In its latest stimulus measure, the Morrison government will extend its first home loan deposit scheme to an extra 10,000 home buyers.
But unlike existing arrangements, where people can purchase a new or existing home, these buyers will have to build a house or buy a newly-built property.
The condition is to direct maximum help to the residential building sector.
As with the existing program, the extended program allows people to buy with a deposit of as little as 5%, much less than the usual deposit of about 20%. The government guarantees the other 15% of the deposit.
The additional guarantee will run until June 30, 2021. The program has already assisted some 20,000 buyers since the start of the year.
Treasurer Josh Frydenberg said: “Helping another 10,000 first home buyers to buy a new home … will help to support all our tradies right through the supply chain including painters, builders, plumbers and electricians.
“In addition to the government’s HomeBuilder program, these measures will support residential construction activity and jobs across the industry at a time when the economy and the sector needs it most.
“At around 5% of GDP, our residential construction industry is vital to the economy and our recovery from the coronavirus crisis.”
The first home loan deposit scheme began in January, to provide up to 10,000 guarantees for the financial year to June 30, 2020. It saw strong demand in its first six months , with 9,984 out of a maximum of 10,000 guarantees offered.
Between March and June, the scheme supported one in eight of all first home buyers.
The government has announced new caps for the scheme, given newly built homes are usually more expensive than existing homes for first home buyers:
The Australian government will provide eligible owner-occupiers with a grant of $25,000 to build a new home or extensively renovate an existing one.
The scheme – estimated to cost up to $688 million – will not be limited to first home buyers.
Contracts must be entered into between now and the end of the year, with work to begin within three months of the contract date, to maximise the stimulus to an industry set to take a big hit from the pandemic crisis.
The means-tested HomeBuilder scheme will be available to individuals with income up to $125,000 and couples whose combined income is up to $200,000.
It will not be available to companies or trusts, those who are not Australian citizens or people under 18 years of age. Owner builders will not be eligible, nor can the scheme be used for investment properties.
New builds must be for a principal place of residence with a cap on the combined value of house and land of $750,000.
Those renovating their existing home as a principal place of residence will have to be making changes valued between $150,000 and $750,000, with the dwelling worth not more than $1.5 million before the renovation.
The renovation must be “to improve the accessibility, safety and liveability” of the home. It can include a combination of work, such as a kitchen and bathroom renovation.
It can’t be for unconnected additions, such as detached sheds or garages, or for swimming pools, tennis courts or outdoor spas and saunas.
It must be under the supervision of a registered or licensed builder.
Sensitive to comparisons with the Rudd government’s stimulus grants in the global financial crisis, notably the controversial pink batts scheme, the government has listed differences including the limited term of the program, tighter eligibility criteria and expert supervision.
The latest package comes as Wednesday’s national accounts showed the Australian economy went backwards by 0.3% in the March quarter. Annual growth was 1.4%.
Treasurer Josh Frydenberg admitted Australia is already in recession, given the June quarter is expected to be horrendous. A common definition of a recession is two negative quarters.
Frydenberg also announced the government’s promised economic and fiscal update has been delayed, from June until July 23.
He said it would include the response to the review of JobKeeper, which is currently under way. He again flagged the government could cut the $1500 a fortnight payment for those earning less than that before COVID.
Shadow treasurer Jim Chalmers said the delay was a disgrace in these uncertain times.
The government says the housing scheme will help support 140,000 direct jobs and another 1,000,000 related jobs in the residential construction sector.
The sector has lobbied for special assistance, saying it expects new dwelling starts to fall by half by the end of this year.
The government expects competition for work will keep prices contained.
Frydenberg said that “with dwelling investment expected to decline by around 20% through the June quarter, the HomeBuilder program will support residential construction activity and jobs across the industry at a time when the economy and the sector needs it most”.
The scheme will be implemented through the states and territories, which will monitor compliance. The grant will be paid to people when they make their first progress payment.
