Building industry lobby groups have given a mixed appraisal to the Commonwealth budget, with industry broadly welcoming measures on housing affordability but some groups claiming that the budget has missed opportunities to improve productivity and has not gone far enough to deliver new housing supply.

The 2023/24 Commonwealth Budget was unveiled by Treasurer Jim Chalmers on Tuesday.

Overall, the Treasury is forecasting a budget surplus over the current financial year of $4.2 billion – the first time a surplus has been forecast since 2008.

The surplus has been achieved on the back of high commodity prices, a strong job market and a boost to net migration.

However, the surplus will be short lived and the budget is expected to return to a deficit of $13.9 billion in 2023/24.

The budget also offered further cost of living relief for families as well as more support for welfare recipients in terms of a $40 per fortnight increase in the Jobseeker Allowance and a 15 percent increase to Commonwealth Rent Assistance.

From the viewpoint of the building and construction sector, the most important budget measures revolve around housing, skills and infrastructure.

In regard to housing, key measures include:

  • increasing the maximum rate of Commonwealth Rent Assistance by 15 percent.
  • reducing the withholding tax rate for eligible fund payments from managed investment trusts attributed to newly constructed build-to-rent developments from 30 to 15 per cent
  • increasing the capital works tax deduction (depreciation) rate from 2.5 per cent to 4 per cent per year, increasing the after-tax returns for newly constructed build-to-rent developments
  • increasing the National Housing Finance and Investment Corporation’s liability cap by $2 billion to a total of $7.5 billion to enable NFIC to support greater lending to community housing providers for social and affordable housing projects; and
  • expanding the eligibility criteria for the First Home Guarantee and Regional First Home Guarantee to cover any two eligible borrowers beyond married and de facto couples and non-first home buyers who have not owned a property in Australia in the preceding 10 years.

Meanwhile, the budget also included important measures on infrastructure, skills and small business.

Regarding infrastructure, new investments focus on the transition to clean energy.

These include:

  • $2 billion in a new Hydrogen Headstart program designed to help Australia to become a world leader in producing and exporting hydrogen power
  • establishment of a Net zero Authority to assist industry, communities and the workforce in the clean energy transition
  • $4 billion in further funds to help facilitate the nation’s future as a renewable energy superpower, including part of the $15 billon National Reconstruction Fund to support the development of green industry; and
  • a new Capacity Investment Scheme that will unlock over $10 billon worth of investment in firmed up renewable energy projects along the east coast.

On small business support and skills, measures include:

  • a $20,000 instant asset write-off
  • a new Small Business Energy Incentive to support investments in power saving assets
  • new help for small business to adopt and adapt to digital technology
  • $3.7 billion to facilitate a revamped 5-year national skills agreement with the states and territories
  • creation of 300,000 fee-free TAFE places
  • expanded access to foundational skills to enable Australians aged fifteen years and older to develop the language, numeracy and digital skills which are needed in the modern workplace; and
  • encouraging more women into apprenticeships through a new Australian Skills Guarantee

Building industry lobby groups have given a mixed response, applauding the measures on housing and skills but suggesting that important opportunities have been missed.

In a statement, Master Builders Australia CEO Denita Wawn welcomed some of the measures specific to small business, skills and affordable housing.

But she said that the budget missed an opportunity on bigger picture issues such as boosting productivity and unlocking housing supply.

“The measures to support SMEs on specific issues including greater flexibility for the ATO to support small business navigate tax issues, increase to the instant asset write-off, small business energy incentive and relief fund, and digital technology uptake will be of assistance,” Wawn said.

“Nevertheless, it was disappointing that business productivity was not a centrepiece of the budget.

“With the challenge of rising interest rates and high inflation, the federal government has failed to provide big picture fiscal policy measures to tackle this head-on and instead opted for a potential inflation-building pathway.”

Wawn also welcomed the housing measures referred to above but stressed that further action is needed to unblock new housing supply.

She expressed disappointment that the government has thus far failed to act on commitments under the Housing Accord announced in the last budget to identify suitable Commonwealth land for social and affordable housing and to extend the Australian Skills Guarantee to include apprentices on Government-funded housing projects.

Other industry bodies were more positive in their budget appraisal.

“It’s hugely positive to see the May Budget take further steps to bolster housing attainability, ownership, affordable and social housing, as well as removing some of the inhibitors to Build to Rent,” said Max Shifman, national president of the Urban Development Institute of Australia.

Meanwhile, engineering and civil construction groups have welcomed efforts regarding infrastructure.

In a statement, Engineers Australia CEO Romilly Madew welcomed the budget measures to accelerate the clean energy transition and to review the overall infrastructure program.

Finally, the Australian Constructors Association CEO Jon Davies welcomed the inclusion of funding to establish the National Construction Industry Forum, which will provide a tripartite forum to help transform the construction industry.


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