Construction’s COVID shutdown hurts building projects big and small, as well as the economy

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A sudden ban on most construction, renovation and repair work in Greater Sydney has left projects big and small in disarray and is set to double to cost of Sydney’s lockdown.

The new rules have left Angie and her husband Banner in limbo.

They ripped out the only bathroom in their place just before the general ban on tradespeople visiting homes was announced.

“My husband and I have a property that we gutted last weekend,” she told ABC News.

With tradespeople due to come and install the new bathroom, Angie and her husband had also given notice to the landlord where they have been staying during the renovation.

In the current tight rental market, their landlord had already lined up new tenants, meaning that they cannot extend their stay now that construction work such as renovations has been paused.

Angie is unsure whether work on their unfinished bathroom is covered under the exception “if the work is urgently required to ensure the health, safety or security of the place of residence or the members of the household.”

The ABC made enquiries to NSW Health Minister Brad Hazzard and his department.

While government sources thought it was likely that Angie and Banner’s bathroom would be considered “urgent” work, the department had not yet replied with an official response.

If not, Angie said the couple will be forced into a crowded house with her parents until the new bathroom can be completed.

“We’re fortunate that we can go and stay with my parents,” she said.

“We’re not in a financial position that we could stay in a hotel or anything like that if staying with them wasn’t an option.”

While the timing could hardly have been worse for Angie and Banner, Robert Sandeman, a builder based on the NSW Central Coast, said the shutdown has not affected him too badly, due to good fortune.

“It timed perfectly for us,” he told ABC News.

“We finished up a job only on Friday.”

Although he added that the shutdown had delayed starting his next major project, a home extension, and potentially some smaller jobs.

He said he was involved with one job where the roof was half done, but the roofers had been able to operate under the emergency exemption to finish making the unfinished roof watertight.

However, depending upon what stage of work a project was up to, Mr Sandeman said it “could take weeks to get some jobs watertight”, meaning that some projects risk damage if there is bad weather before the shutdown ends.

Construction pause doubles the cost of Sydney lockdown

The ban on most construction, renovations and repairs is not just a headache and financial burden on home owners, builders and tradespeople, it is also a big hit to the economy.

The Commonwealth Bank’s head of Australian economics last week put a $ billion-per-week price tag on the Sydney lockdown.

But that was before the latest, tighter restrictions, particularly the construction halt.

He has now told ABC News that, on rough estimates, you can double the economic hit from the Greater Sydney lockdown from $1 billion to $2 billion per week.

That will take 0.4 percentage points off the nation’s economic growth, or GDP, numbers for every week of lockdown until restrictions are loosened.

Master Builders Australia chief economist Shane Garrett told the ABC that ABS figures put weekly construction activity in New South Wales at $750 million, with around a quarter of a million on-site workers, $421 million a week in wages (on the latest 2019-20 data) and around 1,000 new homes started every seven days.

Other estimates have put the cost of Melbourne’s lockdown around $700 million a week, which would also rise dramatically if it had to follow Sydney’s lead and stop building work.

Much of the hit to Sydney’s economy comes from the pause in the NSW government’s record-breaking infrastructure spending, which includes Australia’s largest rail project, the Chatswood-Bankstown metro line, the remaining elements of the Westconnex motorway, Sydney’s second airport and a range of other major projects in various stages of planning and construction.

Infrastructure Partnerships Australia chief executive Adrian Dwyer said the sums of money going from the state government to construction firms and their workers and suppliers have been huge.

“Pre-lockdown, the NSW government was averaging a burn-rate of $1.8 billion a month on infrastructure construction spend,” he told ABC News, noting that figure does not even include spending by state-owned corporations or local councils.

“Pausing that investment, even for a two-week period, is going to have a significant impact on the construction sector workforce and the NSW economy.

“Construction is not an abstract exercise, it’s real people building real things, it’s everyday stimulus that keeps the economy working – and that means we must work collectively to re-open as swiftly and as safely as possible.”

Builders urge shorter shutdown for big projects

Jon Davis, the CEO of the Australian Constructors’ Association, which represents big builders such as Lendlease and Multiplex, welcomed the state government’s handling of the shutdown.

“It is not possible to shut down some sites as quickly as that, we need more time in some areas,” Mr Davis explained on RN Breakfast.

“We need to be able to continue finishing off certain works that, if we didn’t finish, we’d have to go back and ultimately rip out a whole lot of work when we restarted again, and I’ve got to say that the government has been reasonably flexible with us in those regards.”

However, he said his members are desperate for a firmer timeline on when the construction ban will end, so they can plan for restarting work.

“Just as it takes a while to shut down construction sites it takes equally as long, if not longer, to plan and restart construction sites. We can’t work on these sort of vague promises,” he added.

Although it may come as bad news to current and would-be home builders and renovators, Mr Dwyer said large-scale construction “should be the first cab off the rank” when restrictions start easing.

“Large-scale civil construction sites have the most sophisticated health and safety controls and site entry mechanisms of virtually any workplace in the country,” he argued.

“It is harder to get onto and move around a large-scale construction site than it is to get into a hospital.”

Mr Davis agreed that his members, which operate on many of these large civil projects, were already well advanced in their COVID-safe practices ahead of the shutdown.

“We did introduce additional testing, all of our workforce had to have a valid test from the last 72 hours to come to site,” he noted.

“But we were talking to the government around this idea of rapid antigen testing to give quicker responses.”

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By business reporter Michael Janda (Original ABC Article)

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