As we approach the fiscal cliff, could social housing and construction-tech be Australia’s bungee cord?

Simon-Elliott

Construction-tech investor and entrepreneur Simon Elliott.

Do you feel like we’re living in a kind of nostalgia ‘la-la land’ here in Australia?

Where we’ll all seriously still be able to afford our pre-COVID-19 mortgage or rental payments within eight months?

The federal government’s JobKeeper payments are (thankfully) propping up jobs and businesses, but less so from late-September, when those payments will shrink. Fast forward to March 28 — the current expected end date — and it could be a whole new vista for Australia.

By then, rent and eviction moratoriums would no doubt have ended too.

Getting close to the edge

Economists have a catchy name for it: the fiscal cliff.

It’s as if we are having a collective ‘Thelma and Louise’ moment as we hold each other’s hands and say ‘let’s just keep going’.

Already, a quarter of businesses in accommodation and food services have warned they’ll shutter when federal government support dries up.

Business closures and bankruptcies in other sectors are tipped too. One in 10 overall will go, says the Australian Bureau of Statistics.

Think ‘zombie’ businesses on a temporary lifeline.

While we can’t see our way through the pandemic yet, what’s clear is that Australia is nearing the precipice.

Coming from the COVID-19 hotspot of Melbourne, Victoria, you might be thinking that’s influencing my dark prediction. But stay with me. It’s tinged with hope.

I want to talk about what could happen with a vision, planning and compassion.

There is a post-pandemic economic recovery opportunity staring us in the face. It’s construction-tech.

Let’s get back to basics.

A home for us all

A core need of humanity is a home, or shelter if you like. It’s the foundational physiological need when you look at psychologist Abraham Maslow’s hierarchy of needs.

But come 2021, will we have enough affordable and social housing for those in crisis?

Even before COVID-19 took hold, researchers wrote for The Conversation in February that Australia’s three-decade decline in housing affordability was among the developed world’s worst.

The researchers urged the government to treat the trend as a “serious budgetary concern because of impacts on future public spending”.

Yes, they’re linking the housing affordability crisis to economic productivity and system financial risk.

Their solution?

A national housing strategy, which would:

  • Discourage speculation in land and housing (rethink negative gearing and stamp duty);
  • Increase housing diversity;
  • Expand the scale of government and not-for-profit housing provider activity;
  • Reduce the sector’s vulnerability to damaging market volatility; and
  • Encourage states and territories to introduce planning system rules to set minimum levels of affordable housing for future housing developments.

Such a strategy makes sense to me because it’s holistic.

But, is this set-and-forget territory? Will it ‘sort out’ the issue forever?

No. But we’d be doing the best we can in the circumstances.

By the way, the Australian Institute of Health and Welfare admits measuring housing affordability isn’t straightforward.

The simple way is to compare housing costs to gross household income. A savvier way is to factor in overall housing market demand and housing tenure type too — think rental, buying outright, or buying using a home loan.

What we do know, is that in 2017-18, the most recent year for which the institute has issued figures, one-in-six Australian households spent 30% or more of their gross income on housing costs.

People are proud and can hide things well, but chances are you already know someone experiencing housing stress.

Will COVID-19’s impact nudge you into that category too?

Industry groups have already been calling for more investment in social housing as well as fast-tracking infrastructure and sweeteners for home building, as reported in The New Daily.

You would have heard state and territory governments announce billions of dollars of infrastructure projects that are shovel ready, and I’m hoping ‘click ready’.

That is, harnessing construction-tech to allow the sector to innovate, improving quality and driving efficiencies.

(And a PS that construction projects are limping along at 25% capacity now, thanks to a state government decree here in Victoria. Necessary, but harsh.)

As well, governments are reducing stamp duty for certain new-home buyers as home loan interest rates shrink further.

But, where’s social housing in all of this?

You’ve seen thought leaders across the sector elbow into the public debate with their bent on what will lead Australia’s economic recovery. There’s a lot of possibilities out there.

Social housing a potential saviour?

What hasn’t made the headlines is a social housing-led recovery.

That’s what Community Housing Industry Association CEO Wendy Hayhurst is calling for.

Even the think tank, the Grattan Institute, has talked about this, but stops short of urging a revival of the National Rental Affordability Scheme. It points to Australian and international research that says social rather than affordable housing reduces tenants’ risk of homelessness.

Specialist homelessness services were already turning away 254 people seeking help every day before COVID-19 hit, according to CSI’s Homelessness and COVID-19 report.

Key risk groups include young people, those experiencing family and domestic violence, Indigenous Australians, as well as migrants without work and healthcare rights.

Regarding that last demographic, ABC News Online just reported in July, that almost 14,000 refugees and asylum seekers on temporary visas would be at risk of homelessness.

Back to Wendy Hayhurst: social housing may well be our path to recovery.

So, can we quantify what we need?

Yes. UNSW City Futures Research Centre estimated that in March last year. It said we’ll need 728,600 more social housing properties to rent to people on social security by 2036. Add affordable houses to the mix, and the need jumps to one-million-plus.

In a world where more of us will have the flexibility to work from home, why wouldn’t we make sure that more Australian have homes from which to work?

It’s interesting that we focus so much of our government-borrowed funds on infrastructure (roads, tunnels, rail, etc) to help us get to offices faster, when we’ll increasingly not be visiting offices, at least in the short term.

IP and export dollars

Construction-tech has a role to play here too.

Internationally, there is a boom in modular tech for social housing, and Australia is already a world leader in this space.

As well as these innovative building methods, new software applications are improving safety and creating efficiencies throughout the construction value chain, from manufacturing all the way through to the project site.

With the right vision from state and federal governments, imagine the potential innovation that could be generated from our local businesses?

This is valuable intellectual property that will drive export dollars.

And it’s not tech that’s come down in the last shower in our state. Victoria made global headlines due to construction-tech about three years ago. That’s when Melbourne-based construction software company Aconex sold to Oracle for $1.6 billion — a world-first unicorn exit in construction tech.

The Aconex effect in Vic remains. Co-founder, Robert Phillpot and Leigh Jasper are active in the industry, supporting startups as active investors and mentoring the next generation of construction tech leaders. Their legacy also includes other talented individuals who joined the founders on the company’s amazing journey. They’re now driving innovation at new construction tech businesses across the state.

Victoria has become a growing hub for construction tech, exporting to the world. Now is an ideal time for Vic construction firms to check their own backyard to digitally pivot towards better margins.

So, let’s improve affordability and invest in social housing as a country alongside important infrastructure.

At the same time, we can turn to our thriving construction tech industry to build safer, faster, better and more sustainably.

Finally, we can create new opportunities for our local construction companies and the apprentices they employ.

Let’s not leave any Australian out in the cold. What do you think?

NOW READ: Building a stronger future for all: The key to construction stimulus is social housing, not home-buyer grants

NOW READ: How affordable housing can boost Aussie innovation

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