Industry Leaders Urge Fuel Exemption Amid COVID-19 Resurgence, Citing Threats to New Construction Projects

The construction industry is on high alert as rising fuel prices evoke memories of the COVID-19 pandemic, when supply chain disruptions led to skyrocketing costs.

The recent conflict in the Middle East, sparked by U.S. and Israeli military actions against Iran and resulting counterattacks, is raising fears of fuel shortages and their impact on industries that heavily depend on fuel.

Denita Wawn, CEO of Master Builders Australia, expressed the growing concerns over increasing expenses in the building and construction sector.

“We are receiving a flood of notifications from building suppliers informing us of increased transport costs due to fuel surcharge levies,” Wawn shared with SBS News.

“Our industry is deeply dependent on diesel, whether it’s for civil construction projects or the countless utility vehicles crisscrossing our cities and rural areas daily to reach various construction sites.”

She said while developers learned to be more conservative in their forecasts following COVID-19, long approval lead times of six to 24 months before a project start mean these additional costs could not have been factored in.

Wawn is urging the government to step in early and consider a fuel carve-out for the building and construction industry.

“It is critical that essential services like building and construction continue,” she said.

“And if that means that fuel rationing has to occur for the betterment of the country as a whole, so be it. Building and construction has to be included.”

Prime Minister Anthony Albanese has not suggested fuel rationing or carve-outs for particular industries to date, instead urging calm.

On Thursday, Albanese reassured Australians that fuel deliveries have not yet been disrupted and established a fuel taskforce to coordinate state and Commonwealth distribution efforts around the country.

“Our fuel supply is currently secure. However, I want us to be overprepared,” he said.

Energy Minister Chris Bowen revealed that 519 million litres of petrol and diesel have been released from the country’s emergency reserves and directed to regional Australia.

He reiterated government calls for people not to panic-buy fuel, explaining it puts strain on the supply chain, which is already adapting to changing international circumstances.

“If demand is double, the supply chain will struggle,” Bowen told ABC RN on Friday morning.

Government’s new homes target at risk

Wawn stressed that transport and material cost increases and disruptions to the building supply chain will hinder efforts to meet the National Housing Accord target of 1.2 million homes before the end of the decade.

“Higher costs for builders will harm productivity and affordability at a time when we need a dramatic increase in housing supply,” Wawn said.

“Since the start of the Accord, a 75,000-home backlog has already accumulated. Unless the federal government pulls the correct policy levers, recent events are likely to worsen the home building situation even further.”

Earlier this week, the Urban Development Institute of Australia released its annual State of the Land report, examining residential development activity across Australia.

It forecasts a shortfall of 380,000 new dwellings by 2030, and a production drop of 11 per cent in 2026 alone, due to rising costs, labour shortages and volatility in the construction industry.

Opposition housing spokesperson Andrew Bragg says the industry has been “bogged down” by high labour and material costs for years.

“Construction costs and labour shortages were already biting before any conflict in the Middle East disrupted global supply chains,” he told SBS News.

“This has only been made worse by the current oil crisis.”

He pointed to 3,596 building industry insolvencies in 2025, according to the Australian Securities and Investments Commission, as demonstrating the “fragility” of the sector.

“Builders and developers are being forced to operate in a system that is increasingly costly and difficult,” he said.

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