The Master Builders Association of NSW (Master Builders) enters correspondence in advance of the 2026/2027 NSW State Budget with initiatives and considerations for the building and construction sector to remain a key driver of economic growth in NSW.
The NSW economy continues to improve, driven by investment and digital transition. A growing economy and population is also placing additional demand on housing. Combined these factors are going to place additional demands on construction services.
Meanwhile, high and increasingly sticky inflation, high interest rates, red tape, labour shortages, construction material cost increases, and growing insurance premiums are putting pressure on businesses and on the feasibility of projects, particularly in the high-density residential construction sector.
As a result, while we’ve seen improvements in business confidence over the past 12 months, we continue to see above average rates of business failures and too many projects fail on the drawing board.
Master Builders recognises and commends the recent reforms taken by the Minns Government to address some of these issues, particularly regarding planning rules and development approval timeframes.
However, for industry to meet the growing demands on construction services, and assist in meeting the government’s housing targets, further reforms are needed to expand capacity in the construction industry supply chains, grow the construction workforce, boost productivity and improve business resilience.
Master Builders submission in advance of the 2026/2027 State Budget contains measures to help build a bigger, more productive and more resilient building and construction industry.
A commitment to the growth of the building and construction industry, economic prosperity and enhancing community well-being underpins our 2027 Pre-Budget Submission.
Master Builders key policy recommendations are put forward under three Pillars:
- Pillar 1: A bigger, more resilient and more innovative construction industry.
- Pillar 2: Improving productivity to build back capacity.
- Pillar 3: More homes for a growing NSW.
PILLAR 1: A BIGGER, MORE RESILIENT AND MORE INNOVATIVE CONSTRUCTION INDUSTRY
Workforce capacity is holding back the construction of more homes. At the same time, we have seen a fall in the number of new apprentice enrolments in construction trades over the last 12 months. The latter if not addressed will lock in future skills shortages and capacity constraints.
The Land and Housing Corporation Apprentice Program in 2020 was a NSW government investment of $80 million over four years. The program was extremely successful and resulted in hundreds of trades apprenticeship completions over the four-year duration of the program. Master Builders recommends this program be extended for further four years.
We also need more builders in the sector to deliver on higher future demand for construction services, particularly in the residential construction sector. Support for qualified tradespeople to become registered builders is one of the fastest and most effective way government can quickly boost capacity to build more homes.
More broadly we need growth in the construction workforce to meet government housing targets and provide the workers with a growing pipeline of major projects. Workforce growth targets should accompany targets to build more homes. Doing so would ensure we have a suitable workforce to meet future demand for housing and keep down the costs of construction.
Housing targets and the infrastructure needed to support a growing economy and population will not be met if we do not have the required capacity in construction supply chains. MBA NSW proposes to undertake a comprehensive supply chains capacity study. In doing so we’d seek a reputable research partner to lead the work.
Master Builders has recently partnered with researchers from the University of Technology Sydney on two construction industry research reports and would seek to leverage this existing relationship to deliver research on construction industry supply chain capacity.
Supply chains need to be supported to innovate and expand. New methods of construction hold the potential to boost productivity, reduce the costs of construction and accelerate the delivery of new housing.
In addition, government should offer incentives for businesses to support the production capacity for new, innovation and/or alternate methods of construction and the adoption of alternate or innovative building materials and methods.
RECOMMENDATIONS
- Extend the Land and Housing Corporation Apprentice Program for another four years.
- Funding for a detailed construction industry supply chain capacity study. The research would focus on supply chain capacity in the following areas:
- Workforce capacity and required growth
- Labour and multifactor productivity in the construction industry
- Opportunities from innovative and new methods of construction, and
- Local manufacturing capacity to make more building products in NSW
- Funding to support dedicated building registration Support Officers to sit within peak construction industry bodies. This will allow for the acceleration of the registration process, reduce the administrative burden on government departments, and get more registered builders into the market faster.
- Commit to workforce growth targets which align with future housing targets.
- Establishing a dedicated grants program for suppliers and contractors in the construction industry to support the production capacity for new, innovation and/or alternate methods of construction and the adoption of alternate or innovative building materials and methods. Grants should be eligible to all businesses in the supply chain up to the value of $5 million.
- Procure a larger portion over time of all new social housing developments via modern methods of construction.
PILLAR 2: IMPROVING PRODUCTIVITY THROUGH INDUSTRIAL RELATIONS
Construction has a productivity problem. Output produced per worker per hour in the construction industry is now 18 per cent lower than it was a decade ago. Industrial relations have been marked almost unanimously as the issue holding back productivity growth in the industry.
