There was a lot to take in watching last night’s budget. You might even be forgiven for switching it off and tuning into MAFS for something a little lighter (just).
Like anything in politics, it’s only natural for the public to pay attention to what will impact them directly, so for the 2.5 million Australian’s who are employed in either the construction or property industry, here’s our breakdown of the key points relevant to Victorians, and how it may impact employment in the sector moving forward.
Infrastructure was the centrepiece of this year’s budget with the government pledging a $100bn across the next decade on infrastructure for roads and rail, bridges, dams, and ports. Around $42bn is earmarked for spending in the next four years.
New commitments for Victoria include $396m from the urban congestion fund and $490m from the roads of strategic importance scheme. Dozens of projects have been highlighted in the budget papers, including $1.14bn for suburban road upgrades, $2bn for a Geelong to Melbourne fast rail, $360m for the final stage of the Western Highway, and $300m for sealing roads in the Dandenong Ranges and surrounds.
$700m will be allocated to duplicate a section of rail in the Geelong region.
$2.0 billion from 2021-22 allocated for the delivery of a fast rail from Melbourne to Geelong to reduce travel times, increase train patronage and ease congestion on the Princes Highway and West Gate Bridge.
Great news for local Government contractors as expected.
The government announced a $496m package for medical facilities in Victoria for cancer treatment, hospital infrastructure, mental health services and medical research.
Here’s where it gets interesting. The economic forecasts for growth, employment and wages are relatively strong, but the treasurer warned that the outlook for the housing market remains uncertain.
“Following declines in housing prices and building approvals, partly in response to a rebalancing in supply and demand, dwelling investment is expected to detract from growth,” the budget papers said.
The Budget papers highlight the downside risk of a further deterioration in housing prices on dwelling investment and household consumption, noting that if consumption dropped one per cent as a result, this would shave a quarter of a per cent from GDP growth.
Treasury says new dwelling investment will only grow 0.5 per cent this year, before dropping by seven per cent in 2019-20 and a further four per cent in 2020-21 as existing projects are completed.
“This also reinforces our warnings about the impact of changes to negative gearing and capital gains tax, particularly at this uncertain time in the property cycle,” said Treasurer Josh Frydenberg.
In summary, many might say it was an underwhelming budget and a bid to win votes; but overall it’s relatively good news for the sector and employment opportunities will be kept buoyant within the commercial construction and local Government sectors. Residential housing and apartment growth however will be heavily reliant on the falling housing market holding up, and the legislation of the next Parliament.
Next month’s election will be an interesting one.