Budgeting in Australia’s Construction Industry: Opportunities for 2023
Earlier this year, the Australian Government announced the Federal Budget for 2022-23 with a range of policies set to impact the construction industry. As we move into 2023, firms that budget for and leverage these key developments can benefit, now and in the future.
Our construction industry outlook below explores some of the key measures outlined in the Federal Budget and reveals what they could mean for your construction business in the year ahead.
Infrastructure spending is set to drive Australia’s recovery, with the Federal Government announcing a record $17.9 billion investment in road and rail infrastructure projects over the next ten years. This will expand the Government’s initial transport infrastructure pipeline from $110 billion to over $120 billion and support around 40,000 new jobs in building and construction.
Although this might be cause for celebration, concerns are being raised that our industry lacks the resources to handle the influx of projects. Productivity and efficiency in the industry as a whole is also an issue, with the Australian Constructors Association highlighting a 25% productivity gap between the construction industry and others.
While infrastructure spending is a welcome investment in Australia’s future, boosting productivity should also be a priority. Firms looking to increase their efficiency and effectiveness should embrace construction management software that allows for sharing and analysis of project data for improvements in productivity and profitability.
Support for first home buyers
First home buyers are also set to benefit from the Federal Budget, with the Government announcing a new ‘Help to Buy’ scheme. Under the scheme, eligible buyers would pay a minimum 2% deposit, while the Government makes an equity contribution up to 40% of the purchase price of a new home, or up to 30% of the purchase price of an existing home.
Economists have welcomed the new scheme, with Brendan Coates from the Grattan Institute calling it “the missing piece of the puzzle in Australia’s housing policy architecture.” In the short term, the scheme will help first home buyers put off by rising interest rates achieve home ownership. Given the scheme would also only be available to 10,000 eligible Australians every year, it is not expected to impact property prices in the long term.
For builders and property developers looking to take advantage of the buyer demand generated from the scheme, implementing a cloud-based software solution will help with project management, processes and documentation across the construction lifecycle.
Skills and training
Although industry participation is currently at record highs, numerous construction industry outlooks highlight labour supply as an ongoing issue. According to the 2021 Infrastructure Market Capacity report by Infrastructure Australia, more than 105,000 jobs could go unfilled by mid-2023. The industry needs more skilled workers to be able to deliver the volume of projects promised by the Government.
To help construction businesses reduce delays and cash-flow pressures, the government has also extended its apprenticeship and trainee wage subsidy by three months until 30 June 2023. This means employers can apply for a 50% wage subsidy for a new or recommencing trainee or apprentice. If hiring an apprentice who meets the criteria, your business can claim up to $7,000 per quarter for the first 12 months.
It is clear that construction firms wanting to succeed will need to adopt a more proactive approach to sourcing labour for their workforce. Construction technology can support businesses by driving efficiencies and helping speed up the recruitment process. Operators who fail to embrace these technologies may struggle to resource projects in the medium to long term.
Technology investment boost
Technology investment was also at the top of the list in the Federal Budget for 2022-23, with the Government pledging $1 billion in tax breaks for Australian businesses to spend on digital technology such as cloud-based software and website development.
Under the policy, eligible businesses would be able to deduct $120 for every $100 spent on digital services, with a yearly deduction limit of $100,000. Businesses must earn no more than $50 million in aggregated annual turnover to be considered eligible.
While a welcome announcement, especially for SMEs yet to adopt digital technology, Parliament is yet to make this policy law. If approved, we expect more construction firms to move their operations, data and workflows to innovative, cloud-based construction solutions. These solutions will help the smart operators who adopt them drive efficiencies and increase profitability over time.
Women in trade
Women remain underrepresented in the construction industry. According to the National Association of Women in Construction, women make up only 13% of the building and construction industry’s workforce, and only 2% of those are in trades.
To help boost the number of women in trades, the Government announced a $38.6 million investment over four years to support women commencing in trade occupations on the Australian Apprenticeships Priority List. While a welcome investment, firms can do more to ensure greater representation of women. Hiring a workforce based on diversity and inclusion is a considerable first step, and also a way of reducing the ongoing impact of the current labour shortage.
Opportunities for future success
With Australia’s current construction industry outlook, businesses will face challenges in the next 12 months. To set themselves up for success, construction firms should look to opportunities provided by the 2022-23 Federal Budget. Implementing cloud-based construction software will enable firms to position themselves to leverage these opportunities for greater success.