Architects call for stimulus as COVID places projects on ice

Australian architects say a significant number of construction projects have been placed on hold due to the coronavirus crisis, with stalled developments illustrating a need for immediate economic stimulus for the sector.

A survey by the Australian Institute of Architects showed nearly two thirds of respondents had projects stalled as a result of COVID-19, with the biggest impacts felt on projects valued between $1 million and $5 million.

Projects worth between $10 million and $50 million had also been adversely impacted, the survey showed.

The most-cited reason for the disruption was uncertainty associated with the pandemic, with clients reluctant to commit to projects, finance difficult to obtain and a lack of investor confidence leading to developments being placed in mothballs.

Town planning delays were also blamed for holding up progress, despite state governments across the country fast-tracking a wide range of development approvals to prop up the economy.

Australian Institute of Architects chief executive Julia Cambage said the survey results lined up with ABS data that showed a significant drop off in residential approvals.

“These findings have serious implications for jobs, not only in architecture but also in the broader construction sector which employs nearly one in 10 Australians,” Ms Cambage said.

“The number of projects that have been put on hold or postponed indicates that the pandemic will continue to have a significant negative impact on jobs beyond the short-term pain currently being felt.

“Clear opportunities exist to stimulate activity in the sector in ways that will deliver immediate and longer-term benefits, especially in the residential sector.”

The survey results come as Prime Minister Scott Morrison announced an extension to the JobKeeper stimulus package.

From October 1, JobKeeper’s fortnightly 1,500 payment will be split into two tiers; $1,200 for those doing 20 or more hours per week, and $750 for those doing less than 20 hours a week.

The payments will again be scaled back in March, with Tier 1 reduced to $1,000 and Tier 2 slashed to $650.

Businesses will have to show that June quarter turnover in 2019-20 is at least 30 per cent lower than the previous June quarter, while to be eligible for the payments in the New Year, firms must show their September quarter revenue is also down 30 per cent year-on-year.

The JobKeeper package has been crucial for maintaining employment in the building and construction sector, according to recent research by Deloitte Access Economics.

Deloitte released a report this week identifying which sectors were most at risk if JobKeeper payments were shut off from September.

The research showed around 80 per cent of Australian construction businesses intended to use JobKeeper, while fewer than 35 per cent of those businesses had cash reserves to cover more than three months of operations.

Around 64 per cent of respondents to the Architects Institute’s survey said government relief initiatives to date had been somewhat or extremely helpful, with a similar percentage indicating they have accessed the JobKeeper program.

The Architects Institute’s Ms Cambage urged the federal government to provide stimulus beyond JobKeeper for the construction sector.

“Incentivising people to improve the energy efficiency of their homes, paired with a program of upgrades to public buildings is one compelling example,” Ms Cambage said.

“Further substantial investment in social and affordable housing is another priority area that has yet to be fully addressed.”