Australia has done better with COVID-19 than anyone dared to hope. This opens up prospects for the gradual relaxation of restrictions later this year. Organizations that may participate in the economic stimulus plan will need to be in a position to implement “shovel preparation” projects to help the economy recover.
The construction industry is the focus of the stimulus plan, and the construction of social housing should be a priority for the following reasons.
During the global financial crisis, the government’s stimulus package provided us with useful guidelines on what worked and what did not work. The failed plan did so because of a lack of proper planning.
Why construction?
Most of the success factors of Rudd’s package are focused on architecture. the reason is simple. Ten out of ten Australians work in the construction industry. More local people are engaged in the production of construction products.
Both construction and construction product manufacturing provide jobs for people of varying skill levels (including unskilled people). The vast majority of concrete and steel, bricks, wall frames, building panels, doors and windows, tiles and metal cladding are still manufactured here. It also produces a large number of household electrical and plumbing products, including stainless steel sinks, copper pipes and cables.
It is important to realize that the type of building being constructed will affect its local stimulus. For buildings with no more than three floors, more than 50% of the cost is on-site labor. Of the remaining costs, the vast majority are materials and components made in Australia. (Although the Australian Bureau of Statistics stopped a series of surveys on Australian-made construction products in 2014, the employment impact can still be estimated from ABS manufacturing statistics.)
However, the higher the building, the higher the percentage of imported components-elevators, mechanical components and exterior wall systems are mostly imported.
Why do we need housing?
Which stimulus plan should the government consider? Although the countermeasures so far have focused on “fast-tracking” infrastructure, the current crisis has highlighted many urgent social needs. All aspects of social housing rank first:
Housing reduces the number of people living in unstable private rents. A major plan to increase the stock of social housing will be a great legacy.
Provide housing for the homeless. After the lockdown, they will no longer be able to stay in the hotel.
The economy is suitable for workers in health, emergency services, education, and retail, who cannot afford to live near communities that provide important support. It turns out that they are essential workers, some of the most important people in Australia, so we need to take care of them.
Housing construction is a very effective way to create direct and downstream employment opportunities. About 6% of jobs in Australia are related to housing.
What other construction work is needed?
There are other opportunities for targeted building incentives. In many areas of Australia, public schools and kindergartens still rely on low-quality portable buildings or buildings that exceed their economic life. The plan to replace them with new and efficient buildings will generate huge social benefits, reduce maintenance costs and improve sustainability.
Improving the deterioration of community buildings and parks, especially in poor areas, will also bring social benefits and may employ a large number of unskilled labor. Having decent parks and fitness facilities near where people live will allow social isolation to continue when needed.
The Victorian Government’s plan to remove combustible siding from residential and community buildings can also be extended to all states. This is essential work and will also create employment opportunities. The government can also consider a plan to replace or renovate university teaching buildings that are more than 40 years old. Incredibly, as we discovered in ARINA’s consulting work, these older buildings still provide more than half of the total construction area of 11.8 million square meters occupied by the higher education sector.
These aging buildings are not well suited to support research on SARS-CoV-2 solutions and other pressing medical and economic issues. Replacing or refurbishing them will increase output, reduce maintenance costs and improve sustainability, and bring much-needed growth to the higher education sector.
