Emergency fund is a welcome step to avoid large-scale job losses

24 January 2009

The Federal Governments new $4 billion emergency funding pool could help prevent large scale job losses in the construction industry, according to the Urban Taskforce.

The Taskforces chief executive, Aaron Gadiel, said that developers have been unable to secure loans for new major projects.


The credit supply for developers has evaporated, Mr Gadiel said.


Weve been seeing the list of new projects disappear before our very eyes.


As current projects are completed, weve had grave fears that there simply wouldnt be enough work to employ tens of thousands of construction workers and tradespeople.


Mr Gadiel said that the Federal Governments Australian Business Investment Partnership will help unblock the flow of credit to urban development projects.


“Without action we would lose valuable jobs, income and development that our community so desperately needs, he said.


For every $1 million spent in construction, 27 jobs are created in the economy.


The construction sector will be crucial for pulling Australia and NSW out of the current economic slowdown.


Mr Gadiel welcomed reports that the package will safeguard “very big” planned development projects – including shopping centres, factories and high rise buildings affected by global credit markets.


Its crucial that this money is also available to large scale residential development projects, he said.


This should include high density inner suburban development and master planned residential communities in outer suburban areas.


Theres a huge shortfall in the supply of housing, yet attractive new housing developments have been unable to secure finance to get started.


In the three months to September 2008, new NSW home construction fell 27 per cent in comparison with the June quarter. Queensland also saw a fall in new home construction in seasonally adjusted terms declining by 23 per cent in comparison with the previous quarter.


Developer-driven building activity has been the hardest hit, Mr Gadiel said.


NSW apartments and town house construction has nearly been cut in half when compared with the same period last year.


Mr Gadiel said the building approval figures were even more significant because they indicated the likely level of construction activity within 6-12 months.


In the three months from September to November 2008 home approvals were 47 per cent below the average historical level of new home approvals for that time of the year, Mr Gadiel said.


In the same period Queensland recorded 22 per cent less home approvals than its average.


The Government will chair the schemes five-person board with Westpac, the Commonwealth Bank, the National Australia Bank and the ANZ Bank each nominating a director. All of the board’s decisions about allocating finance will have to be unanimous. The government has said that the scheme will operate from March for two years.


The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.



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