The collapse of building giant Probuild is the canary in the coalmine for Victoria and Australia.
The statement on Wednesday from Wilson Bayly Holmes, the parent company of Probuild, said governments’ hardline approach of managing Covid-19, with snap lockdowns, had “created high levels of business uncertainty in Australia”.
Worryingly, the statement also said “the protracted effect of Covid- 19 has delayed any meaningful economic recovery”.
This is significant because it shows we will not “snap back’’ to normal once restrictions are finally lifted and all borders opened.
After two years of living a hard Covid lifestyle, we are now left with the hangover of business closures and unemployment, a direct result of Premier Daniel Andrews’ inhumane lockdowns.
Anyone walking down the streets of the CBD, or their local shopping strips, can see thousands of smaller Probuild-like closures.
The original sin of the lockdowns was the concept of hibernation, the idea the economy and society can simply be frozen and then unfrozen on command once the virus was under control.
It wouldn’t surprise anyone to learn that idea was dreamt up by public sector bureaucrats who were protected from the economic fallout of lockdowns, and many of whom received pay increases.
Decisions have consequences, and the consequences of the decision to keep Victoria under an iron fist for the better part of two years will be with us for years.
But the collapse of Probuild also needs to be understood in a broader economic context. Private-sector business investment in Australia was plummeting before Covid. The lockdowns gave a further hammer blow, knocking new business investment to its lowest share of the Australian economy since records began in 1959.
The assessment by Wilson Bayly Holmes that “the potential risk on large mega-building projects outweighs the current margins available” suggest the trend of declining investment will continue.
And it’s not just lockdowns and restrictions. The red and green tape, approvals, and taxes that come with any big project adds millions to cost and years to time frames. Research by the IPA has found that red tape costs Australia $176bn in lost economic output.
Some are now beginning to wonder if Australia will be able to generate sovereign construction and manufacturing capabilities required to build big and build fast in a world that is becoming increasingly uncertain and hostile.