Urgent stimulus needed to keep building and construction businesses viable and people in jobs

The Federal Government must urgently provide a new and expansive stimulus package with measures targeted to keeping the building and construction industry and the broader economy strong in the face of the Covid-19 shock.

Master Builders Australia CEO Denita Wawn said, “Building and construction is vital to the national economy and to local communities right around the country. The livelihoods of the 1 in 10 Australians employed in the industry are at stake as is the viability of the nearly 390,000 small businesses that make up the industry and the thousands of enterprises that supply them.”

“Master Builders commends the Federal Government for the measures it has already announced including the $17.6 billion package for small businesses and households and also the move by the Reserve Bank to provide funds for banks and non-bank lenders to provide support to small businesses through this challenge,” she said.

“They are important measures, but builders and tradies will not have the necessary confidence to take up tax incentives or keep employees and apprentices on their books if they do not have a pipeline of work,” Denita Wawn said.

“We are calling for measures such as commissioning local builders to immediately commence maintenance, refurbishment and renovation works on government buildings and facilities around the country. This will not require extensive planning, could be actioned quickly and will provide work for thousands of small businesses in local communities,” she said.

“Bringing forward already budgeted spending on social and transport infrastructure projects, for example, accelerating construction work on projects under way by spending the money allocated for 2021 now will provide an immediate boost,” Denita Wawn said.

“Broad eligibility and simplicity of application and tendering is also important. Too often stimulus measures cannot be accessed by many SMEs due to restrictive eligibility criteria. The shackles must come off and money must be immediately injected into the economy by ensuring that eligibility requirements are as broad and as simple as possible. Giving stimulus measures sunset clauses will ensure that they are targeted only to meet the present danger,” she said.

“These measures could also easily be replicated by state governments and local councils to great effect,” Denita Wawn said.

“The Government must also urgently address the major threat to current building and construction projects posed by the potential enforcement of liquidated damages clauses due to delays caused by  a  range of Covid-19 related factors including compliance with government measures to slow the spread of Covid-19 such as social distancing, supply shortages and/or labour shortages due to quarantine arrangements,” Denita Wawn said.

“The threat of millions of dollars in liquidated damages will quickly be hanging over the heads of the nation’s major construction companies and thousands of sub-contractors and threatening their viability. Many businesses will be compelled to close their doors with a resulting loss of jobs that will hurt families and communities,” Denita Wawn said.

“If clients including developers take commercial advantage of the impact of Covid-19 it will devastate the industry and the national economy. Master Builders has called on the Federal Government, to urgently announce that they will not pursue liquidated damages in Commonwealth contracts due to impacts of COVID-19 and that they send a strong signal to private clients that they should follow their example,” she said.

“Importantly, the stimulus measures which we are calling for will deliver long-lasting benefits to the economy and the community which will help us bounce back and also help the Government achieve its policy objectives. We currently have under investment in housing, commercial buildings and civil infrastructure to meet our future population demands so money spent now in the building and construction industry will also pay-off in the long-term,” Denita Wawn said

Master Builders Australia Proposed Stimulus Measures

Housing

• Support ongoing building of house and land packages through interest free loans for a component of the cost, for example 25 per cent for title ready blocks. Housing developers, big and small, will be hit by a dramatic fall in sales for new homes due to anxiety over a potential recession but this will rebound meaning the risk of default on the loan would be minimal. This is needed to keep builders on the job, employing people and paying their tradies.
• First Home-Owner Grants of $40,000 for those buying or building new homes to 30 September 2020.
• Expanding the number of First Home Loan Deposit Scheme loans & ringfencing the majority for new homes only.
• Expand eligibility of those who can apply for federal funding for social and community housing through NHFIC.
• Instant tax write-off/extension of negative gearing for property investors to undertake renovations to rental properties (currently can only claim maintenance) that could include upgrades that provide for the home to be more energy efficient which in turn assists in reducing living costs.
• Financial support to home owners through the use of a registered building practitioner to facilitate home renovations on properties that are pre 6 star requirements to enable them to be more energy efficient (eg change in windows, improved heating/cooling appliances etc) and/or make home more accessible for elderly to maximise ability to stay in their own home for longer.
• Contribution towards cladding rectification on apartments.
• Work with State and Territory Governments to fast track planning approvals.

Commercial and Civil Construction

• Bring forward spend on approved infrastructure projects (infrastructure is used in its broadest sense to include heath, education, community, social, remote and defence) but also bring forward milestone payments. That is, bring forward expenditure that has already been allocated in the forward estimates.
• Identify new infrastructure projects (infrastructure is used in its broadest sense to include heath, education, community, social, remote and defence) with an initial focus on refurbishments or maintenance.
• Recommend officials keep the work packages small and not transfer all risk which will increase the number of SME businesses that can tender.
• Contribution towards cladding rectification on commercial buildings.
• Work with State and Territory Governments to fast track planning approvals.
• Bring forward spend on approved Transport infrastructure projects but also bring forward milestone payments. Recommend officials don’t bundle the contracts or transfer all risk which will increase the number of SME businesses that can tender.
• Expand eligibility and funding for civil infrastructure development of housing estates (currently undertaken through NHIF in limited form) to incentivise developers to release land supply to make it shovel ready for housing.
• Work with State and Territory Governments to fast track planning approvals.

Bushfire Recovery

• Cover all or part of insurance gap to increase likelihood of more rapid rebuild as owners face costs of building to the new bushfire standard.
• Financial support to building practitioners to relocate to bushfire areas where there are shortages (eg Gippsland).

Apprentices & Trainees

• Extend apprentice wage subsidy to all GTOs.
• Funding towards a pre-apprenticeship or general entry level re-skilling to enable those who are displaced from other industries to be able to work in building industry and upskilling current building and construction employees.