The 2020 Budget is over and, as expected, is full of spending measures. We’re only a few years away from a trillion-dollar debt but the interest payments on that debt are about the same as they were back in 2018/19, so no problem, right? Well, not quite, but good for now given that we have massive unemployment and a desperate need to recreate the jobs lost from government reactions to COVID-19, writes trades and construction expert Steve Chandler.
Jobs first, debt later, but at what long term cost?
Let’s talk about building and construction. These are two very different things. Building is more related to, funnily enough, buildings, whereas construction is more akin to roads, bridges, dams, pipelines, power stations and major infrastructure works.
For the construction sector, it was pleasing to see $14billion more investment in infrastructure projects, $2billion in water infrastructure, $2billion for road safety upgrades and $1billion for local council road and path upgrades. But building only had one real opportunity, $1billion of low-cost finance for affordable housing, which may not even be utilised to build new accommodation, it may simply be used by Community Housing Providers to retire more expensive debt.
Whilst the above is all good news for the construction industry in general, only a small portion of it will directly benefit builders and trades.
There will be the flow-on effects of the government’s massive spending measures through business assistance schemes such as 100% asset value write-offs and offsetting losses back to 2018/19 tax year, but the problem remains that builders and trades need to have work to utilise these benefits.
Builders and trades are at the mercy of everyone else recovering from COVID-19. The measures outlined in the Budget must be implemented, actioned and successful before any beneficiary of those measures, employees, will choose to spend money on building or related services.
What about JobMaker?
The new JobMaker hiring credit whilst good, won’t make much difference to builders and trades for quite some time as the Budget measures filter through the economy over the next couple of years to finally generate work for the building industry.
The 340,000 free or low-cost training courses offered by the government might be utilised by many builders and trades looking to reskill into other industries to get a job. And as for the $1.2billion to create 100,000 new apprenticeships via a 50% wage subsidy, it’s unlikely that many of the new apprenticeships will be with builders or trades.
What the building industry needs now is work. HomeBuilder assisted the project home builders to fill their forward books whilst apartment builders received basically nothing from HomeBuilder and have little forward work whatsoever. Some of the building industry has benefited from HomeBuilder but it’s nowhere near enough.
The building industry and the economy
With the building industry being such an important component of the economy and as it imports such a major quantity of building product from overseas, it would have been reasonable to expect that the industry was mentioned in the sovereign manufacturing plan, but not so. This was an opportunity lost.
For builders and tradies the short-term outlook is bleak. First, the economy has to recover, then property developers must regain confidence in the property market before they are willing to start a project. Those projects may also need to obtain authority approvals before they can actually commence. Would you like to be a builder or tradesperson over the next couple of years?
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