Findings of the 2014 Federal Budget Impact Survey

23 May 2014

The ACA’s 2014 Federal Budget Impact Survey sought to better understand what the budget means for architectural practices and the profession. To complement our analysis of the findings, we present the results below. 

The first set of questions aimed to provide a general understanding of the expectations of the impact of the budget on individual practices, the profession and society more broadly.

Impact on practices

1 - Question 1

Twenty-seven people took the opportunity to comment further, with many expressing concern about the increased uncertainty and an even tighter economic environment. A cross-section of responses follow:

"It's going to hit consumer confidence and that impacts on the developers and risk-takers who are our clients."

"Fee bargaining, redundancy, rising construction costs in materials and labour. Unless your market is the ultra wealthy, you're stuffed. Unless of course you cut your services. Or write sneaky fee agreements where the lack of detail is not revealed until the client realises they have been shafted or need detail. Not my way of doing things ..."

"Syphoning additional income from the community will continue to pinch consumer funds and channel into cost of living across the board. Increases likelihood of employee demands on employers for higher wages. Unlike food, building and construction are discretionary for a significant part of the population. The Budget 'take' further increases the lack of enthusiasm in this area and towards projects."

"Short term negative but hopefully positive long term."

"Schools will be seriously impacted with major reductions in funding and little guidance about the long term. New building works and refurbishment will have to be set back or abandoned."

"Reduced state funding impacting negatively on an already contracting market sector."

"Massive cuts in education and health sectors will flow on and ensure the construction sector is starved for work. Architecture at the front end will be the proverbial canary in the mine and we need to brace ourselves for a long cold winter or two, or three."

"Community confidence has evaporated. Government capital expenditure is drying up."

"I have just lost a project partly due to the budget cuts."

"We have already had a significant project cancelled by client who cited the budget as a primary factor."

"Uncertainty and mistrust of policy stops spending."

"Government has been very poor in selling the budget. Basically a good plan for the nation's economy."

"By improving Australia's economic fundamentals it will lead to an acceleration in growth, at least in the medium term, which translates into confidence for the investors we rely on."

"Will not give confidence to our small/medium business clients."

Impact on the profession

 2 - Question 2

Twenty-five people offered further comment in relation to this question. Some of the themes identified in the previous question were reiterated, while others took the opportunity to express concern about the limited opportunities for young graduates and the consequences of this for the profession. Comments include the following:

"The architecture profession is deeply embedded in the education and arts spheres that have been so drastically, unnecessarily impacted by this budget."

"Slower economy, no drive to sustainable technologies or support for sustainable buildings. Budget cuts to hospitals and schools spells less work and less employment."

"Funding cuts for government projects must have a negative effect on the amount of work available and this will put further downward pressure on fees."

"Even less diversity of university graduates due to fees and lack of ability to pay off university debt due to low wages."

"Redundancy is common so young graduates would have to be have financial backing to get through rocky patches in industry."

"There is so much negative talk that we have seen inquiries almost dry up."

"More money for infrastructure = some jobs for architects. Negative effect on individuals starting projects in the short term."

"Business confidence should continue to rise."

"It may increase/support construction projects and bring in new revenue and opportunities. However, it's assumed that these will be larger, commercial and developer-driven developments, so may be "good" financially for the industry but extremely poor in terms of the quality of our built environment."

"Some will be affected more than others eg if involved in NRAS projects or public sector work, but overall will lead to better investment conditions."

"Australia is already highly efficiency across industries. This will further offshore the workforce and encourge the use of 547 visas, which is already being practiced by the small- to medium-sized practices."

"It is an insidious creeping change to the way we live our lives and think about others. For example, refugee management, overseas aid. We are in danger of losing who we are: a generous and welcoming society, a great nation, the best place in the world to live. The changes signal a move to a society where the economy is the only determinant of success."

Impact on Australian society

3 - Question 3

Twenty-one respondents made further comment in relation to long-term impacts on Australian society. This covered a wide range of views, but a clear dominant theme concerned the increased stratification of society. A number of comements relate this directly to architecure becoming increasingly a profession for the elite. Sample comments include the following: 

"This budget has made choices. And it has chosen defence spending, superannuation concessions for the wealthy and subsidies for mining companies (fuel concessions etc) over the welfare of the poor, the old and the young and the quality of our health services, education system and creative industries."

