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Victorian construction shutdown will have long term impacts

Throughout the pandemic, construction has been of the few industries for whom work has stayed relatively unchanged. Now, as Melbourne construction work grinds to a two-week halt, Dan Pollard, veteran tradie and founder of Fergus, a software provider for trades and service businesses said Victoria will feel the effects for a long time to come. 

Melbourne shutdown 

Victoria Premier Dan Andrews announced on the 20th of September that all construction work would stop in Melbourne and other locked down local government areas for at least two weeks. This move came after a compliance blitz found high levels of non-compliance to COVID measures on Victorian worksites. The Victorian government found worksites to be hotspots for COVID transmission, thought to be caused by the low levels of compliance. 

Minister for Industrial Relations Tim Pallas expressed his frustrations saying, “We put the industry on notice just a week ago, we have seen appalling behaviour on-site and on our streets, and now we’re acting decisively and without hesitation.”

Construction workers in Melbourne also expressed their frustration this week. After the closures of break rooms on worksites and the government’s announcement requiring all tradies to have at least one COVID vaccine on-site, construction workers took to the streets in a highly polarising protest. Tradies in Sydney did not repeat these protests. 

Sydney restrictions 

In Sydney, worksites remain open, and tradies continue working. This is despite the fact the NSW state government has enforced similar vaccine requirements as the Victorian government. However, tradies in Sydney are subject to far fewer restrictions on the consumption of food and drink and fewer compliance measures than their counterparts in Melbourne. 

The boiling over of frustrations in Melbourne could be the result of long periods spent in lockdown, said Mr Pollard. “Melbourne and Sydney, though alike in many ways, have had very different Covid responses. Businesses across all industries in Victoria have been forced to adapt to more than 200 days of lockdowns and changing protocols in an 18 month period.” 

Impact of Shutdown 

Melbourne’s construction lockdown will have huge implications for the overall economy and will also come at a personal cost to contractors and construction workers. Despite the industry shut down, the population will still require construction services, likely leading to a long backlog of jobs. 

Mr Pollard said, “Collectively, Sydney and Melbourne make up 40% of Australia’s $360 billion construction industry. So a shutdown in either city is bound to have an impact on the economy,”

He continued: “Skills shortages and site capacity limits are very real challenges for trades businesses. As the demand for construction continues to increase, so too does the backlog of jobs that need to be completed.”

Earlier in the year, NSW’s construction industry was subject to a similar shutdown. Tradies are still feeling the effects in NSW. Mr Pollard said these impacts are likely to be repeated in Victoria.  

“In July 2021, NSW was hit with its first construction shutdown, and although it only lasted two weeks, the impacts are estimated to have caused a $1.4 billion hit to the NSW construction sector. Two months on from the shutdown, NSW is still feeling its effects.

“While we’re still in the early days of the Victorian construction shutdown, by the time week two rolls around, the impact to the sector is expected to be around the $2 billion mark. Similar to NSW, we predict this shutdown will have a trickle-down effect for weeks and months to come. The shutdown will strain all businesses, but particularly small business owners scrambling to organise jobs and maintain client relationships despite the uncertainty,” said Mr Pollard

Advice to businesses 

Aside from ensuring compliance on-site in the future, there is little individuals or businesses can do to impact the state restrictions. However, construction businesses can take steps to get through to the other side of Melbourne’s shutdown. 

Mr Pollard said, “While there’s not a whole lot that they can do to combat the wide-reaching impact of the global pandemic, there are a few things they can keep in mind to better navigate the situation, 

“Firstly, it is vitally important that they have a strong grasp of their financial position. Invoicing quickly, staying on top of outstanding debtors and having a clear understanding of operating costs, rate cards and overheads will help trades business owners manage their cash flow and make more informed decisions about their business operations.”

Contractors keeping communication channels open between themselves, their employees and customers will be critical to maintaining relationships. By maintaining strong relationships, businesses will have a better chance of coming out of the shutdown strong.  

“Ensuring open and frequent communication with both customers and employees is also vital, especially during uncertain times. Chances are customers are feeling a similar strain, so providing them with useful updates and insight around changing rules and how they might impact their projects and operations will be helpful and also go a long way to strengthening existing relationships.

“Staff also need to feel supported and may be feeling unsure about the future of their jobs or work during this time. Provide regular updates on your Covid-safe workplace strategy and offer clear guidance on expectations procedures and how you can work together,” said Mr Pollard.  

Read more: ‘A shattering blow’: Melbourne businesses to remain closed

Read more: SME confidence suffers under lockdowns: ACA monthly SME COVID tracker report

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