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Do tradies really need a $4 billion renovation lifeline?

Even tradies think that handing homeowners $4 billion for renovations is an unnecessary waste of money as they're are flat out with work already.

Prime Minister Scott Morrison on Monday confirmed discussions are under way about a cash splash to stimulate the building industry. 

Not only would billions be spent to boost the construction of new houses, but also grants would be given to residents to give tradies jobs renovating their homes.

The construction sector has been hard hit by the coronavirus pandemic with the Master Builders Association claiming 60,000 projects have been cancelled.

Australian Government is discussing giving homeowners $4 billion to hire tradies to renovate their homes to stimulate the building industry and give tradies jobs

Homeowners could soon be given cash to renovate their homes under a new government stimulus package to stave off a coronavirus-induced construction industry collapse. Pictured: Home renovators Josh Barker and Elyse Knowles 

The group's modelling estimates instead of 159,000 new homes being built in 2020-21 there would now be just 116,000 - and it could even fall by 50 per cent.

However, tradies doing renovations are not near as badly affected and many are doing even better since much of Australia started working from home.

Builders Collective president Phil Dwyer even said he 'couldn't imagine why' the scheme would be needed. 

'At the moment I think it's a little bit busier than usual. There's a heap of renovations in every suburb in this town,' he told 3AW radio.

'I can't imagine why we would need cash injections to help us. We're just going to overheat the industry.' 

Figures from tradie job site SeekingService dipped 18.3 per cent in March and stayed steady in April before rebounding by 27 per cent in May.

Figures from tradie job site SeekingService dipped 18.3 per cent in March and stayed steady in April before rebounding by 27 per cent in May

'This indicates a return to pre-corona levels of demand. The strong rebound is almost unbelievable,' co-founder Jeremy Levitt said.

Dedicated renovations companies took a 15 per cent in April before rising by 6 per cent in May, and tradies doing more specific renovations saw even more work.

Paving jobs doubled and carpentry rose about 25 per cent in both April and May, while flooring crashed 58 per cent in April before jumping 227 per cent in May.

The only services to fall overall were pest control, tiling, and gardening. 

Mr Levitt said he was a big supporter of the proposed $4 billion trade rescue package, especially extending it to renovations.

'Stimulating this sector of the economy is an obvious way to get large swathes of the domestic economy back to work and money flowing again,' he said.  

Taxpayers were sceptical of tradies needing more work - or people who already owned homes needing a new kitchen for free.

Construction of new homes has plummeted during the coronavirus pandemic along with most other economic activity and is feared to be slow to revive. Pictured is a new build house at Toongabbie in Sydney's west

'Tradies appear to be doing just fine - while we've been inside - scaffolds have come, work done and they've moved on to the next jobs - all around us - every day,' one wrote online.

'Everyone I have spoken to says the tradies/renovations they know are run off their feet with work,' another wrote.

Others said they couldn't even get tradies to answer the phone and when they did, many were booked until Christmas.

'I know a million tradies and they keep telling me they’re flat-out. So do the doors that have been sitting in our driveway for a month and not yet installed,' a frustrated homeowner said.

Some taxpayers believed if the goal was to employ more tradies with tax money, it should be spent on badly-needed maintenance of public housing.

'Public money shouldn’t be used for private gains. If you need to invest in construction jobs, try public housing, public amenities, schools, hospitals, public transport,' one wrote.

'If it needs to be renovations- plenty of public housing needs repairs, upgrades, and aircon.'

However, Master Builders Association chief executive Denita Wawn claimed the proposed package would save small businesses from a potential catastrophe.

She said the addition of renovations in the scheme - which also plans to broaden the first home buyers allowance - bypasses 'the red tape' of requesting planning approvals. 

Ms Wawn agreed certain criteria should be met for the types of property renovations people could apply for, including making homes more resilient to natural disasters like fires and floods.

 Homebuyers may be handed thousands of dollars to build houses as the government desperately tries to stave off a construction collapse that would cost many jobs

Home owners should also be able to use the grant money to rectify cladding and asbestos concerns, Ms Wawn suggested.  

The construction stimulus is also expected to provide payments similar to the first homebuyers grant, but be available to anyone building a new home.

This has been far better received as construction of new buildings, as opposed to renovating existing ones, has actually fallen.

The value of construction work done is down 6.5 per cent on a year ago and in NSW, it fell 8.1 per cent in the quarter to be down by 17.3 per cent over the year – the biggest annual decline in almost 19 years.

Master Builders Australia Proposed Stimulus Measures 

Master Builders Australia released a series of proposals in the wake of the COVID-19 pandemic to keep the construction industry afloat.

