Finance Michael Pascoe: Construction industry scores political mates’ rates

Michael Pascoe: Construction industry scores political mates’ rates

housing home builder michael pascoe
The construction industry is better placed than most amid the lockdown bedlam, Michael Pascoe says. Photo: Getty/TND
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Here’s the thing about the construction industry: Stuff that can’t be built over the next couple of weeks or so will still be built.

Jobs delayed aren’t jobs disappeared.

The same can’t be said about the offices and homes not cleaned, the concerts not played, the hotel room beds not turned down, the university students not enrolled, the conferences not held, the exhibitions not staged, the catering for parties not celebrated, the ski accommodation not occupied, the plays not performed, the restaurants diners not seated.

For a tough industry, there seem to be plenty of cry babies in construction.

This is an industry that is suffering a relative hiccup in the middle of an absolute boom.

A couple of weeks’ solid downpour can bring sites to a standstill without headlines threatening economic Armageddon.

The industry closes down for a month every Christmas yet the sun also rises.

You can tell the industry with the most political mates by the attention it’s receiving. From the CFMEU on one wing to the developers on the other, the spectrum for political access is pretty well covered.

The construction industry is well represented across the political spectrum. Photo: Getty

Yes, the lockdown being experienced in three states is a bastard and when bad luck is being handed out, there’s no rule that it has to be distributed equally.

The economic impact on any worker not paid while we’re staying home is hard.

Government assistance this time round isn’t doing much to cushion that and there are always those who fall between the cracks of whatever assistance is offered.

After the rorting of JobKeeper – rorting the Morrison government has shown no interest in clawing back – the feds aren’t “building a bridge” this time, albeit there is more generosity now that New South Wales is the focus.

For businesses whose work and income aren’t delayed but simply disappear during the lockdown – this is absolutely cruel.

But for an industry that primarily has its work and income delayed, well, they are degrees of difficulty in life.

Banks are supposed to be understanding during such a cashflow interruption – and they generally have been. A construction job with a decent contract is bankable.

Clients similarly have no choice but to accept the delay. That may result in some extra costs, but what building project doesn’t end up with those anyway?

For big businesses, it has never been cheaper to borrow. After tax deductibility and inflation, money is free.

Any big business that can’t handle the need to float for a few weeks in the middle of a boom – and construction has been absolutely booming with shortages of materials and skills the biggest problem until now – is probably in trouble for other reasons.

For smaller operators, this is the time to keep your financiers, suppliers, customers and employees close and well informed.

They should be used to that after last year. It will be hard, but hard stuff happens and we get on with it.

Better placed than most

Of all the industries suffering interruption, construction would have to be one of the best able to cope, but every industry and lobby group can be relied on to whinge long and loud if it thinks there might be a payoff.

Again, yes, the delays will shave GDP growth and there are a great many people involved, but there are a lot more people in other industries not getting as much attention and without the ability to recoup what’s missed during the lockdown.

A rare voice of perspective among the screaming headlines this week has been Robert Mellor, the immediate past chairman of BIS Oxford Economics and a construction industry forecaster for more than four decades.

In the bottom half of a story that concentrated on the claim that the Sydney construction shutdown would cost the NSW economy $700 million a week, Mr Mellor said the long-term impact of the construction industry of a two- or even a four-week lockdown would be “relatively minimal” – perhaps 5 per cent less over the course of a year.

“The impact on the construction industry, what is important is that projects under way will still happen eventually once we move out of this lockdown,” he said, stating what should be obvious.

It’s a matter of priorities.

For all our benefit, No.1 now is containing the Delta variant until everyone who wants to be vaccinated can be vaccinated.

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