Prime Minister Scott Morrison said: “Our JobKeeper support has helped the construction sector weather the crisis, now we’re helping fire it up again.
“This is about targeted taxpayer support for a limited time using existing systems to ensure the money gets used how it should by families looking for that bit of extra help to make significant investments themselves.”
Housing Minister Michael Sukkar said “HomeBuilder will not only support the jobs of carpenters, plumbers, bricklayers and electricians on our building sites, it will also support the timber mill workers who produce the frames and trusses and the manufacturing workers who make the glass, brick and tiles for our homes”.
Some days ago, Labor’s housing spokesman Jason Clare said the housing industry was “expected to go off a cliff” and a stimulus package was urgently needed. Labor has also said stimulus should be given to social housing.
There’s no doubt Australia’s construction industry is facing tough times. COVID-19 has caused migration to slow to a trickle. Some 2.6 million Australians have either lost their jobs or had their hours cut in the past two months. Many economists expect property prices to fall.
It all adds up to fewer homes being built in the coming months. That means fewer jobs in the construction industry, which employs nearly one in 10 Australians. The sector has already lost nearly 7% of its workforce since March.
The Morrison Government is set to anounce a stimulus package for the construction sector as soon as this week. But what should it include?
The federal government has signalled it will offer cash grants of at least A$20,000 to buyers of newly built homes. Unlike past schemes that have targeted first home buyers, it seems these new grants will be available to everyone including upsizers and investors. Grants may also be extended to renovations.
Large handouts would prompt some more residential construction by encouraging some people to bring forward their home purchases. It’s why in 2008 the Rudd government tripled the first home buyer grant to A$21,000 for new homes in response to the Global Financial Crisis.
But under such schemes, governments also end up giving grants to people who would have bought a home anyway. Even the more pessimistic industry forecasts expect 110,000 homes to be built in Australia next year. Giving A$20,000 to all of these home buyers would cost A$2.2 billion without adding a single construction job. Grants of A$40,000 would double the bill.
That’s a lot of spending for little economic gain.
Nor do grants to home buyers actually make housing more affordable. They are typically passed through into higher house prices, which benefits sellers more than buyers. In this case, that is likely to include developers eager to clear their existing stock of both newly and nearly built homes.
Cash grants for renovations would likely hit the economy quicker since they don’t necessarily require building approvals. But they bring their own problems. Grants will likely see in-demand tradies raise their prices, especially if the government is effectively paying for most of the work done. It will be also be harder for officials administering the scheme to determine if the work has been done before paying out the money.
Nor is it clear the renovation sector needs further stimulus: reports suggest COVID-19 is driving a renovation boom across many parts of Australia. Research by credit bureau Illion and economic consultancy AlphaBeta shows spending on home improvements is already 33% higher than pre-COVID levels.
There’s a better option
There’s a better way to support residential construction without providing such big windfalls to developers: fund the building of more social housing.
Social housing – where rents are typically capped at no more than 30% of household income – provides a safety net to vulnerable Australians.
In particular, the Morrison government should repeat another GFC-era policy, the Social Housing Initiative, under which 19,500 social housing units were built and another 80,000 refurbished over two years, at a cost of A$5.2 billion.
Under the initiative the federal government funded the states to build social housing units directly or contract community housing providers to act as housing developers
Public residential construction approvals spiked within months of the announcement.
Building 30,000 new social housing units today would cost between A$10 billion an A$15 billion. Because state governments and community housing providers won’t have to worry about finance, marketing and sales, they’ll be able to get to work building homes much quicker than the private sector.
The boost to the economy would be pretty immediate.
Just as important, building social housing would also help tackle the growing scourge of homelessness. At the most recent Census (2016), more than 116,000 people were homeless, up from 90,000 a decade earlier. COVID-19 has shown us that if we let people live in unhealthy conditions it can help spread disease – affecting everybody’s health.
