Tasmanian construction projects worth $1b delayed or ditched because of coronavirus
For construction in Tasmania, the past few years have been golden.
Cranes in the sky, a rush on hotel developments and major government projects have been keeping builders and other tradespeople busy.
But the landscape is changing.
Hugo Bishop has been an electrician for about 10 years and usually works on larger construction projects like hotels.
“It’s really only been in the last three or four months that there’s been a bit of a slowdown,” he said.
Mr Bishop is used to having up to a year’s worth of work on the horizon, but now only has a couple of months locked in.
“It’s looking pretty quiet, there are no major projects coming up that I’m aware of.”
While Mr Bishop still has work, many others in the industry are already looking at an empty diary.
Master Builders Tasmania executive director Matthew Pollock said Tasmania had lost about 1,000 construction jobs since mid-March, mostly because of a decline in private-sector, major projects.
Other workers are on JobKeeper, or effectively sitting on the bench — using up their annual and long service leave while waiting for the next job.
Mr Pollock said about $1 billion worth of projects had been postponed or cancelled since the beginning of April.
“And we’re now seeing those projects that were underway pre-COVID and propping up the industry are starting to finish up.”
‘Crisis of confidence’ for developers
In Hobart, coming to an end or already finished are:
- Stage one of the Royal Hobart Hospital redevelopment
- Vibe Hotel on Argyle Street
- University of Tasmania (UTAS) accommodation building in Melville Street
- Movenpick hotel on Elizabeth Street
- and the Parliament Square redevelopment
There are now no tower cranes on the skyline and uncertainty surrounds some expected developments, such as the Kangaroo Bay hotel and hospitality school and other hotels.
UTAS, which is looking at a serious drop in international student numbers, has also hit pause on its Hobart CBD move but is pushing ahead with its Launceston and Burnie campus changes.
Mr Pollock said the pandemic and its associated restrictions, especially affecting tourism, were creating a crisis of confidence for private developers.
“The silver lining is those projects are still there, we haven’t seen them cancelled per se, it’s about bringing them back into the market and giving those private sector developers the confidence to invest in Tasmania again.”
Lack of projects could see workers leave
Kevin Harkins from the Construction, Forestry, Mining and Energy Union (CFMEU) said with the UTAS Melville Street accommodation nearing its final stages, another 100 people would be out of work soon.
“It’s depressing and it’s depressing for the whole industry,” he said.
Mr Harkins said if more major projects did not come online soon, some tradespeople with few commitments in Tasmania would likely move interstate when restrictions were lifted.
“And of course, once they go interstate, that’ll mean we have a skills shortage here when these jobs start again.”
Economist Saul Eslake said historically, whenever there had been a downturn in the Tasmanian construction industry, skilled people had moved to the mainland and often not returned when the market had improved.
But he said this downturn was different.
“Almost every other state is going to be facing the same dilemma here, whereas in the past if there hasn’t been work for tradies in Tasmania, they’ve been fairly confident of finding it in Queensland or Western Australia or Victoria,” he said.
“They probably can’t be that confident now because every other state is in the same boat as we are.”
Home builds, renovations keeping residential sector busy
When it comes to home building, the situation is very different.
Data from the Australian Bureau of Statistics showed that dwelling approvals jumped 50 per cent in July, compared with June. That figure was 28 per cent higher than in July 2019.
Deb Barratt’s family businesses, All Brick Tasmania and All Carpentry Tasmania, work across both the commercial and residential sectors.
Ms Barratt said the residential sector was going well.
“The larger projects have wound up, there’s only medium-sized commercial works happening at the moment, if any,” Ms Barratt said.
“But we have got the rush of all these Tasmanian people wanting to renovate, wanting to build homes. So we do have that boost to the economy.”
She said the First Home Builders Boost expansion by the State Government was likely making a difference, but the deadline should be extended beyond the end of the year.
“It’s a massive incentive and it’s good for the economy as well,” she said.
But Kevin Harkins said only some of the commercial construction workforce facing unemployment would move into the residential space.
“To be honest, the wages and conditions of employment in residential are a lot less than we’d expect on larger construction sites,” he said.
Saul Eslake said residential construction had done well over the past few years largely because Tasmania was attracting record numbers of overseas migrants and the flow of migrants across Bass Strait had turned around.
He said it was possible that a continued pause on both interstate and overseas migration could result in residential construction falling off a cliff too.
“So it’s right that the State Government, and hopefully the Federal Government, are stepping into the breach by bringing forward a range of other public construction projects that can employ people that would otherwise be out of work — whether that’s in the residential or commercial construction sector.”
Karin Mathison is the chief executive of the Tasmanian Building and Construction Industry Training Board.
She said while it was clear big, commercial projects were dropping off, it wasn’t affecting training and development yet.
“We’re not seeing a huge dip yet, although we do anticipate that in the next few months some of those larger companies, as they start to make difficult decisions about employment contracts, that we will see an impact on training take-up,” she said.
Construction boost only part of the economic answer
Mr Pollock said Master Builders Tasmania and the Civil Contractors Federation were working with the State Government on a “postponed projects register” to better understand why some projects were being put off and encourage developers to come back into the market.
They also want to see payroll tax waived during COVID-19 restrictions as well as other initiatives like headworks support for councils and developers and fast-tracking of land development for new housing.
Premier Peter Gutwein has promised to literally build Tasmania out of coronavirus by bringing forward government expenditure and stimulating private investment.
The Government announced a package to boost construction in June, estimating that plan would support construction worth $3.1 billion over two years.
The Office of the Coordinator-General is working with proponents to stimulate private infrastructure investment and the Government has also accelerated some of its existing projects.
The CFMEU’s Kevin Harkins said any job was welcome.
“But they’re the smaller end of town … and some of the smaller builders around town will be glad to see those projects come out, but we need some of the big stuff to get happening.”
Saul Eslake said construction represented about 8 per cent of employment and economic activity in Tasmania — not as much as tourism or agriculture, but more than mining or wholesale trade.
“So it’s not to be dismissed, but I don’t think it’s going to be the whole answer, especially when it comes to providing employment opportunities for women,” he said.
He said women had lost more jobs than men during the coronavirus crisis because they tended to be employed more in some of the hardest-hit industries, like the arts and tourism.
“So while I support the Government’s emphasis on construction as a path out of this downturn for now, I think they’ll have to attack it on a broader front than just that.”