The shortage of skilled workers in Australia’s construction industry remains a major barrier to addressing the country’s housing crisis.
Speaking at a yesterday’s Property Council National Housing Solutions Summit in Melbourne, Grattan Institute Housing and Economic Security Program Director Brendan Coates highlighted the pressing need for workforce expansion to meet the government’s ambitious target of 1.2 million homes over the next five years.
“The supply of workers is a big constraint on how quickly we can meet those targets of 1.2 million homes over the next five years,” Mr Coates said.
While acknowledging recent workforce growth in the sector, he remained optimistic about the possibility of further expansion in the construction industry.
“There are periods where it does grow very quickly. So, there’s no reason we can’t get it growing quickly again.”
However, a tight labour market has made hiring more difficult. One solution, alongside greater gender diversity and domestic training, is increasing skilled migration into the sector Mr Coates told attendees.
“There are ways to get more skilled construction trades into Australia, but there’s probably no one simple answer. It’s going to be a battle of inches. A game of inches across multiple domains, across multiple policy areas.”
He noted that currently, very few recent migrants work in construction.
“Most of the people working in construction who were born abroad, they arrived here a long time ago.
“Amongst the recent migrants only 2.8 per cent of all construction workers arrived in Australia in the last five years
Mr Coates emphasised that a deeper understanding of Australia’s migration system is essential.
“We can actually boost these numbers because we’re coming off a relatively low base. But we need to start with understanding how the migration program actually works.”
One of the biggest hurdles, according to Mr Coates, is the prohibitive cost of sponsoring a worker.
“It’s costing more than $10,000 to sponsor someone for a visa, even before you think about the fact that, given the system we have, you’re probably using a migration agent to do that. So it’s very expensive.
“Now, once you’ve got your temporary visa, people can then transition onto a permanent visa. That’s how most people who become construction trades workers stay in Australia long term.”
Despite Australia’s urgent need for construction workers, the number of temporary visa holders in the sector remains low.
“We’re in the middle of a housing crisis, and we’ve got less than 10,000 construction trade workers here on sponsored visas. That seems like an enormous missed opportunity to me.”
Beyond cost, the slow and cumbersome skills assessment process further delays the entry of skilled migrants, he said.
“The recent migration review said it cost $9,000 and can take up to 18 months for an electrician. So it’s not just the visa; it’s then the skills assessment process that’s really slow.”
To improve the system, Mr Coates proposed several policy changes.
“Some of the things that we think about we should be doing to make the system better is, one, trying to get rid of the occupation list. The second part is to abolish labour market testing. This is a sham. It does not work in Australia. It just adds a lot of uncertainty and delay and cost.”
Lowering sponsorship fees could also encourage more employers to bring in foreign workers. Mr Coates recommended a cost of $1,000.
“We’re trying to encourage employers because employers are the ones who are going to go out and find workers from other countries to bring them to Australia to work in the construction sector. If we reduce those frictions, those costs, we are more likely to see employees being willing to go out and hire someone from abroad because it looks a lot more like hiring someone locally.”
Mr Coates pointed to New Zealand as a case study in successful construction workforce growth.
“In just a seven-year period, the total workforce grew more than 50 per cent, the migration share doubled, which means that the number of migrants working in the construction sector tripled.
“That’s an extra 20,000 workers. If you put that in the Australian context, that’s about 100,000 extra workers in the Australian context that they found in a very short space of time.”
New Zealand’s approach included removing labour market testing for certain occupations and streamlining migration policies, he said.
We would like to express our appreciation to our valued event partners, with a special acknowledgment to our Principal Sponsor, nbn, for their support of the Housing Summit. nbn’s commitment to connecting communities across the nation remains unparalleled, and their leadership plays a pivotal role in advancing the housing and infrastructure sectors.
We also extend our gratitude to our Major Sponsors: Harwood Andrews, Housing Choices Australia, Investa, Mirvac, Peddle Thorp, Stockland, and Urbis. Their generous contributions were instrumental in making this event a success. The continued support of these sponsors is vital to the ongoing development and transformation of the sector, and we thank them for their dedication and partnership in shaping the future of housing in Australia