[+] Construction Catch-Up: Minister Flags Big Build Slowdown

A slow-down on Victoria’s Big Build will give the labour force time to re-build and skill up, and for supply chains to replenish, the state’s minister for transport infrastructure told property leaders on Tuesday. “Over the last nine years the government has driven an unprecedented level of investment in infrastructure, easily the biggest in the state’s history,” Danny Pearson said. “The projects I’ve mentioned are the headline acts, but the Big Build is so much more than that—it’s a $100-billion program of more than 180 rail and road upgrades across Victoria.” Speaking to members of the Property Council of Australia in Melbourne, Pearson pointed to the International Monetary Fund, which had said “now is the time for governments to deliver infrastructure at a more measured pace”. Pearson, also the government’s assistant treasurer, said the state budget would curb capital programs over the next four years back from a high of $24 billion this year to about $15 billion. “Importantly, we’re also conscious of the need to free up trades for residential construction, which supports our agenda to build more homes,” he said. ▲ Transport and infrastructure minister Danny Pearson: Conscious of the need to free up trades to build houses. Source: Property Council of Australia The minister’s comments come as Victoria’s debt is expected to grow to $156.2 billion, and amid ongoing criticism by the construction industry that the state’s huge infrastructure spend is absorbing labour and materials in an already-constrained market. Last week, the director of business development for one of Victoria’s biggest builders described “an arms race” with infrastructure projects. “We are in an arms race for labour and materials,” Hacer Group’s Vin Sammartino said. “And as long as that keeps going on, we’re going to have pressure at our end,” Sammartino told The Urban Developer’s Build-to-Rent Summit . “Precast [concrete] is an absolute nightmare and still will be while this infrastructure work goes on. ▲ The volume of work across Victoria has left a shortage of skilled tradespeople. “For us, it’s about coming up with the best mitigation strategies to work our way through an alternative.” It’s a sentiment widely shared within Victoria’s construction industry. Last year KPMG chief economist Dr Brendan Rynne blamed the escalating cost of construction , in part, on the sheer volume of work on the books across the state. “What that’s doing is seeing the supply of tradespeople and the supply of products moving to larger, longer projects that tend to pay better,” Rynne said, which he explained, made it harder for smaller, private projects to attract labour. Simmartino says the housing market is the “lowest common denominator” when it comes to wages. “There is so much pressure in the housing market, particularly in the suburbs, where labour has been sucked into infrastructure, because the price differential is huge,” he says. The property council, which has long lobbied on the issue of material and labour shortages, welcomed the minister’s comments. ▲ Hacer Group’s Vin Sammartino calls it “an arms race”. “A robust pipeline of skilled workers and affordable construction materials will put Victoria in the best position to capitalise on the reforms that will continue to flow from the housing statement,” the PCA’s Victorian executive director Cath Evans said. “With significant constraints on the construction labour market and the supply of building materials, this is a welcome development for the industry and the availability of trades for residential construction.” However, in a written response to questions, Evans said that was only one side of the equation. “The industry also needs to see greater investment in building our own local supply of skilled labour in conjunction with an increased targeted skilled migration intake,” she said. The potential conflict between the state’s twin policies—on one hand the city’s Suburban Rail Link (SRL) , while on the other, a vow to build 800,000 homes over the next decade —was not lost on the minister’s audience. By 2050, he said, Melbourne’s population was expected to reach more than 11 million. ▲ Over the next four years Victoria’s capital program will shrink from a high of $24 billion this year to $15.6 billion. “Without a change to the status quo, half of all Melbourne could be living in the outer suburbs by 2050 with the majority of jobs in inner or middle Melbourne. “So, expanding the urban sprawl, putting more and more pressure on roads, transport, infrastructure… it just doesn’t make sense.” The plan calls for six precincts along the first stage of the rail corridor, with 70,000 homes. “It’s more than just a train line that connects those precincts,” the minister said. “It’s about making sure that we’ve got multiple centres for jobs and homes. It’s about making sure that we can provide more housing options for younger people. And we want young people to get in and get started along this corridor because they bring fresh thinking new ideas and a level of diversity.” Work is already under way on the sixth station sites—from Cheltenham to Box Hill—and currently employing more than 1200 workers. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

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[+] Construction Catch-Up: Minister Flags Big Build Slowdown

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