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Fires, floods and pandemics

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As we’ve grappled with disaster after disaster in 2020, HIA has been actively engaged with government working groups and taskforces to keep the home building industry operating.

Graham Wolfe

Managing Director
2020 started as 2019 ended, with the traditional summer bushfire season reaching into regional towns and communities across every state and territory. While Australians expect to see bushfires each year, this experience was different. In January, fires were active in five states at the same time, stretching our firefighting resources, while the impact of smoke shut down cities not directly affected for several weeks. 

The fires ultimately took hold of vast areas of bushland, with the loss of 18.6 million hectares of vegetation, 5900 buildings, including 2776 homes, and sadly 34 people lost their lives. The scale and ferocity of this fire season was unique. 

As the bushfires raged, the summer’s weather also brought the rain. Hundreds of regional towns saw one of our hardest drought events begin to end. Yet the storms brought destructive hail and flash flooding to a number of cities, generating more damage to buildings and homes.

By February the ‘water cooler’ conversation had started to include the seemingly unreal provocation that all we needed now was a plague to complete this series of terrible and unfortunate events. And that’s exactly what happened.

The response to coronavirus

The Australian Government made its first COVID-19 declaration on 21 January advising that COVID-19 was a disease with pandemic potential. This decision pre-empted the World Health Organisation and allowed the government to commence a range of actions to prepare the health system for the potential situation.
The first travel advice for people returning from China came soon after and by 1 February the first 14-day isolation requirements had been introduced. These restrictions continued to increase throughout February until finally all international travellers became subject to the self-isolation requirements. By 19 March, all non-residents were banned from travelling to Australia – our borders were effectively closed. 
The government announced funding in early March, committing with the states to $100 million for the public health response. This increased with a further $2.4 billion on 11 March. 
A day later the first economic stimulus package was announced with $17.6 billion to support businesses. This included the apprentice wage subsidy, the instant asset write-off, a loan guarantee for small businesses, accelerated depreciation for all business and a PAYG rebate. 
At this time, the first restrictions on public movement were introduced with non-essential gatherings of 500 or more people banned. 
The establishment of the national cabinet was also announced with its first meeting held on 15 March. The National Cabinet has continued to meet each week to provide regular updates from the Prime Minister and the states and territories. 
The Australian Government and each state and territory government has since taken specific steps to support businesses and individuals. These measures were targeted at stabilising business activity and supporting individuals unable to work due to the restrictions on non-essential public gatherings and travel.
Collectively, these announcements represent several billions of dollars worth of spending, much of which will see future revenue foregone completely, while some is expenditure brought forward into the current financial year. While the extent of the economic impact coronavirus will have on the Australian and the global economics is unknown, the predictions are telling, particularly for housing this year and into 2021. 

Housing outlook

The economic response to the coronavirus health crisis was swift and severe. More than one million people stopped working almost overnight as restaurants, shops, clubs and other recreational activities were closed. Those who could work were asked to work from home, and many did so to care for their children as schools closed, further reducing economic activity for those businesses that remained open. 

HIA released its February National Outlook just weeks before the crisis took hold. The outlook reflected a positive end for 2019 housing sales, raising expectations for the year ahead. Nationally, HIA had forecast 172,000 new homes would be completed in 2020 (calendar year). 

As the crisis took hold, these forecasts have been adjusted, and HIA’s latest outlooks now foreshadow a rapid decline in housing activity in the June quarter followed by a slow recovery extending into 2022. 

The revised quarterly outlook was published in May and is now available online for members. 

HIA’s latest outlooks now foreshadow a rapid decline in housing activity in the June quarter followed by a slow recovery extending into 2022

Engaging with government

Since mid-March HIA has been actively engaged with state and federal governments through various working groups and taskforces. Meeting regularly to identify concerns and develop responses, HIA has used this platform to put forward our call to action to stabilise home building activity and in some cases, call for recovery stimulus. 

On 17 March HIA put forward early actions seeking the support of the Treasurer for an additional allocation under the First Home Loan Deposit Scheme for new homes only, along with a call for stimulus support for all new home buyers, as occurred during the GFC.

Since then HIA has set out a home building recovery plan outlining measures that the Australian Government, in tandem with the states and territories, could take to support housing demand and ultimately save up to 500,000 jobs which are at risk if the slowdown continues as predicted. 

In contemplating the recovery phase and appropriate government actions, it is critical to consider the real issues that need to be addressed to ensure that the right incentives are put in place. The outcome of a recovery strategy must be to encourage demand to ensure that employment in the residential building market is maintained. Without this there will be a significant deterioration in underlying demand and retail expenditure which will make the downturn deeper. 

The outcome must be to keep housing activity on track. Our industry has a proven history of supporting Australia’s economy at times of economic disruption.