The drivers of homelessness are complex. Nonetheless the best Australian evidence and international experience shows social housing substantially reduces tenants’ risk of homelessness. But Australia’s stagnating social housing stock means there is little “flow” of social housing available for people whose lives take a big turn for the worse.
Funding social housing won’t boost house prices or provide windfalls for developers. It will do more to keep construction workers on the job, while also helping some of our most vulnerable Australians.
New housing in Australia must meet minimum energy performance requirements. We wondered how many buildings exceeded the minimum standard. What our analysis found is that four in five new houses are being built to the minimum standard and a negligible proportion to an optimal performance standard.
There have been calls for these minimum standards to be raised. However, many policymakers and building industry stakeholders believe the market will lift performance beyond minimum standards and so there is no need to raise these.
What did the data show?
We wanted to understand what was happening in the market to see if consumers or regulation were driving the energy performance of new housing. To do this we explored the NatHERS data set of building approvals for new Class 1 housing (detached and row houses) in Australia from May 2016 (when all data sets were integrated by CSIRO and Sustainability Victoria) to December 2018.
Our analysis focuses on new housing in Victoria, South Australia, Western Australia, Tasmania and the ACT, all of which apply the minimum six-star NatHERS requirement. The other states have local variations to the standard, while New South Wales uses the BASIX index to determine the environmental impact of housing.
The chart below shows the performance for 187,320 house ratings. Almost 82% just met the minimum standard (6.0-6.4 star). Another 16% performed just above the minimum standard (6.5-6.9 star).
Only 1.5% were designed to perform at the economically optimal 7.5 stars and beyond. By this we mean a balance between the extra upfront building costs and the savings and benefits from lifetime building performance.
The average rating is 6.2 stars across the states. This has not changed since 2016.
The data analysis shows that, while most housing is built to the minimum standard, the cooler temperate regions (Tasmania, ACT) have more houses above 7.0 stars compared with the warm temperate states.
The ACT increased average performance each year from 6.5 stars in 2016 to 6.9 stars in 2018. This was not seen in any other state or territory.
The ACT is the only region with mandatory disclosure of the energy rating on sale or lease of property. The market can thus value the relative energy efficiency of buildings. Providing this otherwise invisible information may have empowered consumers to demand slightly better performance.
The fact that these improvements aren’t being made suggests there are significant barriers to the market operating efficiently. This is despite increasing awareness among consumers and in the housing industry about the rising cost of energy.
Eight years after the introduction of the six-star NatHERS minimum requirement for new housing in Australia, the results show the market is delivering four out of five houses that just meet this requirement. With only 1.5% designed to 7.5 stars or beyond, regulation rather than the economically optimal energy rating is clearly driving the energy performance of Australian homes.
Increasing the minimum performance standard is the most effective way to improve the energy outcomes.
If we continue to create a legacy of homes with relatively poor energy performance, making the transition to a low-energy and low-carbon economy is likely to get progressively more challenging and expensive. Recent research has calculated that a delay in increasing minimum performance requirements from 2019 to 2022 will result in an estimated A$1.1 billion (to 2050) in avoidable household energy bills. That’s an extra 3 million tonnes of greenhouse gas emissions.
Our research confirms the policy proposition that minimum house energy regulations based on the Nationwide House Energy Rating Scheme are a powerful instrument for delivering better environmental and energy outcomes. While introducing minimum standards has significantly lifted the bottom end of the market, those standards should be reviewed regularly to ensure optimal economic and environmental outcomes.
The series of earthquakes in North Lombok and others further east goes on. But hopefully the worst is over and the intensity will recede from now.
Hundreds of people have been killed and a lot more injured, many of them seriously. Nearly all this human suffering was caused by collapsing buildings. The subsequent homelessness will go on for many months for hundreds of thousands of people.
But a lot of this suffering need not have happened.
The strongest quake on August 5, 6.9 in magnitude and at a relatively shallow depth, is large by any standard. But, as photos and video footage show, not all buildings collapsed. Among the landscape of devastation are many buildings that appear to have suffered little if any damage.
