Commission Impossible - Commissioned modelling of the economic impact of the Australian
11 November 2022
In the lead-up to the 2022 election, a new report came into the ABCC debate, commissioned by the Master Builders Association and written by Ernst and Young (EY).2 The EY report was written up in The Australian, and the article made some startling claims about the importance of the ABCC: Anthony Albanese’s plans to abolish the construction watchdog could deliver a $50bn hit to the economy.3 Likewis. [...] cit., pp i-ii 9 Commission Impossible – Unreliable modelling of the closure of the ABCC Problems with the EY report As the EY authors themselves make clear, the conclusion that the abolition of the ABCC may result in a reduction in GDP of $47.5 billion is based on assumptions that “may not necessarily represent actual or most likely future conditions”.6 The main conceptual, analytical, and modelli. [...] (page 6) While respondents were asked a range of questions on the culture of the building industry, the role of the ABCC and the impacts of industrial action, only questions relating to the impact of abolishing the ABCC appear to have been used as inputs into the CGE model. [...] These were pro-rated to 1.78% and -1.86% respectively, to reflect the fact that only 20% of the industry is covered by the ABCC, then fed into the model as changes, or “shocks”, to construction industry average wages and labour productivity over the period 2022 to 2030.10 Even the authors concede that the survey-based estimations of the ABCC on productivity look to be “quite high—but the data is u. [...] In fact, the rebound in construction industry activity is so strong that by 2030, the impact of the ABCC closure on the output of the services sector output—a sector that is not regulated by the ABCC—is greater than the impact on the construction industry itself.