Labour market conditions heighten concerns that government tax measures will reduce private investment and housing supply
The federal government's plan to lift taxes on property, investments and trusts risks compounding an already softening labour market, Master Builders Australia has warned.
The industry association representing the residential, commercial and civil construction sectors made the statement in response to the latest labour market data released by the Australian Bureau of Statistics on Thursday.
Australia's unemployment rate rose to 4.5% in April – the highest level recorded since late 2021.
"Interest rates have been jacked up three times since the start of the year, on top of the fuel price and supply chain shocks," said Shane Garrett (pictured right), chief economist at Master Builders Australia. "The pain is starting to show in [the labour market] data, with our economy shedding 18,600 jobs during April and unemployment closing in on a five-year high.
"Although the labour market softened during April, the building and construction industry continues to be constrained by workforce shortages. The rise in unemployment has not improved conditions, and a simultaneous decline in investment confidence risks making the situation worse."
Despite the easing in employment conditions, Garrett noted that workforce shortages in the building and construction sector have not abated, and that weakening investment confidence poses an additional risk to the industry's outlook.
Master Builders Australia acting chief executive Melissa Byrne warned that the tax changes could undermine private investment at a time when the sector is already under strain, jeopardising the government's own housing targets.
"The government's tax increases on property, investments and trusts will not boost confidence in the sector and, according to Treasury, will reduce housing supply," Byrne said. "These changes will dampen private investment, resulting in fewer new builds, reduced rental supply and higher rents.
"Builders need holistic policy measures and continue to call for an accelerated depreciation of capital works and an increase to the Instant Tax Write Off to $150,000 to better support small business investment and cashflow, as well as productivity."
Master Builders Australia has called for targeted policy measures, including accelerated depreciation of capital works and an expanded instant asset write-off threshold, to support small business investment and cashflow across the sector.
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