According to one estimate, 70% of buildings suffered serious damage, which means 30% did not. In many parts of the world, such as Japan, New Zealand and Chile, buildings are designed to withstand earthquakes of this scale and many of them do, repeatedly.
Traditional buildings in most of Indonesia, including northern Lombok, were built of timber framing with thatched roofs. In an earthquake they flex and sway but rarely collapse. If they do, it is likely to happen slowly and incompletely and any falling roofing is relatively light and soft.
But over recent decades, building materials and methods have changed. Timber and thatch have become scarce and expensive and popular tastes have shifted towards houses that look, at least superficially, like those of the global modern middle class – little villas with plastered walls, glass windows and tiled roofs.
But underneath the (often picturesque) facades, the construction is of brick or concrete blocks, held together only with weak mortar and supported by little or no framing. The better ones may have some concrete framing, but the quality of the concrete is usually poor and the steel reinforcing, especially at joints, is minimal. These facades do not reliably support infill materials and they are heavy when they fall.
Roof tiles are only loosely secured and ceilings below them are too light to catch them. If one had to design a system of construction for easy collapse and maximum injuries, this would be the perfect model.
Learning from past earthquakes
In Yogyakarta, in central Java, in May 2006, at least 150,000 houses of exactly this kind collapsed in less than a minute of shaking caused by a lesser earthquake than the largest in Lombok. Nearly 6,000 people were killed and thousands more injured. Farm animals housed in traditional buildings mostly survived.
A massive international humanitarian aid response and significant government programmes followed and within a year Yogyakarta was largely rebuilt – an astonishing result in the circumstances. Both government and international agencies went to considerable lengths to design safer methods, educate people about them and offer support, materials and incentives to “build back better”.
An expert report ten years later (unfortunately not yet published) concluded that:
The overall poor quality of construction however has almost certainly placed more people at increased risk of larger, heavier building elements collapsing upon them.
Northern Lombok has not had this kind of experience in recent decades and, because it is a relatively poor part of Indonesia, until 20 years ago, many people outside the urban areas lived in traditional houses. However, over recent years, partly as a result of tourism revenues, many houses have been built or extended in the new style and construction.
Here too, construction standards tend to be low, and even lower for poorer households. The video evidence shows exactly the kind of failures as in Yogyakarta 12 years ago, because of exactly the same basic weaknesses of design. The next earthquake, wherever it may be in Indonesia, will almost certainly have the same effects.
No easy solutions
A recent article makes similar points and blames inadequate enforcement of building codes and lack of government commitment. Unfortunately the reality is not so simple.
The Yogyakarta experience shows that even with a massive campaign by government and international agencies, and with the fear of earthquakes still fresh in people’s minds, the rebuilding was little better than what it replaced. Building codes do exist in Indonesia, but they are rarely followed, easily evaded, and rarely enforced, least of all at the level of owner-built local housing.
Even if there were a serious effort to implement codes, it would be undermined by well-known levels of bureaucratic inefficiency and corruption, as well as public resistance and evasion. It would also have unintended consequences, including making decent housing even less affordable, especially for poorer people.
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There will be no easy solutions, but national education in basic structural design principles, subsidised design, production and distribution of cheap and simple hardware for mitigating the most common failures of design and financial incentives for appropriate construction might be worthwhile places to start.
Intelligence doesn’t have to be, and rarely is, James Bond-esque. Indeed, 007 is the world’s worst spy: everyone knows who he is, meaning he is compromised, exposed and susceptible to blackmail before he even arrives to save the day.
But the September 11, 2001, terror attacks, and the all-encompassing “war on terror” that followed, did have a major transformative impact on the handling of secrecy and surveillance activities in government programs.
One impact has been the growth of executive authority in national security. This has exacerbated demonstrable tensions between civil liberties, trust and secrecy. As noted by former ASIO chief David Irvine, the public will always have some degree of suspicion regarding the secret function of intelligence agencies.
