Minns: Gold-plated tradie salaries can help fix skills shortages

$250k tradie salaries mean many developers are unable to afford building costs, but Premier Chris Minns says rather than demonising tradies, we should be using those fat pay cheques to attract more people to the industry.

While gold-plated tradie salaries are driving up construction costs, they could also be the answer to solving the state’s skills shortage, Premier Chris Minns has said.

Speaking on Thursday morning, Mr Minns acknowledged high labour costs were creating issues for the housing sector but said the government needed to leverage those conditions to convince more people to enter the industry.

“The answer to that is not to demonise those groups of trades, it’s to encourage more people into the profession,” he said.

“We need you and I think we’ve got to do a better job of showing people who are graduating school what the opportunities are if you take on one of those professions.”

The comments come after industry insiders said that tradie salaries hitting more than $250,000 annually were fuelling the housing crisis.

The skyrocketing price of skilled labour comes on the back of new research that shows land prices in Sydney are more than double any other state, helping to make “impossibly unaffordable” Sydney housing the second most expensive in the world.

The Block auctioneer Tom Panos sparked a debate on housing costs with an Instagram post telling how a brick layer was charging $1000 a day for his work.

“Let’s be clear, it’s not a housing problem we’ve got, it’s a construction problem,” he said.

“When you take into account the rising cost of labour, materials, finance and land you end up with developers who cannot afford to start building.”

Master Builders Australia chief executive Denita Wawn said hourly wages for skilled trades people had increased by 26 per cent in the past decade, contributing to a 44 per cent increase in the cost of building a house since the pandemic.

“Labour shortages are currently the biggest source of pressure in construction,” she said. “More than half a million new workers are needed in the building and construction industry over the next five years.”

And she encouraged more people to take up a trade.

“Qualified tradespeople are earning significant sums of money, well in excess of $130,000 — $140,000 a year. You hear of some tradies who are earning in excess of $200,000.”

Rick Graf, development director at Billbergia, which delivers 1500 new apartments a year, said the cost of skilled tradespeople had skyrocketed because training and skilled migration had been neglected.

“For years you could get a dog walker or a Botox injector into Australia as skilled labour but not a chippy or a sparkie.

“Many tradies in NSW are able to demand more than $200,000 a year,” he said.

“What is worse for NSW now is that Queensland is luring our tradies there by offering even more money.”

Tom Panos says Sydney’s housing crisis is really a construction problem.

Eastern suburbs carpenter Ben Collins has been in the industry for a decade and said tradies were also feeling the squeeze of increased costs that they were having to absorb.

“The charge out rates haven’t gone up significantly since I started operation, maybe max five per cent,“ Mr Collins said.

Urban Taskforce chief executive Tom Forrest said the cost of skilled labour coupled with skyrocketing land values was slowing development.

New Taskforce research shows that land in Sydney costs $2,500 per square metre – more than double Melbourne at $1,100 per square metre.

“Sydney has the highest land price, which is a significant factor in pushing up the end sale

price from the actual construction cost,” he said.

The last Demographia International Housing Affordability report found Sydney housing the second most expensive in the world behind Hong Kong requiring a new category called “impossibly unaffordable”.

Both the cost of labour and supplies have increased dramatically.

Premier Chris Minns vision for Parisian-style medium density housing in Sydney has opened the way for 97 per cent of councils to allow low to mid rise developments within 400 metres of stations.

But despite that Robert Furolo, communications manager for Deicorp which has 3000 apartments under construction across Sydney, said that the combined cost of labour, land, finance and materials meant that even though land had been opened up developers could not afford to build.

“To be viable a project needs to sell an apartment for $900,000 and only a few areas around the harbour can sustain that kind of price,” he said.

NSW Skills and TAFE Minister Steve Whan said the demand for tradies and the salaries they command was an excellent argument for parents to encourage their children to get an apprenticeship and take advantage of a $2.5 billion government investment in TAFE.

“We’re making apprenticeships more accessible by providing fee-free training, financial incentives and school-based programs to bring more young people into the construction industry,” he said.

Originally published as Minns: Gold-plated tradie salaries can help fix skills shortages