boasts of employing more than 20,000 people

Many tradespeople have been lured to jobs subject to well-paying CFMEU agreements, where the scope of projects runs in years and even decades.

"So we've lost a huge amount of good tradespeople and it's certainly created a shortage of tradespeople in domestic areas," Mr Dwyer said.

"Most certainly trades have (since) escalated in price, because with the shortages it's, 'No, I can't do it', 'I can do it if you pay me X dollars' or 'This is my price'."

In recent years, supply constraints meant the price of timber, PVC and other items went up. 

Mega-projects have also pushed up a key cost in the construction sector: people.

An aerial view of a complex construction project beside the West Gate Freeway.

Major government infrastructure projects have employed hundreds of thousands of tradespeople across the country.(ABC News: Patrick Rocca)

Flow-on effect

The inability to get tradespeople at rates builders can afford, or in a timely manner, creates delays and exposes builders to penalties for not hitting deadlines.

Very few builders can employ all the tradespeople they need on a permanent basis. 

The way most dwelling construction works is that different skills, like plumbing or electrical work, are needed at different phases of the build. 

So sub-contractors, or "subbies", work on either the entire life of a project or particular tasks.

"This is the reason you're seeing so many builders go down," said Mr Dwyer, who represents small builders.

"There's just that much shortage in the system."

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