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Master Builders has called for the federal budget to focus on unlocking the building and construction industry’s capacity, addressing entrenched inflation and improving declining productivity, all of which were hindering Australia’s economic growth.
The sector, which employs over 1.3 million Australians and consists of approximately 450,000 businesses, is crucial to the economy, but has been held back by ineffective policies, according to Master Builders.
Earlier that week, the Productivity Commission revealed that the industry was producing half as many homes per hour worked compared to 30 years ago.
Master Builders CEO Denita Wawn said: “A strong building industry means a strong economy. For every dollar invested in the building sector, three dollars are injected back into the Australian economy.
“Productivity is more than a buzzword. It is the key to lowering the cost and time it takes to build homes, roads, schools and hospitals. Productivity gains are the central driver of improvements in living standards and industry capacity over time.”
Wawn also called for the expansion of the National Productivity Fund to include regulatory reform areas such as occupational licensing, emphasising the importance of such measures to support the sector.
The Australian economy grew by only 1.5 per cent in 2023–24, marking the weakest annual growth (excluding the COVID-19 pandemic) since 1991–92. While inflation across the broader economy was beginning to ease, inflation within the building and construction industry remained deeply entrenched.
Rents rose 6.2 per cent over the 12 months to December, contributing to significant cost pressures in the economy. Master Builders said that controlling housing-related inflation required a focus on the supply side of the economy.
“The housing crisis was being felt strongly by people all around the country,” Wawn said.
“The building and construction industry was central to resolving the housing crisis with the residential, commercial, and civil sectors all playing a role in building the communities Australians needed.”
Wawn said that governments were making progress on planning reforms and social housing investments, but highlighted that the very businesses relied upon to meet the 1.2 million new homes target were struggling due to ongoing challenges.
Master Builders’ September 2024 forecasts indicated that only 1.03 million homes would be built in the five years from 1 July 2024, leaving a shortfall of 166,000 homes compared to the national target.
This gap is expected to result from factors such as labour shortages, high material costs, delays in planning and building approvals, slow land release, and increased compliance costs.
Over the past five years, building costs had increased by 44.1 per cent.
“We knew what the problems were and how to fix them, and the next Budget was the opportunity to get on with it,” Wawn said.
“Master Builders supported the Government’s new apprentice incentives of $10,000 but the Budget needed to go further with incentives for employers to offset the significant cost that came with employing and training an apprentice.
“Ninety-nine per cent of all businesses in our industry were small businesses. The time it took for these businesses to recruit and train staff, implement regulatory and legislative requirements, manage a business and keep up with changing policy priorities was significant.”
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