Senator Dean Smith:
My name is Dean Smith and I’m a Liberal Party Senator for Perth’s northern suburbs. Michael, welcome to Western Australia. There are only two sorts of people in Western Australia – people who live north of the river and people who live south of the river so it’s great to welcome you to Perth’s northern suburbs. It’s part of the world I grew up in as a kid and a lot of time and energy has been spent by me supporting the community here so we’re really excited to have you in this part of the woods. Also a very, very warm welcome to Michael Bartier from BGC and John Gelavis from the MBA.
Michael Bartier (Executive General Manager – BGC Housing Group):
Welcome, Minister and thank you, Dean. Also welcome to the Master Builder Association who is hosting today’s event. The product that we have here today is a prime example of Western Australian affordable housing. It’s a three bedroom, two bathroom home in the suburb of Balga-Westminster, only 20 kilometres from the CBD. In terms of price point, it will come in at about $380,000. It has two young, new home owners who are not only first home buyers but are also very fortunate to receive the federal HomeBuilder bonus. A couple of little comments about this home as well is that it’s at the peak of sustainability. This one is rated at 6.5 stars under the NatHERS scale which from an ongoing cost perspective will reduce the cost of heating and cooling the home and general energy bills. It’s really exciting to show off what WA can deliver in terms of social and affordable housing.
Minister Michael Sukkar:
Can I start by thanking you, Michael, for hosting us here at this building site? There’s nothing as exciting as being on a site like this that you know is going to create a home for – in this case – first home buyers where they’ll be able to build a life for themselves. Great to be here with my great friend, Senator Dean Smith who is a champion for Western Australia, a champion of the northern suburbs here in Perth and someone who really delivers results so, Dean I’m really grateful that you’re here today and the support that you’ve provided for the residential construction industry in WA and first home buyers is something that I’m very grateful for as housing minister. And John Gelavis from the Master Builders Association – thank you for being here as well.
It’s wonderful to be here, back in WA. It’s been a little bit of time for me and I’ve been very keen to come and see first-hand the residential construction industry that has been ignited – by amongst other things – the HomeBuilder program put in place by the Morrison Government. It was 18 months ago, give or take, that representatives like John at the MBA and the Housing Industry Association came to me and said ‘sales have fallen off a cliff’ once the pandemic hit, ‘tens of thousands of Western Australian jobs in the residential construction industry are at risk and without action we will permanently lose those jobs and permanently lose those businesses’.
We put in place the HomeBuilder program which was supported by the State Government I know with their own building grant, and combined what that has done is ignited the residential construction industry here to the point where the industry is far busier post-pandemic than it was pre-pandemic. No one could have imagined that a program that we put in place just to keep the industry alive would actually increase the number of sales which means an increase to the demand for trades, increase in the demand for supplies and of course underpin what is a growing industry here in WA.
To the team at BGC, I want to thank them and congratulate them and all the builders here in WA who are now dealing with different challenges. We’ve come from the challenge of imminently facing staff reductions and solvency issues in the building industry when the pandemic hit, to now dealing with ‘how do we meet the ever-increasing demand for the product’? The good part of that is that first home buyers are now at their highest levels for nearly 15 years. We’ve seen a 55 per cent increase in first home buyers compared to the long-run average – that’s a good thing – but that of course is putting huge demands on the industry. I want to thank the industry for working overtime. Michael, all of John’s members at the MBA, I can assure their customers are working day and night to deliver your product, to try and ensure that they meet the timelines that they’ve committed to and of course the cost pressures that are associated with that. And equally, I think all of the new home and first time buyers are very understanding and are showing a great deal of patients, working co-operatively with the industry knowing that for many of them, the HomeBuilder program – which has created this huge demand – was the reason that they were able to get over that deposit hurdle and actually get into a home. So I want to congratulate the industry, this is a real bright spot around Australia.
The HomeBuilder program has ignited – as I keep saying – the residential construction industry throughout Australia but WA is a particularly bright spot and that’s something you should be very proud of, it’s something that the Morrison Government is extraordinarily proud of. In the end, what’s more important than supporting the hundreds of thousands of jobs in the residential construction industry, not just the people who work on a building site like this, the brickies, the concreters, the tilers but also – as I’ve been visiting around our country – the manufacturing workers who make the bricks, the tiles, the glass, the others in the supply chain – the designers, the architects, the surveyors. There is a massive ecosystem in this industry, it has one of the biggest multipliers of any industry in Australia and we’ll continue to support it as the Morrison Government.
