GDP: Building and construction slump highlights need for urgent reform

Construction proved to be the economy’s weakest link during the March 2024 quarter, with industry output suffering a sharp 2.6 per cent reverse in the first three months of the year. 

The decrease was driven by a 2.3 per cent fall in construction services, a 3.1 per cent fall in building construction and a 2.6 per cent fall in heavy and civil engineering construction. 

Overall, GDP scraped the smallest gain of 0.1 per cent – the worst outcome in almost two years. 

Master Builders Australia CEO Denita Wawn said when the building and construction industry is strong, so too is the economy. 

“We know for every dollar invested in the industry sees three dollars returned to the broader economy. 

“In 2023, construction was one of the main drivers of economic growth, but today’s sobering figures reflect a continuous decline in building approvals across all sectors of the industry. 

“This comes at a time when an increasing supply of housing is needed to bring down inflation in the rental market. 

“The drastic lengthening in build times for new homes and an increase of costs by 40 per cent since pre-COVID is making it extremely difficult to get projects off the ground. 

“We can’t keep turning a blind eye to the crucial role of productivity in growing our economy and combating inflation. 

“This will only be achieved if the federal, state and territory governments get a move on and speed up planning reforms, finalise the migration review, introduce new incentives to grow the workforce, and introduce an industry regulator with real teeth. 

“If we are going to undo decades of under-building and resolve this housing crisis, we need to change the economic environment to encourage investment across all sectors: residential, civil and commercial construction. 

“Earlier today, the Treasurer and Minister for Housing introduced an important policy lever to encourage investment in build-to-rent which will play a role in bringing down rental inflation. 

“Master Builders is still working through the details of the legislation but supports the principle of diversifying the housing supply mix in our economy,” Ms Wawn said. 

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