There is much to be gained by having an electorate better educated in the work of the Australian Intelligence Community (AIC). An informed public is better placed to question or accept the need for Australia’s intelligence agencies. This extends to the merits of expanding budgets, powers, oversight and responsibilities.
A war of choice
In the botched hunt for Iraq’s alleged weapons of mass destruction (WMD) stockpiles in 2003, the “slam dunk” assessments used to build a preemptive war rationale corroded public confidence in political leadership and the intelligence industry.
It is now widely accepted that Iraq has been a strategic disaster. Yet many core public debate points remain conflicted and uncertain. To what extent should an intelligence “failure” be traced back to failings in domestic leadership, a selective approach to intelligence estimates and a culture of political spin that seeks external scapegoats?
His imagery of a corrupt, rogue and monolithic intelligence bogeyman out to topple him is downright bogus. But its rhetorical simplicity plays into the public’s pre-existing fears about a shadowy political world.
At the same time, push-back against Trump’s political tactics and self-serving showmanship doesn’t mean the intelligence community should be immune from criticism and accountability.
The CIA, for instance, has a lengthy history of pushing or breaking moral and legal boundaries in locations such as Latin America. Ditto the Iran-Contra affair.
US intelligence has also been accused of monitoring human rights workers and harassing civil society groups and social dissenters engaged in legitimate political activities.
Likewise, in Australia in 1977, the Hope Royal Commission on Intelligence and Security unearthed deep-seated problems with principles of propriety, including legality, within ASIO.
The end result of inquiries into the actions of the intelligence community often raises more questions than answers, which feeds public mistrust and anxiety about intelligence and the function of government.
As we have matured, successive Australian governments have extended and deepened the responsibilities of the intelligence community. It is imperative that future boundaries set for our intelligence agencies are not crossed. For example, we should ensure that the AIC collects information as needed, not just because it can.
Unnecessary snooping is just one area that speaks to the broader importance of oversight, accountability, and an educated and understanding electorate.
Sunlight as disinfectant
The overall mandate of the AIC is to provide the government with “information” to better enable it to understand the issues confronting it. This, in turn, is meant to facilitate coherent policymaking.
However, good intelligence will not automatically guarantee good policy. Intelligence, after all, is an imperfect science and just one of the tools available to policymakers.
The task of intelligence agencies is not an easy one. Indeed, large budgets, hardworking staff and all the expertise in the world cannot ensure that a threat, or opportunity, will be recognised or acted upon in a timely fashion. Connecting the dots will rarely result in an end-product of absolute certainty.
At the same time, the demands of policymakers should not distort or corrupt intelligence – intelligence must inform policy (not visa versa). Intelligence agencies must “speak truth to power”. Integrity and candour, rather than ideological or personal loyalty, remain core prerequisites in dealing with political leaders.
Yet, the appearance of accountability does not necessarily de-politicise national security. Nor does it prevent overt political pressure, or the manipulation of intelligence operations to justify preordained political conclusions.
Checks and balances on government error and excess should remain a vital trademark of a healthy democracy. In this sense, a number of the proposed reforms should be applauded. This includes boosting the role and resources of both the Parliamentary Joint Committee on Intelligence and Security, as well as Office of the Inspector-General of Intelligence and Security.
These changes also attempt to resolve questions about whether the boundaries and operational principles between agencies can be more clearly drawn. There are hopes the establishment of a new Office of National Intelligence (in place of the Office of National Assessments) will assist in greater co-ordination and complementary cross-agency efforts.
Of course, much of the devil remains in the detail. And a number of oversight gaps remain, including how to best protect whistle-blowers who expose unethical or illegal behaviour. We are also yet to see the implementation, execution and performance outcomes stemming from this major reform exercise. Further, the simultaneous announcement of new Home Affairs arrangements will demand equal critical scrutiny.
