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By: Sian Sinclair
30 Oct 2020 3 min read
While some cities had the highest occupancy rates in years and property prices that were off the charts, other regions had stagnated and saw little growth in prices. Things had started to cool as a result of the measures, in conjunction with restrictions introduced for foreign buyers - and now COVID-19 has thrown up a whole new round of challenges.
The Budget and Expenditure data in our ‘Federal Budget: A 10 year retrospective’ is representative of infrastructure spend. The data demonstrates a bumpy ride but real estate & construction has been the highest contributor to Australia’s GDP over the last 10 years, sitting at an average of 10.85%.
While the dollar value of contribution has remained relatively steady in these years, the sector’s percentage contribution to Australia’s GDP has dropped – largely due to booms in other sectors such as resources. Getting the balance right for housing supply and demand has always been the challenge, and infrastructure investment in our cities has seen years of expenditure followed by years of regulation to contain the market, and around we go again.
It’s widely known that the real estate & construction industry is a key engine for our economy. The Federal Government brought forward a significant amount of funding to put more “boots and utes” on the ground. However, infrastructure is much more than just roads and bridges and Australia needs to redesign it’s messaging around infrastructure funding. To keep construction firms and services that feed into them operating, we also need built form infrastructure to assist the expansion of communities and regions. With net migration down for the foreseeable future, and more people moving to regional areas, do we need to rethink where these investments are made? Certainly the impressive investment in upgrades to the NBN to close the digital divide between urban and regional Australia suggests that the Government is seeing opportunity outside of our major city centres.
In our report we cover:
We were initially writing the ‘Federal Budget: A 10 year retrospective’ report before COVID-19 as an advocacy piece for more industry investment and support. Of course, the way the year started is not the way the year is ending. Many sectors that had been left to their own devices are now key for our recovery. Sovereign capability. Jobs. Digital economy. Modern manufacturing. Renewable future. Deregulation. Innovation. These are the terms we will use as we settle into COVID-normal.
Our report looks retrospectively at 13 different industries, the investment made into them by Government and their contribution to GDP. This is then overlaid with the opportunity we see for industry in this new normal based on recent Government announcements.
With the Australian economy the weakest it has been in 23 years, Labor has handed down its third Federal Budget delivering its second consecutive surplus, and setting the Government’s agenda as we head into an election cycle.
The future of work is being redefined right now. With more and more businesses embracing flexible working, this will have an impact on the commercial property sector.
Commercial property has been a key focus for policy makers, with a major component of the Prime Minister’s hibernation strategy being rent relief and the recently finalised Commercial Tenancy Code.
There is an overlooked economic opportunity in Australia’s mid-sized businesses – with the right incentives and tax policies in place, they can grow in size, scale and reach. They can employ more people, collaborate with other Australian businesses, and better contribute to Australia’s bottom line.