A $13.2 BILLION building and construction stimulus action would drive over $30 billion in new economic activity and create more than 100,000 new jobs across the economy, according to new EY economic modelling commissioned by Master Builders Australia.
Denita Wawn, CEO of Master Builders said, "We are seeking stimulus not subsidies from government. We want National Cabinet to urgently implement this independently modelled stimulus package and establish a special task force to fast track commencement of construction activity.”
EY modelling shows that a $13.2 billion investment by governments in a Master Builders proposed stimulus package would mean:
- $30.9 billion in GDP from the $13.2 billion investment;
- Creation of 105,500 jobs in construction and across the economy;
- $17.6 billion in expanded construction activity (new dwelling starts, renovations and commercial construction activity).
"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,” Ms Wawn said.
"This economic crisis is not the result of a market failure; it is the result of the lockdown imposed by governments in response to the public health emergency of COVID-19. We are asking our political leaders to show the same courage and vision in supporting our industry as they showed in responding to the health emergency,” she said.
“Work for builders and tradies in 2020/21 is fast evaporating and the indications are that 2021/22 will not be much better. There is no time to spare in meeting this threat to the viability of nearly 400,000 building business and the jobs of 1.2 million people employed in our industry.
“We also want to see a dedicated building and construction industry taskforce established to oversee the implementation of the stimulus action plan. For stimulus to occur building activity needs to commence," Ms Wawn said.
"Builders and tradies cannot sustain their businesses and jobs on promises. 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."
EY was commissioned to model a stimulus package comprised of the following programs:
A $40,000 uncapped the new home building grant.
- $17 billion in additional economic activity resulting from $5.2 billion investment by government.
- The creation of 58,311 jobs right across the economy almost replenishing the 77,580 jobs lost in construction since the start of the Covid-19.
- Delivering 14,000 extra new homes.
Resilience renovation program (funding for renovations to make homes resilient to natural disasters or to make homes more accessible).
- $7 billion in economic activity for $4 billion investment by government.
- Creating 24,036 jobs.
For commercial programs (programs including funding for cladding/asbestos rectification, a10% drop in developer charges, 5% increase in government spending in health, defence and education)
- · $6.8 billion in economic activity for $4 billion investment by government. This excludes wider economic benefits in relation to health, safety and building quality.
DOUBLE DIGIT unemployment for the next few years, a plunge in Gross State Product and slow recovery are the headline findings of a new Flinders University analysis of the impact of the COVID-19 pandemic on South Australia.
The research suggests economic stimulus will be required beyond the expected six months of the JobSeeker and JobKeeper support to assist workers, families, businesses and organisations to endure the extended effects of the tough measures that have been necessary to curb the virus’s spread.
The Flinders University’s Australian Industrial Transformation Institute director, professor John Spoehr said is is a recession and the outlook is grim, urging the state and federal governments to consider all options.
"There’s no way of sugar coating it – the measures we have had to take to tackle the coronavirus crisis are having a profound impact on our state’s economy and employment and will continue to do so until at least 2024," Professor Spoehr said.
"Some 61,000 people will lose their jobs, notwithstanding the JobKeeper initiative. If they’re factored in, the total number of impacted jobs may be as high as 110,000.
"Unemployment will more than double from 52,000 to 117,000 in the current quarter and remain relatively high for the medium term. Peak unemployment is expected to reach 13.3 percent and remain above 10 percent at the end of 2023.
"Gross State Product (GSP) will be 14.8 percent lower this quarter than it would have been without the COVID-19 restrictions, and recovery will be slow, with GSP remaining 6.4 percent lower than would otherwise have been the case at this time next year," Prof. Spoehr said.
"Our earnings from interstate exports will fall 18 percent and our overseas export earnings will plunge 23.5 percent.
"The direct shock to the state economy totals almost $5.1 billion. Importantly, some sectors will be more affected than others. Amongst the biggest employment sectors in this state are the ones most affected – retail, education and training, and accommodation and food services – with their losses far outweighing the growth experienced in other sectors such as hospitals, health care and telecommunications.
"South Australia isn’t alone in this challenge – indeed, the actions necessary to contain the novel coronavirus have had profound impacts nationally and globally, with sharp declines in economic activity and escalating unemployment. However, our state is facing this crisis from a base of underperformance relative to other states, with lower GSP and lower employment growth than the nation as a whole," he said.
"Although the outlook is grim, our earlier emergence from the health crisis and bold action so far is a great advantage. The Australian Government is undoubtedly considering a range of options; substantial public investment in a national industry modernisation program with a focus on infrastructure such as hospitals, education and digital infrastructure would help breathe life back into the economy.
‘The State Government has the opportunity to leverage this with an economic recovery and jobs plan underpinned by further investment in social and physical infrastructure, including industry catapults to accelerate the uptake of advanced technologies and skills."
Prof. Spoehr said courage was needed to halt the coronavirus in its tracks, and similar courage is central to overcoming the ensuing calamity.
"Considerable investment and stimulus will be fundamental to durable recovery. There are fates worse than debt at times of great economic hardship, particularly when interest rates for government are at historic lows," Prof. Spoehr said.
The report Impact of COVID-19 on the South Australian economy and employment – 2020 to 2023 can been read in full at this link.