In May 2020 I published an article on How Program Management can assist in driving economic stimulus, commenting on international examples of stimulus programs implemented during the GFC, and how large programs of small/medium construction works can successfully stimulate economies. Social housing was identified within this article as a key area where demand outstrips supply and Australia’s economic recovery would benefit from investment in large programs of work in this sector.
Following the GFC, a review of global fiscal stimulus was carried out by the European Commission (EC) and the International Labour Organization (ILO). Their report highlighted the significant economic benefit that a well-considered strategy harnessing the construction sector to stimulate the economy would, and should, incorporate large programs of works delivering multiple small to medium construction projects.
The reason for this was simple: for buildings up to three storeys, over 50% of the total project cost relates to on-site labour. Of the remaining project budget, the vast majority of materials are Australian-made. Hence, programs such as housing have been proven to be very effective in creating jobs, both directly and throughout the wider economy through extended supply chains.
The construction industry is one of the lynchpins of the Australian economy. It accounts for around 10% of our GDP and employs 1.2 million people, or 9.1% of the entire Australian workforce. The industry provides more full-time jobs than any other sector of the economy and is made up of 395,000 businesses – 388,800 of which are SMEs.
Australian Council of Social Service (ACOSS) reports investment in social housing provides a greater boost to growth in GDP per dollar spent by government than tax cuts or other transfers to households because the money is spent and not saved, and relatively little of it is spent on imports. The ‘multiplier’ (boost to incomes per dollar spent) from the last major boost to social housing investment in 2009-12 (the Social Housing Initiative or SHI) was 1.3 (1.3 dollars in additional income for every dollar spent).
Just last week both the Victorian and NSW Governments announced a combined total of $6.22B of economic stimulus.
Deciphering government media announcements is much of an art as science and in an attempt to understand Australian social housing commitments, I have adjusted budget data to reflect a 12-month period as per the table below: