Construction industry calls for new stimulus to back SMEs

Master Builders Australia is calling for billions in stimulus measures in the October budget to support the building and construction industry through the devastating demand shock that is forecast to hit in 2020-21.

“Our modelling suggests that an investment of $3.8 billion will deliver a boost of $6.8 billion to GDP and create 13,000 new jobs,” said Denita Wawn, CEO of Master Builders Australia.

Master Builders has also asked for the extension of the HomeBuilder grant scheme by 12 months, calling it the “most effective government stimulus measure in a decade”.

“A 12-month extension of HomeBuilder will boost GDP by between nearly $4 billion and $4.5 billion, create more than 4,500 new jobs and result in up to 6,200 new dwelling starts,” Ms Wawn said.

“Our call for these measures is backed up by our latest forecasts, which show the sheer scale of the challenge our industry faces.”

Master Builders said that despite the positive impact of the HomeBuilder grants, it has downgraded its forecast for the housing sector by 25 per cent for 2020-21 and is now predicting a 27 per cent fall in homebuilding activity compared with 2019-20.

“Commercial construction activity is forecast to slump by 17 per cent. You will not see many cranes in the sky, and it will mean that thousands of businesses are at risk of simply exiting the industry along with the thousands of jobs that they provide,” she said.

“Our industry is facing a bloodbath, there is simply no other way to describe it. Private sector investment is evaporating, and the government must step in to save businesses and jobs.”

She explained that residential and commercial construction respectively have the second and third largest multiplier effect in the economy, which means a potentially disastrous day at the office for thousands of other businesses in the building supply chain and the broader economy.

“CommunityBuilder would involve the federal government providing grants to not-for-profit and local grassroots community organisations to help fund the construction of new facilities or the substantial renovation of existing ones,” Ms Wawn said.

“The government could set the parameters at funding 25 per cent of projects costing up to $5 million and like HomeBuilder the beneficiary of the grants would need to put up the rest of the money and also receive additional assistance from state and local government.”

Noting that HomeBuilder has resulted in home builders having the best months in terms of sales in a decade, Ms Wawn said CommunityBuilder would have the same effect and see new or enhanced community centres, libraries, school buildings and sporting facilities.

“Grant recipients having skin in the game would mean they would be highly motivated to ensure that builders provided value for money and a three-year window would ensure there sufficient competition to ensure costs don’t blow out,” Ms Wawn said.