23rd July, 2021
With a recent surge in COVID-19 cases of the Delta variant around Australia, the trades and construction industry of two states has been told to hit pause.
As the COVID-19 Delta strain makes itself felt around the country, two states have chosen to restrict trade and construction operations to a degree not yet seen in Australia’s pandemic response.
To help trades and construction businesses through, this article covers the news as its most relevant for affected business owners as well as their advisors.
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Construction sites in Greater Sydney, including the Blue Mountains, Central Coast, Wollongong, and Shellharbour, are currently shut down.
The NSW government ruled that construction site work must wait until August. The same goes for residential renovations, alterations, and additions.
During the lockdown, only urgent work relating to emergencies, safety and security, environmental risks, and some other factors may be carried out.
According to the Public Health Orders, these NSW restrictions are in place until at least Friday, 30 July.
The South Australian government also recently announced a seven-day lockdown that includes the construction industry.
Restrictions in SA began at 6PM on 20 July, and construction will shut down for at least a week.
Hundreds of thousands of Australian tradies, employees and business owners in the trades and construction sector are being affected by the restrictions.
The Master Builders Australia (MBA) reports the building and construction sector in NSW employs close to 350,000 people in the state.
“72 percent of those are typically ‘on site’ and thus affected by the lockdown,” said Denita Wawn, CEO at MBA.
“There are more than 130,000 building and construction businesses in NSW, too, 98.7 percent of which are SMEs.”
In NSW, the weekly value of wages is around $420 million.
For South Australia, while the number of building and construction workers may be fewer, at 72,634, this actually accounts for a significant 8.8 percent of total employment figures.
“Plus, almost 53,000 of those people work on-site, meaning a high percentage of tradies are currently having to down tools,” said Wawn.
There are over 23,500 building and construction businesses in SA, 98.2 percent of which are small and medium businesses, according to MBA.
The weekly value of wages in the state is $63.9 million, indicating the scale of impact there.
The current restrictions are being severely felt by tradies in NSW and SA.
“The shutdown of our industry is going to hit thousands of small business people in our industry very hard,” said Wawn.
“It is important for employers to take into account the impact that lockdowns and shutdowns of the industry have on employees and subcontractors.
“They must ensure compliance with employee entitlements and HR best practice in relation to the employment consequences of lockdown. Despite the challenges, compliance with your legal obligations is obviously still required.”
Penny Petridis of Female Tradie is a Sydney business owner and tradie dealing with the fallouts first hand.
“The lockdown doesn’t allow me to move freely through my scheduled work for the next two weeks at least, which will definitely impact the business financially and also delay projects,” she said.
“I have had pretty much all my projects paused.”
Petridis had work until the lockdown, but things certainly weren’t business as usual at that point, either.
“The only reason I still had work then was because I was halfway finished, and it was urgent to complete. I had to practise COVID-safe procedures just to get through the job,” she said.
Also in Sydney, plasterer and director of interior drywall company Bietola Interiors Craig Bietola is feeling the shock of the tools-down order.
“For the first time in my life, I have no job,” he said. “I’ve never had to go to Centrelink before, so this is a first for me,” Bietola told The Pulse.
“The shutdowns not only affect my family and I but the other eight guys that work for me, and their families, too.”
While Bietola notes that the business has plenty of work lined up to go on with once the restrictions ease, the mental stress is not without impact.
“To have your ability to work taken away from you isn’t nice, especially when you’ve been working through the pandemic the whole time and now, all of a sudden, you can’t.”
But Bietola also notes he’s looking for ways to stay positive and keep his team feeling okay during this time.
“I’m trying hard with my guys to keep morale up and keep us all united and looking out for each other,” he said.
“We have a work-based group chat, and I’ve told everyone to keep talking to each other on it so we can all support each other.”
Unable to work right now, many tradies are facing increasingly dire financial circumstances.
Under a new combined Commonwealth and NSW government support package, the COVID-19 Disaster Payment is currently available for affected people in NSW hotspots.
Eligible recipients receive $375 per person if they’ve lost between eight and less than 20 hours of work a week, or $600 for 20 hours or more lost work per week.
There is also the Covid19 Business Support Grant, micro-business grants and a small and medium business payment (JobSaver) available for eligible businesses, solopreneurs, and contractors.
