Building industry representatives in Western Australia are calling for government action to avoid more company collapses.
In the past fortnight, two WA home builders, New Sensation Homes and Home Innovation Builders became the latest to go into liquidation.
The crisis has overwhelmingly been blamed on soaring material costs, labour shortages and other Covid-related impacts.
In WA, a decline in new projects from 2014-2020 dubbed the “Valley of Death” has contributed to leaving many businesses vulnerable.
The sudden uptick in building approvals in 2020 as a result of government stimulus has left the industry dangerously understaffed and undersupplied.
The Master Builders Association of Western Australia (MBA WA) warned more company collapses could be on the way if things don’t change.
Executive Director John Gelavis said the builders themselves were not to blame for difficult conditions which have persisted since the pandemic.
“Not just in WA, but as an industry Australia-wide, I think it’s well publicised there are challenges around both local and global supply chains,” he said.
The latest round of ABS figures in December last year showed the cost of reinforcing steel up 43.1 per cent and structural timber up 39.7 per cent.
Builders are reporting those prices climbed even higher in the first part of 2022 and planned government tariffs related to the Ukraine conflict could see prices climb higher still.
“Depending on the contract, in cases there’s limited opportunity to pass those costs on, then the pressure is applied through cash flow impact,” Mr Gelavis explained.
Government stimulus measures in 2020 saw new project approvals jump to more than double what they were prior to the pandemic.
While the development was overall a welcome one, the loss of skilled workers during the pandemic also meant the soaring demand for builders has in itself become an issue.
“Understandably, people want their homes, their commercial project finished; but there simply isn’t enough people in the industry to keep up with the demand of work out there,” the MBA WA said in a statement last month.
“If the trend continues, with more price increases and labour shortages, there will be more and more contracts that are completed with no profit, which will impact all building companies and their capacity to stay profitable.”
The MBA WA is calling on the State Government to remove mandatory Covid-19 vaccinations for the building and construction Industry and to facilitate the entry of skilled overseas workers into the state.
“We’re sitting down with the state government and saying, ‘how can we work together in a collaborative sense’ to try and find some solutions to help the industry,” Mr Gelavis said.
“One thing that’s evident is the challenges around the workforce, so how can we improve the current workforce capability.”
