While there’s no doubt that the current global financial crisis will see some projects stopped and some delayed in the short term, this doesn’t spell recession for architects, says David Parken, CEO of the Australian Institute of Architects. Hope lies in projects being ‘fast-tracked’ by the government and a fundamental housing need.
“Clearly there has been a shock to the economy, but the government has a number of levers it can pull to minimise the damage,“ said Parken. “The Prime Minister has already brought forward the reporting date for the Infrastructure Australia Group so that the government will have a priorities list by the end of this year and there’s the $20bn Building Australia Fund. The government could fast track some of those projects into the market and provide some respite,” said Parken.
“[…] The government could also turn its attention to the housing market on how they can support on the supply side. I think that fast tracking land to become available cheaply, possibly on a leasing basis, could really lend support.”
The situation may not be as dire as the recession of the late 80s and early 90s when one in two working architects lost his or her job. Then, interest rates were at 18 per cent and over-building was evident in both the commercial and housing sectors.
“We don’t have those problems now. The government has already hit the button to trim interest rates by one per cent. Also, we haven’t over-built, particularly in the housing area. The Housing Industry Association has upgraded its assessment of the shortage of new housing in Australia from 30,000 to 50,000 units — that’s a big number.
Added to this, said Parken, the Rudd government has increased Australia’s immigration intake by 37,000, on top of the already record number achieved last year when the figure hit 200,000 for the first time. It’s possible for Australia’s immigration quota to reach nearly 250,000, which is over one per cent of the population.
“If you look at the fundamentals of the Australian economy, we’ve got a $20bn budget surplus, which creates a shock absorber for the government to be able to take some reduction in revenue, particularly from property sales and transactions. We’ve got interest rates reducing, which as we know stimulates activity. We’ve got a fundamental housing need that is not being met. And we’ve got an affordability housing crisis because we’re not building enough. So the demand side is there.
“So if I look at all of these things, the long-term outlook is actually quite positive. There’s no doubt that in the short term some projects will stop and some will be delayed. But the government needs to think about how it can get involved in a supportive way, without taking all the risk,” said Parken.
