Coronavirus Australia: renovation rescue for tradies’ jobs

Direct cash grants for home renovations are being considered as a key plank of a multi-billon building stimulus package.

Scott Morrison flagged a new round of stimulus for the residential contruction sector just last week. Picture: AAP

Direct cash grants for home renovations are expected to be a key plank of a multi-billion-dollar building stimulus package to rescue the housing construction ­industry and save tens of thousands of jobs.

Scott Morrison is also expected to announce $1.75bn in federal funding to the NSW government to bring forward the construction start date to this year for the Western Sydney Airport metro rail line service, with forecasts the project could create 14,000 jobs.

The Australian understands that the stimulus package, which will be the fourth major economic intervention by the Morrison government since the start of the COVID-19 outbreak, is due to be signed off this week by cabinet’s­ ­expenditure review committee.

With the housing sector emerging as the next big economic ­casualty from the coronavirus, the government is considering a cash grants scheme in its housing stimulus package that would ­extend grants for the first time to include home renovations.

The government believes this would provide a more immediate stimulus measure and directly target up to 380,000 tradespeople who have been hardest hit by the economic shutdown and the slowdown in the housing sector.

It is understood that limits or conditions would be placed around the types of renovations that could be included, with the ­industry estimating that the ­inclusion of a $4bn home renovation grant scheme could double the economic return to about $7-8bn.

Treasurer Josh Frydenberg said on Friday significant stimulus measures are not yet finalised. Picture: AAP

While the stimulus package is set to include extending the eligibility of the first-home buyer’s scheme to existing owners in a bid to stimulate the construction of new dwellings over the next year, the inclusion of home renovations in the stimulus would allow money out the door quickly, with many projects not requiring ­development applications or long approvals from local government.

Treasurer Josh Frydenberg briefed state treasurers last Friday on the broader elements of the package but approval for all the ­elements of the “significant” stimulus measures have yet to be finalised.

The government wants to use existing mechanisms to roll out grants and avoid any comparison to the Rudd government’s more controversial global financial crisis stimulus programs such as the pink batts disaster.

The treasurers’ meeting followed the agreement last week by Scott Morrison and the state and territory leaders for the formal creation of a permanent national cabinet structure that would focus its first task on driving job creation.

The Prime Minister last week flagged a new round of stimulus for the residential construction sector amid concerns that the ­collapse in net migration would escalate the slowdown in housing, with forecasts that residential construction could fall by up to 50 per cent.

He said the issue had been a major focus of the talks in the ­national cabinet over the past several weeks, having acknowledged in April that it was a sector that would have to be helped.

“We're very mindful of the areas in housing construction or in parts of the country, whether it be in north Queensland or other places, that are deeply affected and will be more deeply affected than other parts of the country,” Mr Morrison said.

While the housing package would be funded and administered by the federal government, it is ­expected that state and territory governments would roll out complimentary stimulus packages to accelerate residential construction in their jurisdictions.

Master Builders chief executive Denita Warn says a stimulus solution which can be started immediately is needed.

Master Builders Australia, in a submission to the government, pushed for home renovations to be included in a building sector stimulus package, claiming it would not only protect existing jobs but potentially create 24,036 new jobs.

It would also directly target the 400,000 tradies and small building firms that faced a potential ­“catastrophe” within the next 12 months with forward construction work forecast to contract by more than 40 per cent without intervention.

It claimed that renovation grants could be restricted to those with a social or environmental dividend such as energy-efficient constructions or additions and bushfire resistant or cyclone- and flood-proof renovations.

“What we need is stimulus that will kick-off building activity ­immediately across the full range of residential building,” Master Builders chief executive Denita Wawn said.

“Funding renovations is an excellent stimulus measure because the money hits the ground very quickly because red tape is minimised because in many cases they don’t require planning approvals.

“However, the modelling shows that for taxpayers to get the best return on investment in terms of new economic activity generated and jobs created, it should be combined with stimulus for new detached home builds.

“Do both and you support the thousands of small builders and tradies with a ute and dog that you see in every community around the country.”

Modelling has shown that ­extending the first-home buyers grants to existing homeowners and increasing it to $40,000 to build new homes would deliver a $17bn return from a $5.2bn government stimulus investment.

This would provide employment for 58,311 people that would address the 60-70,000 jobs lost in construction so far. The modelling suggested that this would also deliver 14,000 new homes and partly address the shortfall created by the coronavirus crisis.

The Master Builders’ forecasts show that instead of 159,000 new homes being built in 2020-21 there would now be just 116,000.

The industry claims that the worst-case scenario would be the potential loss of 400,000 jobs in a sector that employers about 1.2 million workers. It is estimated that 60,000 construction and building jobs have already been lost since the start of the crisis.