'Couldn't have happened at a worse time': Tradies losing as war drags on

Tradespeople are losing out as the cost of fuel and building material soars due to the war in Iran but they remain locked into fixed price contracts.

It could force some out of business, or push much-needed apprentices out of trades entirely.

"These flow-on effects from the Middle East conflict could not have happened at a worse time for the industry," executive director of Master Builders NSW Matthew Pollock said in a statement.

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"They are compounding the effects of stubbornly high inflation and the morass of unnecessary, inconsistent and contradictory regulation that is strangling productivity."

Have you got a story? Contact reporter Maddison Leach at mleach@nine.com.au

Most of Australia's construction industry operates on fixed price contracts, meaning the customer agrees to pay a set amount for a project before it begins.

It's great for customers, as it means the price they pay won't suddenly spike if the cost of fuel or building materials increase while the project is in progress.

But right now, it's costing tradespeople dearly.

"[It] means that builders are exposed to significant commercial risk when there is extreme supply chain volatility," Pollock said.

"Spare a thought for our members who can't pass on rising costs from the current fuel shock because they are locked into fixed price contracts."

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Some suppliers and service providers have worked with builders to help ease the rising cost of fuel and materials as the war in the Middle East rages on.

Others have been quick to pass on price hikes in full, putting Australian builders in dire financial straits.

"Once a fixed price contract is signed, which due to the building approvals process often happens some time before construction commences, builders have to cope with cost fluctuations that occur between that point and the completion of the project," Pollock said.

The conflict in Iran is causing major fluctuations that some builders may not be able to keep up with.

Tradespeople already raised the alarm about having to hike prices or face going out of business due to the rising price of fuel and materials.

Struggling apprentices have also been forced to consider alternative careers because they can't afford petrol on top of living costs.

Now Pollock has revealed some employers are standing down apprentices because they just can't afford to keep them on as cashflow and profits decline.

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It's bad news for the Australian building industry, which is currently facing a dire shortage of tradespeople.

"This is the absolute worst thing that can happen at this time," he said.

Pollock is calling on the NSW Government to support the industry by allowing for more leniency around contracts and extensions for projects delayed by supply chain issues.

He also suggested temporary tax relief measures where appropriate.

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