Building crisis continues despite budget injection


Midalia Steel and BlueScope remain as the only suppliers in WA to get their steel from Australian resources. Midalia Steel own the AusTube Mills located on the east coast. Picture credit: Unsplash

Millions of dollars have been committed to assist the WA building industry in this year’s budget as the rising costs of materials, supply chain and staff issues cripple companies.

In the 2022/2023 budget, the State Government promised $30m to assist with increases in material, such as steel, alongside $1.5m for a campaign to attract construction workers from overseas.

The building industry in WA has been booming since WA government rolled out a First Home Buyers scheme providing 3000 citizens grants of up to $10,000 dollars for new builds.

As the pandemic hit, the scheme was to prop up the building industry and young buyers and has been continued into 2022, with $20,000 grants being handed out.

But building contractors say they have been left in the lurch as client demands grows, materials run low, and worker shortages hit the country as a result of the pandemic border closures.

The Master Builder Association of Western Australia said the funding announcment is welcome news but that more is needed to support residential builders.

“In the housing sector alone approvals have skyrocketed, which has been extremely challenging for the industry coming off such poor market conditions over the past four years,” Master Builders spokeswoman Reney Omar said.

“The State Government must shift to create a more viable and sustainable construction industry for all.”

In the last month the price of steel has increased by 5 per cent after doubling last year, Midalia Steel spokesman Josh Kemp said.

“This is because we get all our steel from over east, and during the pandemic our steel mills reduced production. And then the boom happened here as grants got released,” Mr Kemp said.

Mr Kemp said it took between 3 and 6 months for the steel mills to restart production after the pandemic halted them, and a further 3 to 6 months for builders to receive materials, such as iron ore and iron billets.

“Before the pandemic it would take about two days, now its three to four weeks,” Mr Kemp said.

While the industry is seeing some stability now, there are still contractors backlogged to receive materials.

For some housing projects, the wait time for a roof has doubled since the boom began, according to Jamie Gillespie from ASIL Roofing.

“We’re seeing a lot of disputes between the clients and the builders fall back onto the sub-contractors,” Mr Gillespie said.

“And the only place they can come to recover the money is the sub-contractor.”

When first home buyers sign up for cheaper contracts, a lot of the risks fall back on them and longer waiting periods and unexpected costing are often missed in the fine print, Mr Gillespie said.

“The whole system doesn’t seem to work.”

While steel suppliers, like Midalia Steel and BlueScop,e get their stock from Australian mills, other suppliers are facing bigger challenges to get materials while they wait for supplies from a pandemic-induced, locked-down China.

Master Builders withheld comment on the recent folds of New Sensation Homes and Home Innovation Builder.

However the spokewoman said the pressure to continue if labour shortages, price escalations and supply chain disruptions grow will mean that building companies will struggle to stay profitable.