Australian Treasurer Leaves Door Open For Licensing Reform To Boost Productivity In Construction

Australian Treasurer, The Hon Dr Jim Chalmers MP has just handed down the federal budget in what is likely to be the final major step before the federal election is called in the next few weeks.

In his speech overnight the Treasurer outlined a range of measures including policies to address skills shortages, boost housing supply and affordability and support construction productivity.

Included below is an overview of the chief announcements made including a summary of the economic outlook for the Australian economy and announcements which relate to specific areas of interest for RICS members.

Overall Outlook

The Treasurer acknowledged that the 2020s so far has created economic challenges including a global pandemic, global inflation and the threat of a global trade war.

In the Australian context it is forecast that:

• Growth will increase from 1.5% to 2.5% in 2026-27 (primarily driven by private sector activity)
• Unemployment is projected to peak lower at 4.5%
• Employment and real wage growth has strengthened and participation remains at a record high
• Inflation is currently dropping
• Interest rates have come down slightly.
   

General Announcements

In terms of overall initiatives the Treasurer has confirmed:

• Two additional tax cuts for every taxpayer
• Continued energy bill relief
• Increasing wages and reforming non-compete clauses
• More bulk billing and support for medicines
• $1.2 billion to help recovery from ex-Tropical Cyclone Alfred.
   

Specific Announcements

The government has continued its focus on education to help resolve the chronic skills shortage in the Australian construction sector by:

• Committing $1.6 billion for free TAFE until 2035
• Providing up to $10,000 for eligible apprentices in housing construction occupations
• Reducing student debt loans by 20%, raising the minimum repayment threshold and reducing repayment rates
• Maintaining existing debt relief that has reduced student debt by $19 billion for 3 million Australians
• Introduction of a national occupation licensing regime for electrical trades to allow electricians to move to where they're needed most with the potential for this to be extended under reforms to occupational licensing.
   

This last reform is estimated to increase annual GDP by $10 billion.

In terms of infrastructure the government has committed to: 

• $7.2 billion to upgrade the Bruce Highway to Queensland
• $2.3 billion for Western Sydney
• $2 billion for Sunshine Station as part of Melbourne Airport Rail.
   

Measures to address housing availability and affordability include:

• An overall allocation of $33 billion to make it easier to buy and rent, and to build more homes
• $21 billion committed to housing supply including through the National Housing Accord to build 1.2 million new, well-located homes over 5 years
• Commitment to support a pipeline of 55,000 social and affordable homes through initiatives like the Housing Australia Future Fund (HAFF) and the Social Housing Accelerator
• Lower deposits and support smaller mortgages by expanding the Help to Buy scheme
• Delivering 18,000 homes under rounds 1 and 2 of the Housing Australia Future Fund
• $16 billion increase in the Housing Australia liability cap
• Providing the states, territories and local government with $4.5 billion to address local infrastructure backlogs and meeting housing targets and working with them on the National Planning Reform Blueprint
• $120 million for the National Productivity Fund for states and territories to remove barriers to modular and prefabricated construction
• $54 million to build Australia's capacity in moder construction methods to build more homes quickly
• A ban on foreign buyers from purchasing existing dwellings for two years from 1 April 2025
• Continuation of a 45 per cent increase in maximum rates of Commonwealth Rent Assistance and support of stronger renters' rights through the Better Deal for Renters programme.
   

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