It is not unsurprising that governments – both federal and state – are turning to the construction sector to help battered economies pull through. In this insight, Masco Group’s Director, Abdul-Majid Abu Mahmoud, explores what this means and the opportunity it presents to the sector.
The construction sector has had no shortage of challenges in the last few years. From accusations of corruption to the hanging cloud regarding building standards and practices, the industry has been under a public blowtorch.
A sector sometimes seen as problem-riddled, it is now a possible golden goose for governments’ efforts to help shore up people’s incomes and well-being, as well as being a possible growth lever at a time when there are very few others.
With the travel and tourism sectors in disarray and retail and hospitality badly affected, governments are turning to property and construction to help provide a silver lining to the economic havoc created by aggressive policies that have aimed to counter the spread of a once-in-a-century pandemic.
The irony could barely be more pronounced, given the way the sector has been seen – and treated – in the last half-decade.
COVID-19 has devastated Australia’s economy
The COVID-19 pandemic has hammered Australia’s economy, with the first real recession in close to three decades. The economic impacts are well documented and barely need mention.
But they glaze over a much deeper emerging problem: that of the social impact on our communities and on individuals’ mental health and wellbeing. These will be long-lasting, and may well outlast the economic impacts we are beginning to see.
The Federal Treasury estimates that unemployment will reach 10 per cent in December this year. The impact on people’s wellbeing is already emerging, with documented cases of Domestic Violence on the rise and calls to agencies such as Lifeline up by over 20 per cent since March.
Young people will be hard hit by this crisis. Youth unemployment is expected to peak at above 15 per cent with some one-in-three young people between the age of 15 and 24 being unemployed or underemployed. All this without mentioning other already disadvantaged groups such as the disabled, Indigenous people and refugees.
Construction to the rescue?
Following the lead of other countries, major industries like construction have become central to the government’s economic recovery strategy. Governments are seeking to leverage their construction and infrastructure pipeline of investments to “require” the construction sector to be a jobs engine, and to help to create jobs in the communities in which the sector spearheads projects.
This hardly comes as a surprise. As a tool of social and economic policy, the construction industry is uniquely placed to play a leading role in economic recovery.
It is the third largest employer of any sector in Australia (8-10 per cent of all Australians), employs a higher proportion of indigenous businesses than any other sector (27.5 per cent), is the third largest employer of youth in Australia (16 per cent), largest provider of apprentices and trainees (87,000 in 2018), and contains twice as many refugee start-ups as any other sector.
This is a compelling series of facts that shows just how important the sector is to Australia’s economy, notwithstanding its internal challenges (mentioned above).
Opportunities: How the sector can be a major force for growth
By levering and encouraging construction spending, governments can:
- Encourage spending to stimulate the economy
- Build much needed infrastructure where it is most needed
- Address growing unemployment and disadvantage
- Build productive community infrastructure and resilience for the future.
The advent of the HomeBuilder package is also a much-needed shot in the arm for the residential segment of the construction sector, and is likely to stimulate much-needed activity and the associated economic activity that helps create a positive, reinforcing loop.
Given the place of the construction sector described above, construction and property businesses are uniquely placed to contribute to economic recovery. Proprietors need to know the important social role they play and the pay-off of taking (calculated) risks in the here and now. While it is tempting to be conservative in choppy times, they are also times of potential and opportunity.
At Masco Group, we are using this historic moment as an opportunity to grow, expand our horizons and take on opportunities where others refuse. This is both out of a sense of realisation of what our business means to our employees, partners and clients, and also a broader recognition that we will be playing a part in the stabilisation of the broader economy and – ultimately – people’s health and wellbeing.
The sense of responsibility could barely be more daunting!