“Businesses in NSW are able to apply for one-off, ‘tax free’ grants of up to $15,000 based on the extent of their decline in turnover over a minimum two-week consecutive period from 26 June to 17 July 2021, when compared to the same period in 2019,” said registered tax agent and chartered accountant, Joe Kaleb of Australianbiz.
“This seems to be problematic for building and construction operators that were forced to shut down from 11.59pm 17 July following the government’s tightening of lockdown restrictions.”
Check out the NSW government’s website for more information on the financial support available in the state.
Bietola worries that the government assistance simply won’t be enough for many people in the industry right now, though.
“This will hit hard for a lot of tradies,” he said, “as a lot get by on a week-to-week basis.
“Six hundred dollars from the government won’t cover my living costs in these times.”
Penny Petridis from Female Tradie is eligible for the support payment but can’t see it helping too much.
“I’m grateful for the help, and the process to apply seems easy enough so far, but I will still have to dip into my savings.”
She also worries about the tradies who work week-to-week. “Many rely heavily on their weekly wage, and the $600 won’t be enough.”
MBA advises those in the industry to get on top of their finances ASAP since the shutdown of building activity in NSW and SA will delay progress payments.
“Having a strong and clear understanding of your cash flow position is vital to ensuring businesses are resilient,” Wawn said.
“Risk mitigation is something that is accessible to small businesses through the use of readily available, best practice systems and resources to understand the detailed financial status of projects.”
Wawn suggests people reach out to their accountants and bookkeepers for advice. Also, “be in regular contact with your suppliers and subcontractors,” she advised.
Plus, the Master Builders Associations in each state are focusing on providing information and support to members during this time.
“We are working with the Federal and State governments on a daily basis to ensure that there is appropriate financial support and that we can successfully reopen in New South Wales and South Australia.”
With Federal and State support coming into play, business owners are expected to turn to their accountants, bookkeepers and registered tax agents to assist in evidencing claims of lost turnover.
And that means there’s likely to be a spike in calls to advisors over the coming days and weeks.
“Unlike JobKeeper or the Cash Flow Boost announced last year, these support payments will be delivered via Services Australia and its State-based equivalent,” said Kaleb.
“This time it’s all coming down to good record keeping and having an up-to-date view of cash flow,” he said. “Businesses should be doing those things anyway, but they’re even more important now.
“Tradies, builders and their suppliers who have been just getting by day-to-day with very tight cash flow and very slim profit margins are the ones most likely to struggle during this period.”
Advisors to trades and construction businesses may find that now’s the time to get proactive and begin checking in with clients on a regular basis to assist them with reporting activities and helping them gain access to available grants and support.
During this period of being unable to work on-site, tradies can catch up on other jobs.
“I’m lucky enough to have a lot of work, so I’m going to manage my downtime by catching up on paperwork, planning, and sorting equipment. That way, when we get the green light, I’ll be good to go,” said Petridis.
Meanwhile Biotela plans to focus on paperwork for now.
“I’m mainly using the downtime to catch up on the quoting and office work I’m behind on.”
For mental health, Bietola also notes how essential it is to stay busy.
“I have a list of things to do, like wash my car, mow the lawn, paint the eaves. The important thing is to just do one job per day. If I run out of things to do, I will start to go crazy!”
If you’re a tradie trying to work out how to cope with the current restrictions and financial fallout, start by tracking your financial position and getting in touch with your accountant or bookkeeper.
Learn about the available support, too. Plus, research to see if you might be eligible to complete any on-site work at the moment due to some of the limited exemptions.
If the mental and emotional toll is getting to you, remember that mental health treatment plans are still available and can provide you with access to discounted visits to mental health professionals.
NB: This article is designed to be general in nature and should not be considered professional advice. Businesses impacted by lockdowns are advised to seek the advice of a qualified accountant or registered tax professional before making any decision in applying for government grants and support.
It’s worth highlighting the importance of good record keeping in order to ensure your business is able to maximise any support available and provide evidence of claims when required.
With MYOB, not only will your books be up to date, you’ll find it easier to work with an accountant to evidence your claims and maintain compliance, while integration with bank accounts via bank feeds means you’re able to keep a complete view of cash flow.