Construction industry welcomes budget boost
The federal budget’s boost to infrastructure spending and home-building will give a lift to a construction industry facing a worse-than-expected slump by 2020.
The Australian Construction Industry Forum, which last week predicted the loss of 166,000 construction jobs over the next three years as the double-whammy of falling housing and engineering construction pushes the value of total construction down 14 per cent from last year to $193.7 billion, said the federal budget’s $75 billion boost to infrastructure spending and moves to boost investment in affordable housing could ease that scenario.
It’s not all new money – Tuesday’s announcements included projects that were already factored into ACIF’s latest forecasts, including the second Sydney airport at Badgery’s Creek, roads and the inland rail line connecting Brisbane and Melbourne. And the timing of new projects is still unclear. But the spending was likely to give a much-needed boost to an industry facing the prospect of both engineering and residential construction drying up at the same time, said Adrian Harrington, the chairman of ACIF’s construction forecasting council.
“It will certainly be positive in the medium term,” Mr Harrington said on Wednesday. “But over the next 12 months I don’t see a material change. We need to get more detail on the timing of these projects so we revisit our forecasts in more detail next month.”
Last week ACIF painted a sharply deteriorating picture of a longer and deeper-than-expected downturn in infrastructure investment coinciding with a slump in housing construction in the largest states of NSW and Victoria, after revised official figures showing that WA’s expected downturn still had a long way to go before it was complete.
Any boost to the overall picture from new government infrastructure spending would help, but it was unclear how much of the announced spending was actually new, said Kerry Barwise, ACIF’s consultant economist.
“We’re still assessing what is new and what is actually adding to expenditure,” Mr Barwise said. “A significant slice has already been factored into our forecasts.”
On housing, the likely boost from a stimulated affordable housing sector could be up to $2 billion – much less than the $100 billion value of residential construction at its peak, but still a welcome addition, he said.
“For $100 billion activity these measures are adding $1 billion or $2 billion spread over a number of years,” he said.
“They will be particularly welcome when they arrive but they’re not really going to completely counter the second dip.”
Shares of building, construction and infrastructure companies soared on Wednesday on the prospect of new infrastructure spending from the federal government.
Master Builders Australia chief executive Denita Wawn said the extra spending and federal government commitment to work with state and territory governments to reduce planning hurdles to new housing construction would boost the country’s 340,000 builders and tradies.
