Master Builders Australia CEO shares budget wishlist and hopes for small business

Australia is at a crossroads, struggling with both a cost of living and a housing crisis. Housing affordability has been a decades-long challenge of demand outnumbering supply, and whether it’s mortgages or rent, housing costs eat the lion’s share of household incomes, meaning housing affordability conditions have a major impact on the wellbeing of Australian families.

Amidst this turmoil, small businesses within the building and construction industry stand ready to be part of the solution.

Small businesses are the heart and soul of the industry. With over 445,000 businesses in the industry, around 98% are small in size and make up a workforce of over 1.35 million people. So it’s no surprise that when the industry is strong, so is the economy.

This structure delivers great flexibility and connects communities around the country but small businesses are liable to unique vulnerabilities. This includes a lack of ancillary support meaning that paperwork, regulation, and administrative obligations are taking up time better spent on the tools.

Small businesses kept the economy afloat during the COVID-19 pandemic, but many businesses now find themselves caught in fixed price contracts, increasing regulations and supply chain bottlenecks, squeezing cash flow and frequently putting projects at a loss.

Rising inflation and interest rates and chronic labour shortages exacerbate the challenge. Since 2019, the cost of building materials has increased 33.5%, labour by 12.7% and building a house by 39.8% overall.

Productivity declined 18% over the last decade. Home building time, from approvals to completions, has blown out from an average of 8.5 to 12 months in that period. It’s even worse for higher-density buildings, going from 21 months to almost 30 months.

There is, however, light at the end of the tunnel. We have already seen a number of initiatives, including the formation of a National Housing Accord to build 1.2 million homes, the establishment of the Housing Australia Future Fund to encourage investment in social and affordable housing, and a number of planning reforms to minimise the impact of pinch points in the construction timeline. But we can’t slow down yet.

The May federal budget provides an opportunity for more private-led activity and supports the industry’s capacity to build a better and more sustainable Australia. Master Builders Australia has made several recommendations in its pre-budget submission that provide short and longer-term solutions to these challenges.

Recommendations focusing on measures that lift productivity, deliver housing needs, build local defence capabilities, improve regulatory barriers, ensure safety and wellbeing in the workplace, better connect communities, enhance the federation and support the workforce, sustainable building practices and investment.

This starts with a flexible workplace relations system. While the federal government has undertaken substantial reforms, questions linger regarding actual advantages for workplaces. What’s imperative is an approach grounded in common sense, emphasising quality over the sheer volume of legislation and regulation.

After the Australian Building and Construction Commission (ABCC) was dismantled, the government must re-establish an industry-specific regulator and ensure ongoing resourcing. We must stamp out uncompetitive, disruptive behaviour which ultimately hurts small businesses and their clients.

Infrastructure is a key building block of productivity. With Australia’s growing population, more roads, bridges and railways are needed, as well as an expanded capacity to create and distribute key utilities like electricity, water and digital information.

The industry faces acute labour shortages, as confirmed by the most recent Skills Priority List, nearly half of all jobs within the trade workers group were in shortage. By the end of 2026, Master Builders estimates we need over 480,000 new entrants. BuildSkills Australia has gone a step further, calling for 90,000 new tradies in 90 days.

Compounding the challenge is declining apprenticeship commencements. Efforts to diversify the workforce, including attracting migrants, women, and older individuals, are underway but are insufficient to meet demand with more targeted support needed.

Excessive regulation imposed on the industry by all levels of government loses sight of the people running the businesses, making projects more expensive, and more time-consuming and hindering the way projects can be delivered. Frequent regulation changes and additions mean small businesses are always on the back foot.

Vocational education and training, licensing frameworks, building regulation and accreditation frameworks differ from state to state, disincentivising growth and creating barriers to skilled migration.

The government must enhance the Federation to ensure consistency in the industry, with WHS law and policy that is clear, concise and designed to facilitate and encourage compliance.

Supporting small businesses in the building and construction industry isn’t just about economic resilience; it’s about fortifying the social fabric of communities. Through targeted support and collaborative efforts, governments can foster an environment conducive to sustainable growth, ensuring the prosperity of both businesses and communities alike.

Denita Wawn is the chief executive of Master Builders Australia.

Published on April 29, 2024, on SmartCompany, the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.