Your Future Home Has Been Sacrificed In A Political Sweetheart Deal

Written by:
15 January 2024
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In this article, Saxon Davidson contextualises and disseminates the findings of the IPA’s research into Australia’s housing shortage and how that affects Australia’s economic freedom and prosperity.

The infrastructure and construction sector has been one of the worst affected by persistent worker shortages, with a December report from Infrastructure Australia finding the sector faces a shortage of 229,000 workers.

This ought to be a wake-up call for the federal government, which just a week prior to the release of the report regulated a form of hiring commonly used by the construction and infrastructure sectors.

The federal government’s Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 passed the Senate during the last sitting week of 2023 with crossbench support, but only after most of its more controversial elements, such as increased restrictions on casual work, were deferred until later this year.

One controversial aspect of the Bill however was included – the so-called ‘crackdown’ on labour hire arrangements.

The increased restrictions on labour hire arrangements, misleadingly titled the ‘same job, same pay’ reforms, brings workers who are currently hired through an agency under the control of the federal government’s trade union masters, particularly the CFMEU. The practical effect of this new law is to capture labour hire workers in the collective bargaining system, which adds to project costs and dramatically reduces flexibility.

Labour hire arrangements provide businesses with surge capacity, enabling them to meet unexpected increases in demand for their services and providing workers with a flexible form of employment. Not anymore. This new law will significantly curtail the ability of businesses to rapidly adjust their operations in response to changing market conditions.

It was not a ‘loophole’ that needed to be ‘closed’, despite the government’s claim. Given the country is currently experiencing a persistent worker shortage crisis, regulating a form of work that has traditionally been used to meet surge demand, and making the employment system more rigid, makes little sense – it will only exacerbate the problem. And the reforms deny Australians the right to choose the form of employment that best suits their personal circumstances.

The Institute of Public Affairs’ submission to the Senate Standing Committee on Economics’ inquiry into the Housing Australia Future Fund Bill, found the average quarterly number of new private houses on the market over the past two years of worker shortages is almost 20 per cent lower than the two years prior to the Covid pandemic.

The legislating of ‘same job, same pay’ only worsens the situation, adversely affecting construction businesses, which utilise labour hire arrangements at twice the rate of the economy-wide average.

This will drastically increase the cost of construction at a time when Australians are struggling to purchase a home or find a place to rent.

A significant reason for this is the government’s unprecedented and unplanned increase in immigration, forecast to be no fewer than 1.7 million people between now and 2028, which is driving up demand. This increase in migration will exacerbate the nation’s housing shortfall, leading to a shortage of more than 252,000 homes over the same period.

Removing flexibility in the labour market will not help the construction sector address that projected shortfall and build the homes that Australians desperately need. ‘Same job, same pay’ will, in fact, prolong two of Australia’s most pressing crises.

The present trajectory is a scenario in which housing supply is driven down due to increased costs and an artificial scarcity of labour, while demand for housing is driven up by record immigration. Such an equation defies logic; it can only be explained by the federal government’s decision to put the interests of its union mates ahead of those of ordinary Australians.

Australians deserve real solutions to the urgent economic problems we face in 2024. At a time when the nation is facing a housing shortage, and the cost of housing skyrockets, how can it be in the national interest to make it harder for businesses to hire the people they desperately need to build houses?

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