Latest / 360 with Katie Woolf / Master Builders NT CEO Ben Carter says there’s been delays with Defence projects and spending of late which has significant flow on effects for the local economy

Transcript

Master Builders NT CEO Ben Carter says there’s been delays with Defence projects and spending of late which has significant flow on effects for the local economy · 360 with Katie Woolf

• 0:00
  Speaker 1: We have had a number of contractors in the building
• 0:02
  Speaker 1: industry getting contact with concerns that defense spending in the
• 0:06
  Speaker 1: Northern Territory is delayed or no longer happening now. One
• 0:10
  Speaker 1: person had said that two hundred and fifty million dollars
• 0:12
  Speaker 1: of funding had either been pulled or that it was
• 0:15
  Speaker 1: unlikely to happen until a defense review is completed. So,
• 0:21
  Speaker 1: like I said, some quite concerned about the period of
• 0:24
  Speaker 1: time that this is going to be delayed and what
• 0:25
  Speaker 1: it means for those that have got contracts. Now. Joining
• 0:29
  Speaker 1: me in the studio to talk more about this is
• 0:31
  Speaker 1: the CEO of Master Builders here in the Northern Territory,
• 0:34
  Speaker 1: Ben Carter.
• 0:35
  Speaker 2: Good morning to you, Ben Okatie. How are you going?
• 0:37
  Speaker 1: Yeah, really good, Thanks so much for your time, Ben.
• 0:40
  Speaker 1: What is the situation. Has the defense spend in the
• 0:43
  Speaker 1: Northern Territory been seriously delayed?
• 0:46
  Speaker 3: There is a delay, and we are working very hard
• 0:51
  Speaker 3: with defense right now, so try and get some more
• 0:53
  Speaker 3: clarity and also get us some solutions. The problem seems
• 0:55
  Speaker 3: to be there's a confluence of factors. There's the Defense
• 0:58
  Speaker 3: Strategic Review, as you've mentioned, which has created a little
• 1:02
  Speaker 3: bit of uncertainty because that's not clear yet what the
• 1:04
  Speaker 3: government's going to do.
• 1:05
  Speaker 2: However, that's not the main factor.
• 1:07
  Speaker 3: Master builders and most of our stakeholders are fairly confident
• 1:11
  Speaker 3: that certainly there won't mean any less work and in
• 1:13
  Speaker 3: fact could mean some enhanced work in the next few
• 1:17
  Speaker 3: years as.
• 1:18
  Speaker 2: A result of that review. So that's really good news.
• 1:20
  Speaker 3: However, the main trouble seems to be that in the
• 1:23
  Speaker 3: Defense and a Security of State works. In other words,
• 1:25
  Speaker 3: a lot of the projects that smaller contractors are working
• 1:28
  Speaker 3: on in and around Darwin as opposed to the projects
• 1:31
  Speaker 3: have been delayed, and that's a pretty that's a real
• 1:34
  Speaker 3: problem because we want really people from the territory and
• 1:38
  Speaker 3: territories to really understand every day just how important this
• 1:42
  Speaker 3: is for their economy as opposed to the rest of Australia.
• 1:46
  Speaker 3: The defense expenditurey is a huge, massive part of our economy.
• 1:50
  Speaker 3: When people go to the supermarket shelves, they need to
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  Speaker 3: understand that so many people in Darwen and the territory
• 1:57
  Speaker 3: more broadly are really dependent upon this one million dollars
• 2:00
  Speaker 3: on average a year that's been pumped into our comedy
• 2:03
  Speaker 3: by defense, and so this delay is going to be
• 2:05
  Speaker 3: really problematic. Now the work is going to be done.
• 2:08
  Speaker 3: There's no signal from Defense whatsoever that it won't be done.
• 2:13
  Speaker 3: It's an issue of delay, yeah, and it's a pretty
• 2:15
  Speaker 3: random decision that we want Defense to understand because what
• 2:19
  Speaker 3: they've what they're doing is they're doing this internal review
• 2:22
  Speaker 3: from what we can gather, which will cause this massive
• 2:24
  Speaker 3: delay of you know, some months, and for people who
• 2:28
  Speaker 3: are earning their living doing that, that's going to be
• 2:30
  Speaker 3: a real problem. So many contractors in Darwin and around
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  Speaker 3: a territory of geared up to work on defense projects
• 2:37
  Speaker 3: and they've invested in their businesses and for a delayed
• 2:41
  Speaker 3: occur just because Defense is doing an internal review and
• 2:45
  Speaker 3: restructure of how they'll deliver that work is a bit
• 2:50
  Speaker 3: bizarre and it's an example, I think of what we
• 2:52
  Speaker 3: need to make sure the Defense understands that real people
• 2:55
  Speaker 3: in real businesses actually are affected by their decisions and
• 2:59
  Speaker 3: what might seem like a good idea on paper in
• 3:01
  Speaker 3: Canberra affects real people at day to day in Darwin well.
