It is very hard to predict what the rest of 2021 has in store. More COVID-19 induced lockdowns? Exhausting discussions about our governments’ various virus responses? Crowds or no crowds at the MCG, large groups (or not) at restaurants or in our homes? A furiously busy housing market, with genuine uncertainty beyond year end? Supply concerns and almost daily news of price increases? All are necessary contemplations. Most are gloomy, discouraging and serious. Our predicament is undoubtedly surreal. How did the world come to this? Think, for a moment. If, 12 months ago, I had suggested in these pages we would all be wearing face masks, unable to travel and more than a million people would die from a virus we were yet to hear of, my team would have called me insane. Yet, here we are.
In a group chat with some old friends on Viber, (yes, I think we might be the only people in the world using Viber for a chat) we raised the idea of someone or some group, somewhere, sitting above us all, playing with our lives like kids moving plastic toy soldiers or Barbie dolls. At this thought we remembered and then shared a clip from an early 1990s movie, ‘So I married an Axe Murderer’. Mike Myers ludicrously suggests there is a secret society, known as The Pentaverate, who run everything in the world. This group of five includes the Queen, the Rothchilds, the Vatican, the Gettys and Colonel Sanders – “ … before he went tits up.” https://youtu.be/TPMS6tGOACo
While the idea of The Pentaverate is pure fantasy, it is a useful comedic metaphor to illustrate the predicament in which the world finds itself. It injects some well needed humour into what has otherwise been a dour year of seemingly unlimited, weighty issues and troubling politics. So much is not making sense. How could it have possibly come to this? Beyond the idea of a world turned on its head, is the number of contradictions we are required to deal with. So many incongruous, paradoxical events to occupy our attention. I would like to unpack a few.
The Victorian Government locked us down, again, in early February; this time with all construction sites included in their directive. I believe I am right in saying no ‘unlinked’ cases were found over the five days we hid from the more virulent ‘UK strain’ of the virus. We went into stage 4 plus, yet when the reins were loosened and virtually no cases identified, we did not go back to where we were prior to day 1. Masks continued to be mandated for all indoor environments and welcoming well-meaning visitors felt like a criminal activity. As the days of zero cases extended, our lives of normality appeared further away.
A little over eleven months ago the majority of us predicted our building industry was heading for devastation, only a contrarian could have envisaged the high volume of activity now in evidence. House building contracts have spiked sharply, with the number of residential building approvals rising 10.9 percent m/m and 22.8 percent y/y, in December, to an annualised rate of 234,000 dwellings. As Bowens and Timbertruss supply very little to the high-rise market, it has been encouraging to see growth in detached housing of 55 percent over the twelve months – the highest level of activity since records began more than sixty years ago. (Macquarie Research Department, Feb ‘21)
While housing is not what we predicted, the improved activity is easily followed. Not so the contradictory issues around employment. Job Keeper and Job Seeker were winners for the Federal Government and the Australian public. In late March last year, these initiatives smelled of policy-making on the run. Not so, it turned out. They got it right and should be congratulated. In the same vein, their decision to draw a curtain on these initiatives in March also makes sense. In recent months both Timbertruss and Bowens have struggled to fill employment gaps. I know many of our suppliers are in the same boat and a friend of mine in Geelong is not going ahead with a significant investment in his manufacturing business because he does not believe he can find the additional one hundred staff required. All around us the evidence in: fruit pickers, construction jobs, engineering roles, truck drivers … the list of job opportunities appear endless. However, complaints of an impending rise in unemployment dominate nightly news bulletins.
Groups involved in supporting the underemployed are screaming about the Government’s programs being pulled, despite the official unemployment number continuing to reduce, as it has done since July last year. Paradoxically, wage growth remains as low as it has been since the early 1990s. The varying data points don’t line-up for me.
Opposing forces continue, wherever we look. Price increases in building materials have been gathering pace since the third quarter of 2020, no product group has been spared. I don’t know any other industry not complaining of the same; from housing to groceries, it feels like ‘everything’ is more expensive. Nevertheless, inflation remains stubbornly low.
Victoria experienced the worst of Australia’s lockdown, yet it is the state with the largest increase in residential building. The Vic spend on dwelling construction has surpassed NSW for the first time since late 2014. (ABS, Jan ‘21) Immigration numbers have dropped off a cliff, yet the industry’s confidence appears to be unshakable.
With so many incompatible happenings, it would be fair to say we are living in a new paradigm. The best of us will use our changed environment to find success, perhaps in ways different to the past. In this regard I’d like to leave my final words in the hands of the Rector at my boys’ school. In his February newsletter Father Chris wrote, “Reality checks are a part of life. Covid has been a massive reality check for the global community … hardly one aspect of life has not been touched or altered by its impact … our experience of reality checks can lead us to despair, or a loss of hope, or we can surrender to a simple fatalism, ‘stuff happens’ that we can’t do anything about. Or, reality checks can lead us to the realization that life is too precious to waste a moment; we can make the choice to make the most of the opportunities life presents. We come face to face with what is really important in our lives, with what matters most.”
Whether or not our opportunities are immediately rewarding, I like the idea of making the most of what we are provided. Even so, I still hope the Pentaverate is looking favourably upon us all.