The 2019 Federal Budget promises to boost construction spending, especially for infrastructure projects. Our Australian budget breakdown looks at the implications for Queensland and the rest of the nation. Will the assistance go far enough to combat the bleak conditions affecting the industry?
It’s been a tough year for Australia’s construction sector, and we’re not even at the halfway mark yet.
Both residential and commercial projects are struggling, margin pressures are strong, there are fewer new orders and jobs are being shed for the eighth consecutive month.
Not a whole lot to feel good about, but there could be some relief around the corner!
Thankfully, conditions aren’t as severe as they were at the start of the year.
The Performance of Construction Index measures activity levels across the sector each month. It currently sits at 45.6 points, which is 1.8 points higher than February levels. The higher this number gets, the better, as anything above 50 indicates performance growth.
With any luck, these levels will continue to rise – especially in light of the promises made in the 2019 Federal Budget earlier this month.
Our article explores:
- National construction spending
- Criticism about national spending
- Federal budget allocation for Queensland Construction
- Criticism about Queensland spending
Infrastructure, small businesses, regional communities and apprentices look set to benefit from this budget, depending on the outcome of the upcoming Federal election.
Master Builders CEO Denita Wawn has said this budget has been good to builders.
“The return to surplus will boost confidence that the economy is back on track and will give builders the incentive to invest, create jobs, hire more people and take on more apprentices.”
“Master Builders welcomes the Government’s announcements on new investment in skills, infrastructure and small business because they are targeted at what’s needed to strengthen the economy,” she said.
Australian Budget Breakdown: national construction spending
There’s a strong focus on infrastructure in this budget – particularly roads and rail.
The $100 billion National Infrastructure Plan will be rolled out over the next decade, to support Australia’s growing population and improve transport.
This funding includes:
- $23 billion for new initiatives
- $2.2 billion for the new Road Safety Package
- Urban Congestion Fund
- Increasing funding to fix “roads of strategic importance” from $3.5 billion to $4.5 billion
- Setting up a National Faster Rail Agency
- Improving the Tonkin Highway in Perth, North-South Corridor in Adelaide and the Gateway Motorway in Brisbane
- Fast rail projects:
- Building a $2 billion link between Geelong and Melbourne to halve travel time
- Creating business cases for five more projects in NSW, Victoria and Queensland
- Tasmania’s Freight Rail Revitalisation Program
As far as energy projects are concerned, the National Water Infrastructure Development Fund will be expanded.
There will also be an injection of $1.38 billion into the Snowy Hydro 2.0 project, which will span six years. This will generate hydro-power on demand.
Regional areas haven’t been forgotten – with an extra $200 million going towards creating jobs and building stronger communities, as part of the Building Better Regions Fund.
Most fatal car crashes in Australia occur on regional roads, so $2 billion dollars will be spent on improving conditions.
There will also be a $3.9 billion Emergency Response Fund to assist with future natural disasters.
Small to medium construction businesses could benefit from the government lowering the company tax rate by 2.5 per cent, set to occur in July 2021.
On top of this:
The instant asset write-off threshold will increase to $30 000 per asset and it won’t just be small businesses that benefit. Medium-sized companies will also be eligible for the scheme.
The protection of workers:
A $26.8 million National Labour Hire Registration Scheme will be set up to protect the rights of vulnerable workers and improve the capacity of the Fair Work Commission to investigate underpayments.
Skills and training:
Occupations with skills shortages will benefit from the creation of up to 80 000 new apprentices over five years.
The $525 million package includes:
- New training hubs in regional areas
- Reforming the VET sector with a National Skills Commission
- Tradies, bricklayers and others will get $2000 when they begin their apprenticeship
- Incentive payments for employers will be doubled to $8000 per recruit
- Employers will receive higher incentives of $8000 for each recruit.
Criticism about national construction spending:
Infrastructure spending is lower than the decade-average
Although key players have welcomed the $100 billion infrastructure investment, there are a few criticisms too.
Infrastructure Partnership Australia says there isn’t enough clarity about the 10-year plan.
The total amount of funding spread out over four years is also $1.9 billion less than the decade-average levels.
Not sustainable enough
The Green Building Council of Australia wants the government to do more to curb emissions, by allocating funds to low-carbon building initiatives.
“Australian industry leads the world in delivering net zero carbon buildings. We urge government to match industry leadership with more ambitious policy that rewards broader action.”
Jonathan Cartledge, Head of Public Affairs and Membership.
Affordable housing left behind
Although Treasurer Josh Frydenberg said that housing affordability would be a priority, this isn’t supported by the budget.
Nicole Gurran, professor of urban planning at the University of Sydney told Domain she’s underwhelmed by the lack of support.
“It’s disappointing, particularly given there is a concern around housing affordability and around a depressed period of construction. It would have been a good opportunity to boost social housing supply,” she said.
Queensland construction spending allocated in the Federal budget:
Queensland will benefit from a surge in infrastructure spending.
The government intends to spend $2.6 billion on “priority regional and urban transport infrastructure” from 2020 to 2021.
Individual projects include:
- Extending the Gateway Motorway ($800 million)
- Upgrading the M1 ($500 million)
- Bruce Highway projects ($425.4 million)
- Improving the Warrego Highway between Ipswich and Toowoomba ($320 million)
- Cooktown to Weipa corridor ($190 million)
- Cairns Ring Road ($287 million)
- Gladstone Port Access Road ($100 million)
Criticism about Queensland construction spending:
Queensland is not a priority for the Coalition, according to premier Annastacia Palaszczuk.
She released a statement slamming the federal budget for leaving Queensland “in the dark”.
“We get less than our population share under the National Partnerships on Community Health, Hospitals and Infrastructure projects.”
Although the budget supports better roads in Queensland, Ms Palaszczuk says it will be two years until 90 per cent of that funding is released.
She’s also disappointed that the Cross River Rail project didn’t get any funding.
As for the $3.9 billion Emergency Response Fund, it’s not enough to cover the 35 natural disasters that have hit Queensland since 2015.
“There were 4,077 words in last night’s budget speech. The word ‘Queensland’ was used only once and then only in relation to the floods.”