July Economic Statement
We have known for some time that COVID-19 is an economic as well as a health crisis. The stark reality of just how profound the econoimc shock being devliered courtesy of the pandemic has now been confirmed by the Treasurer Josh Frydenberg in the Federal Budget Update
So far the Federal Government’s handling of the health and economic crisis has saved lives and thousands of businesses and jobs. But today’s statement is effectively only the quarter time siren and they will need to stay focussed on ‘Best on Ground’ performances to underpin economic recovery.
Measures such as JobKeeper, HomeBuilder and JobTrainer are proving to be extremely effective but there is no doubt that more is going to be needed before we emerge from the economic wreckage of the pandemic.
The 6% fall in investment in 2019/20 and 12.5% in 2020/21 will be particularly painful for the building and construction industry which is crucial to a strong economy.
As the industry that provides the most full time jobs in the economy we are deeply worried about the impact of the forecast fall in demand on the industry, the viability of around 380,000 of small builder and tradie businesses and opportunities for future careers for young people.
We need to go to a new phase where government stimulus and subsidies continue and expand while fundamental policy reform to maximise private investment in all facets of the economy gain pace.
The policy reform priorities being pursued by the Government to date are largely on the money but the need for continuing IR flexibility and IR reform is now greater than ever and raises the stakes for the Government’s IR working groups.
The construction sector works under very inflexible pattern industrial agreements and our members tell us they need flexibility to deal with the effects of the COVID crisis now, not when it’s too late.
The HomeBuilder grants scheme is proving to be one of the most effective government stimulus packages in decades and more highly effective measures to stimulate demand for building activity are necessary.
With the second largest economic multiplier effect in the economy, stimulating the building and construction industry is a no-brainer.
Master Builders also wants to see more policy reform, subsidies and stimulus to reskill and up-skill people whose employment has been lost due to the pandemic for opportunities in industries like ours which has a strong track record of providing jobs on completion of skills training.
Tax reform and measures to free up investment by institutional investors like industry super funds also need to be fast tracked.
With over 630,000 small businesses with between 0-4 employees on currently on JobKeeper, measures to boost the resilience of small businesses are also vital.
Our industry is 98% comprised of SMEs and there are more small businesses in building and construction than any other industry. They need to support to boost their online presence, get across digital ways of doing business and better managing their businesses to survive this crisis.
We know that a strong building and construction industry means a strong a strong economy and today’s update just reinforces Master Builders call for policies to ensure that private investment is maximised and supplemented by the Government in form of stimulus and subsidies in the October Budget.