The Australian Government recently announced the Federal Budget for 2022-23, which includes a range of policies set to impact the construction industry. These programs, combined with the major influence of new technology on contractors’ bottom lines, suggests now is the time to budget for and leverage solutions that will help your business remain competitive.
Digital construction technology continues to transform outdated manual contractor business processes, allowing businesses to simplify multiple processes, connect teams to real-time data and increase productivity and profits for all project stakeholders.
Four policies in particular warrant a deeper dive: infrastructure spending, first-time homebuyer perks, subsidies for construction workforce training and tax breaks for businesses investing in digital technology solutions.
Infrastructure spending is set to drive Australia’s recovery, with a record $225 billion committed in major infrastructure investments by the end of 2024. The budget includes $17.9 billion for higher-priority road and rail projects over the next decade, which will expand the government’s initial transport infrastructure pipeline from $110 billion to over $120 billion and support around 40,000 new jobs in building and construction.
The big question here is: Will our current construction industry infrastructure support this influx of projects? Productivity and efficiency in the industry are key issues. In its ‘Disrupt or die’ report, the Australian Constructors Association notes, “Over the last 30 years, almost every other industry has advanced, yet Australia’s construction industry has gone backwards. Construction productivity today is lower than it was in 1990, and the industry is out of touch with the next generation of workers who no longer view it as an industry of choice.”
Adopting digital technology is a proven method for construction companies to increase productivity (and profitability) and attract a new generation of workers to the industry. Construction management software allows for sharing and analysis of project data from the field to the office. The major benefits include:
- Having key project data on hand for informed and speedy decision making
- Collaboration among project stakeholders who have real-time data on their individual devices
- Ability to track and manage employee time for automating payroll functions
Support for first-time homebuyers
First-time homebuyers are also set to benefit from the Federal Budget, with the government announcing the ‘Help to Buy’ scheme. Under the scheme, eligible buyers would pay a minimum 2 per cent deposit, while the government makes an equity contribution up to 40 per cent of the purchase price of a new home, or up to 30 per cent of the purchase price of an existing home.
Economists have welcomed the new scheme, with Brendan Coates from the Grattan Institute calling it “the missing piece of the puzzle in Australia’s housing policy architecture.” In the short term, the scheme will help first home buyers put off by rising interest rates achieve home ownership. Given that the scheme would also only be available to 10,000 eligible Australians every year, it is not expected to impact property prices in the long term.
For builders and property developers looking to take advantage of the buyer demand generated from the scheme, implementing digital construction technology, such as a cloud-based software solution, will help streamline project management, processes and documentation across the project lifecycle. Contractors who are able to stay on top of projects, improve communication and access project information in real-time are well-positioned to pursue additional building projects and strengthen business relationships with owners and developers.
Skills and training
Construction industry employment is projected to grow by 66,400 jobs (an increase of 5.8 per cent) by late 2026, according to Australian Government data; yet, labour supply is an ongoing issue. Brian Wexham, chairman of National Skills Week, cites a severe shortage of skilled construction workers as being responsible for slowing delivery of major construction projects in the country. Two initiatives contractors can take to alleviate the employment issues are training and adopting technology to aid the workforce.
To help construction businesses reduce delays and cash-flow pressures, the government extended its apprenticeship and trainee wage subsidy by three months until 30 June 2023. This means employers can apply for a 50 per cent wage subsidy for a new or recommencing trainee or apprentice.
Along with training a new generation of construction workers, firms wanting to succeed will need to adopt a more proactive approach to sourcing labour for their workforce. Construction technology can support businesses by driving efficiencies and helping speed up the recruitment process. Further, construction technology, such as robotic technology, can improve worker safety by deploying robots to inspect areas that are unsafe for workers. Operators who embrace these technologies are set to gain competitive advantages due to the benefits of innovation.
Technology investment boost
Technology investment was also at the top of the list in the Federal Budget for 2022-23, with the government pledging $1 billion in tax breaks for Australian businesses to spend on digital technology to help manage and grow their business. Cloud-based digital construction software, for example, helps contractors plan, manage and review projects by connecting various systems.
Under the policy, eligible businesses would be able to deduct $120 for every $100 spent on digital services, with a yearly deduction limit of $100,000. Businesses must earn no more than $50 million in aggregated annual turnover to be considered eligible.
While this is a welcome announcement, especially for small- and medium-sized enterprises that have not adopted digital technology, Parliament is yet to make this policy law. If approved, we expect more construction firms to move their operations, data and workflows to modern and innovative, cloud-based construction solutions. These solutions will help manage the considerable infrastructure construction projects planned by the Australian government.
The new federal budget has a number of policies that will greatly benefit contractors, which would be even further improved if they implemented modern construction management technology. Adopting a connected construction approach, where data, workflows and timelines are easily shared, analysed and understood will enable contractors to improve productivity, profitability and efficiency, while also helping to move our industry – and our economy – forward.