What are the BPICs?
Under the Queensland Procurement Policy and the 'Best Practice Principles', the former Labor Queensland Government issued the Best Practice Industry Conditions (most commonly referred to as BPICs) for major government-funded construction projects.
The introduction of the BPICs was supported by the relevant unions and was designed to introduce best practice principles for companies who win tenders for major government-funded construction projects.
The content and obligations in respect of the BPICs evolved over time. The introduction of BPICs, amongst other things, provided favourable industrial entitlements for relevant workers and mandated requirements for work health and safety systems. As the procurement policy evolved, the result was that contractors seeking to perform major State-funded construction work were essentially required to ensure that all construction workers on these projects had to receive terms and conditions no less favourable than the BPICs. If that was not provided, the contractor could not perform the work.
BPICs have been frequently cited as the cause of budget blow outs, reduced market competition and distorted procurement outcomes. Within the media statement dated 14 November 2024, the Government stated that independent economic modelling by Queensland Treasury over 2024-30 estimates BPICs are likely to increase project costs by up to 25% and create a net economic cost of up to $1.7 billion. The same modelling also revealed that if BPIC continues in its current form it would result in 7% additional rental costs over the next five years and 22,000 less homes being built across Queensland.
Deputy Premier Jarrod Bleijie stated:
"We need to urgently control the cost blow-outs of government-funded construction projects, which ultimately hits the hip-pockets of Queensland families and businesses" and "Queenslanders shouldn’t have to bear the brunt of this which is why we’ve ordered this pause and review".
Minister for Housing and Public Works Sam O'Connor added that:
"Independent Treasury modelling shows Queenslanders will pay more to rent a home and there will be fewer homes built in our state under the current BPIC conditions, it would be irresponsible to ignore this advice in the face of a housing crisis" and "if BPICs were to continue, they would also apply to energy and storage projects implemented by Government Owned Corporations, placing upward pressure on electricity prices and household cost of living".
Minister for Transport and Main Roads Brent Mickelberg observed that the pause on the use of BPICs would permit new projects to be commenced without existing overheads while the review was being conducted by QPC:
"The cost of delivering critical road and rail projects that are needed to deliver the infrastructure our growing State needs will be reined in … we will honour existing contracts and work with industry as best as we can to help deliver those on time and on budget".
What does the pause on the use of BPICs mean?
Following the announcement on 14 November 2024 by the newly elected Queensland Government, the use of BPICs on new major government-funded construction projects in Queensland will be paused. This includes new projects that have not yet reached the procurement stage.
It has been flagged that changes may also be made to existing projects, in particular to enhance productivity on those projects. Productivity has been the main focus of the new Government's focus on the BPIC to date.
The Queensland Government has stated that the pause on the use of BPIC does not cover safety obligations.
The pause on the use of BPICs will remain in place at least until new legislation has been introduced to re-establish the Queensland Productivity Commission (QPC) and the QPC has completed a review of the building industry. This is likely to be early 2025, and is clearly a priority of the new Government.
Whether the Queensland Government will reopen tendering processes for new major government-funded construction projects that have not yet reached the procurement stage remains to be seen.
What is the likely immediate effect of the pause of the use of BPICs?
Limited information has been provided about what can be expected in the Queensland construction sector following the suspension of the use of BPICs. However, relevant unions have already vocalised substantial dissent and flagged protest action that could also amount to unprotected industrial action. Substantial disruption is expected to be caused by any union activity in response to the Queensland Government's announcement about the use of BPICs.
Given the abolition of the Australian Building and Construction Commission, the Fair Work Ombudsman (FWO) will be left to prosecute any unlawful industrial action taken. Whether FWO action will be taken remains to be seen. Affected parties may be left to take their own enforcement action when responding to any significant disputes.
If you have any questions about how your organisation may be affected by these changes, please contact our Workplace team.
