Data commissioned by industry redundancy fund Incolink shows an estimated decline in economic activity of $291 million (8.6 per cent) during the next financial year, with a predicted loss of more than 2000 jobs in Victoria.
The research, by economic consultants ACIL Allen, shows social distancing is hindering operational efficiency, particularly for high-rise construction, and demand for construction of commercial buildings is set to decline as more businesses embrace working from home and flexible work options. Changing policies, developed to stem the community spread of COVID-19, have also led to unclear and often conflicting advice with small businesses hardest hit by the confusion.
Federal and state government initiatives such as JobKeeper, HomeBuilder and the creation of Building Victoria’s Recovery Taskforce, which will bring forward more than $1.2 billion of building and development projects are easing the impact and to some extent staving off the threat of industry closure.
But Incolink chief executive Erik Loke said more State Government support was needed to create a reliable pipeline of work into the future.
“We … think the government should be working out ways to build a bridge, as they keep saying, because there’s large-scale infrastructure projects that employ a bunch of people and take a long time to get started, and a long time to deliver,” he said.
“There’s HomeBuilder and not a lot in between at the moment. We want approvals fast tracked for medium and high-density projects so that we have a better pipeline in residential construction.”
Since mid-March 2020, nearly $5 billion in building and construction packages have been announced by the State Government to stimulate economic activity. But the research points to a new opportunity in social housing stimulus, which may counteract some of the contraction in private demand.
“We would like to see the government seize this opportunity to address some long-standing issues like social housing in Australia and that could form a really good pipeline of work for the industry,” Loke said.
Despite the bleak outlook, there are some opportunities the pandemic has highlighted for the construction sector. The data reports one specialist company performing an increasing number of routine maintenance thanks to less office activity in many buildings.
Geelong plumber Michael Tomlinson, who specialises in maintenance and service work, said there could be upsides in the COVID-19 situation for small businesses like his.
“I can see that in about six to 12 months, with a lot more people working from home, it could change some of the homes which are becoming workplaces,” he said.
“Some people might want to set up a home office in the garage and would like a kitchen in there and maybe a toilet, hot water and heating.
“That’s what I’m looking at for the future and we’ve already had a few phone calls regarding that.”
Tomlinson, who works throughout Torquay as well as the wider Geelong area, said the pandemic had definitely decreased his workload. He puts this down to people being cautious about who comes into their homes.
“It has made a big difference,” he said. “At this time of the year we would be five to six weeks booked in advance, but we’re currently down on that, booked to about three weeks in advance,”.
“But we’re steady, we have work and we’re grateful for that.”
Like most tradespeople, being careful with the jobs he takes on and prioritising health protocol are his top priorities.
“Some days you wake up and have a little bit of anxiety because you’re not sure what’s happening,” Tomlinson said.
“But you’ve just got to check to see whether the area you need to work in is having issues and how they might impact us.
“So for example, the other side of our business is we do drain camera inspection. But with the COVID situation we’ve stopped doing that at the moment, because of the bacteria that they’re saying from the infection could be in the sewers. So we’ll give that a miss for a while.”
“During rapidly evolving situations like COVID-19 many businesses turn to their industry associations to understand the most relevant information, provide support services and advocate on their behalf,” Master Plumbers chief executive Peter Daly said. “Our organisation has been right behind its members since COVID-19 began impacting the plumbing sector at the beginning of the year.
“I think we’ve done our very best to support members through this crisis, through our COVID portal, our regular updates, through some practical resources that help them manage their business and through strong political and sector advocacy.
“Half of the plumbing businesses are either sole traders or small businesses. These guys in particular need support around them and that’s where Master Plumbers comes in.
“Pulling together and guiding members towards online resources has helped more plumbing organisations to strengthen their businesses, Peter said.
“Is this a silver lining to the cloud? Yes, I think there is,” he said. “There has been a forced cultural shift in understanding the benefits of technology and collaboration tools that will benefit a lot of businesses and it’s probably forced a lot of businesses to reflect on their business model, everyone from the sole trader up to the massive corporate plumbing companies.
“To understand where their strengths and weaknesses lie, and how they can use that knowledge helps them be better prepared for the future.”
