Electrical Union Impasse Pushes Developers to Brink

UPDATE Agreements have now been reached between Essential Energy, Ausgrid and the Electrical Trades Union. Regional energy supplier Essential Energy, which had experienced more than 1000 outages during the industrial action, told The Urban Developer that the energy supplier and Combined Unions met on December 18, 2024, to continue regular bargaining for the 2024 Enterprise Agreement. “The meeting was both constructive and positive, reaching in principle agreement on a number of key matters,” a spokesperson said. The ETU and Mining and Energy Union agreed to suspend all protected industrial action and have notified their members. Fellow energy supplier Ausgrid said that their Enterprise Agreement had also been accepted, with 92 per cent of EA-covered workforce voting and 89 per cent voting for the offer in late December. Ausgrid’s group executive people &amp; culture Celina Cross said it was a positive result. “This Agreement is an investment of over $220 million in our people,” she said. “It recognises cost of living pressures while rewarding our employees for their hard work. “It includes record wage increases, increased progression opportunities, no loss of conditions and key enhancements to items such as allowances, leave conditions and benefits.” It includes a year one 7 per cent wage increase and 0.5 in superannuation contributions, with increases in the subsequent two years increased by either 3 per cent, or tied to inflation, whichever is higher. A pay dispute with a union in New South Wales is holding back occupier-ready developments in the state and putting developers perilously close to the financial edge. The Electrical Trade Unions (ETU) has rejected pay deals from electricity providers Ausgrid and Essential Energy, and has been undertaking Protected Industrial Action (PIA) since August as enterprise agreements are negotiated. As a result, developers are dealing with cancelled appointments to connect newly finished projects to the grid, preventing them from securing Occupation Certificates (OCs). The ETU lifted its action this week against another NSW provider, Endeavour Energy, after the intervention at the ETU’s request of the Fair Work Ombudsman. Ausgrid group executive people and culture Celina Cross says its wage offer to employees, which was rejected, was the strongest in Ausgrid’s history. “In addition to our wage and superannuation increases, our rejected offer included progression opportunities that would have seen many employees receive as much as a 21 per cent pay increase over three years,” she says. “The PIA is centred on activities that have the most significant impact on our customers and this impact is becoming devastating for many of them. ▲ The pay dispute between the union and providers has been dragging on since August of this year. “Ausgrid remains committed to good faith bargaining and ensuring our offer is fair and competitive for our employees.” Developer impacts The impact on projects has been ongoing for months as promises that projects would be connected to the grid are broken when appointments are cancelled. Concerned about what effect talking to the media about the issue will have, there has been a culture of silence among affected developers. “As developers we don’t have a lobby group, and this is dire,” one developer, willing to speak to The Urban Developer under the condition of anonymity, says. “We’re in the middle of a housing crisis, you’ve got completed projects and projects that need OCs, and we can’t get them. “Time has been our killer and it’s diabolical, with rates and all the other nuances that have been confronting our industry.” Property Council of Australia NSW executive director Katie Stevenson says that with every delay, holding costs rise and “developers are left carrying the burden”. “This impacts project viability and developers’ ability to invest in future housing, adding more pressure to an already strained housing market. ▲ The NSW Government says the previous LNP administration was warned not to privatise the sector. “Developers can’t deliver completed homes to families because projects are essentially left on standby waiting for power—it’s a backlog that will grow with every month the dispute drags on. “The sooner all parties can come together to find a solution, the sooner we can move forward in meeting Sydney’s housing needs. “The NSW Government also has a key role to play here to broker a solution to bring this long-running dispute to an end.” A spokesperson for the NSW Government told The Urban Developer that the former Liberal National Government “was warned that selling off these energy companies would cause issues like this and they sold them off anyway”. A majority stake in Ausgrid was sold in 2016 to an Australian consortium. “While this dispute falls within the federal industrial relations system, the NSW Government is continuing to work with both the union and energy companies while considering options to help resolve this dispute,” the spokesperson said. Connecting to power Electricity providers and the unions have been attempting to structure a wage deal for several months. Endeavour is slightly ahead of the pack with its timeline. Ausgrid says its offer would amount to up to 21 per cent over three years, and included super and CPI increases, but that they have been unable to strike a deal with the union. ▲ Ausgrid is among the providers that says it has been unable to reach an agreement with the ETU. Essential Energy, which supplies electricity to much of regional NSW, says that since August 8 “more than 1000 planned outages have been cancelled due to protected industrial action”. Those outages are required to connect or maintain electrical supply to buildings. “This includes outages for Essential Energy-specific projects including maintenance and upgrades on the electricity network and more than 140 outages for ASPs (Accredited Service Providers),” a spokesperson says. “Examples of projects impacted include housing developments, business renovations and extensions, including single dwellings that need power for building or for people to move in too, and upgrade work to some schools to connect new cooling-heating systems for use in Term 4.” Essential expects the industrial action to continue, “deliberately impacting customers and small businesses through unpredictable cancellations of planned outages that have a direct impact on the day-to-day activities of the NSW community”. Developers are now feeling the pinch as completion dates are dragged out further. “At this stage in development you’re at peak debt, they’ve cancelled on me already, but you can’t talk to anyone about getting switched on, no one responds and there’s no one to contact,” a developer told The Urban Developer . Cost to consumers While buyers wait to move into properties standing ready aside for the power, developers fear that the longer the dispute lasts, the closer they get to sunset clauses for pre-sold apartments. “I’ve got all my certificates except the power, I’ve got people on bridging loans upset at the situation, and I’m running close to the sunset date there as well,” another developer says. ▲ Developers say the dispute is pushing projects to the brink of failure. “There are billions of dollars of projects, and guys sitting at full debt, buyers paying bridging loans ... it’s a real mess for everyone. “If someone has a bridging loan and then this unnecessary stress in their life, and if the sunset clause expires and they can get a full refund, why wouldn’t they take that and re-evaluate?” However this means that buyers are then entering a market in which home prices since 2020 have risen 33.9 per cent in the capitals for houses and 11.2 per cent for apartments, according to CoreLogic data. Developers then have the added cost of putting apartments to the market again. “So it keeps getting pushed back on the developer, including everything we have to pay, all the contributions and holding costs,” the developer says. Another said that “everyone is struggling, it’s a game and a game that shouldn’t need to be played at the expense of consumers who need to get on with their lives and move. “They need to take notice, because it’s going completely against the [housing] agenda.” The ETU was contacted for this article but declined to be quoted. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

Electrical Union Impasse Pushes Developers to Brink

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