{"id":384572,"date":"2026-04-10T06:39:23","date_gmt":"2026-04-10T06:39:23","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/384572\/"},"modified":"2026-04-10T06:39:23","modified_gmt":"2026-04-10T06:39:23","slug":"construction-sector-warns-of-housing-delays-mass-lay-offs-due-to-middle-east-war","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/384572\/","title":{"rendered":"Construction sector warns of housing delays, mass lay-offs due to Middle East war"},"content":{"rendered":"

When Graeme Collins and his wife bought a block of land in Pyalong, about an hour north of Melbourne, he thought they were finally about to build their dream home in the Victorian countryside.<\/p>\n

After delaying construction by five years due to COVID, the project finally began this year. Then war erupted in the Middle East.<\/p>\n

In just six weeks, the cost of their home has risen by $120,000.<\/p>\n

Iran war live updates<\/a>: For the latest news on the Middle East crisis, read our blog<\/p>\n

“We’re presently trying to move from the planning stage to the earthworks. What was initially quoted as $14,000 for site cut and another $8,000 to $12,000 for the driveway, has now doubled due to the diesel prices. And that’s before we even start doing the slab, the house build or anything else,” he said.<\/p>\n

\"A<\/p>\n

The idyllic Victorian countryside where Graeme Collins’s new family home is being built. (ABC)<\/p>\n

“Overall, we’re looking at an extra $120,000 to build our house \u2014 even with a fixed price contract with our builder, and he’ll suffer for that.<\/p>\n

“I feel very sorry for people trying to deliver on contracts where prices have gone up overnight.”<\/p>\n

Andrew Mahar is one of them. His company, Central Vic Civil, employs 40 people in Ballarat and predominantly delivers local government infrastructure, road projects, and land subdivisions for developers.<\/p>\n

\"A<\/p>\n

Andrew Mahar says families will be impacted if construction companies go broke.\u00a0 (ABC)<\/p>\n

“Since the start of the conflict in the Middle East, products like asphalt have gone up 50 per cent. PVC products, pipelines, water mains, sewer mains, storm water drainage \u2014 all that material has gone up 30 to 40 per cent,” he said.<\/p>\n

“Then fuel, as everyone knows, has doubled. It’s a major, major cost implication.”<\/p>\n

Mr Mahar said the vast majority of civil construction work was covered by fixed lump-sum price contracts, which leave little room for sudden global shocks.<\/p>\n

“So, you’re locked in, and if the cost of fuel or materials goes up \u2014 that’s borne by the contractor,” he said.<\/p>\n

“If we can’t negotiate with clients or local government authorities to change these contracts to include the rise in the cost, it’s just not sustainable. So, we would have to lay staff off and stop operations.”<\/p>\n

\"A<\/p>\n

Central Vic Civil employs 40 people in Ballarat, and predominantly delivers local government infrastructure, road projects, and land subdivisions for developers. (Instagram: central_vic_civil)<\/p>\n

‘Mass’ lay-offs, housing delays<\/p>\n

Civil Contractors Federation (CCF) chief executive Nicholas Proud said the predicament described by Mr Mahar was widespread, warning that thousands of businesses would go bankrupt and major projects would be delayed without urgent government intervention.<\/p>\n

A report CCF has commissioned into the economic impact of the global fuel crisis as the Strait of Hormuz remains effectively shut, points out insolvency rates in the sector have more than doubled since the COVID-19 pandemic, and the latest crisis could make things worse.<\/p>\n

“The construction industry has the highest insolvency rates of any industry in Australia, and those have almost doubled since COVID, with around 3,500 businesses going under in the last year,” Mr Proud said.<\/p>\n

“Construction also has the highest reliance of any industry on diesel. Those two factors are a formula for failure. We need to make sure those businesses, where they can’t recover their costs, are being seen and supported by government.”<\/p>\n

Mr Proud is calling for all levels of government to “offset” the price gap borne by contractors amid the sharp rises to input costs.<\/p>\n

“Pretty much all those private contracts where there’s a developer or a small builder building on a subdivision, are fixed-cost,” he said.<\/p>\n

Fuel heading to Australia ‘won’t last a month’<\/a><\/p>\n

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“We don’t see much room for [cost] recovery there, so that’s going to be a challenge for those businesses to get those projects started and completed.<\/p>\n

“We need to look at how to keep those businesses operational, or we’ll just have to let them go.”<\/p>\n

‘More serious’ than COVID shocks<\/p>\n

Independent economist Saul Eslake, who wrote the CCF’s report, does not believe such a cash injection \u2014 likely to be in the order of tens of billions of dollars \u2014 would fuel inflation.<\/p>\n

“All that the financial assistance would do is prevent a significant decline in construction activity that would occur if companies can’t sustain themselves,” Mr Eslake said.<\/p>\n

“If companies were to go broke on a significant scale, the problem would not be inflation, it would be a drop in economic activity and a lot of people losing their jobs.”<\/p>\n

\"A<\/p>\n

Andrew Mahar says vital construction materials like asphalt, have gone up 50 per cent since the start of the Iran war in the Middle East.\u00a0 (ABC)<\/p>\n

Mr Eslake has recommended that the federal government amend the Liquid Fuel Emergency Act to include the construction sector as “essential users” of fuel, in the event of rationing.<\/p>\n

Currently, the act covers defence, emergency services, taxis and public transport.<\/p>\n

He has also called on state and territory governments to establish a “consistent, practical mechanism to adjust contract values in response to significant input price movements” and for governments to provide time-limited support for projects where abnormal input cost increases cannot be absorbed within existing budgets.<\/p>\n

“Another wave of insolvencies among civil construction businesses would seriously detract from the government’s capacity to achieve a range of policy objectives,” Mr Eslake said.<\/p>\n

\"generic<\/p>\n

There is broad concern that the shock of higher fuel prices could be more serious than the COVID supply chain shocks.\u00a0 (ABC News: Monish Nand)<\/p>\n

“That includes building 1.2 million new homes to 2029, achieving 82 per cent renewable energy generation by 2030, as well as the completion of major infrastructure projects.<\/p>\n

“That’s of course in addition to the potential for significant job losses.”<\/p>\n

Mr Eslake said the scale of the challenge facing the industry was greater than that during COVID, which up-ended global supply chains and saw the cost of construction double in Australia.<\/p>\n

“Although there were interruptions to a range of supply chains [during COVID] what we didn’t see was big increases in fuel prices,” he said.<\/p>\n

“If there’s a parallel at all, it’s more with the big rises in energy prices that followed Russia’s invasion of Ukraine, but then, there weren’t really any risks to the supply of diesel or fuel, as there is now. So [this crisis] is \u2026 potentially more serious.”<\/p>\n

Despite all the global uncertainty, he said one thing is almost certain: “Prices are probably not going to go back to where they were at the start of February.”<\/p>\n

A government spokesperson said it was already working to ease pressure on businesses as a result of war in the Middle East.<\/p>\n

“The vast majority of construction contracts are administered by state and territory governments. The Australian government encourages the CCF to work with the states and territories to explore contract flexibility through the construction supply chain,” a statement said.<\/p>\n

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“In addition to the targeted relief the government has already provided through the temporary halving of the fuel excise and the cancellation of the Heavy Vehicle User Charge, which will flow through to prices at the fuel bowser.\u00a0<\/p>\n

“The government will continue to engage with industry to understand the potential impact on specific sectors and locations.”<\/p>\n

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