Josh Frydenberg and his beleaguered PM Scott Morrison might find themselves regretting that the much-demonised CFMEU, a favourite government bogyman used to scare the electorate, doesn’t have more sway with the Berejiklian government. So might a lot of major construction companies.
At no stage in Victoria last year did Daniel Andrews ever shut down that state’s construction sector — a sensible decision given the lack of transmission of the virus on building sites, but also one that reflected the power of the construction sector union in that state.
But Gladys Berejiklian announced a different approach on Saturday, shutting down all Sydney construction — from mega-projects like Westconnex right down to bathroom renos — in a move that took the sector, and the other industries that rely on it, by surprise.
Whether her decision is based on the science of the higher transmissibility of the delta variant or, as some have suggested, the optics of finally demanding a strict lockdown while allowing government projects to continue working isn’t clear.
But by having resisted locking down, and then not locking down hard enough, to look after the Liberals’ business constituency, Berejiklian has ended up having to go much harder and with far more damage than a Victorian-style lockdown would have inflicted. And with one of Australia’s biggest employers as a casualty. Gold-standard stuff. One can only imagine the fury that would have been directed at Andrews by the Morrison government and the media if he’d done the same.
Shutting down a sector that employs 250,000 people for a fortnight might send a few marginal operators to the wall but the work will still be there in two weeks’ time and the sector should be able to resume as normal then.
An extension beyond that, however, will increase the risk that major economic damage is inflicted — not merely in terms of jobs lost but on the financing of property developments.
Fortunately, the sector has been booming since the government introduced Homebuilder and people began taking advantage of historically low interest rates to move into the housing market, so this is the least worst moment for a shutdown. It might even temper the massive pressure on building supplies that has been delaying projects across the country.
A failure to get on top of Sydney’s outbreak will leave Berejiklian and her ministers with a difficult dilemma of whether to allow construction to resume or take the risk of causing serious economy-wide damage, with construction firms and developers failing, and flow-on effects into the financial system.
Berejiklian and her cabinet won’t lack for advice from business — self-interested, as always. Wesfarmers, which has a direct stake in the construction shutdown via its ownership of Bunnings, has backed the government’s decision but says it’s strictly a short-term approach — flagging what they’ll say if the shutdown gets extended. Kerry Stokes’ Seven West Media and Seven Group Holdings also has an interest, given Stokes is in the process of taking over Boral, the country’s biggest building materials supplier. Stokes’ Seven Group Holdings already controls Westrac, the distributor of Caterpillar machinery in WA (for the booming iron ore industry) and in NSW, plus Coates equipment hire and the AllightSykes lighting equipment hiring company (great for 24-hour infrastructure projects).
For that matter, both Nine and News Corp are also self-interested because they control the two biggest real estate listing websites, REA and Domain – News controls 61% of REA, the biggest; Domain, the runner-up, is 58% controlled by Nine. All real estate dealings are virtual now in greater Sydney and Victoria. Both companies now own mortgage originators, too.
And the longer the lockdown drags on, the less we’ll hear from the “rate rise looms” crowd who had started tipping that the Reserve Bank would be forced to lift rates as early as the end of next year due to the booming economy. The Sydney lockdown will materially detract from the September quarter GDP numbers — we won’t know how much until December — but there’ll be a bounce back in the December quarter, unless, of course, there are more lockdowns because we’re not getting vaccinated fast enough.
Who’s game to say the current shutdowns in Sydney and Melbourne will be the last?
You might be missing the biggy Bernard, Delta is entering pretty well a 90% unvaccinated population. That’s when you will see some real economic damage.
And that’ll be the sound of the roosters coming home after lockdown after lockdown…in Melbourne, I’m worried that we’ll turn into something like Detroit in the 90’s. Of course this is all due to lack of Vaccine availability, but lockdowns are being sold as the only solution by anyone who has the LNP in their crosshairs.
PS not trying to dispute the Massive mess up the LNP made with vaccines.
Too early to be sure, but I am guessing the current Melbourne lockdown will extend by another 5 or 7 days. The biggest difference between Victoria and the current NSW lockdown, is that the numbers are not continuing to rise (although that may change in the next few days). If Victoria gets out with a 12 day lockdown and Greater Sydney goes over a couple of months all up, it will be a good argument for an early short sharp lockdown to control this virus’s impact on our society. NSW left it way too late – and in doing so, also caused the latest Victorian lockdown.
The overall solution is to get vaccination rates up (and get confidence back in the vaccines themselves). From my perspective the short sharp lockdowns look like the best working solution until we get there.
Quite possibly, but if Melbourne is returned to a donut city with a hollowed out core with boarded up streets and shops but Sydney remains vibrant and alive, does that still hold? Also, lets not forget, its the “response” to the virus which is having negative impact on our society.
I’m of the opinion that real impact of lockdown may not yet be fully realized.
No alternative strategy has been tried other than brute force lockdown.
Many state premiers took the opportunity to go into lockdown or close borders with only a few known Corona cases in the community, capitalizing politically on the perception of protecting one state.
The absence of any federal presence was most glaring at this point, to me the feds were focused entirely on re-election as well. Essentially our federation is now broken, and the current crop of politicians, state and federal, are to blame entirely.
Now, because of vaccine procurement errors, some state leaders, Victoria especially, are going for the jugular in an attempt to magnify the error, once again with Australians in the middle of the shit sandwich.
We are reduced by parochial politics to an unvaccinated gaggle of unconnected fiefdoms at the rear end of the world with closed borders internally and internationally, arguing about vaccines as the rest of the western world moves forward. I read today that several pharmaceutical companies are hoping to bring a Covid tablet to market next year rather than an injection. We’re stuck here arguing about almost obsolete vaccines and lockdowns.
“lockdowns are being sold as the only solution”
I don’t recall anyone arguing that lock-downs are “the only solution”, not even Dan. Lock-downs have always been sold as an essential but temporary part of managing the problem, pending effective, safe vaccines in enough people’s arms. Despite Australia’s isolation advantage, it should have been the urgent priority to get a critical mass vaccinated before the onset of winter. It most definitely was a race. Collectively Australia took its eyes off the ball over summer – for some unaccountable reason, we assumed the Feds knew what they were doing about vaccines.
“roosters coming home”
The effect on Australian and particularly Melbourne industry structure remains to be seen; but after 2020, national unemployment is at 4.9% (although under-employment has risen, mainly in Melbourne), and profits are high (per Greg Jericho in The Guardian today). We’ll see.
Agreed, I see no reason for optimism, but would be pleased to be wrong.
PS Keith, I see Australia’s isolation as a distinct disadvantage, economically, socially and militarily.
A few developer failings.
Now there’s a thought.
That bunch of rent seeking environmental vandals would get about as much sympathy as your average drug cartel.
And be about as deserving.
Scotty from sales has lost the women’s vote, and now it is the tradies who will turn on him. He’ll need more than a miracle next election.
I think that you are correct – it is not just that they may voted for him to save their utes in 2019 but the demographic spread in those western suburbs electorate of aspirational McMansions that decide elections.
So, all those tradies with an enforced two week break will head to Bunnings or Mitre 10 (both still open) to stock up on what they need for that project around the home that they’ve been putting off. Which big green shed retail site will host the super-spreader event?
A lot of talk back callers ask why mass vaccination tents are not set up at suburban Bunnings/Homebases – they could use the spaces previously occupied by the sausage sizzlers who are now a vanished species.
While its shutdown is the perfect time to do some inspections to see if its been built correctly. Much easier than waiting for all the owners to move in and then doing it.