A lack of productivity growth has made the sector less competitive in the contest for skilled trades workers. Higher productivity will support higher wages, better margins for businesses and better value for money for taxpayers when delivering major projects.
For too long industrial relations reforms have acted counter to productivity, often reducing productivity growth and reducing flexibility in the labour market.
While often the jurisdiction of the federal government, there remain several things the NSW state government can do to help foster an industrial relations environment that helps to promote productivity growth in the construction industry, particularly via procurement reform.
Moreover, past research shows that CFMEU pattern bargaining reduces productivity and increases the costs of construction on union pattern EA projects. Analysis by Rider Lovett Bucknall of the current CFMEU enterprise agreement shows that the cost of high-rise apartment projects, including those funded by NSW taxpayers, will rise by at least 20 percent if the union is permitted to pressure construction contractors into signing up to the union’s enterprise agreement.
The NSW government must not allow CFMEU pattern EA conditions to become a feature on high rise and medium rise apartment developments in NSW. Doing so will force up the costs of new apartments and further damage housing affordability.
We have a unique opportunity to drive reforms while the CFMEU is under administration and for all stakeholders to work together to drive better outcomes for workers, taxpayers and employers alike.
RECOMMENDATIONS
- Revocation of the NSW Government’s Practice Direction that prevents the NSW Construction Compliance Unit (CCU) from enforcing sections 5, 8 and 10 of the NSW Industrial Relations Guidelines: Building and Construction Procurement.
- While the administration process of the CFMEU is underway in NSW the state government should:
- Ensure that all enterprise agreements that apply to state government funded projects to which the CFMEU are a party are in fact genuinely agreed and are free from coercion and intimidation.
- Not issues any state right of entry permits involving the CFMEU while under administration.
- Ensure that all individuals that hold positions of power in a union are fit and proper persons.
- Take steps to ensure that any individual CFMEU removed persons, personnel, officer, officials or agents are not able to act as bargaining agents in a personal capacity involving state government funded projects.
- Prevent the CFMEU from intervening in any matters involving enterprise bargaining where they are not already parties.
- Not allow EA agreements on state government funded projects that mandate specific insurance providers, specific workplace training, or training providers, specific employee assistance programs, worker entitlement schemes, or any other support service.
- Not allow EA agreements on state government funded projects that give unions the right of veto, or mandate the requirement to consult over the selection and use of subcontractors, or that restrict the deployment and use of particular types of classes of workers, or when work is performed.
- Not allow EA agreements on state government funded projects that impose any arrangement or process regarding the resolution of workplace disputes other than that prescribed by workplace laws.
PILLAR 3: MORE HOMES FOR A GROWING NSW
A growing NSW population and economy continues to place more pressure on new housing demand. Simply, we haven’t built enough homes over the past decade, and we continue to fall short of current housing targets.
The NSW government should be commended for recent reforms to planning and approvals legislation which will reduce the time it takes to get residential construction project through the planning and approvals process. These reforms will make it cheaper, easier and faster to build new homes.
However, additional reforms must be considered if new housing supply is to keep pace with demand. The regulatory environment must protect consumers but not get in the way of delivering projects.
Other than those needed to address immediate safety concerns or serious issues of consumer protection, regulation changes that add to costs or project timeframes, or risk reducing the overall productive capacity of the industry should be paused until such time as the supply of new housing is deemed to keep pace with demand.
The NSW Government’s changes to the administration of the Home Building Compensation Fund (HBCF) constitute a risk to the residential building sectors capacity to deliver the thousands of new homes required to meet the NSW Government’s Housing Accord target.
HBCF premiums on a medium rise in apartment development are now upwards of 13 per cent of building costs. This is a major barrier to midrise apartment project feasibilities. Government should work with industry to find ways to reduce the costs of insurance on these projects. This must include but not be limited to ensuring any legislative reforms do not limit the ability for private sector insurance providers to offer warranty and insurance products to the construction industry.
RECOMMENDATIONS
- Freeze proposed changes to the administration and application of cover and claims under the Home Building Compensation Fund (HBCF) to an online portal, until such time as the supply of new homes is deemed to keep pace with demand.
- Ensure future legislative reforms do not limit the ability for private sector insurance providers to offer warranty and insurance products to the construction industry.
- Ensure the Building Commission is adequately resourced to perform its function as the industry regulator, with a focus on education and higher risk class 2 buildings.
Master Builders welcomes the opportunity to work with your government in progression of these objectives.
Matthew Pollock
Executive Director
Master Builders Association of NSW