It’s been mooted that intelligence successes are often overlooked, while intelligence failures are widely broadcast. Popular misconceptions, polarisation and arguably excessive secrecy arrangements mean that the AIC will continue to operate in, and need to be responsive to, a backdrop of public misgivings, political point-scoring and conspiracy theories.
For the next two weeks, the Gold Coast is hosting the Commonwealth Games, a record fifth time for Australia. But it’s the first time an Australian non-capital city will host the event.
Another great distinction from past hosts is that the Gold Coast is mostly relying on its existing assets, and the community aspect has generally prevailed: most of the refurbishments and extensions took place one to three years before the start of the Games, meaning the community has already been able to use these facilities.
Even the new venues were completed some time ago. At the Coomera Sports Centre, early site works began in February 2015. Construction was completed in early August 2016, 20 months ahead of the Games.
Similarly, the Carrara Sports Centre was completed in early 2017. The nearly 20,000m2 venue was available to Gold Coast residents to enjoy more than a year before the Games.
Refurbishment is costly, but looking at the bigger picture it might still be less expensive. A new building usually involves other costs such as building new road access, water and electrical connections, and so on.
The same strategy was implemented for all the refurbishment projects without exception. For example, the aquatic centre is a recycling and expansion of the original 1960s Southport pool. Finished in 2014, it hosted the Pan Pacific Swimming Championships the same year. Although at that time debate about the lack of a roof was raging, being able to test the facility in advance is a luxury that few host cities have had.
What about the architectural legacy?
In designing venues, architecture plays a a critical role in delivering a premium experience for athletes and spectators, and thus ensuring the success of the Games.
It’s doubtful any of these buildings will enter into the history of architecture as references or models for future Games. They are not comparable to what has been done, for example, in Beijing in terms of structural innovation (such as the swimming pool or the stadium) or iconic status.
I am convinced, however, that all these buildings display a very good critical approach by their architects.
For example, for the Coomera centre, the choices made by Gold Coast-based BDA architects were fundamental to achieve the flexibility to accommodate up to 7,500 spectators when starting from 350 permanent seats. The truss structure, in allowing a very long span (82m by 168m for the roof), frees the indoor space from columns and increases flexibility of uses. In the same way, the 23m roof clearance frees the volume.
In terms of aesthetic, the choice not to enclose fully the centre at the entrance gives both a lighter perception of the building – despite the use of 600 tonnes of structural steel and 6,000 cubic metres of concrete – and a different look from the traditional box often found for gymnasiums.
The key new facility at Carrara presents some similar characteristics. Because of its central location on the Gold Coast, the idea was that the new centre would contribute to the creation of a sport precinct and to economic development and sport advocacy programs. Knowing that Glasgow had a 17% increase in people doing sport after the Games, it was a reasonable vision to bet on long-term use by locals and not only on the visitors for the brief period of the Games.
Designed by BVN architects, the Carrara centre consists of a street space between two major halls. As the nominated venue for the badminton, wrestling and table tennis programs, it is quite an unexpected arrangement; it does not feel like the traditional sport hall, but more like a place to meet others. The colours and material palette have been used to symbolise the young and vibrant image of the Gold Coast. Again, all these architectural choices come together to provide a memorable experience for visitors and athletes alike.
Within the given budget, the balance between an appealing aesthetic and a long-term legacy has been achieved. Maybe none of these buildings will become international landmarks, but present uses have shown their functionality and benefits for the Gold Coast.
Even if we don’t all agree with the current politics, there is one thing we cannot deny about the Games preparation: architecture has been a tool for enhancing public facilities thanks to a very long-term vision. The social, cultural and economic legacy is already there, since facilities are being used.
Finally, since the Games preparations began, major debates on the Gold Coast concerned new casinos, the Spit redevelopment and the light rail extension. None of these debates caused any real problems for the Games. It is quite an achievement, or the result of a very good communication strategy, but that might be another discussion…