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Balancing act

Balancing act

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Federal Budget 2024-25 is taking delicate steps forward to what we can hope will be a soft landing - offering cost-of-living relief and more housing.

Matt King

HIA Senior Economist

Federal Treasurer Jim Chalmers handed down his third budget on 14 May, promising responsible economic management, a taming of sticky inflation, cost-of-living relief, and a housing centrepiece. It’s certainly not an enviable task. The unapologetic, delicate push-pull approach certainly treads a very fine line. Only time will tell if the government achieves these multiple macro outcomes.

As policy announcements trickled through in the lead-up to the announcement, HIA applauded the housing focus and welcomed numerous initiatives aimed at boosting overall supply. There was a focus on financing social and affordable housing, essential infrastructure, and delivering a financial boost to investment in essential skilled trades.

However, as is often the case, our suspicions were confirmed that this ‘housing centrepiece’ should be more aptly characterised as ‘a good start’ than bold and transformative leadership and funding.

This ‘housing centrepiece’ should be more aptly characterised as ‘a good start’ than bold and transformative leadership and funding.

Apprentice help 

So, what was included in this budget for housing in Australia? One key measure was the continuation of financial incentives for employers to take on an apprentice. In its pre-budget submission, HIA outlined the need to increase skilled migration and attract new apprentices and other workers to increase the supply of new housing.

There has always been a problem supplying the industry with enough skilled tradespeople. However, infrastructure projects, mining and other non-residential projects have recently absorbed a lot of skilled trades, resulting in shortages.

HIA was extremely pleased to see prudence prevail and a funding commitment to continue the employer-subsidy program. To support apprentice retention and completion rates, the government has committed to increasing Phase Two Incentive System payments for apprentices in priority occupations from $3000 to $5000 and hiring incentives for priority occupation employers from $4000 to $5000 for 12 months from 1 July 2024.

This will provide certainty to apprentices and employers while the government awaits the Strategic Review of the Australian Apprenticeship Incentive System findings. HIA will continue to advocate for long-term continuous employer funding arrangements rather than alternative cyclical schemes.

In response to the shortage of skilled trades crisis, the federal budget promises an investment of $90.6 million to boost the number of qualified workers in the construction and housing sector.

The government purports that this investment will help close the national skills gap and provide the skilled workforce we need to increase housing supply. The multimillion-dollar investment includes:

  • $62.4 million to work with states and territories to deliver an additional 15,000 fee free TAFE and VET places over two years from 1 January 2025 
  • $26.4 million to work with states and territories to deliver approximately 5000 places in pre apprenticeship programs over two years from 1 January 2025 
  • $1.8 million to streamline skills assessments for around 1,900 potential migrants from countries with comparable qualifications. And prioritise processing around 2,600 Trades Recognition Australia skills assessments in targeted occupations.
The Building Women’s Careers Program will help local projects offer flexible training for women in construction, technology and more.

Homes for Australia 

The federal government also announced an $11.3 billion ‘Homes for Australia’ Plan, emphasising investment in social and affordable housing, critical housing infrastructure, and crisis and student accommodation. It must be stated that underneath the headline, the details indicate continuity and certainty of long-standing funding ($1.6 billion per year) under the National Housing and Homelessness Agreement and more modest down payments on the scale of funding required.

Under the new National Agreement on Social Housing and Homelessness, the government is offering the states and territories an additional $423.1 million over five years for social housing and homelessness services, bringing the total to $9.3 billion.

One key commitment in the plan includes an additional $1 billion in funding for states and territories to build essential civil infrastructure, such as roads, sewerage, energy and water. This is an important step to unlocking land for new homes and clearing bottlenecks delaying the construction of new housing.

HIA has been calling on the government to double its previous $500 million infrastructure commitment announced in last year’s budget, so it is pleasing to see this funding boost included. As part of the government’s commitment to this target, $1.5 billion will be made available to the states and territories, including $1 billion through the 2024-25 Budget.

Prime Minister Anthony Albanese.

Changing the system 

Also of note was the government’s announcement to invest in launching the Building Women’s Careers Program. The goal is an investment of $55.6 million over four years from 2024–25 to drive structural and systemic change in work and training environments.

The program will fund partnerships between training providers, community organisations, employers, and unions to improve women’s access to flexible, safe and inclusive work and training opportunities in traditionally male-dominated industries of national priority. It will deliver around 10 large-scale and several smaller local projects, to support women in accessing flexible training in clean energy, construction, technology and other areas.

More reforms needed

In summary, it’s pleasing to see the recognition and focus on housing as a budget centrepiece. However, while there is some welcomed investment in home building, essential infrastructure and skilled trades, more investment and further ambitious policy reform are needed. Particularly if we are to reach the federal government’s target of 1.2 million new homes over the next five years.

We will continue to advocate for this focus to be maintained in the lead-up to the next federal election.

First published 25 June 2024

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