The Federal Budget has landed with a mixed reception from the building industry, with welcomed measures around skills, infrastructure and compliance overshadowed by concerns that changes to property investment settings could slow new housing supply.
Housing supply concerns dominate
Master Builders Australia says the key question surrounding the Budget was simple: would it help increase housing supply?
According to the organisation, the answer is complicated.
Master Builders CEO Denita Wawn said proposed changes to Negative Gearing and Capital Gains Tax concessions risk undermining the Government’s broader housing ambitions.
“By Treasury’s own estimate, the new restrictions on Negative Gearing and Capital Gains Tax (CGT) will deprive us of 35,000 new homes over the next decade,” Ms Wawn said.
“The Government’s broken promises on CGT and Negative Gearing dilutes many of the positive features of tonight’s federal budget (sic). The opportunity that exists to turbocharge housing supply has been lost.”
The comments come as Australia continues to grapple with housing shortages, rising construction costs and ongoing workforce constraints.
Cost pressures still weighing on construction
Housing affordability remains under pressure, with the cost of building continuing to climb.
“Leading into tonight, the National Housing Accord is forecast to be over 200,000 homes short of target and building a new detached house is now 48.6 per cent more expensive than it was right before the pandemic,” Ms Wawn said.
For builders already navigating higher labour, material and compliance costs, any policy settings that potentially reduce investment activity are likely to be watched closely.
Wins for skills and workforce shortages
Despite criticism of the housing settings, Master Builders welcomed several measures aimed at easing labour shortages.
Support for skilled migration was among the biggest positives, including faster skills assessments for migrant tradies and reforms to occupational licensing.
The Budget also includes a new skills assessment pathway for onshore visa holders, designed to better recognise existing qualifications and practical trade experience—an area Master Builders has long advocated for.
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The changes are forecast to deliver an additional 4,000 skilled trades workers per year.
“Workforce shortages remain one of the biggest constraints to delivering homes,” Ms Wawn said.
However, she warned the measures still fall short of what is needed to fully unlock supply.
“The Budget doesn’t go far enough to address this.”
Red tape relief and business support
The industry also welcomed moves to reduce compliance burdens, particularly the removal of the paywall surrounding Australian Standards referenced in legislation.
For builders and contractors, free access to these standards is expected to lower compliance costs and improve accessibility to key regulatory requirements.
Other measures backed by the sector included making the $20,000 instant asset write-off permanent and continued support for enabling infrastructure projects, which are expected to support up to 65,000 new homes.
Further funding for the administration of the Construction, Forestry and Maritime Employees Union was also noted in the Budget measures.
More work still needed
While Master Builders acknowledged several positives, the organisation said the broader test remains whether policy settings will materially lift housing supply.
“There is more work to do to make it easier to deliver the homes, infrastructure and buildings Australians rely on,” Ms Wawn said.
“Australia needs to see a material uplift in supply, and we will be undertaking modelling to understand and test the holistic effect of these budget measures.”
For the construction sector, the challenge now will be whether skills, infrastructure and regulatory reforms can offset growing concerns around investment settings and housing delivery.
