Covid 19 Delta outbreak: Workers' pay might soon be cut, says building chief

What will extending the hardest lockdown do to Auckland's building sector? Photo / Greg Bowker

Construction chiefs meet at midday to discuss Tāmaki Makaurau's lockdown, which has frozen thousands of building sites and delayed staff returning to projects.

Julien Leys, Building Industry Federation chief executive, said members of the Construction Strategy Group would today hear from BDO's James MacQueen who last month released his firm's annual construction sector survey.

Discussion is expected to be around the city's current alert level status and what any extension of that would mean.

The group's board includes representatives from Leigh's Construction, Smiths Cranes, BECA, Watercare, Stevensons Group and Jasmax.

Nearly 20,000 houses and apartments could be being built throughout Auckland currently. Stats NZ said building consents were issued for 19,158 new Auckland homes in the year to July 2021. Most building work is undertaken within two years after consent for a new home is issued. New house construction nationally is at an all-time record.

Non-residential building work consented was $7.8b, up 15 per cent from the July 2020 year and much of that is in Auckland.

Leys said: "Our focus is on a number of key issues of real concern.

• "Delays in resuming construction work is driving inflation worries and increasing costs," he said, referring to the sector already suffering cost rises from supply chain issues, material and labour shortages;

• "Costs continue in construction regardless of whether sites are working or not. Some contractors are working out discounts with major suppliers of equipment and materials. Construction sites that cannot operate incur significant cost overruns and this is starting to erode any profit margins for head contractors and clients," Leys said.

• "Some construction companies operating nationally are not eligible for the wage subsidy to pay their Auckland workers because they don't meet the 40 per cent threshold but nevertheless may need to start reducing pay for workers in Auckland if the lockdown continues;

• "Construction work is physically tough and the prolonged lockdown means that our workers are getting unfit and when they eventually return to work, may suffer more injuries. The mental health of workers who are stuck at home on the couch and no longer able to play sport and keep physically active is a real concern as well," Leys said.

But there were also broader issues at stake, Leys said.

BDO partner James MacQueen. Photo / supplied

"Contractors are only giving fixed prices with a validity period of two weeks which is not feasible for the construction industry. Lead-in times for key construction materials especially steel of six to eight months and structural timber of three to four months is adding to delays and cost increases.

MacQueen said the meeting had been scheduled as part of BDO's survey release. Its timing so close to Prime Minister Jacinda Ardern's announcement for Auckland's future was coincidental.

But he has no doubt discussion will include the alert level and he has a grim outlook on that.

"There are lots of impacts of extending this. Incomes won't be coming in, but you've still got to pay your staff. There's a massive staff shortage and people are haemorrhaging cash at a rapid rate.

"It's been clear to me this is going to be a whole lot longer. We're going to be in lockdown for weeks. It depends on the numbers today."

"There are thousands of construction sites throughout Auckland. Some are multi-unit residential sites while others are commercial or industrial," MacQueen said.

Cabinet Ministers will meet today to decide if any part of the country is ready to change alert levels.

Tāmaki Makaurau remains at level 4 until at least midnight Tuesday and the rest of the country is at level 2.

Yesterday there were 20 new community cases of Covid-19, bringing the total number in the outbreak to 922, but 34 of those cases still have no known link to the original outbreak, raising fears there may be unknown chains of transmission.