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Construction needs further economic reform

The Chamber of Commerce and Industry WA (CCIWA) recognises that both the State and Federal Governments have sought to further support the construction of residential houses, to create temporary work for the construction workforce. This will be a welcome relief to construction companies and their workers.

The latest announcements however do not provide a long-term fix to the challenges faced by WA’s residential and commercial construction sector.

The fundamental challenges for the sector are weak business investment – particularly outside mining – and low population growth. The only sustainable fix for those challenges is to create a competitive advantage for WA businesses through a lower tax and regulatory burden. Once international border restrictions are lifted, policies to better allow the migration of skilled workers will also play an important role.

CCIWA has recently welcomed the introduction of a number of priority measures called for in our COVID-19 Reform Recovery Roadmap, including announcements yesterday of funds for the maintenance and building of social housing, and support for apprentices and abolishing change of use approvals. It is also important to recognise the State Government has undertaken a range of planning reforms to improve the regulatory environment. It has so far however, ruled out meaningful tax reform that could stimulate the economy, including the proper investigation of how a shift from stamp duty to a broader-based land tax might occur.

The current emphasis on a transactional stamp duty tax not only undermines the residential construction industry, it makes it more costly to move. This imposes an unfair burden on people with lower incomes, who are more likely to need to move multiple times in their lives to be nearer to schools and work.

There is a real opportunity for further reform to build a more competitive and sustainable economy, without which more stimulus packages will be needed in future to prop up the pipeline of temporary work for the construction industry.

Aaron Morey

CCIWA Chief Economist

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