Gold Coast construction: job losses feared next year if stimulus is pulled
Gold Coast subcontractors are “buying work” just to survive the COVID-19 pandemic — and industry leaders fear it will all come crashing down if the Federal Government withdraws stimulus spending early next year.
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GOLD Coast subcontractors are “buying work” just to survive the COVID-19 pandemic — and industry leaders fear it will all come crashing down if the Federal Government withdraws stimulus spending early next year.
The Australian Bureau of Statistics says the city lost 5100 tradies in the six months to August. Despite this, the construction sector still employs 32,200 full-time workers, making it the city’s largest employer ahead of healthcare and social assistance with 26,400.
However, even that figure will free fall if government subsidies such as JobKeeper are canned or further relaxed when they will be reviewed again in March.
Condev Construction boss Steve Marais said the industry was bracing for an “unprecedented” level of subcontractor liquidations in 2021.
“The concern for us is the capacity for subcontractors who secure work in this market to deliver in a year’s time or 18 months time. I think there is a significant risk of liquidations,” he said.
The Federal Government last month announced the most significant in 30 years to the insolvency process, in which financially distressed but viable companies could restructure their existing debts and continue to trade.
Under the changes an insolvency practitioner is appointed to restructure the business’ debts and put out a proposal after 20 business days to pay back creditors.
If less than 50 per cent of creditors fail to endorse the plan the business can then be placed into liquidation.
However, Mr Marais said the changes wouldn’t be enough to help subbies battling reduced margins and cutting their rates to keep working.
“Some contractors are discounting their pricing based on JobKeeper,” he said.
“The issue is what happens when it stops?” he said.
Federal Government figures showed 27,000 Gold Coast businesses applied for JobKeeper in May. JobKeeper payments have been extended until March 28 next year and have been cut from $1500 to $1200 a fortnight.
In July, 44,600 Gold Coast residents were dependent on JobSeeker. Tuesday’s Federal budget is expected to provide guidance on whether the JobSeeker payment will remain at its current rate or return to the pre-pandemic level.
Mr Marais said while the residential construction sector was firing — partly thanks to the government’s HomeBuilder grant — commercial building, including offices, retail and public buildings such as schools, was dormant.
“We don’t have any commercial work on the books. That was 10 per cent of our workbook,” he said.
“That is where I think the job losses have come from.
“We would be employing another 80 tradespeople and eight staff if the commercial work was there.”
Industry lobby group Master Builders is calling for more stimulus spending to help the commercial construction sector.
CEO Paul Bidwell welcomed the State Government’s $14 billion capital works plan but said more details were needed.
“We’re calling on the Queensland Government to release the finer details of a three-year building work pipeline, providing a comprehensive picture of all the planned government spending on public buildings,” Mr Bidwell said.
Subbies United spokesman John Goddard said a “whole stack” of subbies were out work.
“There are other subbies still working but quoting too cheap,” he said.
“There was already no money in it, now if they are buying work there is even less money.
“I think there is going to a huge lot of second-tier lower-level builders that are going to liquidate).”
Mr Goddard said there are a “hell of a lot” of subbies on JobKeeper.
Originally published as Gold Coast construction: job losses feared next year if stimulus is pulled