Budget 2022-23: What’s in it for the construction sector

The latest Federal Budget was handed down on Tuesday, October 25, and according to Treasurer, Jim Chalmers, is one that is responsible and sensible for the times, in the face of ongoing global turmoil and rising cost of living.

While it aims to deliver on its election promises, Labor’s Budget has also slashed or redirected funding across several sectors and is only focusing on what it deemed essential, such as more affordable housing, cheaper childcare and medication and more.

There were some major positives for the construction industry in the Budget with its new housing pledges. However, some infrastructure spending has been cut, and funding for the Australian Building and Construction Commission has all but gone out the window.

Here are some key Budget measures that concern the construction industry.

One of the key features of Tuesday’s Budget is the National Housing Accord that aims to build one million new “well-located” homes over five years from 2024.

The Accord was a collaborative effort between government, investors and industry aiming to tackle the housing crisis.

“Most of this supply needs to come from the market, not the government. But there’s a role for government, and we intend to play a leading role – by coordinating and kick-starting the investment we know needs to happen,” Dr Chalmers said.

To kick-start the Accord, the Government is committing an initial $350 million in additional funding for another 10,000 new affordable homes, on top of its existing commitments.

State and territory governments will build on the Federal Government’s commitment with up to 10,000 new homes as well, delivering up to 20,000 new affordable homes in total.

“Institutional investors, including superannuation funds, have endorsed the Accord and will work with us to leverage more investment that delivers for their investors’ and members’ interests, and for the national interest,” Dr Chalmers said.

“And peak organisations for the construction sector support building these homes at a high energy efficiency rating – and training more apprentices under an extended Skills Guarantee.

“We don’t pretend that this Accord solves every issue, nor do we pretend we can solve this problem overnight. But this is a serious start – a serious agenda that will lead to more Australians knowing the security of a good job and decent housing.”

Beyond the Accord, the Government will develop a National Housing and Homelessness Plan to set out other actions and longer-term reforms. The Plan will be developed in close consultation with the states and territories and other stakeholders.

In addition to the Accord, the Government has also pledged more dollars in existing policies and commitments made previously including Help to Buy, Regional First Home Guarantee and more.

Under the Housing Australia Future Fund, the Government is pledging to build 30,000 new social and affordable homes in its first five years, and 5,500 new homes under the National Housing Infrastructure Facility.

Its Help to Buy Scheme aims to make it easier for Australians to own their own home, allowing up to 40,000 eligible Australians to get into the housing market with a lower deposit and smaller mortgage.

Under the scheme, the Federal Government will contribute up to 40 per cent towards the purchase of a new home.

The Budget also maintained the Regional First Home Buyer Guarantee from last Budget but is only limiting it to first home buyers, offering 10,000 places and guaranteeing up to 15 per cent of the purchase price of new homes.

The Government is also hoping to make downsizing easier for older Australians which could free up housing stock for younger families. To do this, the Government is extending the exemption of home sale proceeds from pension asset testing from 12 months to 24 months. This will give pensioners more time to purchase, build or renovate a new home before their pension is affected.

In addition, the Government is expanding access to downsizer superannuation contributions for people aged 55 to 59.

With all the measures mentioned above, it is hoped that housing construction, which has been on a bit of a downward slide of late due to interest rate rises, will pick back up in due course.

In the latest Budget, the Government is delivering on $9.6 billion of election commitments for vital infrastructure projects across Australia.

In a statement, Minister for Infrastructure, Catherine King, said the Budget aims to make the infrastructure pipeline more sustainable and ensures the sector, already under pressure with labour, inflation and supply chain challenges, doesn’t face further strain.

“We are delivering on our election commitments which takes the total investment in transport infrastructure in every state and territory in this Budget at $55 billion over the forward estimates for new and existing projects,” she said.

Some of the commitments in this Budget include:

However, the Government conceded funding for some projects had to be canceled or postponed for future consideration when market conditions improve.

Some projects that had been axed include the $5 billion Urban Congestion Fund and its associated commuter car park projects.

Construction is one of many sectors in dire need of more talent and workers, and the Federal Government, alongside all states and territories, are planning to address that by pouring $1 billion in a one-year National Skills Agreement.

The agreement will commence on January 1, 2023, and deliver 180,000 fee-free TAFE and community-based vocational education places throughout 2023.

While the interim agreement operates throughout 2023, the Government and all states and territories will work together to improve the VET sector, including by delivering a further 300,000 fee-free places from 2024.

Some of the sectors targeted in this initiative include the aged care sector, education, technology, hospitality, construction, agriculture, manufacturing and defence.  

In addition, the Government is also committed to providing up to 20,000 additional university places for people from under-represented backgrounds such as those from regional areas and First Nations Australians, offering everyone an opportunity to obtain higher education.

The additional places will be allocated over two years from the start of 2023 and will be targeted at areas of skills shortage like education, health, engineering, and technology.

In order to encourage more Australians to pursue a career in new energy such as in wind and solar as the Government steers the country towards a clean energy economy, the Budget has promised 10,000 spots for apprentices skilling up in New Energy.

Eligible apprentices will be able to claim a New Energy Apprentice Support Payment of up to $10,000 over the duration of their apprenticeship.

This includes $2000 on commencement, $2000 per year for up to three years, and $2000 on completion.

New Energy Apprentices will also be eligible for additional in-training support places, with further support for priority groups.

However, this also means the previous Australian Apprenticeships Incentive System that applies to a range of priority occupations has been canned.

To strengthen workforce planning, the Government has invested an additional $12.9 million to establish Jobs and Skills Australia (JSA).

“JSA will bring together unions, employers, states and territory governments and other experts and provide independent advice about current, emerging, and future skill needs to assist the nation to plan for the labour workforce our country needs,” said Minister for Skills and Training, Brendan O’Connor, in a statement.

“One of the first priorities for JSA is delivering the Clean Energy Capacity Study, which will provide the critical evidence and insights needed to support workforce planning, inform skills development needs and training program design to build a strong and vibrant Clean Energy sector.”

Delivering on its election promise, the Labor Government has also abolished the Australian Building and Construction Commission (ABCC), with its role of enforcing the Fair Work Act 2009 in the commercial building and construction industry to transfer to the Fair Work Ombudsman.

This particular funding cut has drawn the ire of advocacy bodies such as Master Builders Australia, which argues the abolishment of the ABCC will “endanger economic recovery and growth, and raise costs for taxpayers.”

The organisation released a report earlier this year that shows abolishing the ABCC could cost the Australian economy $47 billion by 2030.

“We continue to call on the Government not to depart from decades of bipartisan recognition that the building and construction industry requires industry specific regulation and oversight,” said Master Builders Australia CEO, Denita Wawn.

The Australian Construction Industry Forum (ACIF) has also deemed the abolishment of the ABCC “disappointing and negative for the industry”.

“The Labor Government has a key role to play in improving the poor culture of the construction industry,” said ACIF Executive Director, Dr James Cameron.

“We would like to see a cooperative rather than a confrontational environment on construction sites. The construction industry unfortunately has a particular culture, and so needs an industry-specific watchdog like the ABCC.”

Budget 2022: What’s in it for the construction sector, business owners and tradies