The Sunshine Coast job paying $870 a day
THE construction sector is at risk of doing itself out of a job as executive salaries and trade wages pushed to unsustainable levels, an industry expert has warned.
Sunshine Coast University Hospital has advertised for a project Master Scheduler at a rate of $870 a day, to fill one of two such positions on the $1.8bn project.
David Chandler OAM, Adjunct Fellow at Western Sydney University, says a job of the hospital's scale would require two master schedulers to coordinate continual work across the project.
"This role is responsible for supporting program/project scheduling and tracking, working closely with the Master Scheduler and Project Managers to ensure continual work across all projects, and the effective use of resources to meet agreed milestones. Hospital commissioning experience is mandatory," the position description read.
Mr Chandler was not stunned by the hourly rate of $116.
He said the cost of hiring tradesmen for the project would not leave much change from $95 an hour.
Mr Chandler said Enterprise Bargaining Agreements (EBA) in the construction sector had been negotiated at twice the rate of the Consumer Price Index (CPI) for the three past four-year periods.
The rate of wage growth was double the national wage growth for the same period.
He said those headline agreements tended to flow across the project.
"The major contractors just pass the cost to the client,'' Mr Chandler said.
"The four majors are the only people who can build these projects. The unions get what they want but there will be a pay day.
"Construction is too expensive. It has to stop or clients will just make other arrangements.
"We saw that in NSW where it was 25% cheaper to import trains and there will be more and more prefab coming.''
Mr Chandler, the former CEO of Fletcher Constructions Australian, New Zealand, Pacific, North American and Asian operations, also served on the Building the Education Revolution implementation review taskforce.
He said pay rates for construction workers provided a "perverse" benchmark for executive salaries with 5-6% gained on the floor used to justify increases for those on the upper storeys.
Mr Chandler warned the day was fast coming where groups of companies that held a construction business as part of their operation would begin selling them off because their results diluted the rest of the group earnings.
He said the current state of play was only sustainable because of record low interest rates.
A Deloitte Access Economics report for the Victorian Master Builders Association published in April found that on an hourly basis both entry-level labourers and carpenters earned far more an hour than nurses, accountants, police or teachers.
The report also found the largest non-residential construction firms located in Victoria had profit margins are thin at 0.3% in 2013-14 and 0.4% in 2014-15, while the return on assets is also extremely low - at just 0.7% in 2013-14 and 1.0% in 2014-15.
"Wage rises in the construction industry have outpaced rises in the prices charged for construction work done in both Australia and Victoria in recent years,'' the report found.
"Someone always pays: higher labour costs eventually mean higher construction costs for buildings such as offices, hotels, shops, schools and hospitals, and also place upward cost pressure on the Victorian Government's infrastructure budget.
"In turn, these costs to private businesses and to taxpayers fall in part on Victorian families, including via higher prices. Although such subsidies to construction workers from all other workers may not be well understood or well recognised, it is in this way that the broader public funds large wage rises seen in the construction industry."