Master Builders calls out for urgent stimulus in the face of coronavirus shock

Master Builders has called for a Federal Government stimulus package to keep people in jobs and building and construction businesses viable.

“Building and construction is vital to the national economy and to local communities right around the country,” says CEO Denita Wawn in a press release. “The livelihoods of the one 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.”

The Federal Government’s $17.6 billion package for small businesses and households will not give builders and tradies the confidence to take tax incentives or keep employees and apprentices on the books without pipelines of work, says the release. Wawn calls for the Government to commission 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,” says Wawn. 

Here are the Master Builders’ proposed stimulus measures, released 22 March 2020:

Housing

• Support ongoing building of house and land packages through interest-free loans for a component of the cost. For example, 25 percent for title ready blocks. Housing developers, big and small, will be hit by a dramatic fall in sales of 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 and ring-fencing the majority for new homes only.
• Expand eligibility of those who can apply for federal funding for social and community housing through the National Housing Finance and Investment Corporation (NHFIC).
• Instant tax write-off/extension of negative gearing for property investors to undertake renovations to rental properties (they 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 six star requirements to enable them to be more energy efficient (e.g. change in windows, improved heating/cooling appliances etc) and/or make homes more accessible for the elderly to maximise the 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 heath, education, community, social, remote and defence projects, but also bring forward milestone payments. That is, bring forward expenditure that has already been allocated in the forward estimates.
•  Identify new infrastructure projects 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 NHFIC in limited form) to incentivise developers to release land supply to make it shovel ready for housing.

Bushfire recovery

• Cover all or part of insurance gap to increase likelihood of more rapid rebuilding, 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 (e.g. Gippsland in Victoria).

Apprentices and trainees

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

“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,” Wawn says.

Master Builders has also called for the Federal Government to announce it will not pursue liquidated damages in Commonwealth contracts due to impacts of COVID-19 and that it sends a strong signal to private clients that they should follow its example.

“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 underinvestment 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,” Wawn says.

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