Positive Budget measures for building sector but challenges remain for private sector recovery

The 2011 Federal Budget contains a number of positive measures for the building and construction industry, but doubts remain about the impetus it will provide for a private sector recovery, according to Master Builders Australia, the peak body for the building and construction industry.

Mr Wilhelm Harnisch, CEO of Master Builders Australia said: “The Federal Budget strategy of a return to surplus by 2012-13 is welcome, but relies on dividends from the resources boom and provides limited guidance to businesses in the slow lane as they seek to be part of the post-GFC economic recovery.

“Master Builders strongly supports the substantial investment in skills and employment initiatives in the Budget, and the projected expansion of the skilled migration program. However, the budget contains a patchwork of savings measures, and more substantial tax, economic and productivity reforms are needed to ensure that Australia maximises the benefits of a sustainable economic recovery and the resources boom.

“A broad private sector recovery is needed to guarantee the longer term health of the Budget beyond the resources boom. But the reality for many in the building and construction industry is that it will be a bumpy road ahead as the private sector seeks to transition from a deleveraging finance environment.”

“Building and construction is the third largest employer and the largest employer of skilled tradespeople. A reinvigorated industry-led training system is a vital concern and the measures introduced in the Budget represent an important down payment on tackling the quality and size of the future workforce. An increase in the skilled migrant intake of approximately 12,000 is also a welcome measure.”

Specific budget measures welcomed by Master Builders include the creation of a $558 m National Workforce Development Fund, $201 m in increased support for apprenticeships, $1.7 billion for a new training partnership with the states (partially offset by the reallocation of $843 m Productivity Places Program funding) and a range of measures to support disadvantaged Australians move into meaningful employment.

The proposal to improve deductibility provisions for some privately funded public infrastructure projects is also is very welcome and should promote private sector investment, particularly from superannuation funds, in much needed economic infrastructure projects to lift Australia’s productivity. A number of major roads investments and other planning and infrastructure initiatives is also welcome. At the same time, there are a number of other measures that potentially increase the compliance burden on business and Master Builders will be seeking further detail on these from the Government.

“The savings announced as part of the Government’s fiscal strategy should help stem future interest rate rises, thereby assisting the building and construction industry to recover and ensure home ownership remains affordable. The Government’s investment in skills and employment alone is welcome but may not be enough to lift business and consumer confidence, and bolder leadership is likely to be needed over the coming period to secure Australia’s economic future.”

Sourced from Masters Builders Australia.