The federal government is considering giving householders cash grants for home renovations, under a multi-billion dollar stimulus package to boost the economy.
Prime Minister Scott Morrison on Monday confirmed discussions are underway about a fourth cash splash aimed at saving the jobs of 1.2million tradesmen.
The government will also discuss offering first home buyers a $40,000 incentive to buy or build a new home and broadening the scope for who can access the grants.
It comes after the COVID-19 pandemic crippled the housing construction industry and cost an estimated 70,000 tradesmen their jobs.
Construction of new homes plummeted throughout the crisis along with most other economic activity – and authorities fear it will be slow to revive.
The $4billion cash grant scheme would encourage homeowners to make changes to their properties and provide tradesmen with immediate work, which could create an estimated 58,311 new jobs, The Australian reports.
But there would be limits on the type of renovations that could be undertaken, and Mr Morrison warned there would be ‘safeguards’ in place to avoid people ‘rorting’ the system.
‘You’ve gotta try and avoid the rorting and people taking advantage of it,’ Mr Morrison told 2GB on Monday.
‘Even though Australians have been amazing during this crisis, there’s still those that will do the wrong things.’
Homeowners could soon be given cash to renovate their homes under a new government stimulus package to stave off a coronavirus-induced construction industry collapse. Pictured: Home renovators Josh Barker and Elyse Knowles
Construction of new homes has plummeted during the coronavirus pandemic along with most other economic activity and is feared to be slow to revive. Pictured is a new build house at Toongabbie in Sydney’s west
Master Builders Australia chief executive Denita Wawn said the proposed package would save small businesses from a potential catastrophe.
She said the addition of renovations in the scheme – which also plans to broaden the first home buyers allowance – bypasses ‘the red tape’ of requesting planning approvals.
Ms Wawn agreed certain criteria should be met for the types of property renovations people could apply for, including making homes more resilient to natural disasters like fires and floods.
Home owners should also be able to use the grant money to rectify cladding and asbestos concerns, Ms Wawn suggested.
Economic modelling commissioned by the business determined the entire stimulus package could generate upwards of 105,500 jobs in the wake of the crisis.
Already, the industry has taken a significant hit for 2020/2021 and 2021/2022. Instead of 159,000 new homes scheduled for completion by 2021, there is only 116,000.
Based on previous economic downturns, the modelling warns it will likely take the construction industry four times longer to recover than other sectors.
‘We have seen that governments can fast track construction activity in response to natural disasters and COVID-19 is shaping up as an economic disaster,’ Ms Wawn said.
Treasurer Josh Frydenberg is expected to confirm the details of the scheme after it is considered by the cabinet expenditure review committee meeting this week.
Homebuyers may be handed thousands of dollars to build houses as the government desperately tries to stave off a construction collapse that would cost many jobs
Master Builders Australia Proposed Stimulus Measures
Master Builders Australia released a series of proposals in the wake of the COVID-19 pandemic to keep the construction industry afloat.
We are calling for measures such as commissioning local builders to immediately commence maintenance, refurbishment and renovation works on government buildings and facilities around the country,’ CEO Denita Wawn said.
‘This will not require extensive planning, could be actioned quickly and will provide work for thousands of small businesses in local communities.’
She also called on the government to bring forward any planned government spends for 2021 to give the industry a much needed boost.
Some of the proposals are outlined below:
– Support ongoing building of house and land packages through interest free loans.
– First Home-Owner Grants of $40,000 for those buying or building new homes.
– Expanding the number of First Home Loan Deposit Scheme loans.
– Instant tax write-off/extension of negative gearing for property investors to undertake renovations to rental properties (currently can only claim maintenance) that could include upgrades that provide for the home to be more energy efficient which in turn assists in reducing living costs.
– Financial support to home owners through the use of a registered building practitioner to facilitate home renovations on properties that are pre 6 star requirements to enable them to be more energy efficient (eg change in windows, improved heating/cooling appliances etc) and/or make home more accessible for elderly to maximise ability to stay in their own home for longer.
– Contribution towards cladding rectification on apartments.
It will also include a clause to help pay $40,000 deposits for buyers of new homes, Sky News claimed on Sunday.
Grants of up to $10,000 have at various times been offered by the states, but only to first homebuyers struggling to own their first property.
The government’s new plan is instead believed to be across the board – offering financial support to anyone wanting a new home.
Home auctions and inspections have only just been allowed for the first time in more than two months and are still subject to many restrictions.
More than a million people have also lost their jobs, taken pay cuts, or fear they could be next, and are in no position to take out a mountain of debt.
Despite already spending well over $300billion on coronavirus stimulus packages, the Federal Government is tipped to splash more cash to tackle this.
As Australia’s population grows it needs more housing supply to avoid running out, so it is hoped giving an incentive to build will jump-start construction.
House prices would skyrocket if there was not enough ongoing construction, as well as thousands of jobs potentially lost.
Home auctions and inspections have only just been allowed for the first time in more than two months and are still subject to many restrictions
Registered bidders line up for the auction in Coorparoo, Queensland, after restrictions were relaxed there, but the industry still faces a long road back
Shadow Treasurer Jim Chalmers cautiously welcomed the plan but wanted to see the details before giving it any support.
‘Already, before the crisis, construction was relatively weak and homeownership was at 60-year lows, so we had a challenge there,’ he said on Sky News.
‘That has been exacerbated by this coronavirus crisis. In two or three months, we are very worried that construction will fall off a cliff and that’s why we have been making very constructive suggestions about what the government might do.
‘We want to make sure that their plan is comprehensive, and we hope that they pick up and run with some of the ideas that (Labor has) put on the table.’
Dr Chalmers also suggested a program to help essential workers move closer to where they worked.
The claimed new stimulus appears similar to a proposal by the Property Council of Australia to give every buyer of a newly-built home $50,000.
As Australia’s population grows it needs more housing supply to avoid running out, so it is hoped giving an incentive to build will jump-start construction
WHAT IS THE ‘NEW HOME BOOST’ PROPOSAL?
– $50,000 grant to all purchasers of newly constructed dwellings only, not existing housing
– Potential to stimulate the construction of 50,000 new dwellings, supporting 200,000+ jobs
– Grant scheme limited to the first 50,000 purchasers, including lessees of new retirement living units, with these to be geographically spread
– Approximately $2.5billion of Federal funding required to stimulate
– No pricing cap – the aim is to bring forward all possible market demand and stimulate the greatest economic response
– Scheme would require commencement on site between 1 July 2020 and 30 June 2021 only
Property Council of Australia
Under that $2.5 billion proposal, 50,000 new homes will be built and more than 200,000 jobs created.
The proposed ‘new home boost’ initiative would be limited to the first 50,000 purchases and run between July 2020 and June 2021.
The PCA also wants stamp duty scrapped and foreigners welcomed back to Australia to buy more properties.
Chief executive Ken Morrison said ‘big and bold thinking’ was needed to restart the economy after the pandemic.
‘As Australia’s biggest employer which contributes over 13 per cent of GDP, the property industry can be a powerhouse behind economic recovery and growth with the right policy settings and market incentives from the federal, state and territory governments,’ he said.
The PCA also proposed a ‘Welcome to Australia’ program aimed at promoting Australia as a ‘safe and healthy destination’ for skilled workers.
The government already has a scheme in place to guarantee first homebuyer deposits, allowing them to get a mortgage with just a five per cent down payment.
The program was a key part of Prime Minister Scott Morrison’s election campaign and was already maxed out in the first few months of this year.