We are calling for measures such as commissioning local builders to immediately commence maintenance, refurbishment and renovation works on government buildings and facilities around the country,' CEO Denita Wawn said.

'This will not require extensive planning, could be actioned quickly and will provide work for thousands of small businesses in local communities.'

She also called on the government to bring forward any planned government spends for 2021 to give the industry a much needed boost.

Some of the proposals are outlined below: 

- Support ongoing building of house and land packages through interest free loans.

- First Home-Owner Grants of $40,000 for those buying or building new homes.

- Expanding the number of First Home Loan Deposit Scheme loans. 

- Instant tax write-off/extension of negative gearing for property investors to undertake renovations to rental properties (currently can only claim maintenance) that could include upgrades that provide for the home to be more energy efficient which in turn assists in reducing living costs.

- Financial support to home owners through the use of a registered building practitioner to facilitate home renovations on properties that are pre 6 star requirements to enable them to be more energy efficient (eg change in windows, improved heating/cooling appliances etc) and/or make home more accessible for elderly to maximise ability to stay in their own home for longer.

- Contribution towards cladding rectification on apartments. 

New residential work fell by 2.1 per cent over the quarter and by 14.4 per cent over the year to March – also the biggest annual fall in almost 19 years.

Falling construction is blamed on a general slowdown in the property market, but is accelerated by the effects of coronavirus.

More than a million people have lost their jobs, taken pay cuts, or fear they could be next, and are in no position to take out a mountain of debt. 

Fewer immigrants, the population engine of Australia given its low birth rate, from border closures is also helping the sector grind to a halt. 

But once immigration resumes and the economy improves, the country will need more housing supply to avoid running out.

House prices would skyrocket if there was not enough ongoing construction, as well as thousands of jobs potentially lost. 

The government will also discuss offering first home buyers a $40,000 incentive to buy or build a new home and broadening the scope for who can access the grants. 

The $4 billion cash grant scheme would encourage homeowners to make changes to their properties and provide tradesmen with immediate work, which could create up to 58,311 new jobs, The Australian reports. 

Home auctions and inspections have only just been allowed for the first time in more than two months and are still subject to many restrictions

 Registered bidders line up for the auction in Coorparoo, Queensland, after restrictions were relaxed there, but the industry still faces a long road back

WHAT IS THE 'NEW HOME BOOST' PROPOSAL?

- $50,000 grant to all purchasers of newly constructed dwellings only, not existing housing 

- Potential to stimulate the construction of 50,000 new dwellings, supporting 200,000+ jobs

- Grant scheme limited to the first 50,000 purchasers, including lessees of new retirement living units, with these to be geographically spread

- Approximately $2.5billion of Federal funding required to stimulate

- No pricing cap – the aim is to bring forward all possible market demand and stimulate the greatest economic response

- Scheme would require commencement on site between 1 July 2020 and 30 June 2021 only

Property Council of Australia 

There would be limits on the type of renovations that could be undertaken, and Mr Morrison warned there would be 'safeguards' in place to avoid people 'rorting' the system. 

'You've gotta try and avoid the rorting and people taking advantage of it,' Mr Morrison told 2GB on Monday.

'Even though Australians have been amazing during this crisis, there's still those that will do the wrong things.'

Economic modelling commissioned by the business determined the entire stimulus package could generate upwards of 105,500 jobs in the wake of the crisis.  

Based on previous economic downturns, the modelling warns it will likely take the construction industry four times longer to recover than other sectors.  

Treasurer Josh Frydenberg is expected to confirm the details of the scheme after it is considered by the cabinet expenditure review committee meeting this week. 

The potential new stimulus appears similar to a proposal by the Property Council of Australia to give every buyer of a newly-built home $50,000.

Under that $2.5 billion proposal, 50,000 new homes will be built and more than 200,000 jobs created. 

The proposed 'new home boost' initiative would be limited to the first 50,000 purchases and run between July 2020 and June 2021.

The PCA also wants stamp duty scrapped and foreigners welcomed back to Australia to buy more properties.

Chief executive Ken Morrison said 'big and bold thinking' was needed to restart the economy after the pandemic.

'As Australia's biggest employer which contributes over 13 per cent of GDP, the property industry can be a powerhouse behind economic recovery and growth with the right policy settings and market incentives from the federal, state and territory governments,' he said.

The PCA also proposed a 'Welcome to Australia' program aimed at promoting Australia as a 'safe and healthy destination' for skilled workers. 

The government already has a scheme in place to guarantee first homebuyer deposits, allowing them to get a mortgage with just a five per cent down payment.

The program was a key part of Prime Minister Scott Morrison's election campaign and was already maxed out in the first few months of this year.

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