A new report says a national shortage of construction workers is impacting on Australia's housing supply, with the issue shaping up to be a key concern for voters this federal election.
Australia's housing supply shortage is being significantly influenced by a lack of construction workers. Master Builders Australia estimates the industry needs an extra 130,000 workers to reach the national target of 1.
2 million homes by mid-2029.The Productivity Commission says governments should improve job pathways for skilled migrants and increase support for apprentices.Share article A new Productivity Commission report says construction workforce issues are impacting on Australia's housing supply, as the issue remains a key concern for voters ahead of the federal election. The report's release comes as Master Builders Australia forecasts the construction industry will need an additional 130,000 workers to reach the National Housing Accord target of 1.2 million new homes by mid-2029.following an agreement between industry, the Commonwealth and the states and territories. Having begun in July 2024, the target is already off-track, with National Housing Supply and Affordability Council modelling showing it is set to be missed by about 257,000 dwellings.Photo shows Rows of newly built houses in a suburb. If predictions come true it will be another year of deteriorating housing affordability, prices will rise at twice the rate of disposable income. In its report, released on Monday, the Productivity Commission said construction workforce issues were impacting new supply and had contributed to poor productivity. "The construction industry has experienced shortages in the post-COVID period and current workforce growth is likely insufficient to meet … policy objectives," the report said. According to an MBA analysis of labour force data from the Australian Bureau of Statistics, 1.37 million people are employed by the construction industry nation-wide, with 57 per cent engaged in residential building. To fill its estimated 130,000-person construction workforce shortfall, MBA says getting people into and completing apprenticeships is key. Across Australia there were more than 116,000 construction apprentices in training as of the end of 2023, according to MBA.Johnny Fish says he's loving his chosen career, including "being out in the weather, using my hands".Working for Darwin company Sunbuild, the 18-year-old said he couldn't imagine doing anything else. "I'm loving it. I definitely like being out in the weather, using my hands, it's the place for me," he said.Cooper Hardiman sees a long-term future in construction and is hoping to rise to the managerial ranks.Fellow third-year apprentice Cooper Hardiman, 25, said he also planned to stay in the industry long-term. "Completing a job and then looking back at what you started with … that's definitely the most enjoyable part of the job," he said.Although both Mr Fish and Mr Hardiman are destined for long construction careers, the same can't be said for everyone who enters the industry. According to the latest yearly data analysed by MBA, just over 21,400 people completed a construction-industry apprenticeship in 2023, in a 15 per cent drop on the year before. The number of people starting an apprenticeship also fell in 2023, to just under 42,000 — a 22 per cent drop compared to 2022.announced a $10,000 incentive schemeDamien Moriarty says there has been a big drop in apprenticeship commencements and completions have also "started to fall away again".Leading into this year's federal election, MBA Northern Territory chief executive Damien Moriarty said apprentice wage subsidies for employers also needed to be increased and made easier to access. "We had great apprentice uplift in the pandemic-affected years when the introduced a 50 per cent subsidy, a generational uplift," he said. "After it was removed, we have seen quite a large and completions have started to fall away again too. "A 50 per cent is probably too high, but there will be a number in between 50 and 0 to incentivise employers to take that chance, knowing that it's going to cost them money and time to train someone up." The number of people starting construction apprenticeships fell in 2023, in a 22 per cent drop on the year before.Currently, employers can access a hiring incentive of up to $5,000 in the first year of an employee's apprenticeship. Increasing skilled migration to Australia is another avenue to boost the workforce, and last year the government expanded its skilled occupation list to include several construction trades. In its report, the Productivity Commission recommended governments should improve skill assessment criteria for qualified migrants to make their path into a job quicker. The report also said Australia should establish a more consistent licensing system across jurisdictions and improve support for apprentices.As Australia's population has increased in recent decades, housing stock has not kept pace.Family-friendly apartment pushApartment living is a key pillar of government plans to ease the housing crisis by densifying well-connected parts of Australia's largest cities. But some have questioned the viability of the plans, saying the current stock of apartments was poorly suited for families. It's led to many people being priced out of home ownership, and housing becoming a key concern for many ahead of the federal election. Curtain University economist Steven Rowley said the housing stock shortage had been significantly influenced by a lack of workers. "While it varies from state to state, that lack of capacity and indeed lack of productivity has played a big part," he said. Professor Rowley said it wasn't the only factor at play though, with the primary barrier being a lack profitability from some developments. "We have a situation where we saw construction costs rise by about 40 per cent over the last few years," he said.ABC News: Glyn Jones"It means that a lot of projects are just not financially viable and in order for housing supply to get off the ground, developers need to make money.Professor Rowley said government subsidies for construction infrastructure such as roads, electricity and water could help more developments get off the ground. "If governments can try and reduce those upfront infrastructure charges, it does have a positive impact on viability and means some projects that would otherwise not have been financially viable become viable," he said.
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