• 3:05
  Speaker 1: And it's something that I know Master Builders have worked
• 3:07
  Speaker 1: so hard on previously to make sure that local contractors
• 3:11
  Speaker 1: were actually winning those contracts as well, you know, from
• 3:14
  Speaker 1: those from those larger companies that are obviously winning the
• 3:18
  Speaker 1: higher tier of the contracts to begin with, but that's
• 3:21
  Speaker 1: you know, the other jobs are subcontracted to local business,
• 3:25
  Speaker 1: so it's something that had been worked so hard on.
• 3:27
  Speaker 1: So those delays realistically, like if you are a contractor
• 3:31
  Speaker 1: that's thinking that you're going to do some work let's say,
• 3:34
  Speaker 1: you know, as an example, at Tindall and and now
• 3:38
  Speaker 1: you're unsure of the period of time that that delay
• 3:40
  Speaker 1: is going to hold out for.
• 3:42
  Speaker 2: What does it mean today? Oh, I'm not sure that
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  Speaker 2: Tindall is the real problem, but it will be.
• 3:45
  Speaker 3: It'll be again, and it will depend a little bit
• 3:49
  Speaker 3: on what work you're already doing. But a lot of
• 3:51
  Speaker 3: this is around the defense of Security of State stuff,
• 3:53
  Speaker 3: so smaller bundles of work, you know, like fitouts and
• 3:58
  Speaker 3: other barracks, work on barracks and things like that. So
• 4:03
  Speaker 3: it's a little bit unclear, but that said, what seems
• 4:05
  Speaker 3: to be the message is that that's going to be
• 4:06
  Speaker 3: the main focus of the delay, and that's a real
• 4:09
  Speaker 3: problem for our contractors, which is why we're working so
• 4:12
  Speaker 3: hard in the next well now and and continuing to
• 4:15
  Speaker 3: do that to get some to talk to the federal
• 4:18
  Speaker 3: government and the Defense and also the NT government about
• 4:20
  Speaker 3: what we can do to to see people through because
• 4:24
  Speaker 3: and also to to try and I guess ameliorate that
• 4:27
  Speaker 3: decision because there's there's it's an internal defense process that's
• 4:32
  Speaker 3: going to result in in this delay. It's not because
• 4:35
  Speaker 3: the work's not going to be done. Even Defense is
• 4:38
  Speaker 3: clear the fact that it's going to be done. And
• 4:39
  Speaker 3: then we need to send that signal to our members
• 4:41
  Speaker 3: and to the into the into the industry that it
• 4:43
  Speaker 3: will be done. The work will be done. And as
• 4:46
  Speaker 3: I said, it's it's likely under the DSR that after
• 4:49
  Speaker 3: the DSR, the Defense Tragic Review, that there will be
• 4:51
  Speaker 3: an enhanced pipeline of work of some of some dimension. However,
• 4:57
  Speaker 3: we need to know what's going to happen now in
• 5:01
  Speaker 3: the next few months. We don't know exactly. Some people
• 5:03
  Speaker 3: are playing saying six months, some people are saying twelve months.
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  Speaker 3: We don't think it will be twelve months. We find
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  Speaker 3: it hard to believe it they will be able to
• 5:09
  Speaker 3: turn a tap off for that long. Nevertheless, this is
• 5:13
  Speaker 3: again another example of Defense need to understand that decisions
• 5:17
  Speaker 3: made around processes like this have a real impact on
• 5:21
  Speaker 3: the ground, for real businesses. And the problem will be
• 5:23
  Speaker 3: also is that once this review, once they're the internal
• 5:27
  Speaker 3: processing review is completed, then there will be in an
• 5:30
  Speaker 3: avalanche of work again.
• 5:32
  Speaker 1: And then you've got to make sure that you're.
• 5:34
  Speaker 2: Able to ramp up and cope with it.
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  Speaker 1: Then what a contract is saying to you right now
• 5:38
  Speaker 1: about these delays.
• 5:40
  Speaker 2: Well, there's a number of angers.
