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CONSTRUCTION & INFRASTRUCTURE
While the impact of the COVID-19 pandemic still hangs over Australia’s economy, the construction & infrastructure sector is currently enjoying some of its most promising conditions in years, spurred on in large part by generous government stimulus measures. For innovative advanced manufacturing businesses, there are big opportunities up for grabs. By William Poole.
The onset of the COVID-19 crisis last year brought with it a wave of pessimistic forecasts about Australia’s economic prospects. Concerns were focused in particular regarding that key plank of the national economy – the property market. But while Australia did indeed slip into recession, the much-anticipated slump in the property market never materialised. Indeed, in many ways quite the opposite occurred.
ABS figures also showed that in January investors rushed back into the property market. Lending indicators for January found the number of loan commitments for investors soared by 9.4% over the month, having increased by 22.7% over the year. In NSW the value of new loan commitments to investors rose by 6.7% in January – the highest since about June 2018, according to the ABS.
House building approvals surged during the second half of 2020. According to the Australian Bureau of Statistics (ABS), building approvals for houses increased by 14.6% during 2020 compared to 2019, with 117,721 recorded nationally – the highest annual total since 2015. All of the state capitals reported significant increases in approvals; Perth was the top performer, recording an annual rise of 34.0%, followed by Brisbane (14.5%), Melbourne (13.3%), Adelaide (11.9%) and Sydney 7.2%.
At the other end of the construction industry scale the situation is equally promising. As part of its strategy to stem the economic impact of COVID-19, the Government has committed to delivering a $110bn, ten-year pipeline of infrastructure investment. Last June it announced a $1.5bn infrastructure stimulus package, comprising $1bn in funding for shovel-ready projects that could commence within six months, and $500m for Targeted Road Safety Works delivered by states and territories that could be completed within 12 months.
Many analysts attributed these figures to the Federal Government’s HomeBuilder grants program. The HomeBuilder program provided eligible owner-occupiers (including buyers of first homes) with a grant to build a new home or to substantially renovate an existing property. The aim of HomeBuilder was to assist the residential construction sector by encouraging the commencement of new home builds and renovations. Although the initial HomeBuilder offering expired on 31 December 2020, the Government subsequently extended the policy, albeit with a reduced grant, to the end of March.
AMT APR/MAY 2021
As Australia looks towards a post-COVID future, this buoyant outlook across the construction sector is seen as a promising route for the country to find its way out of recession. As a sector dominated by traditional processes and practices, it offers exciting opportunities for innovative businesses, not least advanced manufacturers.