Australia’s housing minister has backed in the nation’s construction industry, confirming that the sector will benefit from a stimulus package on which the government is working as it seeks to restart the economy after COVID-19.
In a webinar hosted by the Urban Development Institute of Australia, Minister for Housing and Assistant Treasurer Michael Sukkar did not make any specific policy announcements.
Nevertheless, he confirmed that the housing sector will be a key focus of a stimulus package on which the government is working.
“We find ourselves now well and truly moving out of that phase as many of you will know as hibernation … to how we harness the outstanding health outcomes that we have been able to achieve to deliver some real economic benefits,” Sukkar told the audience.
“At this point in time, I think it is fair to say that the Government, the Prime Minister, the Treasurer, myself and others involved with the economic settings are looking at where we can undertake targeted support for particular areas of the economy that are going to be hard hit, that can generate prosperity and can generate wealth and jobs for our country.
“There is no doubt that broadly speaking, the construction industry and residential construction in particular is going to play a big part.
“Its fair to say – and it’s very hard to keep secrets in Canberra as I am sure you are all aware – we are actively considering and working on proposals to underpin a workforce of anywhere between three quarters of a million to a million people (the construction workforce) who generate so much wealth and prosperity in our country.”
Sukkar’s comments come amid concerns that activity in the building sector will be hard hit as a result of COVID-19.
During the coming financial year of 2020/21, Master Builders Australia says it expects COVID-19 to result in 44,446 fewer dwelling commencements and a loss of $7.18 billion worth of construction work in commercial building.
This, it says, could result in a potential loss of 464,300 jobs in direct construction and 171,600 jobs across other sectors which support the construction sector.
In response, Master Builders has called for $13.2 billion in industry stimulus measures including a $40,000 uncapped new home building grant; a renovation funding program designed to make homes more accessible and resilient and commercial building initiatives including funding for cladding rectification, reduced developer charges and greater government spending on infrastructure related to health, defence and education.
According to Master Builders, EY modelling which it commissioned showed that the $13.2 billion investment would increase GDP by $30.9 billion, create 105,500 new jobs in construction and related areas and expand construction activity by $17.6 billion.
In its own plan, the UDIA has called for eight actions across four areas which include:
- a housing stimulus fund worth more than $4 billion
- a commitment to clearing the backlog of work under assessment via the Environmental Protection and Biodiversity Conservation Act
- a second tranche of 10,000 places under the first Home Buyers Deposit Gap Scheme
- supporting the return of immigration levels to 200,000 over financial years 2021 and 2022 subject to health protocols.
In his presentation, Sukkar said the Government would be guided by several considerations.
Whilst primary responsibility for housing policy rests with states, he says the Commonwealth is keen to play a role in interventions which are specifically targeted.
As examples, he points to past initiatives such as the First Home Loan Deposit Scheme through which the Commonwealth guarantees up to 15 percent of the value of properties purchased for participating first home buyers, a downsizing scheme introduced in 2018 to enable those over 65 to sell their homes to make one-off deposits of up to $300,000 in their superannuation fund and the First Home Owner Super Saver Scheme introduced in 2017 to enable young Australians to make voluntary concessional contributions into their superannuation fund in order to save for their first home.
Each of these interventions, Sukkar says, addressed specific market needs.
The downsizing scheme helped older Australians to relocate to more suitable housing whilst freeing up larger homes for families.
The deposit scheme, meanwhile, has helped to bridge a gap which occurred after the amount of deposit which home buyers need to raise in order to be granted home loans increased from around five percent of the value of their home to in some cases up to 20 percent of the value of their home as more restrictive lending practices set in in the wake of the Royal Commission.
Another area which Sukkar sees as important involves greater alignment of federal migration settings and state/territory housing/infrastructure provision.
On this score, he says the new Population Centre led by Alan Tudge could play a pivotal role.
Also important in informing this will be research by the National Housing Finance and Investment Corporation (NHFIC).
Sukkar says priorities in the stimulus will involve boosting the economy through building and construction along with mitigating any impacts on housing affordability which originate through this crisis.
“In essence, what we will seek to do is two things,” he said.
“(First,) Focus on how we generate enough activity to keep people on building sites and not just on building sites but all the associated work that is involved – the designing, the architects, the planning, the sales staff …
“That will be the focus of interventions that the government will take for the housing market.
“Just as important in the medium to longer term will be trying to avoid a circumstance where we see a significant slowdown in housing supply now that has serious consequences down the track for in in terms of much worse housing affordability outcomes”
“We all know – everyone on this conference I’m sure is aware – that if we see immediate sudden shocks as we have with the coronavirus pandemic that significantly reduce supply even for a short period of time, whilst that won’t be felt immediately, at some point a day of reckoning will come and the outcome will inevitably a worsening housing affordability outcome.”