The Council of Australian Governments (COAG) has announced it will conduct a wide ranging investigation into the cost and productivity challenges for the construction industry.

The council has recognised that the building and construction industry has an important role boosting the nation’s productivity by providing cost effective economic and social infrastructure

Master Builders Australia chief executive Wilhelm Harnisch welcomed the inclusion of labour costs, skills and workplace relations in the terms of reference.

“Labour accounts for approximately 50 per cent of construction costs. It is pleasing to see this has been included in the investigation’s terms of reference.

“Master Builders looks forward to the announcement of the independent three person panel undertaking the investigation.

“Master Builders Australia will work with the Panel and looks forward to contributing to its outcomes,” Harnisch concluded.

Meanwhile, the Housing Industry Association (HIA) released details of a new report on the importance of residential building to the Australian economy, and the economic value of adequate housing to improving employment and social participation.

Key findings of the report, which was undertaken by the Centre for International Economics (CIE) on behalf of HIA, were discussed at a roundtable of building industry leaders held at Parliament House in response to recessionary levels of building activity.

"The residential building industry is directly worth $70 billion to the Australian economy and is responsible for putting over 350,000 people into a new home each year," said HIA Managing Director, Shane Goodwin.

"This new independent research now quantifies the impact of housing on the economy and concludes that a 1 per cent increase in productivity in the sector can boost the broader economy by a factor as high as 4.81."

"Given the burden of red and green tape on the sector, itself a substantial weight on improvements to productivity, there is a large amount of economic gain that can be achieved through modest and targeted action by government."

"Similarly, for every dollar in taxation removed from housing construction, there is a return of $2.46 to the economy."

"This is a significant finding, as previous studies have shown that over 40 per cent of the cost of a new house and land package can be government taxes, levies and charges - which makes no sense in terms of providing affordable housing for the community or fostering a mobile workforce that can respond to the structural changes in the economy."

"Whether government is directly intervening through investing in affordable housing or providing incentives for new home buyers, or indirectly through tax reform and red tape reduction, investment in residential building will provide a significant return to the overall economy," concluded Goodwin.