Stimulus To Stimulate
Are your projects ready for a market resurgence?
There is a range of stimulus packages currently being proposed to stimulate the property industry. It’s never been a better time to ensure you are shovel ready to take advantage of the guaranteed market surge that will follow.
The Housing Institute of Australia estimates that half a million Australian jobs in the building and construction sector are at risk if there is a reduction in new home construction. To ensure the stabilisation of the industry and the retention of a large portion of these jobs, industry leaders are proposing several recommendations to help stimulate the industry.
At a National Level:
Both Master Builders Australia and the Property Council of Australia have proposed a new home grant of $40,000 and $50,000 respectively to aid in the construction of 130,000 homes for the 2021 financial year.
In the last couple of days, it now seems clear that the government plans to ratify a similar package targeting new construction to the tune of up to $25,000 per new home. Whilst this is evolving rapidly, it’s something we are watching very closely!
The Property Council of Australia have proposed a comprehensive 7 Point Plan, encouraging strategic and financial changes to the building sector, as well as bolstering the tourism industry and international migration. Full details of the 7 points below.
Kick-start housing construction - The Property Council’s plan proposes three strategies to kick-start this economic multiplier: a $50,000 ‘New Home Boost’ grant; additional assistance from states and territories, such as new housing stamp duty relief; and for the National Housing Finance and Investment Corporation to revisit some requirements to unlock the $1 billion housing infrastructure facility.
Accelerate growth with catalyst projects - The plan outlines eight strategies – from unlocking surplus government land to fast-track planning and incentives for building upgrades – that can kick-start property and infrastructure projects with the greatest potential to catalyse economic growth.
Reset the housing affordability equation - Government taxes and charges account for 25 per cent of the cost of a new home, while planning systems are under-resourced and prone to unnecessary delay. The Property Council’s six strategies include incentives to reduce costs in the production of new housing, accelerate investment in retirement living and build-to-rent housing, as well as new incentives to help the private sector create affordable housing for key workers.
Drive productivity through tax settings - Stamp duty costs the economy 72 cents for every $1 of revenue it raises, while company tax costs 50 cents in the dollar. The Property Council proposes a broad-based tax reform agenda to drive productivity and economic growth.
Harness capital to support recovery - Australia is heavily reliant on wholesale capital – both locally and internationally – to create housing and commercial real estate. The Property Council calls for consistent messages from all governments to “make it clear that Australia is open for business and investment”, alongside the removal of hurdles to Foreign Investment Review Board approvals and counterproductive foreign tax surcharges.
A resilient and forward-looking Australia - Australia can incorporate lessons from the pandemic period to deepen current economic strengths, foster new areas of competitive advantage and increase resilience in the economy and our communities. The Productivity Commission’s recommendations from the 2017 Shifting the Dial report around future skills, work, energy, innovation and regulatory reform can form a basis for priorities.
A ‘Welcome to Australia’ migration plan - Australia’s population was forecast to grow by 1.7 per cent per annum over 2020 and 2021 – but it will now most certainly shrink, creating an enormous economic drag. The Property Council advocates secure testing, isolation and arrangements for international arrivals and a major international advertising campaign to promote Australia as a safe and healthy destination. A migration plan should also target temporary visa classes that can make an immediate and positive impact on economic growth and incentivise permanent skilled migration.
Full details on the plan can be found here.
Master Builders Australia have compiled a detailed report and COVID-19 Recovery Action Plan that includes calls for commercial and civil building stimulus, residential housing stimulus including a new home grant and financing options. Read the full plan here.
At a State level:
The Queensland Government have outlined Stage 1 of their Economic Recovery Strategy, which focuses on 3 key sectors, detailed below.
1. Investing in vital infrastructure to stimulate the economy.
The government have committed to $51.8 billion in infrastructure spend across the state over the next four years.
$400 million Accelerated Works Program to support the regions with a substantial capital and maintenance roads program.
$200m Works for Queensland COVID Recovery Package—to support local jobs and Local Governments with funding for building productive infrastructure.
$11.25m Household Resilience Program—to support local industry by improving the resilience of North and Central Queensland homes against natural disasters
2. Strengthening Queensland’s Industries
$50m to support Queensland's Tourism Industry—to fast track tourism projects and assist our national tourism icons
$100m Small Business Adaption Grants Program—to help sustain small businesses so they can succeed post-COVID-19.
$7m Domestic Tourism Campaign—to support jobs and businesses in our tourism regions by marketing Queensland as the destination of choice for Australian travellers.
$50m Making it for Queensland—attracting industry to grow the Queensland’s advanced manufacturing capacity, particularly biomedical and health
3. Enabling future growth
CopperString—$14.8M to continue investigating the feasibility of the CopperString project to connect the North West Minerals Province with the national electricity market.
Up to $20m for additional training—to assist Queenslanders, particularly young people and women who have borne a disproportionate burden through job losses nationally, with access to additional free training.
$20m Queensland Apprenticeships Centre—to help position Queensland at the forefront of renewable hydrogen.
Read the full Queensland Economic Recovery Strategy here.
With so many stimulus packages and economic recovery plans confirmed or proposed, at both a national and state level, now is the perfect time to ensure that your projects are shovel ready. With the expected surge in purchasers returning to the market it is crucial your projects are front of mind.
Talk to us today about how we can help you prepare your projects in readiness.