NSW ELECTION

NSW ELECTION 2023

The people of NSW will head to the polls on 25 March 2023. As your voice, we are advocating for reforms to create a sustainable, viable NSW civil construction industry. Not just for a few… but for all. And, while we are having some major successes, there remains much to do to achieve this vision.

A Sustainable, Viable Industry will ensure:

¿ ¿ Local-region jobs ¿ ¿ Improved project performance ¿ ¿ More women joining the industry ¿ ¿ Better value for money for clients ¿ ¿ An expanded economy ¿ ¿ Improved living standards

Without reform by the NSW Government, the structure of the entire NSW civil infrastructure industry will be altered. This will have major ramifications for its largest user – the NSW Government.

Uncorrected, NSW will soon have a civil industry of just international Tier 1 civil contractors and labour and plant hire companies. The Tier 2 and 3 contractors that currently form the backbone of the workforce and capability of the NSW civil industry will be forced out.

This is not a model for a sustainable, viable NSW civil construction industry, the data inextricably points to this collapse happening extremely quickly – perhaps within five years. The once highly competitive industry will be a thing of the past.

No-one can blame COVID, Floods, War, or Workforce Capacity

The Civil Industry is in Trouble

A decade of unprecedented NSW Government project announcements seemingly places the NSW civil infrastructure industry at an all-time high, however, the reality is quite different. In the four-year period FY18 to FY21, the dollar value of new NSW Government infrastructure contract commencements did not increase to match these announcements. Rather, it dropped1 by 39% across all NSW Government; with Transport for NSW dropping by 60%. The restriction of the pipeline naturally flows through to work volumes. For the second year in a row, actual work done in the industry dropped in FY21, a significant 4.3% against a forecast growth of 11.5%2.

But it is not only the volume of new work that has reduced; the very size of the contracts being released has significantly altered, and this is consequently reshaping the structure of the industry: ¿ In the seven years from FY15 to FY21, contracts commenced under $500m have reduced in Transport for NSW by 58% – for projects under $100m, by 62%. ¿ The only sector of the industry to receive any growth from Transport for NSW in the period were the mega-companies; their share of new commencements rose from 20% FY15 to 40% FY18 and remains at 35% in FY21.

Tier 2 companies and below were effectively, and rapidly, being left out of NSW Government contracts in favour of mega-projects by mega-companies. Let’s be frank – these problems did not happen as a result of the last couple of years. They were not caused by mice plagues, LGAs of concern, Trump, war, COVID, or even Tik-Tok.

Our data is absolutely clear and shows that these problems were happening before 2015. Indeed, when most industry bodies were getting very excited in August 2011 about a civil construction boom coming, CCF NSW was advocating in the trenches for NSW Government procurement reform to make the most of that boom.

The harsh reality is that these problems are occurring because of the way the NSW Government has chosen to procure from the civil industry.

A Dozen Do’s

So, we listened to our family of Members, and took from them the solutions that they believed would work. We released A Dozen Do’s to Create a Sustainable, Viable NSW Civil Construction Industry in March 2022 – exactly 12 months out from the NSW election. You can find it on the home page of our website ccfnsw.com. These 12 recommendations map the reforms industry believe are needed and most importantly they reflect the diverse industry civil is. While surprising to some, there are civil contractors not just

in Barangaroo but also Bermagui, Broken Hill and Ballina. All parts of our industry deserve their voice to be included.

And the good news is… your voice is making a difference! The NSW Government’s recently released State Infrastructure Strategy acknowledged that procurement needed to shift from mega projects to Tier 2 and below contractors. That it needed to adjust its procurement practices to construct a sustainable NSW civil construction industry (sound familiar?).

And Ministers have been telling us in our meetings with them that, with our abundance of evidence, they now understand the problem and are pushing for more work to be released, and more work to go to smaller, local, contractors.

We are seeing the advocacy pay off.

And the Baker’s Dozen:

Hyper-Escalation

When the CCF NSW released A Dozen Do’s in March 2022, ‘hyperescalation’ of key input supplies was not a sentence.

Fuel and steel are examples of inputs that have seen huge increases which were impossible to foresee. And that’s why we have been strongly advocating for the Baker’s Dozen Do’s… for the NSW Government to support industry by granting price relief to contracts on these select hyper-inflation items. A number of other States and their infrastructure agencies have been supportive of their industries by granting cost escalation on such key inputs. In our advocacy to the NSW Government (the selfproclaimed Infrastructure Government), we referred and relied on the NSW Government’s 10 Point Action Plan released in 2018… its ‘Commitment to the Construction Sector’.

In that ‘Commitment’ they state: “The Government aims to be a ‘best in class’ client for the construction industry and its suppliers” and in Commitment Number 2 they commit to “Adopt partnership-based approaches to risk allocation” that “Recognise that not all risks are capable of being fully assessed, priced, or managed or absorbed by the private sector, and that such risks must be managed collaboratively…”. However, when the industry needed them, the NSW Government baulked. On 2 September they announced there would be no hyperescalation relief for any contract signed before 31 August 2022 (ie, the period support was most needed). Rather, when the going got tough, the NSW Government cast aside its Commitment and threw the burden of carrying the cost for hyperescalation onto contractors. At time of writing, the ALP has been silent on this issue. This is not “best in class” client behaviour. This is not a “partnership-based approach to risk allocation”. Rest assured; we will keep fearlessly representing your concerns.

An increasing And on a Positive Note... number of smart businesses have CCF NSW put a BIG stake in the already figured ground in when it declared in its out how women Dozen Do’s a vision of gender are a very able equality in civil roles – a 50/50 resource.” gender split – by 2050. And to make it happen we were prepared to invest 20% of our revenue each year. We were the first construction industry body to set such a vision and make such a huge commitment. Good things happen when a great vision is set. Our first touchstone on that path was 15% females by 2030, and we were delighted when the NSW Government announced in June that 15by30 was its vision for the entire construction industry. The CCF NSW believes 50by50 can be achieved without forcing anyone to do anything they are not comfortable doing. We do not believe in contractually imposed stretch targets for female participation, because that is implicitly telling people how to think, will put a price on the head of women, and will be counter-productive to cultural change. P.S. This is what the women in our family of Members have been telling us. Rather, we believe in champions. An increasing number of smart businesses have already figured out how women are a very able resource and that there are enormous benefits in accessing this underutilised resource. CCF NSW is all about facilitating these businesses for, in this highly competitive industry, they will lead the way.