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Event: Press Conference on Federal Government housing announcement
Date: Saturday 11 May 2024, 12.45pm AEST
Speakers: Denita Wawn, CEO Master Builders Australia
Topics: Housing supply, Federal Budget, labour shortages, productivity, industrial relations, building costs, business viability
E&OE
Denita Wawn, CEO Master Builders Australia: Good morning, Denita Wawn, CEO, Master Builders Australia. Master Builders Australia commends the decision announced by the government today in providing support for people in need in terms of housing. It’s also provided some opportunities to provide some greatly needed funding for state and territory governments on the supply of critical infrastructure. We hear too often that housing is delayed because we don’t have the critical infrastructure ready to go. So, the fact that we can focus on all of those civil activities that will also support our members is a great thing. However, putting money down for building when you don’t get the supply narrative right is not enough. And Master Builders Australia will be seeking on Tuesday night an opportunity for the Treasurer and the government as a whole to really heavily focused on supply. What does that mean? It means inflation down. It means an environment whereby interest rates start ratcheting down. It means we have more people in apprenticeships and more people completing apprenticeships. It means more skilled tradies, being migrants, coming to this country and also for them to be recognised with their skills. We commended the government in terms of fast-tracking the skills assessment, but more needs to be done to prioritise trade-qualified people coming into this country as a matter of urgency. We also need to ensure that we get our planning systems right. We know that the government has asked state and territory, and local government to get the settings right, but more needs to be done and we think greater incentives need to be provided to the other levels of government to fast-track our planning system, particularly around approvals. But finally, a word of warning to the government, even if they got all of those supply levers right, there is still one hanging over their heads, and that is the industrial relations reforms. We have now seen three pieces of legislation before Parliament over the last 18 months. The impact of that industrial relations legislation is only just starting to trickle out in the next 12 months. The impact will not be felt until 2025, and our productivity report supported by CIE Economics says it’s the biggest drain on our capacity to deliver 1.2 million homes. So, the government needs to look at housing holistically not just announcements by the Housing Minister. Thank you.
Journalist: Denita, can you clear something up for us? Apart from the billion dollars for the housing infrastructure, is any of the money announced today actually new?
Denita: We understand that the money is not new. There is a new agreement that extends existing funding, but it’s not new from our understanding. Of course, it’s important that existing funding is extended beyond what has been committed to date and that there is certainty in the system, particularly around social housing and community housing. That is critical. Nevertheless, we need to focus on private investment, not necessarily government investment. If we’re really going to go gangbusters on housing all Australians, then we need to ensure that we get the parameters for private investment right.
Journalist: What are the construction time blowouts we’re seeing from before COVID to now?
Denita: Construction costs and construction times really is a sad state of affairs at the moment. We have a situation in which the cost of building at the moment is 40 per cent more than what it was pre-COVID. But more alarmingly, is the time it’s taking us to build, and that is because of both planning approval delays as well as people shortages. To build a detached house at the moment, it was generally around nine months. That is now up to 13 months and just has not been sliding down. Of the worst story, is around apartments. Pre-COVID it took us around two years to build that, now it’s three years and if we’re going to meet the 1.2 million homes, we have to have at least 50 per cent of the buildings being built for housing focused on medium and high-rise density. So, if we don’t get that time compressed, then we’re in serious trouble.
Journalist: How much of those delays come down to issues with supply chains of actually getting the material for these new apartment buildings and houses together?
Denita: We know that the stress on the materials is actually getting better. We now find a situation in which we actually have ample supply of timber, for example. Material prices still have stayed stubbornly high, but nevertheless, the supply of materials is not too bad. There are really two or three key impacts as to why it’s taking us so long. We don’t have enough trades so it’s very, very hard to structure your build to ensure you’re getting trades in and out really quickly. So that is a significant delay. The other issue is around approvals and also occupation certificates as well at a local government and territory and state government level. For example, we’ve heard of up to three months before you can get an occupancy certificate. Up to 12 months before you get a building approval to start commencement of building. The list goes on. And of course, we cannot forget that if you look at high rise, many of our high-rise buildings are built by commercial builders that are dealing with enterprise bargaining agreements with the CFMEU. And we know that there are significant delays from the use of those EBAs. Queensland, for example, we’re now looking at around 100 days that can be non-productive days through the EBA, but they’re still getting paid. They are the types of reasons why we cannot build productively at the moment.
Journalist: Just to clarify, the housing infrastructure money, the money for pipes, poles and wire etc. That is new funding in the budget as you understand?
Denita: We understand that the one billion towards critical infrastructure is new funding. But of course, we will need to consider the budget holistically when we get to see the budget papers on Tuesday night and get a full assessment of what the government has done around housing. As I said earlier, the housing issue is not just the Housing Minister’s responsibility. There are four or five federal ministers, let alone the state, territory governments and councils that have responsibility that impacts our capacity to build, and we will be looking at all of those portfolios on Tuesday to see how it fits the piece of the puzzle for us to build 1.2 million homes in Australia.
Journalist: You’ve outlined some of the pressures in the system at the moment. Some of the blockages or chokepoints there. There’s also a lot of concern at the moment around the viability a lot of construction companies. I’ve lost track of how many have gone under here in Canberra alone. But there’s quite a few. Is that a situation that’s being seen across the country? Is there anything that the government can actually do to help with the viability of some of these firms?
Denita: The issue around the viability of building businesses is very much focused on the increase of costs and the decline in private investment in the industry. What do we therefore need governments to do in that space? Well, for starters, governments as clients themselves have to be best model clients and they’re not in many circumstances. There’s also delays in payments, they don’t share risk. So, we’re of the view that the government for a start can actually be a model client. The other issue is terms of fixed-price contracts and because of escalating costs including people. So, get the supply of people right, get inflation down, get interest rates down and resolve some of the IR problems that we have all means that we get less costs and therefore we have greater capacity to build. It’s as simple as that.
Journalist: Do you think it’s fair to say we’re seeing councillors or state government MPs trying to protect their own jobs in Parliament by being anti-development in communities where people want things to stay as they are?
Denita: It’s really, really disappointing that we see every day in the news that on one hand we have leaders in our communities saying we need to solve the housing crisis, and yet they continue to frustrate the system. Of course, we need to be cognisant of the impact of our built environment on our ecosystem and of course we need appropriate processes. Nevertheless, the whole issue of not in my backyard is fundamentally wrong and what we expect of our leaders is actually to bring the community along the journey about how we need to change our built environment rather than actually exacerbating the situation currently being faced in our communities. A change process and a communications process needs to be undertaken by all of our leaders about what does the next 25 years in this country look like to ensure that we are accommodating all Australians to have a roof over their heads. Thank you.
Media contact:
Dee Zegarac | National Director, Media & Public Affairs
0400 493 071 | dee.zegarac@masterbuilders.com.au