The major concerns voiced by the building industry with the 2012/13 Federal Budget included the failure to address house building activity, an infrastructure backlog, and the scrapping of Tax Breaks for Green Buildings.
HIA's senior economist, Andrew Harvey, said that while the Federal Budget provides a handful of useful measures more broadly, it contains nothing to address the ongoing weakness in residential building, nor anything to help the nation's chronic housing shortage and poor levels of housing affordability.
"At a time when new home building is in decline in virtually every state and territory, the Budget has failed to deliver any new measure to reinvigorate the home building sector, despite the sector's health being absolutely crucial to a healthy domestic economy," said Harvey.
The 2012 Federal Budget contains measures that will be appreciated by small and medium sized businesses particularly in the building and construction industry, but the real test of how the budget will be seen is the degree to which it will boost business and consumer confidence, according to Master Builders Australia, the peak body for the building and construction industry.
Wilhelm Harnisch, CEO of Master Builders Australia said: “Business is looking for a positive economic story over the next budget year.
“Business confidence is severely lacking in the building and construction industry. The industry faces a stalled housing recovery and commercial builders are experiencing a severe slow down following the BER Program,” he said.
“The move back to a budget surplus — albeit a slender $1.5 billion — sends the right message to international investors that Australia can run a disciplined fiscal strategy which in turn better positions the nation to withstand any further global shocks to the economy.
“The planned surplus should help the Reserve Bank find room to move further on interest rates.”
The absence of Budget funding to guarantee the future of Tax Breaks for Green Buildings indicates a government missing the opportunities of reducing GHG emissions quickly and cost effectively, the Australian Sustainable Built Environment Council (ASBEC).
“This disappearance of allocated funding from last night’s Federal Budget indicates that the Tax Breaks for Green Buildings scheme has been scrapped,” said ASBEC presidentTom Roper, “contradicting Government assertions that it had been merely deferred for twelve months to fine-tune the details.”
“In the twelve months since the Government announced the scheme’s deferral last May, industry has been working closely with the Government to design a scheme to maximise uptake among building owners and developers,” Roper said.
“In good faith the industry provided an enormous amount of time and effort in collaborating with the Government on the recommendations advocated by the Industry Roundtable, set up to consult on the scheme.
"Scrapping the program altogether sends clear signals to a sector already fatigued by uncertainty around carbon pricing. In the long term, it will undoubtedly mean a loss of potential jobs that would have been created through retrofit projects, which are far less likely to eventuate without the scheme and will add to unemployment in the building sector in the next twelve months.
Even before the budget announcement, Master Builders Australia were pleased with the prospects of measures to boost business and consumer confidence.
As outlined by Assistant Treasurer Bill Shorten in April 2011, the Tax Breaks for Green Buildings program was delayed by 12 months to finalise the design of the program and to get it right. But its absence from the 2012/2013 Budget would indicate a withdrawal of the funding allocated to the scheme in last year’s Forward Estimates.
The July 1st commencement of the Tax Breaks for Green Buildings scheme has been eagerly anticipated by organisations within the Building and Construction sector, including the broad ranging ASBEC membership.
ASBEC’s ‘Second Plank Update’ report, released during 2010, identified some 46 mega tonnes of reductions in CO2-e emissions through improved energy efficiency in buildings alone. It was expected that the scheme would provide a strong incentive for owners and developers to achieve real results towards emissions reductions through effective investment in building retrofit.
“Enhancing the energy efficiency capabilities in the Built Environment represents one of the quickest and easiest wins for reducing our emissions and improving the carbon footprint of our economy,” Roper said.
Chief executive of the Green Building Council of Australia (GBCA), Romilly Madew, said: “The decision to scrap the Tax Breaks for Green Buildings program is extremely disappointing.”
“The Gillard Government is backing away from a 2010 election promise and abandoning its commitment to provide incentives for green buildings,” Madew says.
Consult Australia agreed the decision to abandon the Tax Breaks for Green Buildings initiative is short sighted and completely fails to realise the significant opportunity to reduce emissions through energy efficiency gains in the buildings sector.
This is a sector that contributes nearly a quarter of Australia's emissions, so this is a failure to seize some low hanging fruit.
Consult Australia CEO, Megan Motto says the focus of the 2012 Federal Budget is light on major reforms aimed at driving productivity and economic growth over the longer term.
"In the race to surplus, the Federal government has produced a beige budget which concentrates more on welfare and short term stimulus than on using our relatively strong economic position to drive fundamental reform which will build the productivity of the nation.
This budget fails to continue the Government's previous investment in the infrastructure backlog.
Professional services firms with significant labour costs will be particularly hard hit, and will lose competitiveness if these increases are not offset by productivity gains.
The $54 million investment in education funding aimed at increasing Australia's engineering, maths and science graduates is applauded by Consult Australia.
Investment in the technical capability of our nation is crucial to embedding regional and global competitive advantage into our services based economy.
Whilst the Federal Budget is set to meet the Government’s undertaking to deliver a surplus, it is austere and has missed an opportunity to significantly develop the nation’s infrastructure," Australian Constructors Association, Executive Director, Jim Barrett said today.
"The imperative to deliver a surplus was political rather than economic. The opportunity to build new assets and re-build old stock has unfortunately been missed.
"ACA welcomes the announcements made regarding infrastructure spending and the modest expansion of the Nation Building Program but Australia has been running too lean for the challenges it needs to meet. With an infrastructure backlog of over $700 billion it is disappointing that the Budget did not use the current economic environment to further build our national infrastructure stocks.
"The recent Performance of Construction Index demonstrated that sections of the industry are facing significant challenges and the industry would have welcomed further support through the Budget.
"Skill shortages remain a significant risk for the development of the industry’s productive capacity over the next few years and the focus on skills and education is welcomed. The support for maths and science education is most welcome as is the increase in the level of permanent immigration and the focus on mature age employment incentives.
"Changes to the LAFH tax concessions had already been signalled in an earlier consultation paper however, these further changes will be a significant impediment to employers trying to attract high-level international professional skilled people to work in regional areas," Mr Barrett said.
