A $13.2 billion building and construction stimulus action could create over $30 billion in new economic activity and more than 100,00 new jobs.
That's according to new economic modelling commissioned by Master Builders Australia, who found a $40,000 uncapped new home building grant would deliver 14,000 extra new homes and replenish most of the construction jobs lost since the start of COVID-19.
In addition to the grant, the stimulus would include funding for renovations to make homes more resilient to natural disasters, and funding for commercial programs, such as cladding and asbestos rectification.
Denita Wawn, CEO of Master Builders said the construction industry was one of the worst hit sectors by the pandemic and urgent government support was needed.
"We are seeking stimulus not subsidies from government, we want the National Cabinet to urgently implement this independently modelled stimulus package and establish a special task force to fast track commencement of construction activity.” Ms Wawn said.
"Building and construction is shaping up to be one of the industries worst hit in the long term by the COVID-19 economic crisis.
"We know from previous downturns that it takes four times longer for our industry to recover than the rest of the economy."
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) owner-occupied home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
Under the proposed stimulus package, a $13.2 billion investment from governments would deliver:
- $30.9 billion in GDP growth;
- 105,500 jobs in construction and across the economy; and
- $17.6 billion in expanded construction activity (new dwelling starts, renovations and commercial construction activity
Ms Wawn said they were asking for political leaders to show the same courage and vision in supporting the construction industry as they showed in responding to the health emergency.
"Work for builders and tradies in 2020/21 is fast evaporating and the indications are that 2021/22 will not be much better," she said.
"There is no time to spare in meeting this threat to the viability of nearly 400,000 building businesses and the jobs of 1.2 million people employed in our industry.”
Ms Wawn added Master Builders wanted to see a dedicated building and construction industry taskforce established to oversee the implementation of the stimulus package.
"For stimulus to occur building activity needs to commence. Builders and tradies cannot sustain their businesses and jobs on promises," Ms Wawn said.
"We have seen that governments can fast track construction activity in response to natural disasters and COVID-19 is shaping up as an economic disaster."
Master Builders estimated 77,580 jobs had been lost in construction since the start of COVID-19.
Their proposal comes only a week after the Property Council of Australia lobbied the government to provide a $50,000 grant to buyers of newly constructed dwellings.
That grant would be limited to the first 50,000 purchasers of newly-built homes across the country, requiring an estimated $2.5 billion in federal government funding, over $10 billion less than what Master Builders have asked for.
Eligible properties would only include those with on-site construction commencement dates between 1 July 2020 and 30 June 2021.
Both proposals coincide with forecasts from the Housing Industry Association (HIA) of a near 50% fall in new home building which could put half a million jobs at risk over the next year.
The HIA said it expects only 112,000 new home building commencements next financial year, down from nearly 200,000 in 2018/19.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
- If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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