Experts weigh in on $900 million National Productivity Fund’s impact on housing

Last week, Treasurer Jim Chalmers announced the launch of a $900 million National Productivity Fund, a significant initiative aimed at revitalising Australia’s construction sector. The fund offers incentives to states and territories to modernise construction practices, with a focus on modular and prefabricated methods. These methods are expected to address housing shortages, reduce costs, and improve environmental outcomes. (main pic: DWTT FutureFit panels ready for delivery to site.)

Building 4.0 Cooperative Research Centre CEO, Professor Mathew Aitchison, and Dr Ehsan Noroozinejad, Senior Research Fellow at Western Sydney University’s Urban Transformations Research Centre, both weighed in on the implications of this funding and its potential to reshape the construction landscape in Australia.

A New Era for Construction Productivity

Professor Aitchison emphasised that the initiative addresses deep-rooted issues within the sector.

“The cost problem plaguing the sector’s low numbers is actually a productivity problem, which is actually an innovation problem,” he said. “We need to find new ways to do more, with less.”

He highlighted the transformative potential of Modern Methods of Construction (MMC), which include modular and prefabricated approaches. “The Government’s increased focus on Modern Methods of Construction recognises that we need to ramp up our adoption of new ways of building if we are to solve our housing crisis,” he stated.

Dr Noroozinejad shared this perspective, describing the fund as a necessary intervention to modernise outdated practices. “We have checked all the other options in other countries, including Australia, and it seems that in terms of time, cost, and environmental impact, modular and prefab housing are much better compared to traditional construction,” he said.

Faster Construction Times and Cost Efficiencies

Both experts noted that modular and prefabricated approaches could significantly reduce construction times and costs.

“MMC using offsite manufacturing and productised building approaches delivers certainty, safety, and higher quality designs,” Professor Aitchison explained. “Through higher waste reduction and factory-made quality, we can also make a large dent in our decarbonisation efforts.”

Dr Noroozinejad expanded on these advantages, pointing to the pace of construction as a standout benefit. “On average, modular and prefab systems can be 50% faster. If we use advanced platforms like robotic systems, it can be up to 75% faster compared to traditional systems,” he stated. “That time saving translates into reduced labour costs, fewer cost overruns, and increased affordability.”

Challenges in Adoption and Implementation

Despite their optimism, both experts acknowledged that significant challenges remain. Professor Aitchison highlighted the need for a cultural shift in the construction industry. “Slavish adherence to the old ways of building have landed us in this mess; we are in the midst of a massive market failure and declining productivity that began over 50 years ago,” he said. “We have no time to waste.”

Dr Noroozinejad pointed to barriers within the industry itself. “Many of the current construction industries prefer traditional construction because they are used to it,” he said. “Transitioning to new methods of construction like prefab and modular would be costly and time-consuming for them, and without substantial support from the state or federal government, it’s not possible.”

Government Incentives and Industry Readiness

The National Productivity Fund’s focus on incentivising innovation is a step in the right direction, according to Professor Aitchison. “Those governments who are investing in research and development to drive generational productivity gains should rightfully be rewarded,” he said. “It is our hope that exemplar government housing projects underway can be accelerated and amplified.”

Dr Noroozinejad emphasised the importance of government support in building industry capacity. “Currently, offsite manufacturing facilities in Australia do not have enough capacity to meet the demand for modular and prefabricated housing,” he said. “The new fund can enhance the infrastructure and facilities, but we need much more support from the government to address the housing shortfall.”

He also stressed the need for international collaboration. “There are very strong prefab and modular housing sectors in European, Asian, and North American countries, which are eager to enter the Australian market,” he said. “Bringing them on board could help resolve the crisis and accelerate the process.”

Environmental and Workforce Benefits

Both experts noted that modular and prefabricated methods align with sustainability goals. “MMC can conservatively reduce costs and timeframes by 20%,” Professor Aitchison said. “Importantly, it can attract a more diverse workforce, critical if we are to meet the gaping shortfall in construction labour in Australia.”

Dr Noroozinejad added that these methods are inherently more sustainable. “Many prefab and modular housing systems use timber and recycled materials, which reduce carbon emissions. Automated construction facilities also lower material usage and decarbonisation efforts,” he explained.

The Future of Modular Construction

The consensus among both experts is that modular and prefabricated methods represent the future of construction in Australia, provided the right support structures are in place. “The National Productivity Fund is a critical step, but it is only the beginning,” Professor Aitchison said. “We must harness both traditional and modern methods of construction to address the housing crisis.”

Dr Noroozinejad echoed this sentiment, urging a holistic approach to bridging the gap between government initiatives and industry readiness. “The good news is that the government understands the problem and is investing in solutions,” he said. “But we need much more support and collaboration to realise the full potential of modular and prefabricated housing.”

See: Urban Transformations Research Centre

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