Again, I just want to congratulate the Western Australian industry and perhaps, before we got to questions, just invite you, John, to say some words on behalf of MBA because you’ve really been able to see the evolution of an industry that was under major threat 18 months ago, to now an industry that is booming, I think is probably the best description.
John Gelavis (Executive Director – Master Builders Association):
It is. Thank you, Minister.
I’d certainly like to also acknowledge the Minister and Senator Dean Smith and also Michael Bartier from BGC and as a Master Builders member. I think that the Minister is quite right going back to the early part of 2020, just before Covid hit, the building construction industry – particularly the housing sector – was really in a slump with three or four years of probably some of the worst conditions that we’d ever seen. Then Covid hit and that put additional pressures on the sector. Display homes were closed and we certainly went to the Government at a federal level and said ‘look we really need some help, we need to build a pipeline of work between now and the end of the year to help not just the building and construction industry but the subcontractors, the mum-and-date builders that needed the support at the time. It was a really important policy. It saved jobs, it saved local businesses and small businesses form potential disaster and we were falling off a cliff at the end of the year. When you shut display homes down which are effectively that shopfront of the industry, the impact was going to be quite significant.
So very much HomeBuilder saved jobs, saved a lot of the local economy and now we’re seeing another challenge, that challenge is how do we build the type of work and build the homes we need to support the clients and the community but also the local economy. The one thing about the building construction industry is for every dollar that is invested, there’s a $3 multiplier through the other side. It’s a critical economic stimulus and a critical investment in the economy to help not just the building industry but the multiplier effect right across the economy. That’s been really important not just in Perth but through regional Western Australia and we’ve seen regional areas like Geraldton and the mid-west coming through probably some of the worst conditions that we’ve ever seen in that area. It saved some of those regional communities also and not just in Western Australia.
The challenge coming out now is how do we build? We’ve seen infrastructure investment as well and that’s part of the building challenge. We’ve also seen some natural disasters. We’ve seen the Seroja cyclone. We’ve seen the Wooroloo bushfires and the building construction industry is now being asked to help lead the recovery in these areas and we’re seeing global supply chains apply.
If it wasn’t for HomeBuilder, I think the industry would be in a much worse place than it probably had been and this is a really important policy. The Master Builders were really pleased we were able to work with the Federal Government to get HomeBuilder off the ground and we’ve seen the massive success that it’s actually created. So on behalf of the Master Builders, I’d like to certainly thank the Minister and thank the Government for its great support. As I said, it saved jobs and saved a lot of local jobs as well and our subcontractor base. We look forward to continuing to work with the Government on these important developments. It can only help the state but also help the country as well. Thank you.
Thanks, John. Just hearing you speak reminded me of our early discussions when we put the HomeBuilder program in place. We were thinking that we might have 5,000 projects that qualify. We’re now at 20,000 projects that have qualified so it’s four times bigger than we thought and as housing minister that just makes me four times happier and now we entrust it in your very capable hands, Michael, for you and all of your colleagues to deliver it.
Again thanks, Dean, for being here with me today and happy to take questions.
Just to clarify that ‘four times bigger’ figure. Is that just for WA?
Yeah, just WA.
You mentioned obviously the huge demand. There are reports of building times for residential construction literally doubling since pre-pandemic. Has the program become a victim of its own success?
It’s created additional challenges, as I said. What we’ve done is try to ensure that the program remains flexible with the circumstances of the time. So we put the program in place which originally require a commencement timeframe of three months. We did that quite deliberately because we wanted to keep tension in the system. In the middle of the pandemic, we wanted people to make those critical decisions to buy now otherwise jobs would’ve been lost. As it got bigger and bigger as a program and more successful, we extended that timeframe from three to six months and then it culminated with an announcement we made just prior to the Budget which extended the commencement timeframe to 18 months to smooth out that timeline of work for builders to make sure that they were able to meet those timeframes. That obviously, as I said, requires purchasers to work closely with their builders and the feedback I’ve received to date is that, particularly for first home buyers, the HomeBuilder grant was the difference between being able to buy a home or not, getting out of the rental market and into your own home. So for many of them, the price to pay of having a slightly longer build time is a price they’re willing to pay and they’re working really constructively with their builders. I think also Western Australians are seeing first-hand, with their own eyes, how hard their builders are working. Nobody is sitting there saying ‘gee, my builder is sitting on their hands’, they know they’re working extraordinarily hard. I think that helps that co-operative arrangement between homebuilders and the builder that’s delivering it for them.
Do you have any worries that these grants have brought forward demand massively and that we’re approaching a cliff further down the line especially because we don’t have international migration happening at the moment?
