Territory ‘staring into a valley of death’ as Defence suspends works program

The long-awaited Defence Strategic Review is already having an impact in the Territory – but for the wrong reasons. We reveal why local businesses and jobs are on the line.

The viability of potentially thousands of Territory businesses and hundreds of jobs could be at risk after the Australian Defence Force froze a key works program.

The Office of Defence Industry Support, which assists small and medium-sized businesses link with Defence projects, has told key building sector figures the Estate Works Program has been put on hold, potentially until the second half of 2024.

It’s believed the EWP is worth $200m annually to the NT economy.

The changes are understood to be about providing clear air for the release and implementation of the Commonwealth’s Defence Strategic Review, which was commissioned to align the ADF with modern strategic and defence requirements.

Prime Minister Anthony Albanese said the review findings would be released before the May budget.

Master Builders NT chief executive Ben Carter is concerned for local businesses.

The ODIS provides facilities maintenance on Defence Force assets including housing, bases and air-strips, delivered through national infrastructure providers such as Ventia, Auricon and Cushman & Wakefield, who in turn sub-contract to local tradies.

Master Builders NT chief executive Ben Carter said some local contractors have heard from ODIS directly and others via their head offices that the “new works tap has been turned off for potentially six to 12 months”.

He said potentially thousands of Territory businesses could be “staring into a valley of death” in coming months if the freeze on new works in this key Department of Defence works program continues for an extended period.

”The pressure on these businesses’ cash flow will be enormous with repercussions not just for them but the wider economy.”

A member survey by Master Builders NT illustrated the importance of Defence contracts to NT industry.

Key findings showed:

* 30 per cent of respondents say the EWP comprises up to a quarter of business;

* 40 per cent say EWP comprises between a quarter to a half of business;

* 25 per cent say EWP makes-up between 50 and 80 per cent of business; and

* Five per cent say it makes up more than 80 per cent of business.

The survey also shows 70 per cent of surveyed businesses have up to 20 employees on EWP projects and a third have 20 employees engaged on EWP projects.

The RAAF‘s Tindal base.

It also identified 78 per cent of business operators will struggle to keep employees if the delay exceeds six months and 54 per cent said they would consider ceasing Defence work if the delay exceeds 6-12 months.

The Defence Department website also flags a restructure of Defence’s works management through the Base Services Transformation Program, which also has the potential to impact on future contracts dolled out under the Estate Works Program’s procurement processes.

“Contractors have been told that there will be only eight new projects released to the market for the remainder of financial year 2022-23 and none of them will be in the Territory,” Mr Carter said.

“It’s anticipated that the new pipeline following the possible restructure will be turned on again for financial year 2023-24. The industry is abuzz with concern because potentially thousands of local small-to-medium-size enterprises could be impacted.”

He said a delay in the rollout of Defence work could have serious workforce and capability implications.

RAAF Base Darwin contributes to the local economy. Picture: Glenn Campbell

“We are very concerned because it will be a big financial stress on SMEs in our industry. A twelve month gap could be a valley of death for many SMEs,” he said.

“It could mean that less local contractors make themselves available to work on Defence work.

“Many businesses already feel that the technical requirements to work on Defence projects make it very challenging and this could be a bridge too far.

“With the expectation at the Defence Strategic Review will see increased demand for construction services in the Top End, this is an outcome that Defence should seek to avoid. A solution could be to exempt work on bases in Northern Australia from the pause in the EWP.”

A Defence spokesman played down the significance of changes to estate works.

“Defence estate and infrastructure is critical to sustaining Defence capability,” he said. “Construction, refurbishment and maintenance works continue across the Defence estate.

“Almost $600 million has been invested in estate projects in the Northern Territory over the past three financial years. The Estate Works Program 2022–23 budget is comparable to the 2021–22 budget, and will result in expenditure in excess of $1 billion for estate works across Australia.

“New estate projects will be released once the 2023-24 budget is finalised and the outcomes of the Defence Strategic Review are considered. The DSR may present future opportunities for industry.”

Originally published as Territory ‘staring into a valley of death’ as Defence suspends works program