Post-Budget Insights: Australia’s Construction Industry
By Maya Sathiamoorthy
Our construction industry holds a significant place in the Australian economy, and will be subject to growth in the coming years; this is why Crisp Law has sought to become an expert in it. In this newsletter, we explore the effects of the federal pre-election budget on the construction industry and provide our key insights into the industry.
Economic overview 2025: A budget insight for builders
The construction industry accounts for 11% of Australia’s GDP, and performs over $289b worth of building and construction work annually (Master Builders Australia). Whilst overall construction activity has slowed and there are marginally fewer projects (ABS 2020), infrastructure projects are driving revenue growth in the industry. Railway and renewable energy construction will continue to surge due to further public investment. In the recent federal budget package, the government has allocated $17.1b to priority road and rail projects, and $7.2b for the Bruce Highway upgrades (KPMG). Further, they have committed to investing $22.7b on clean energy projects, including the construction of hydrogen and solar infrastructure.
Additionally, there will be strong growth in industrial building projects in 2025-2028. This is attributed to increasing merchandise trade and successful online retail platforms stimulating property developers’ investment in warehousing and distribution facilities in outer regions of major capital cities. Private investment will fortify these projects. In 2024–2026, private demand is predicted to grow by 2.4% (Turner & Townsend); the government has reduced fees for foreign investors to purchase established rental developments. This will encourage higher overall private investment in the construction industry.
The housing crisis and the construction industry
The housing market is one of the most important issues to voters; 1 in 4 say housing is the most important issue to them this election (MBA). In response to this concern, the National Cabinet agreed to an ambitious national target of 1.2 million ‘new, well-located homes’ by 2029. This will include prefabricated and modular homes that reduce build time and up to 50% of material costs. This will significantly increase residential building activity and drive the construction industry’s growth. The government has also dedicated an additional $1.9b in concessional loans to make social and affordable housing accessible and to meet demand, driving the industry further.
Travel restrictions during the pandemic severely impacted Australia’s access to skilled migrants. Research forecasts a subsequent shortage of 130,000 workers across building and construction (MBA 2024); this has been a contributing factor to the housing crisis. In the recent budget, the government has sought to address this shortage through policies such as the addition of 20,000 fee-free TAFE and pre-apprenticeship programs relevant to the construction sector.
Small Businesses
The construction industry is made up of approximately 450,000 business entities, 98% of which are small businesses with fewer than 20 employees. The pre-election budget seeks to empower small businesses, who will receive $150 in energy bill rebates and tax cuts to individual earnings that will give an average of $50 back to workers weekly (ABC). Whilst these forecasts and budget incentives are largely positive for the construction industry, the volatile nature of current global politics may leave businesses feeling uncertain. Insolvencies are common, with 22.7% of businesses in the sector becoming insolvent each year, accounting for 10% of all insolvencies in Australia. To safeguard your business and ensure you’re well-equipped in the face of legislative and economic changes, get in touch with Crisp Law.
Contact Crisp Law for advice and information at:
Telephone: +61 2 8042 8701
Email: admin@crisplaw.com.au
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