Interview with Ron Wilson, 2SM

Date: 17 January 2025, 7:05am AEDT
Speakers: Denita Wawn, CEO Master Builders Australia
Topics: Engineering construction, housing crisis, economy, Federal Election

Ron Wilson, host 2SM Breakfast: At six minutes after seven o’clock, new data from the Australian Bureau of Statistics shows that 3.3 per cent increase in the volume of engineering construction work during the final quarter of 2024. Now this was driven by a strong 5.5 per cent expansion in public sector projects, while private sector work saw a lot more modest increase of just 1.4 per cent. A well performing construction sector is good news for the economy, and of course, provides an optimistic outlook for addressing pressing issues like the housing crisis. Denita Wawn is the chief executive of Master Builders Australia, and she joins us now live. Denita, good morning.

Denita Wawn CEO Master Builders Australia: Good morning, Ron.

Ron: In the last report we had from the Reserve Bank of Australia, the governor said that government spending had a lot to do with the maintaining of a very high inflation rate. But when it comes to investment by the government in things like these projects, in construction, that’s got to be a whole different ball game.

Denita: Yes, that’s right. We have to ensure that we have appropriate infrastructure to enable growth in our communities. We can’t build houses unless we have roads to new suburbs. If we don’t have electricity to new suburbs and so forth. And of course, we need increased productivity, and that only occurs if we’re having massive transport hubs, such as the new Sydney Airport. So that is the big issue around public infrastructure. But equally, concerns remain that we have a really low level in private investment in infrastructure, which again, has an implication on trying to resolve the housing crisis.

Ron: Is that, is that purely, is that purely a lack of confidence, though, in the private sector?

Denita: Yes, it is unfortunately. We’ve seen a 40 per cent increase in the cost of construction over the last five years, and when you combine that with higher interest rates that are stubbornly staying at that level. Also, combined with people around the cost of living, the investment in our housing industry, whether it’s from big institutional investors right through to mum and dads, is declining significantly. And so, if we don’t get our infrastructure right, and the subsequent investment by private investment, then that is causing an increase in terms of that housing crisis, which is of concern to us.

Ron: Is it an egg and chicken sort of situation? Does the government need to spend to get private investment motivated? Or is it the other way around?

Denita: It’s actually, bizarrely enough, the other way around. If we don’t get inflation down in this country, then investors won’t invest. It’s as simple as that. So while public infrastructure to facilitate private investment is important, the overall government spending does need to reduce, as the RBA has indicated, so we can get inflation down, and as a consequence, see an increase in private investment, because inflation is down, and hopefully those stubborn interest rates are down as well.

Ron: Well, I’m associated with the hospitality industry, and I can tell you just how, what a struggle it is out there these days for, you know, any kind of hospitality business. How does the construction industry, generally, the construction sector, compare to other sectors of the economy?

Denita: Well, we know first of all that the more you spend on construction, the better the economy is. But unfortunately, other than civil construction, commercial and residential construction is in the doldrums. We are seeing a decline in investment. It’s an increase in government spending in housing, for example, in public and social housing, but we’re seeing an overall decline in that private investment. And as a consequence, we’re building a lot at the moment, but our forward books are not looking great, so that’s a really big issue coming into this election – economic management. How do we make an environment where private sector, whether large or small, are willing to invest? And we’re seeing that across the economy, and seeing the implications such as you say, with the hospitality industry, where people are saying, no, I just don’t want to go out. With us, they’re saying no, we’re not going to renovate. We’re not going to buy and build a new house and so forth. And that is a big concern to our economy at large.

Ron: You mentioned the election coming up. What sort of commitments would you be looking for from either of the major parties?

Denita: Well, first and foremost, it’s the issue around economic management. Cost of living is the biggest issue facing the Australian community at the moment. So, for us, the economy is critical. Who is going to manage the economy effectively? So, we can reduce the stress on the community. For us, it’s also about, what are you going to do to facilitate private investment in housing? We do have a housing crisis in this country, whether it’s owner occupier or rental, and we can’t rely on government spending alone. So how are we going to facilitate private investment in housing? They are our two really big key things. But of course, we can’t forget, we need people to build, and we need more money towards apprenticeships and encouraging more migration of skilled people into this country to build for all Australians.

Ron: Such a big question, Denita. Thanks very much for joining us this morning. I appreciate it.

Denita: Pleasure, thank you.

Ron: Denita Wawn, she’s the chief executive of Master Builders Australia.

Media contact:
Dee Zegarac
National Director, Media & Public Affairs
0400 493 071
dee.zegarac@masterbuilders.com.au