Australia’s construction outlook has improved over Q2 2021, however slow vaccination roll-out, rising costs from supply chain pressures and labour shortages create considerable challenges, a report by global consultant Turner and Townsend suggests.
In its latest Australia and New Zealand market insight report, Turner and Townsend has found that while the construction outlook looks positive for both countries, there are increasing concerns around the surge in building material costs due to global supply chain bottlenecks.
“We expect this to result in a high level of construction cost escalation over 2021 for all markets across Australia and New Zealand. Adding to this pressure is the increasing skills shortages being felt across the region, which is not expected to ease until international borders reopen,” the company said.
Predicting a high level of construction cost escalation over 2021, the market insight report has revised its construction cost escalation forecasts for non-residential projects in Australia by up to 4.5 per cent for Perth, 4 per cent for Sydney, and 3.5 per cent for Adelaide, Brisbane and Melbourne.
Australia’s economic recovery experienced better than expected economic growth over the last quarter, helping boost confidence which paves the way for a stronger and swifter economic recovery.
However, the slow COVID-19 vaccination roll-out will continue to be a downside risk for the economic outlooks, the report suggests.
Victoria tightens restrictions
The report comes as the Victorian Government announced a tightening of restrictions in metropolitan Melbourne yesterday due to the on-going community transmission of COVID-19.
The new directives from the state government will see the current lockdown across Melbourne extended by 14 days until 11.59pm on 2 September.
For large scale construction sites, the tighter restrictions will mean a reduction of workers on site down to 25 per cent, or five workers on site, whichever is greater.
Authorised workers will be required to carry permits when working, and when travelling for work, from 11:59pm on Tuesday August 17.
Face masks will remain mandatory indoors (not at home) and outdoors, including in all workplaces, unless an exemption applies.
Support for businesses
The Victorian Government has also announced additional support for businesses most affected by the extension of the public health lockdown in Melbourne.
Under the new initiative, businesses including sole traders who have received or been approved for a Business Costs Assistance Program Round Two or Business Costs Assistance Program Round Two July Extension grant will receive an automatic payment.
Eligible workers across the state who lose hours due to the lockdown will be able to access the Commonwealth’s COVID-19 Disaster Payment, as will individuals who are sole-trader businesses who lose work and that do not qualify for Victorian Government support programs.
The payment is set at $450 for people who have lost from eight and up to 20 hours work or a full day of work (over seven days), and $750 for 20 hours or more of work lost. People who receive certain Commonwealth income support are eligible to receive a $200 payment.
Workplace guidelines
Current construction guidelines will continue, with physical distancing, reduction of tool and equipment sharing and maintaining hygiene still being encouraged by WorkSafe Victoria.
Workplace mapping is also being encouraged, which will include the recording of scheduled workers as well as work locations. This will enable contract tracing between worksites to be more successful.
Victoria’s construction industry employees almost 240,000 people and contributes $21.6 billion to the Victorian economy.
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