One of the results of the Greens taking on the trade union agenda is the coming crisis for independent contractors in the housing industry. House-building can be a very efficient process due to the flexibility and productivity of the small traders involved and practically all the increase in housing costs in recent decades can be attributed to the land component (and demands for more things in houses these days).
Let me add a home-grown threat [to house prices] that few would currently recognise – the carefully orchestrated government campaign to decimate independent contracting in Australia. If the government succeeds it’s very likely it will increase the cost of building a house by 25 or 40 per cent and devastate contractor-dependent industries like IT.
In commercial building, including high rise apartments, the going hourly rate is between $50 and $60 which can rise above $100 for contracts where unions have negotiated more expensive deals such as the Victorian desalination plant. But there are a whole series of work practices in commercial building that restrict productivity which is one reason why apartments are more expensive than houses. Of course in the case of ‘rort’ contracts these practices go much further requiring many more workers.
In housing most (but not all) independent contractors charge an hourly rate in the vicinity of $45 an hour, but the real difference is not the hourly rate but the flexibility and efficiency that the independent contractors deliver. Take that away by imposing employee relationships and union work practices and my contacts in the contracting industry say you will see the cost structure probably rise between 25 and 40 per cent.
No single action could decease productivity in Australia by a greater amount. But it is being pushed by the groups who fund the ALP and the Greens. This is going to be one of the toughest fights Australian business has ever had and the odds are that business and the economy will lose. So will those who want to build or renovate a house.