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  Speaker 3: I think what part of this is again is anxiety
• 5:44
  Speaker 3: feeding in because people are aware of the Defense Strategic Review.
• 5:48
  Speaker 3: There's a lot of talk about it in the media
• 5:50
  Speaker 3: and nationally and among politicians. People are concerned, they don't
• 5:54
  Speaker 3: know what's going to happen. And we were certainly urging
• 5:57
  Speaker 3: the federal Defense minister ministers to release, say public version
• 6:01
  Speaker 3: of their review because they need to send some signals
• 6:04
  Speaker 3: to industry and to the community so that they understand
• 6:09
  Speaker 3: what's going to happen in abroad. We of course defenses
• 6:13
  Speaker 3: in charge of fighting wars, and we don't need to
• 6:14
  Speaker 3: know about all the different intricacies of their decisions. And
• 6:17
  Speaker 3: likewise the federal government, but the federal budget will can
• 6:20
  Speaker 3: be coming up, there'll be some strong signals about spending
• 6:23
  Speaker 3: in that and but we want the federal government to
• 6:25
  Speaker 3: prefer that to release a sort of a public version
• 6:27
  Speaker 3: of the of the DSR so that there's some signals,
• 6:31
  Speaker 3: if you like, about what will be coming forward and
• 6:34
  Speaker 3: in terms of what contractors are saying. There's anxiety around
• 6:37
  Speaker 3: that and also a lot of anxiety around this pause
• 6:39
  Speaker 3: because businesses, cash flows everything.
• 6:42
  Speaker 2: Businesses need to be able to sustain and be.
• 6:44
  Speaker 3: Resilient, and it's just you know, it would be very
• 6:48
  Speaker 3: unfortunate if there's a demand collapse that's foisted on us
• 6:53
  Speaker 3: just because Defense is doing a internal restructure of its
• 6:57
  Speaker 3: one process. We are strongly communicating to the federal government
• 7:03
  Speaker 3: to Defense that this is there needs to be there
• 7:06
  Speaker 3: needs to be a way to sustain the smaller contracts
• 7:09
  Speaker 3: in particular, which I think why this is going on.
• 7:12
  Speaker 1: Hey, just very quickly before I let you go, the
• 7:14
  Speaker 1: interest rate rises? What kind of impact is that having
• 7:18
  Speaker 1: on the industry right now?
• 7:20
  Speaker 3: Okay, do you interestrate rises are biding, There's no question
• 7:22
  Speaker 3: about that. However, we have to strongly, we have to
• 7:25
  Speaker 3: strongly understand that inflation is the problem. Flat The interest
• 7:30
  Speaker 3: rates are rising because of the inflation, which is which
• 7:32
  Speaker 3: is the federal government tells us reached the peak of
• 7:35
  Speaker 3: seven point eight percent last year. However, you can tell
• 7:38
  Speaker 3: the federal government is very concerned that inflation is not
• 7:41
  Speaker 3: going down enough. That's the key issue, and that's why
• 7:45
  Speaker 3: the rate rises are going up. So while we're concerned
• 7:48
  Speaker 3: that rate rises are having an impact, inflation is a
• 7:51
  Speaker 3: capacity killer. Inflation is an economy killer, and an inflation
• 7:55
  Speaker 3: is a capacity killer, and if we don't get inflastioned
• 7:57
  Speaker 3: under control, then things will be a lot worse than
• 8:00
  Speaker 3: higher interest rates. And one of the things we want
• 8:03
  Speaker 3: to see from the federal government is that they work
• 8:05
  Speaker 3: closely with the Reserve Bank so they're not at odds
• 8:07
  Speaker 3: in their policy decisions. So the federal government should, for instance,
• 8:11
  Speaker 3: not be making policy decisions that put money into the
• 8:13
  Speaker 3: economy and an inflationary impact while that while the Reserve
• 8:16
  Speaker 3: Bank is trying to have trying to find an incredibly
• 8:20
  Speaker 3: narrow glide path to a soft landing. So this is
• 8:25
  Speaker 3: an issue that did the federal government, and we would
• 8:27
  Speaker 3: hope that you know that our federal representatives in Darwena
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  Speaker 3: and in the territory of communicating this that they need
• 8:34
  Speaker 3: to work with the federal with the Reserve Bank and
• 8:36
  Speaker 3: not work at odds with each other.
• 8:38
  Speaker 1: Well Ben Carter, the CEO of master Builders here in
• 8:41
  Speaker 1: the Northern Territory, We will have to leave it there.
• 8:43
  Speaker 1: Thank you, as always for your time this morning.