COVID19 Update: MBA – Standing up for our industry…and jobs!
May 25, 2020

More than any other industry building and construction is crucial to South Australia’s economic recovery from COVID-19.

That’s a message Master Builders has been conveying to the South Australian and Federal governments on a daily basis since COVID-19 first began having an impact on the industry.

As featured on the front page of today’s Advertiser, newly-released modelling by Ernst and Young (EY) indicates that Master Builders’ proposed package of stimulus for the building and construction industry would have major benefits for the South Australian economy. These include:
  • The creation of over 6,750 jobs right across the South Australian labour market
  • A lift to South Australia’s economy valued at $1.75 billion
  • An expansion in construction activity worth $1.03 billion
  • An additional 724 new homes being built across the state
  • Vital support for 107 construction businesses in South Australia – most of which are small in size
At the start of this year, 70,200 workers in South Australia relied directly on construction for their employment. Latest ABS employment data indicate that about 3,370 of these jobs have been lost since the beginning of the COVID-19 crisis. Under a worst-case scenario, Master Builders estimates that the construction job losses in South Australia could be as high as 27,380 in the aftermath of COVID-19. The 6,750 jobs which would be created by Master Builders’ proposed package of stimulus measures would significantly offset the detrimental impact of COVID-19 on South Australia’s labour market and make a major contribution towards moving the state’s economy back in the right direction. Master Builders’ proposed stimulus package is comprised of five elements which would support activity right across the spectrum of construction including residential building, civil construction and commercial building. The table below summarises the likely economic impacts of each of these measures. The experience of previous economic downturns shows that construction is one of the last sectors of the economy to recover – a reality which underlines the imperative for immediate stimulus for our industry.
Background on EY approach to Modelling
MBA engaged EY to undertake independent modelling of five scenarios for government stimulus focused on residential and commercial building stimulus to measure the direct and indirect benefits of stimulus on the Australian economy. The direct estimates of impacts on construction sector activity draw on a range of public sources depending on the specifics of the scenario, while the economy wide results have been estimated using EY’s in-house Computable General Equilibrium model, the EYGEM model.
Scenarios modelled
The five policy scenarios modelled for residential and commercial building include:
Residential Building

Scenario A: Provision of an immediate time-limited cash grant of $40,000 for the construction of a new residential home, subject to meeting particular socio-economic thresholds and on a Federal-State dollar for dollar basis.

Scenario B: Resilience Renovations Programme funding to eligible homeowners to improve the resilience of their homes to natural disasters or to make homes more accessible. Modelling will be undertaken on the basis of stimulus equalling 10% ($4b) of the value of home renovation activity to fund the program, with funding matched by Federal and State governments on a dollar for dollar basis.

Commercial/Civil Construction

Scenario C: Provision of funding for cladding rectification for audited buildings requiring rectification in affected states/territories and for asbestos removal for projects on the National Asbestos Exposure Register. Specifically, this calls for application of the South Australian model across the country for cladding rectification, fully funded by government and not requiring an increase in building permit levies to partially fund the cost of the program.

Scenario D: A 10 per cent reduction in developer and infrastructure related charges across states/territories for commercial projects.

Scenario E: Increasing institutional spending by 5% for health, higher and vocational education, defence and indigenous infrastructure.

Master Builders SA is doing everything we can to ensure you have future work opportunities and South Australia has a building and construction led economic recovery. I’m hopeful that some significant government announcements are not far away.

For more information, or if you would like to discuss, please contact Will Frogley, Director of Policy and Communications, on 8211 7466 or wfrogley@mbasa.com.au

Regards,

IAN MARKOS
CHIEF EXECUTIVE OFFICER
MASTER BUILDERS SA