Construction sector set to lose billions in ‘catastrophic’ shutdown

For our free coronavirus pandemic coverage, learn more here.

Major developers and peak building industry bodies have slammed the NSW government’s decision to put the brakes on construction work, labelling it an over-reach that will cost the economy billions of dollars and lead to substantial job losses.

Premier Gladys Berejiklian announced on Saturday that construction would be paused for two weeks, in a move to stop the spread of the COVID-19 virus.

However, industry groups have accused the government of blindsiding the building sector, warning that it will result in a trail of litigation that could take years to resolve. Industry representatives are sitting down with the NSW government on Monday afternoon to make its case for a staged reopening over the next fortnight.

From 12:01am on Monday, 19 July all construction work will be paused to stop the spread of COVID-19. Credit:Rhett Wyman

Construction in NSW is worth more than $60 billion and is one of the biggest employers behind the hospitality industry. On average, through each quarter about $15 billlion to $16 billion worth of construction is completed in NSW, comprising about $10 billion in building and $5 billion-$6 billion in engineering.

It has been estimated that more than 350,000 jobs will be impacted at a cost of about $1.4 billion to the NSW economy per week.

Built, one of the larger builders in the country, warned the economic effect of an industry shutdown would extend beyond the construction sector.

“The downstream supply chain is in disarray this week and the upstream commercial arrangements with developers and clients will be difficult to sort through,” Built managing director Brett Mason said.

“We’re concerned for many of our smaller subcontractors who we partner with – they have limited cashflows and in speaking with many of them they say they can just absorb two weeks with no work, beyond that we are looking at insolvencies.”

The lockdown regulations have forced Built to stop work at all of its NSW sites, including the Anzac Memorial in Sydney’s Hyde Park and the $6 billion upgrade of Parramatta Square in western Sydney.

“Anything beyond a two week shutdown will have catastrophic effects for the industry and will have an exponential effect on how quickly the construction and property sectors can recover,” Mr Mason said.

The Urban Taskforce, which represents the development sector, has also warned the impact of closing down construction sites will be felt by the entire economy.

Urban Taskforce boss Tom Forrest said the hasty decision by the NSW state government, made without consultation with industry, reeks of a government in panic following its indecisive action on controlling the Delta strain outbreak that started in the eastern suburbs of Sydney. “There is simply no evidence base to support the decision to close down the entire construction industry – 100 per cent,” Mr Forrest said.

Brian Seidler, the NSW executive director of the Master Builders Association Credit:Louie Douvis

Master Builders Association executive director Brian Seidler and the Construction, Forestry, Maritime, Mining and Energy union (CFMMEU) both only received about an hour’s notice of the government’s plan to suspend building works before it was announced on Saturday morning.

“Generally, the industry has been above reproach on the whole COVID issue and then suddenly to be told without notice that we’re closing down was interesting, if you know what I mean,” Mr Seidler said.

He said 160 major projects had submitted their COVID safe plans to the government last Friday to show that they could stay open and manage the risk of the coronavirus.

“We thought… we could satisfy the government we are working safely,” Mr Seidler said.

The industry is also concerned about ensuring subcontractors and workers can keep getting paid despite the lockdown. Mr Seidler acknowledged there was already state and federal government support on offer, but said the money “needs to be quick”.

Mr Forrest added that even in the peak of the Victorian lockdown, the construction industry stayed open on a scaled back basis. At its worst, Victoria limited numbers on construction sites to 25 per cent.

Stockland, the owner of large developments across the state, said it was engaging with government through the Property Council to provide input on how to come out of the lockdowns once the outbreak is brought under control.

“There are examples in the Victorian market with how projects have been able to operate safely. So they’re the things we’re discussing with the government, but it’s very important that we do continue to follow the health advice,” Stockland chief executive Tarun Gupta said.

Ken Morrison, chief executive of the Property Council of Australia, has called on clarity from the NSW government, saying it is vital to engage with industry on the roadmap to end the lockdown
on July 31.

“This was a very abrupt move and, while we know construction sites can routinely operate in
a COVID safe manner, industry will continue to do the right thing and work with government
toward a safe reopening,” Mr Morrison said.

“Our priority right now is to support jobs and workers in the construction sector during the
forced closure period, to minimise issues between parties and ensure the government
support is adequate and clear for subcontractors and the construction supply chain.”

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.

Most Viewed in Business

From our partners

Source: Read Full Article