The Queensland Government is pausing the use of Best Practice Industry Conditions (BPICs) on new government-funded construction projects as part of efforts to increase productivity.
The State Government will introduce legislation to re-establish the Queensland Productivity Commission (QPC) by the end of 2024, with its first order of business a review of the Queensland building industry.
Until the review has occurred and the government has responded, BPICs will be paused, stemming budget blowouts and the flow-on impacts to the broader construction market in Queensland, and ultimately the cost of living for homeowners and renters.
It follows revelations from treasury modelling that if BPIC continued in its current form, Queenslanders would pay an additional seven per cent rent over the next five years and 22,000 homes would not be built across the State.
The pause will apply to new projects and those that have not yet reached procurement stage. There may be opportunities for existing projects to improve productivity with the suspension.
This is part of the Queensland Government’s commitment to boost productivity and deliver projects on time and on budget.
BPICs have applied to government construction projects costing more than $100 million and set conditions on employment terms. BPICs require the prequalification of contractors and subcontractors before being able to undertake major government project work, limiting the pool of available contractors and sub-contractors.
Industry critics said BPICs create extra red tape and distorts procurement outcomes, contributing to increased costs and reduced market competition.
The pause aims to lower the cost of doing business in Queensland. Safety outcomes will not be compromised.
Best practice workplace health and safety systems and standards and best practice commitment to apprentices and trainees will continue to remain in force.
Independent economic modelling by Queensland Treasury over 2024-30 estimates BPICs are likely to increase project costs by up to 25 per cent and create a net economic cost of up to $17.1 billion.
As well as major general infrastructure projects like hospitals, roads and rail, BPICs were also extended over future renewable energy projects.
Queensland Deputy Premier, Jarrod Bleijie, said BPICs have had a significant impact on productivity and labour capacity and have resulted in delays on government-funded major projects.
“We need to urgently control the cost blow-outs of government-funded construction projects, which ultimately hits the hip-pockets of Queensland families and businesses,” Mr Bleijie said.
“Queenslanders shouldn’t have to bear the brunt of this which is why we’ve ordered this pause and review.
“It will also give sub-contractors, especially small and family businesses and regional firms, a greater chance of securing work on government projects, without all the costs and time involved in having to gain unnecessary prequalification.”
Minister for Housing and Public Works, Sam O’Connor, said not only would BPICs impact housing, but they would also impact energy projects.
“Independent Treasury modelling shows Queenslanders will pay more to rent a home and there will be fewer homes built in our state under the current BPIC conditions, it would be irresponsible to ignore this advice in the face of a housing crisis,” Minister O’Connor said.
“If BPICs were to continue, they would also apply to energy and storage projects implemented by Government Owned Corporations, placing upward pressure on electricity prices and household cost of living.”
Queensland Minister for Transport and Main Roads, Brent Mickelberg, said pausing BPICs would allow for new projects to go ahead without additional overheads, while the QPC review is carried out.
“The cost of delivering critical road and rail projects that are needed to deliver the infrastructure our growing State needs will be reined in,” Minister Mickelberg said.
“We will honour existing contracts and work with industry as best as we can to help deliver those on time and on budget.”
ACA response
The Australian Constructors Association (ACA) has welcomed the Queensland Government’s decision to pause the use of BPICs on new government funded construction projects.
ACA has long advocated for a focus on improving productivity to ensure it can deliver the infrastructure Queensland needs, when it needs it and at a price it can afford.
ACA CEO Jon Davies, said, “The BPIC pause does not mean we lose sight of the critical importance of safety and training. Our workers are our greatest asset, and they stand to benefit significantly from enhanced productivity.”
The ACA also welcomed the re-establishment of the Queensland Productivity Commission, a move that signals the government’s commitment to a productivity-focused agenda for the state.
“We are committed to working alongside the Queensland Government and the broader industry to realise the $10.93 billion annual productivity potential this pause and an increased focus on efficiency offers to Queensland,” Mr Davies said.
“This is an exciting time for Queensland, and we look forward to collaborating with the government to strengthen Queensland’s infrastructure pipeline while building a more sustainable future for the construction industry.”