Well we’re much less concerned about that now because the pipeline of work is, conservatively speaking, two years and some analysis that we have done in my office indicates that whilst there’s a portion of the HomeBuilder recipients who are certainly people who were going to make a decision at some point in the next few years to do what they’ve done in building a home, there is a large cohort of people who we’ve converted from probably never realistically being able to purchase a home, to becoming a homeowner. The big challenge in Australia at the moment to home ownership, amongst the many challenges, but the significant challenge for home owners is getting that deposit together. The deposit hurdle is the biggest barrier, particularly in a record-low interest rate environment. A grant program like HomeBuilder, that you might couple with the First Home Loan Deposit Scheme which is another Morrison Government initiative which allows people to purchase their first home with a deposit of as little as five per cent and Michael and I were talking about this just yesterday, using those programs together to get into the market is converting people who would have probably been perpetual renters to now being homeowners. So it’s not a complete bring-forward, we’ve actually created new home buyers that may never have existed and so in that sense, I’m very confident of the pipeline of work. No one has got a crystal ball, even as housing minister it’s very hard to project. In fact talking to organisations like BGC or Master Builders, it’s very hard to look years into the future but we know we’ve got a solid pipeline of work here in WA for at least two years, I suspect longer. The changes we’ve made to extend the timeframes out to 18 months now mean that’s smoothed out a lot and I think that’s about the best position the industry has been here in WA for a very long time.
On a different issue, the Covid support package announced for New South Wales has been criticised by both the Victorian and Western Australian governments. They feel like they’ve been duded. How do you respond to that?
Well no, the support package that we’ve put in place for New South Wales is the same as the support package that was put in place for Victoria for the first two weeks. This support package now applies to New South Wales if it enters a fourth week of lockdown. That’s the difference. The duration of the lockdown dictates the amount of support that the Federal Government will provide.
In the case of Western Australia where there was a very short lockdown, similar to Queensland, that occurred post JobKeeper, anything under a week has not attracted additional support. So that’s consistent. Our approach is consistent throughout the country whether you’re a Western Australian, or a Victorian or a South Australian, whatever you might be. As the lockdowns increase, the federal assistance increases and I think that most Australians understand that, that as things get worse for a state in lockdown, that that assistance ramps-up. So the assistance that we’ve provided New South Wales to date is identical to Victoria. Victoria didn’t get into a fourth week of lockdown and New South Wales may, that’s why the additional support has been put in place.
The Western Australian Premier’s argument is that in the case of WA we had a four day lockdown and then ten more days of quite harsh restrictions that did impact workers, some workers would have lost jobs and you get punished, I guess, if your lockdown doesn’t go long enough to qualify for the direct worker payments.
Well you don’t get punished and nothing precludes state governments from putting in support that backs up their decisions to lockdown. Particularly in the case of the Western Australia State Government running a budget surplus, they’re in a very good position to put their hand in their own pocket and support Western Australians, should that happen. Fingers crossed that doesn’t happen. One thing that’s been great being over here is seeing the relative freedom that Western Australians have got so long may that continue. But our support is consistent wherever you are. We’re the Federal Government, we support Australians wherever they are – from Victoria to Northern Territory, from Queensland to WA – it’s consistent but I think that we all understand that as things get worse, our assistance ramps-up.
Just back-tracking a moment. Do you have any figures on how many people are leaving the rental market as a result of these grants?
No, we don’t have any analysis. CoreLogic may undertake some analysis. That would be quite granular but in the feedback we’ve received particular from the banks who, let’s be frank, they’re the ones undertaking the credit assessments of their clients, they have a really good understanding of who they are, the pretty consistent feedback we’ve received from them is that there’s this growing cohort of long term renters who are now first home buyers. That was a phenomenon that I suspect none of us really could have gauged at the time. Here in WA if you combined the HomeBuilder grant with the State Government grant and the stamp duty exemption, all of a sudden I think that it’s easy to understand why so many people have moved from the rental market into home ownership and probably their monthly payments are about the same.
A program that I announced in the Budget, which was an extension of the First Home Loan Deposit Scheme – the Family Home Guarantee – seeks to do just that. It’s a program that provides support for single parents with dependent children to enter or re-enter, you don’t have to be a first home buyer, re-enter the housing market with a deposit of 2 per cent. The analysis we did was similar with the banks in that we looked at the monthly repayments of an average renter and again saw that the deposit hurdle was the big barrier and for a single parent – if they were able to get into their own home – that their monthly payments – rent vs mortgage – was about the same. So we’re converting single parent renters into single parent home owners and I think we all understand that that’s a really great outcome for our society.