A $50 billion infrastructure package leads the list of Federal Budget wins for the building and construction industry.

The Abbott Government handed down its first Federal Budget on Tuesday with many describing it as ‘harshest’ budget in over a decade.

The infrastructure spend will mainly go towards roads, rather than public transport infrastructure, and includes $3 billion for the first and second stage of the East West Link.

Master Builders Australia CEO Wilhelm Harnisch said: “But roads are not everything and the Government will need to focus on broadening infrastructure investment to include urban investment in the post-Budget period.”

No funding was allocated for the planned $8.5 to $11 billion Melbourne Rail Link project from Melbourne Airport to Southern Cross, South Melbourne, Domain and South Yarra.

There is also some cause for concern about the negative impact of several initiatives on the building and construction industry. 

Housing
The National Rental Affordability Scheme (NRAS) has been scrapped making it doubly important for the Government to find more effective methods of tackling the lack of housing, especially affordable social housing. This measure is expected to result in $235 million in savings over the next three years.

The Government will also abolish First Home Owner Saver Accounts (FHOSA). Federal Treasurer Joe Hockey MP said the scheme “had limited effectiveness in improving housing affordability due to the low take up of the accounts.” Under the new arrangements, any new accounts opened after 13 May 2014 will not be eligible for the existing Federal Government co-contribution, or any tax or social security concessions. The measure is expected to result in savings of around $125 million over the next four years.

Training
The cessation of the Tools For Your Trade program is another disappointing development that will hopefully be offset by the Trade Support Loans for apprentices.

“The phasing out of skills programs such as the Apprenticeship Mentoring Program and the National Workforce Development Fund is another disappointment which will place pressure on the Government to implement a viable apprenticeship reform program to guarantee a skilled workforce for the future,” Mr Harnisch said. 

Small business
The imposition of the increased fuel levy will also have a detrimental effect on tradespeople because of their need to travel constantly. The levy will rise from 38.1 cents a litre, in line with inflation, twice per year. This is expected to add about one cent per litre to pump prices for the next four years.

However, the Federal Government has announced it will fund a $2.8 million unit to provide specialist advice to small business on contracts to ensure they are not disadvantaged by federal public sector tendering and procurement processes. 

Industrial relations
In a positive development for the commercial construction sector, Fair Work Building and Construction (FWBC) staff will increase from 131 to 155 in 2014-15 with expenses due to increase from $29.8 million to $34.7 million.

With construction the hardest hit sector for industrial disputes, this fortified FWBC is welcome.

“Our industry needs a ‘strong cop on the beat’ to ensure the rule of law is upheld on site,” Master Builders General Manager of IR, Lawrie Cross said.

Tax
The company tax rate will be reduced by 1.5 per cent from 1 July, 2015. For large companies, this will offset the cost of the Government’s proposed Paid Parental Leave scheme which would be introduced at the same time.

A two per cent level will also be imposed on individuals with taxable incomes above $180,000 per year. This level will apply for three years.

Overall, some wins and some losses for the construction and building industry have come out of the Federal Budget. 

To read about the State Budget, click here.