Event: Denita Wawn interview with Amanda Stoker, Sky News
Date: Sunday, 16 July 2023, 7.00pm AEST
Speakers: Amanda Stoker, host Sky News; Denita Wawn, CEO Master Builders Australia
Topics: building and construction industry, insolvencies, labour shortages, industrial relations, migration, housing, regulatory costs
Amanda Stoker, host Sky News: Well, the cost of living continues to rise and so does the financial pain that industries across Australia are being forced to endure. In Queensland alone, insolvencies in the construction sector have spiked by 50 per cent in the past year. That figure is worse nationally, rising by 75.4 per cent. Joining me now is Master Builders Association CEO Denita Wawn. Denita, thank you for joining me for tonight’s program. There’s many drivers in the costs that are faced by the construction industry where building companies and contractors are struggling. But what are the main pressure points that are affecting the viability of businesses in this sector?
Denita Wawn, chief executive Master Builders of Australia: Good evening, Amanda. Well, really three things, we’ve had a large number of contracts that were signed prior to inflation really hitting the economy and so in many instances, building is occurring at a loss or at least a break-even point. We’ve then had inflation which is skyrocketing prices, restrictions on materials, and of course labour shortages as well which has also increased not just the cost of labour but also the time it takes to build a home. Anything from, usually, it takes nine months for a home to be built. It’s taking around about 13 months at its peak. That means you then have not only cost pressures but cashflow pressures as well in the industry. And unfortunately, that’s reflected in those insolvency figures that you referred to.
Amanda: It’s reasonably easy to understand that the difference in the price of materials at the time of quote, then being faced with inflation that expands those costs could put enormous cashflow pressures on a business. But what about those skills pressures? What’s the source of the shortage in skills that’s faced by the sector and what can be done at an industrial relations policy level and a skills policy level to try and ease them?
Denita: Well the interesting thing from a skills perspective is we’re now estimating that we need nearly half a million new people entering into the industry over the next two to three years. That’s a significant number of people for an industry that currently employs 1.3 million. That’s to deal with retirements, attrition but also while we’re forecasting a dip in construction over the next 12 months, we’re forecasting significant increases from 2025-26 onwards. We’ve got an 18-month window of opportunity to resolve those skill shortages. There’s really two key issues. Attracting more people to the industry from trades level, professional level and entry-level, and getting more people both men and women into the industry and seeing what a great industry it is. But also migration is the solution as well. We know that migration increasing means more pressure on the housing market but equally, if we don’t get enough skilled people, it then brings pressure on us being able to actually meet those housing needs in the first instance. So, an opportunity for us to get our industry right and attractive for people to join. However, it’s not going to be so attractive if we don’t get the industrial relations reforms right. And we are really frustrated at the moment that there are a series of reforms being promoted by the federal government that we believe will actually restrict job opportunities in our sector. It will restrict people being their own boss as an independent contractor. It’s going to put a significant strain on our industry and the economy at large.
Amanda: I think you’re right about that. The question of attrition is one that you raised. The number of people who are experienced and skilled trades walking away from the sector. And the regulatory burden on businesses is really heavy and at times quite punitive between corporate governance, safety, security of payments, finance, environmental standards. I could keep going. What should be at the top of the government’s list for reducing that burden so that there aren’t so many reasons for skilled people to walk away?
Denita: Well, we’ve got to remember that out of our 430-odd thousand businesses in this industry, 99 per cent are small to medium-sized businesses. 260,000 of them are sole trades. They are independent contractors. They are already burdened so incredibly much and you’ve listed those amongst many including building code constant requirements to keep abreast of those as well as any new industrial relations. So, many people go I’ve had enough, it’s too much, I’m getting out of this sector, I’m going to work somewhere else. So, first and foremost our focus is on these industrial relations changes and making sure that we’re reducing the burdens not increasing them. But then we’re also having conversations with government around how can we actually streamline many of the costs. One of the big issues at the moment is around the National Construction Code. It is cumbersome, it is hard to read, you can’t even access it, you need to pay to access the law through standards and so forth. So, it’s a mess. We’ve been really appreciative of the Minister…
Amanda: And it’s a pretty penny too. It’s not cheap.
Denita: It’s not cheap at all to buy a few standards to understand what the laws are. So, we continue to implore the federal government to work with us and I must say Minister Husic has been really open to those discussions, and equally, Minister Collins in addressing some of those frustrations that we’ve got in running a small business in our sector. But the industrial relations reforms are going to be diabolical not only for building and construction but the entire economy. And that’s where our efforts are going at the moment to ensure that they are reduced down so there’s a better balance between business and workers.
Amanda: Well, I wish you all the very best as you try and get that message through to Minister Burke. Denita Wawn, thank you very much for joining us tonight.
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