Show Notes
In this episode, Hamish and Matt navigate the "geopolitical bruises" impacting the Australian construction industry in early 2026. They discuss the sharp rise in material costs driven by global tensions, the controversial shift in Victorian builder licensing, and the silver lining of surging apprenticeship numbers. The duo emphasises that while the climate is "doomy," transparent communication and creative contract management (like provisional sums) are the keys to survival.
Key Discussion Points 1. The "Strait of Hormuz" Effect & Rising Costs The industry is facing a second wave of price hikes, this time driven by geopolitical issues rather than the pandemic. Material Spikes: PVC piping is up 37%, cement is up 25%, and "quality products" have surged by 50%. Fuel Impact: The HIA warns of sustained fuel increases, potentially adding $8,000 to $15,000 to the cost of a new home. The Victoria Disadvantage: Matt notes that unlike other states, Victoria lacks a standard "rise and fall" clause in residential contracts, making it difficult for builders to pass on direct costs without risking insolvency.
2. Navigating the Crunch: Practical Solutions Hamish and Matt share how they are protecting their businesses and clients: Provisional Sums (PS) & Prime Costs (PC): Moving volatile items (like concrete and PVC) into PS/PC categories to allow for real-time cost reconciliation. Early Deposits: Securing stock by paying deposits for tiles, joinery, and lighting months in advance to lock in prices. "No Margin" Variations: Offering to pass on direct cost increases with zero builder margin to maintain trust and transparency. Granular Negotiations: Ensuring trade increases are only applied to the specific material (e.g., the PVC component of a plumbing quote) rather than the total labor/global price.
3. The BPC (Formerly VBA) Controversy Matt critiques the Victorian Building Authority's transition to the Building and Plumbing Commission (BPC). AI & Online Exams: The BPC is moving toward a "trust and verify" model, replacing face-to-face interviews with online AI exams and reduced documentation (from 40 pages down to seven). The Risk: The hosts argue this "faster route" may invite "shit builders" into the industry who lack the communication skills and practical experience that an in-person assessor can "smell".
4. Apprenticeship Surge & Labour Targets There is a "bright spot" in industry training thanks to federal incentives. Incentives: A $10,000 staggered incentive for apprentices is driving record commencements. Leading Trades: Carpenters and joiners are leading the way with ~6,400 new starters, followed by plumbers and electricians. State Rankings: Victoria is currently leading the race with over 5,000 new commencements. The 2029 Goal: The Master Builders Association estimates the sector needs 500,000 additional workers by 2029 to meet housing targets.
Shoutout of the Week
Dylan from Alwyn Projects: Recognized for his work in home retrofitting and his upcoming presentation at the SBA event. The hosts recommend following his mid-century project on social media.
More from Mindful Builder
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