FAIR

The Future Australian Infrastructure Rating (FAIR) is an initiative proposed by the Australian Constructors Association to measure the performance of federally funded infrastructure projects. It has the single purpose of improving the sustainability and performance of the industry. It is not about exposing the worst projects. FAIR is about driving innovation, improving productivity, building capability and capacity and improving the culture of the Australian construction industry.

On its current course, the construction industry is not sustainable. Infrastructure Australia has produced well-researched and considered plans for reform that align with calls from industry and reports prepared for state governments. Governments and industry understand the problems and even agree on the solutions. The challenge is how to implement them. With a major workforce shortage predicted by mid-2023, a step change in productivity and innovation is needed now. Without urgent change delivery of the record pipeline of projects and realisation of the substantial productivity opportunity will be put at risk.

Key statistics:

• Infrastructure Australia predicts that by mid-2023 more than 105,000 construction jobs could go unfilled as governments attempt to deliver big infrastructure agendas worth $218b in the next 5 years.
• Productivity growth in the construction industry has trailed other significant industries by 25 per cent over the last 30 years. If we could just halve the gap in productivity growth, we could be constructing an extra $15 billion of infrastructure every year for the same level of expenditure and employ an extra 15,000 people.
• The construction sector accounts for 25% of all insolvencies in Australia and this trend on the rise.
• Women make up just 12 per cent of the workforce and workers are six times more likely to die from suicide than a workplace incident.

FAIR is designed to complement and build on the success of existing schemes like NABERs, Green Star and the IS Rating. FAIR will bring forward a national, consistent approach to implementing broad reforms outlined in the Australian Infrastructure Plan.

FAIR is not intended to replace existing schemes. It is anticipated FAIR would either expand or connect into these schemes. The best way forward would be determined by government in consultation with industry.

Until now there has not been mechanism to ensure reforms proposed by expert bodies like Infrastructure Australia to drive productivity and innovation are implemented—let alone expedited. FAIR provides a way to implement industry reforms consistently across the nation.

As the bank roller of major projects, the Federal Government is well positioned to drive widespread change across all Australian jurisdictions, and it can do this through FAIR. Federally funded projects undertaken by state government delivery agencies would be given a rating that would be published on a website leading them to strive for increasingly better outcomes for their stakeholders.

Just like people who look at restaurant ratings, contractors, wanting the opportunity to demonstrate their capabilities, would look at state government agency ratings when choosing where to focus their best resources, providing another reason for government delivery agencies to collaborate with industry to drive improved outcomes.

FAIR has the potential to address the industry’s challenges including the critical skills shortage, while unlocking productivity gains in the vicinity of $15 billion annually.

A coordinated effort among Australian, State and Territory governments, together with industry, is required to establish the FAIR initiative.

Central to the initiative’s success is the establishment of consistent key reform areas. Key reform areas would likely include productivity improvements, emissions reductions, increased participation of women in the industry, improved worker health and wellbeing, increased sovereign capability, skills development and increased innovation. Performance in these areas would form the basis for an overall project rating.

All federally funded projects would be required to submit a completion report to the body administering FAIR. These reports would provide accountability by demonstrating that projects performed as intended. They would also support the sharing of best practice and lessons learned.

The FAIR initiative could be included in the next iteration of the National Partnership Agreement as a requirement for all federally funded projects. To further incentivise quality outcomes, high ratings could unlock access to new funding pools similar to the previous Asset Recycling Scheme

While FAIR will rate projects attributed to delivery agencies, it is expected there will also be an average annual agency score. This will help to drive high standards across agencies. FAIR is not proposed to rate contractors.

In developing the FAIR concept, the Australian Constructors Association consulted with state and federal government agencies and industry bodies. The initiative has received widespread support.

Ultimately, the FAIR scheme could also be used by ethical investors such as superannuation funds and other infrastructure owners to demonstrate their own support and action for improved industry outcomes.

The Australian Constructors Association has made a pre-budget submission calling for the Federal Government to progress the initiative in partnership with industry. It is anticipated the immediate actions would be to map existing schemes and frameworks, produce a gap analysis, key reform area recommendations, and start piloting projects.

Ideally, in the next iteration of the National Partnership Agreement, there would be a requirement for projects to produce a FAIR score.