Builders push for $40k home buyer grant to stave off construction crisis - but Barr says no

A $40,000 grant for new home buyers is the centrepiece of a proposal to stave off a looming crisis in Canberra's construction sector.

The Master Builders Association has pitched the idea to the ACT government as part of a broader 16-point plan to spur construction activity and prevent thousands of job losses in the wake of the COVID-19 crisis.

The proposed stimulus package, which would cost ACT taxpayers an estimated $293 million, includes a fund for cladding rectification work, extra investment in public housing and temporary waivers of property taxes and charges.

It would create nearly 1900 jobs and pump $660 million into the territory economy, according to modelling commissioned by the building lobby.

Chief Minister Andrew Barr said the government was considering some of the ideas as part of its plan to support Canberra's economic recovery.

But Mr Barr has explicitly ruled out the $40,000 new home buyer grant scheme, saying it would worsen housing affordability.

While the construction sector hasn't been forced to shut down during the pandemic, the economic shock has sparked widespread concerns about the industry's short to medium-term prospects.

The Master Builders predicts that under the worst-case scenario almost a third of Canberra's 18,600 construction sector jobs could be lost in the aftermath of the pandemic. Some 1500 jobs have already been wiped out since mid-March, according to the latest Australian Bureau of Statistics data.

The Housing Industry Association last week published its own gloomy forecast for the local building industry, predicting a massive drop in the construction of new homes - in particular apartments and townhouses - in the next financial year.

In a submission to Chief Minister Andrew Barr outlining the proposed stimulus package, Master Builders Association chief executive Michael Hopkins commended the ACT government for its efforts to keep the sector ticking over through the worst of pandemic, including the fast-tracking of $25 million worth of small-scale infrastructure projects.

But Mr Hopkins said that "action is required now" to ensure that there was a pipeline of projects in the next six to 12 months.

The centerpiece of the proposed package was a $40,000 grant for people buying homes which are newly built, or purchased off the plan.

Modelling from consultancy firm EY estimated the scheme could lead to the construction of nearly 500 new homes and create more than 1000 jobs. It would cost taxpayers about $182 million, but generate more than $340 million worth of economic activity in the construction sector.

The submission said a similar incentive was "instrumental" in helping the housing sector bounce back after the global financial crisis a decade ago. It suggested the offer be available for a limited time, creating a "sense of urgency" among prospective buyers. Only owner-occupiers would be eligible for the grants.

The ACT government last year introduced a new first home concession scheme, waiving stamp duty for purchasers whose annual household income was below $160,000.

The industry's group proposal also called on the ACT government to implement a version of Victoria's cladding rectification fund, which it established last year. The scheme would cost about $40 million, but create some 260 jobs.

Mr Barr said some of the proposals were already being considered as part of the government's "multi-stage recovery program", which was due to be announced in the coming weeks.

But he made clear the $40,000 home buyer grant scheme was off the table.

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He said a far better use of the territory's "scarce resources" would be to further cut stamp duty and invest more money in public housing. He hinted the two measures would be part of the government's rebuild plan.

"This would support the housing construction sector and provide a lasting community benefit," he said.