The construction industry proved to be a significant drag on Australia’s economic growth during the March 2024 quarter, according to the latest GDP figures released recently.
Construction output suffered a sharp 2.6 per cent decline in the first three months of the year, driven by falls across all major sectors of the industry.
Construction services dropped by 2.3 per cent, building construction fell by 3.1 per cent, and heavy and civil engineering construction declined by 2.6 per cent.
Overall, the Australian economy eked out a meagre 0.1 per cent growth in GDP for the quarter, marking the worst economic performance in almost two years.
Denita Wawn, CEO of Master Builders Australia, emphasised the construction industry’s crucial role in driving broader economic growth.
“When the building and construction industry is strong, so too is the economy,” she said.
“We know for every dollar invested in the industry, three dollars are returned to the broader economy.”
Wawn attributed the construction slump to a continuous decline in building approvals across all sectors, exacerbated by drastic lengthening in build times for new homes and a 40 per cent increase in costs since pre-COVID levels.
“This comes at a time when an increasing supply of housing is needed to bring down inflation in the rental market,” Wawn stated.
“We can’t keep turning a blind eye to the crucial role of productivity in growing our economy and combating inflation.”
To address the housing crisis and spur economic growth, Wawn called for urgent action from federal, state, and territory governments.
She advocated for speeding up planning reforms, finalising the migration review, introducing new incentives to grow the workforce, and establishing an industry regulator with real enforcement powers.
“If we are going to undo decades of under-building and resolve this housing crisis, we need to change the economic environment to encourage investment across all sectors: residential, civil, and commercial construction,” Wawn emphasised.
Earlier today, the Treasurer and Minister for Housing introduced a policy lever to encourage investment in build-to-rent housing, which Wawn said could play a role in bringing down rental inflation.
While Master Builders is still reviewing the details of the legislation, Wawn expressed support for the principle of diversifying the housing supply mix in the economy.
As the construction industry grapples with challenges, its performance will be closely watched as a key indicator of Australia’s economic health and the effectiveness of government policies in addressing the housing crisis and promoting sustainable growth.
