Australia’s building industry is in turmoil.

COVID restrictions have bitten into operations of building firms. Many have lost all income on account of restrictions even as day to day costs continue to mount. For some, this has led to financial failure through no fault of their own.

The construction industry – or more specifically the building registrar – has two components: commercial builders and domestic builders.

While there are only a few commercial builders, there are many thousands of domestic builders. Yet COVID restrictions have been developed and imposed with the former in mind and without consideration of the impact on the latter. This has happened with the backing of the CFMEU who represent workers employed by large builders.

The violent conduct in Victoria prior to Christmas at the CFMEU headquarters was disturbing. So too was the appalling behaviour at the Shrine of Remembrance that followed. Whilst questions remain about whether these violent people were really construction workers or were in fact anti-vaxers, what is not in dispute is that the behaviour was not acceptable.

Still, it must be said that the impact of the approximately 250 days of lockdown on many types of businesses has been massive. Just to name a few, these include cleaning services, telehealth services, groceries, bottle shops, takeaway food, fitness equipment companies, delivery services and the used car market. Restaurants, hotels, and cafes are suffering. Whilst the lockdown roadmap enabled these venues to re-open before Christmas, density restrictions are making many of these businesses unviable and subject to failure.

The new COVID approach is to have most of the community vaccinated and we should then return to relative normality. Nevertheless, COVID is a moving beast and restrictions such as elective surgery bans can appear out of nowhere.

COVID’s impact is far reaching, and the building industry is not immune. Courtesy of supply chain disruption, basic framing timber a scarce commodity. Cost escalation of around 40 percent along with substantial delays are creating massive headaches for builders on fixed price contracts who are trying to deliver within time and budget.

The overheating in our industry is placing enormous pressure on trade and labor availability. This has seen skills left wanting that require years of practical experience to develop – not just a piece of paper.

All state and territory building industries are suffering and the current circumstances are placing many in the industry at risk. Whilst some are profiting handsomely, most are at risk of failure and the inability to complete contracts.

The direction of the building industry managed by the regulators has come off the rails and has completely lost direction and now left to its own devices. This can only lead to disaster as regulation is not being effectively administered or enforced and the lack of competence among so-called professionals is seeing so many put into the industry without the skillsets to deliver compliant buildings.

These comments have been reinforced by many inquiries and reviews which have concluded that the percentage of new buildings which do not meet basic NCC/Australian Standard requirements is unacceptable.

However, these views are not being taken seriously by the regulators – too many of whom are taking a reactive and ‘steady as we go’ position rather than a pro-active role of administering the NCC under its existing regulations.

This leaves the consumer exposed. Those who have chosen to take the quote that fits their budget and then find themselves in dispute with their builder have no recourse let alone support from the authorities.

Future forecasting of the building industry is nigh on impossible. There was a time when forecasting was based on cycles of a recession every seven years or so. Now it appears that recessions are circumstances of the past. (Sourceable note: Australia did enter a technical recession, two periods of a contraction in GDP, when the COVID crisis hit during the first two quarters of 2020).

The unprecedented escalation in house prices shows little sign of abating. While financial experts often suggest a bubble that has to burst, they soon accept the ongoing escalation as normal.

History suggests the current abnormal pricing of property cannot be sustained but this view is weakened by the fact that many of those who have argued this have been proven wrong over recent years.

Where we will end up in terms of our industry is anyone’s guess.

One thing for certain, however, is that current challenges are unlikely to abate anytime soon.