The property development and construction industry is having a lend of Australia: By promoting massive migration numbers, it keeps housing and land costs high and it keeps its own costs low. It leans on government for subsidies and it builds virtually uninsurable high-rises, , and houses which are compulsorily insured by its own special insurers, who almost never find themselves liable.[1] And when the industry's excesses cause its practitioners to go broke, their customers are rendered homeless and bankrupt. There was never a better case for the state to take over an industry, but we find the reverse has happened.
A Master Builders Association press release issued today (3 July 23) makes some typical assertions:
“May’s sharp increase in unit/apartment building approvals is welcome given the severity of shortages in the rental market," Master Builders Australia chief economist Shane Garrett commented today in a press release. He claimed this to be due to “prolonged underbuilding in the medium/high-density part of the market." But it is not the result of 'underbuilding,' as the industry well knows, it is the result of driving up demand through massive migration intakes.
The Tower of Babel, is a biblical cautionary tale about a group of
men who wanted to make a name for themselves by building a city.
God felt they were becoming too powerful, so he sent difficulties
their way.
Going by their reproductive rate - a reflection of increasing economic and environmental pressures - if Australians had self-determination, their population would be a lot smaller.
The industry and the Master Builders have been selfishly and irresponsibly calling for - and getting - continuously increasing migration - for decades now. See, for instance, their submission to the Department of Home Affairs review of the Australian migration system: https://www.homeaffairs.gov.au/reports-and-pubs/files/migration-system-aust-future-submissions/m-r/Master_Builders_Australia.PDF.
They persistently and guilefully ignore their success in creating overdemand and its accompanying inflationary housing-bubble.
“We will need to see a sustained recovery in higher density home building volumes before the affordability crisis in our rental market starts to abate."
They metaphorically wring their hands, from time to time, at housing unaffordability, and their developer-members often have a presence on the boards of charities, advising their investments, which increasingly trend to real estate.
“The 12 interest rate increases we have endured so far have made it much more expensive to build new homes. “Higher mortgage rates have also forced up the cost of providing homes to the rental market. [...] Master Builders Australia warns of the need for sustained recovery and cautions against unnecessary government-induced cost pressures."
Yes, it is true. Variable interest rates are an exceptionately cruel and stupid way to 'control' the market, especially when at the same time the government is inviting massive quantities of new migrants, at the behest of the construction and development industry. How can families weather the kinds of financial insults delivered by these structurally inflationary policies?
Worse, the construction industry trains few and imports many of its workers, thus maintaining pressure downwards on wages.
The industry has it both ways: it is highly influential in causing migration-induced inflationary housing demand, whilst keeping its employees poor and insecure through continous importing of cheap labor from overseas.
Here is a Master Builders Association wish-list (from their submission to the Department of Home Affairs review of the Australian migration system).
• Increase permanent skilled visas to 200,000 places in 2023-24 and 2024-25 with preference to employer sponsored visa applications to address severe workforce shortages and strengthen Australia’s economic resilience.
• Reduce the proliferation of occupation lists, or preferably remove them all together. Occupation lists add complexity and confusion to the system. Additionally, they are based on the Australian and New Zealand Standard Classification of Occupations (ANZSCO) which is out of date.
• Remove the requirement for labour market testing. There is a lack of evidence that this requirement contributes to the recruitment of Australian workers first and it adds significant red tape.
• Improve recognition of comparable international qualifications and pathways to reduce tedious assessment processes, speed up recruitment and remove red tape.
• Review English language requirements to ensure they align with occupational needs, for example at present a tradesperson requires the same level of English proficiency as a journalist.
• Review points-tested independent visa pathways to ensure policy objectives are being met, workers can secure work appropriate to their level of education and experience, and address shortcomings in the system.
• Expand eligibility for the graduate visa extension to address acute workforce shortages and improve economic outcomes. The visa extension should apply to all current graduate visa holders regardless of their field of study or qualification, and eligibility for the visa should be expanded to include Certificate III and Certificate IV level qualifications.
• Pilot a building and construction stream within the Pacific Australia Labour Mobility (PALM) scheme to meet the government’s commitment to improving opportunities for Pacific nationals in Australia and to assist Australian employers to meet acute workforce shortages.
So, we can understand its alarm at the idea that Prime Minister Albanese might actually follow through with promises to increase wage-regulation in the industry.
“By pumping up costs right across the economy, proposed changes to industrial relations would be very counterproductive in terms of beating inflation and unduly add costs to construction,” Ms Wawn said in a 3 July 2023 press releast titled, "Government must not reverse building approvals uplift":
The industry also frequently vaunts its importance as a major source of employment. But the conditions of employment and the inflationary costs its practices cause mean that Australia would be much better off if it undercut the industry's opportunistic tendencies, through public development and construction, as proposed by Whitlam and as practised in Europe, which has a history of much more affordable housing and stable population numbers.
For a long time Australia did manage to curb some of the worst exploitative tendencies of the industry by state award regulation, which made it impossible to legally import cheap construction labor. After the industrial law changes made by Prime Minister Howard, these limitations on migrant labor exploitation were largely removed. If Prime Minister Albanese really does remove the exception he made last year in his wages reform program, Australia stands to benefit.
The current state policies to increase high-rise building in Australia are encouraged by the industry, but the industry runs its own compulsory building insurance and that does not cover any building over three stories high. It also hardly ever awards anything to people who finish up with unlivable newly built houses. Some say that the size of the industry and its clout in the courts means that lawyers cannot afford to effectively represent complainants.
NOTES
[1] "Since 2002 there have been mandated payments for builders in all states to take out domestic building insurance (DBI in Victoria), yet almost no owner who has suffered by bad building has successfully claimed their insurance, despite multiple defects. For instance, in 2011, $88m was paid into the Victorian fund, a year when 40% of building consumers suffered financial loss. [1] Yet, for that same year, only three owners had successful insurance claims against their builders. Yet many, many more qualify. The money goes to salaries in administrative infrastructure for the funds. Recently it was reported that owners who suffered in the 2011 Lacrosse dangerous cladding fire disaster had a 'big' win of $7.5m at VCAT. This sum does not even cover the amount paid to get people out of the building on the day of the fire. Owners have borrowed far more than that just to go to court. And the builder was not even held responsible. The system protected him." Source: Anne Paten, VBAG, in Sheila Newman, "Video: "Lies, spin and secrecy" - How government & the law mistreat Australian building consumers." https://candobetter.net/sheila-newman/blog/5851/video-lies-spin-and-secrecy-how-government-law-mistreat-australian-building
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