Builders pitch for $5.1bn to avert corona ‘bloodbath’

Australia’s building industry is pushing for $5.1bn in additional stimulus packages to protect jobs and avoid a COVID-19 ‘bloodbath’.

MBA chief executive Denita Wawn, centre, on a Manteena construction site in Canberra with its CEO Simon Butt and project manager Jemma Butt. Picture: Sean Davey

Australia’s building industry is pushing for $5.1bn in additional stimulus packages to protect jobs and avoid a COVID-19 “bloodbath”, as grim new forecasts predict a dramatic slump across the residential and commercial construction sectors.

The nation’s peak building lobby group will reveal dire outlooks for the sector on Monday, forecasting a 27 per cent drop in residential building activity and the largest dive in commercial building activity since 1976.

Master Builders Australia is pushing the Morrison government to back a new $3.8bn CommunityBuilder scheme, supporting the commercial construction sector through funding boosts for projects valued up to $5m, and a 12-month extension to the HomeBuilder program.

As the federal government closely monitors construction activity, made worse by the second wave of COVID-19 infections in Victoria, Josh Frydenberg on Monday will deliver a major boost for tradies across the country under a new national licensing framework.

The Treasurer said the plan — backed by state and territory treasurers — would cut red tape and allow workers including builders, electricians, plumbers, property agents and teachers to have their licences recognised across Australia.

“This will especially assist our tradies apply their craft around the country without having to get individual licences in each state or territory if they are working across borders,” Mr Frydenberg said.

“Currently, there are over 800 different licences in manual trades alone, with around 20 per cent of workers in the economy required to be licensed.”

Ahead of the October budget, Master Builders Australia chief executive Denita Wawn has outlined new stimulus supports for the construction sector, which she said would create almost 18,000 jobs and boost economic growth by $11.3bn.

Ms Wawn said the projected 27 per cent fall in home-building activity, up from a previously forecast decline of 16 per cent, and 17 per cent drop in commercial construction activity, would ­deliver a “bloodbath” in 2021.

“Residential and commercial construction 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,” she said.

“You’ll be lucky to see too many cranes in the sky with a nearly 20 per cent collapse in commercial building activity. That will mean thousands of businesses will simply exit the industry along with the thousands of jobs that they provide.”

Under the MBA CommunityBuilder proposal, the federal government would cover 25 per cent of new commercial projects valued up to $5m, which could ­include community halls, sporting facilities and extensions to aged-care homes.

With HomeBuilder delivering construction firms the “best months in terms of sales in a decade”, Ms Wawn said a 12-month extension would stimulate ­activity well into next year.

“A 12-month extension of HomeBuilder will boost GDP by between $4bn and $4.5bn, create more than 4500 new jobs and result in up to 6200 new dwelling starts,” she said.

The Australian understands the Morrison government is closely watching COVID-19 ­developments in Victoria, which accounts for one-third of the ­nation’s new housing market, and was committed to delivering ­additional support if required.

The government is unlikely to move on extending the $680m HomeBuilder before the October budget because it wants to maximise the demand-driven scheme ahead of its December 31 deadline. As of Friday, 42,427 Australians had registered for the HomeBuilder program, including 11,483 in Victoria who have been handed a three-month construction commencement extension by the Victorian State Revenue office.

Treasury had estimated about 27,000 Australians would take up the $25,000 grant scheme, supporting new home builds and major renovations. The Australian understands strong interest in the construction stimulus package could drive applications up to 40,000.

As the national cabinet ­attempts to keep as many Australians in jobs and off JobKeeper payments, Mr Frydenberg said the new licensing framework would help provide automatic recognition of qualifications across the country.

The framework, expected to take effect from January 1, will “prioritise implementation of a uniform scheme to support widespread occupational mobility via automatic recognition … subject to the passage of legislation in individual jurisdictions”.

Mr Frydenberg said the “current mutual-recognition regime for licensed occupations across Australia is complex, costly” and imposed an “excessive regulatory burden on businesses that operate across jurisdictions”.

“A uniform scheme will make it easier and less expensive for businesses, professionals and workers to move or operate within jurisdictions and across Australia, thereby creating jobs, increasing output, competition and innovation, and resulting in lower prices for consumers and businesses,” he said.

John Ripp, director of prominent WA construction firm EMCO Building, said while the immediate hit to housing construction was “catastrophic”, the commercial building sector was preparing for a significant downturn next year.

“Most commercial builders would have had a forward workload. That can range from about six to 12 months. As that starts to peter out, you start looking for more work. But right at the moment all that work has come to a halt,” he said.

Mr Ripp said the CommunityBuilder program, which would ­involve a buy-in by a proponent, would not operate like Kevin Rudd’s Building the Education Revolution scheme.

“Unlike the BER where there was no buy-in by the community at large, this proposal actually talks about getting support from the government but also getting buy-in from the people who are most likely to use it,” he said.

Simonds Group chief executive Kelvin Ryan — who runs one of the nation’s top homebuilding groups — said while the HomeBuilder scheme had been effective in keeping tradies in work, more support would be needed.

“HomeBuilder has been a really good shot in the arm but the industry needs a bit more than that. There’s a very strong appetite in the marketplace for it, notwithstanding a good commercial case,” he said.