How we can re-build our economy after COVID-19 through social procurement and construction

There are some creative ideas flowing to deal with the coronavirus and some of the most influential in helping communities survive are in the construction sector.  Multiplex Construction’s innovative Connectivity Centres, for example, are an internationally recognised exemplar of social procurement and innovation to provide training, employment and support for the most vulnerable people in the communities in which Multiplex builds. At the Westmead Hospital Redevelopment project, this created 129 new jobs for the long-term unemployed, including 102 Indigenous people and 10 refugees.


While coping with the most serious health crisis in living memory, it’s good that we are starting to think about recovery. The economic impact is likely to be serious and the most vulnerable in society will suffer most.

They are inevitably the first to be laid off in a downturn and the last to be re-employed. Indigenous people, people suffering disability, refugees and migrants, young people at risk, long-term unemployed and women at risk are accustomed to facing uncertainty, job insecurity and disadvantage. Now they face an even more uncertain future.

We can learn a lot from the UK in how to plan for recovery in a way which benefits everyone. In the recent UK budget, Chancellor Rishi Sunak committed to the country’s largest construction and infrastructure building program since the Second World War

Under the insightful heading of  “Levelling up and getting Britain building” the UK will invest £640 billion (AU$1280 billion) over the next five years in new roads, railways, communications, schools, hospitals and power networks across the UK. The UK government will also invest £1.5 billion to refurbish further education colleges, and further £2.5 billion to improve adult skills through eight new Institutes of Technology. Critically, the UK government is also reviewing its Green Book, to make sure that this unprecedented investment benefits the most vulnerable in UK society.

Why did the UK Chancellor Rishi Sunak target the building industry?

Because he knows that it is one of the UK’s largest employers. He knows that the construction industry provides a multitude of jobs for all levels and segments of society.

He knows that it operates in the UK’s most vulnerable communities. He knows that spending on construction has a large multiplier effect into the wider economy. And he knows that through tools like The Green Book and social procurement legislation like the UK’s Social Value (Public Services) Act 2012, construction firms can be required to create jobs for society’s most disadvantaged people as a condition of being awarded the contract.

It’s a no-brainer. By investing in infrastructure and construction, he can leverage his budget and partner with business to magnify its social impact at virtually no extra cost.

Our government’s response to reducing the economic damage caused by the coronavirus pandemic involves spending across four key areas: delivering support for business investment; cash flow assistance for employers; stimulus payments to households to support growth; and assistance for severely affected regions. A total of $189 billion is being injected into the economy which the government estimates will benefit about 690,000 businesses employing around 7.8 million people, and about 30,000 not-for-profits.

While these measures are positive, we must ensure this support reaches the most vulnerable in our society. However, I fear that stimulating business is unlikely to help them much. Even if trickle-down economics worked, it doesn’t for people who are already unemployed.

It’s critical we leverage our stimulus spending by requiring the private sector to step-up and support our most vulnerable people.

These people now face a generational threat of unemployment which we know will have lasting scarring effects on mental and physical health, housing security, increased substance abuse, family violence and other types of crime.

The power of the Australian construction industry should be leveraged in the much touted third stimulus package. It is labour-intensive and it directly employs about 9 per cent of Australia’s labour force (indirectly many more). It is also Australia’s largest employer of young people with 43 per cent of employees being aged 15-23 compared to 38 per cent across all other sectors.

The industry also builds in our most remote and marginalised communities and the multiplier effect of construction into the wider economy are significant with every $1m spent on the industry generating a possible $2.9 m in output in the wider economy, giving rise to nine jobs in the construction industry and 37 jobs elsewhere.

The construction sector is also the largest growing employer of Indigenous people with, a 38 per cent increase in Indigenous people working in the industry from 2011 to 2016.

Ironically, Australia has better regulatory tools and construction industry leadership than the UK to ensure that the benefits of extra investments in building and infrastructure will reach the most vulnerable.

Our growing body of social procurement legislation is more prescriptive than the UK’s and targeted at the vulnerable communities who will be most adversely affected by the COVID-19 crisis. See for example the Federal Indigenous Procurement Policy (2015), QLD Building and Construction Training Policy (2015), Victorian Social Procurement Framework 2018

Australian construction firms have also shown internationally recognised leadership in helping those most at need in the communities in which they build.

See for example Multiplex Construction’s innovative Connectivity Centres which are an internationally recognised exemplar of social procurement and innovation to provide training, employment and support for the most vulnerable people in the communities in which Multiplex builds

This is the latest centre located on the Westmead Hospital Redevelopment project which one project alone, created 129 new jobs for the long-term unemployed, including 102 Indigenous people and 10 refugees.

These are new jobs which would not  have existed without the Connectivity Centre. Coincidentally, similar centres are being used overseas to help communities recover from disasters such as the bushfires we have just experienced which we are in danger of forgetting.

Martin Loosemore is Professor of Construction Management, University of Technology Sydney

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Comments

One Response to “How we can re-build our economy after COVID-19 through social procurement and construction”

  • claire parry says:

    Hi Martin

    How are you? You may recall we spoke ( as did my daughter) when you were researching for your book.

    Strange times right now and your recent article linking social procurement through construction to rebuild the economy post- COVID is timely. I’m looking at how to use some of our social procurement strategies and associated delivery approaches to help respond to the challenge we have ahead, including jobs, business and industry support. We’d actually started some of this thinking as a response to the bushfire crisis and other climate related issues that are impacted the future of jobs and industry in both the short and longer term. I agree that lots of opportunities will emerge from infrastructure/ construction as government use these sectors to stimulate the economy.

    I’m having some interesting government conversations both in NSW and with the Commonwealth. Lots of thinking but not very joined up currently. Would be great to have a chat with you some time and share our thoughts.

    For interest, my website details are:

    https://infrastructureskillsadvisory.com

    Look forward to catching up sometime soon!

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