"I do think we need to curb the debt. I like the analogy of a cruise ship: we need to turn it around, but slowly. This ain't no speed boat. I do think that in the long term, as a country, we will all be better off if there is not a massive debt, and we never want to head in the that direction. Spain and Greece, and the levels of unemployment there, are not to be copied."

"I agree we need a tough budget – but this is not a fair budget. It is full of bad policies that will cause a lot of pain that is proportionately much bigger than the gain. There is no investment in good policies that will make a difference in productivity and growth. This is lazy economics – the work of incompetent, ignorant politicians with no creativity."

"The logic of lower debt is appealing. The reality of where money seems to be directed is less so. Government mostly doesn't support objectives I most strongly believe in, and there is no transparent honest debate in politics around economy – only accusatory statements and denials. What I am certain about is that government thinking has turned mean, and they actively encourage more mean thinking. That is worse than bad."

"I feel that I would not have been able to become an architect had this budget been in place when I was young. This means the demographic of those entering the profession could be limited to one group and affect the architectural outcome for the different demographics in society. A hobby for wealthy and employed only for the wealthy."

"Definitely not. The long term impact on society, especially the disadvantage will be greatly impacted. I am also concerned that the increased costs to education may result in architecture becoming an elite profession. Is this what we want for a profession?"

"A massive concern is the proposed increase in both the amount of debt required to obtain an architecture degree and the interest rate charged. Such a degree is likely to become more of a liability than an asset."

"This budget continues (and speeds-up) the stratification of Australia pushing us closer to the US experience of an expanding 'underclass'."

"A less civilised Australia with less access to health, education for those less well off."

"Wealthy Australians and corporate businesses may be better off for a time. This model will inevitably lead to a significant crisis as the environment, social welfare, health and resources become increasingly compromised."

"Medium term will be financially better off, however, long term we're not creating a plan for employment with skilled labour. The use of offshore labour will further separate the highly knowledgeable skilled workforce, with limited numbers flowing up through the industry."

"From an economic point of view, yes from a social point of view, no."

"Environmental issues significantly downgraded. General expenditure down, design value not recognised."

Who responded to the survey?

The second set of questions was designed to give a better understanding of the basic demographics of those who responded. 

The majority of respondents were directors, partners or owners of an architectural practice, but there was also some input comment from employed architects and others active in the profession. Respondents came from firms ranging from sole practitioners to firms of over 100 staff, with the profile of respondents reflecting the structure of the profession. A wide range of types of work was represented. 

Size of practice

4 - Question 4

Location

8 - Question 5

Types of work

7 - Question 6

Respondents identified a range of other sectors in addition to those available in the tick box section. These included retail, cultural and performing arts, industrial, pro bono work, heritage and conservation, government and strategic project advice. 

Respondents' roles within practice

5 - Question 8

How do practices plan to navigate economic changes? 

6 - Question 7

The ACA was also interested to know if and how practices engage in business planning to help navigate shifting economic circumstances. Just over half the respondents indicated that they did, with a range of strategies identified. Ineterstingly, the proportion of ACA members who engage in business planning of higher than non members (66% of ACA members and 50% on non-members). Strategies identified include the following:

"Strategic planning already started to accommodate challenging conditions, this budget just prolongs the challenges."

"Keep overheads down to a minimum."

"We develop strategies in response to many kinds of external influences and the budget is just one of them. This budget will re-inforce our concentration on the private sector rather than government."

"Analysis of forecast expenditure in our relevant sectors."

"I try too. but I am using my current client list which is not long enough. The builders are positive. This is good."

"Maintain staff and wait for the J curve to kick in."

"Ensuring we market more actively in Transport and Infrastructure."

"Identified potential risks in response to the Federal budget. Identify potential markets to undertake target marketing. Reviewing employment agreements."

"No new employment. No new car leases or purchases. No spending. Diversify into another sector."

"Taking strategic advice regarding potential redundancies."

"Engage more staff." 

"My strategies are loose, but include having staff on contract rather than a permanent position. I hope this will change as my practice grows."

"Keep our fingers crossed (!), look seriously at redundancies if workload doesn't pick up, continue looking for new sources of work."

"Review of current clients and potential impact to their business. Review of submissions, potential, past win loss etc. Review of office capacity."

"Diversifying markets. Minimizing fixed outgoings to protect against projects freezing/stopping."

"Don't keep all our eggs in the one basket. By having a diverse range of clients you are better placed to cope with a sector downturn."

"Targetted approaches to planning and urban design firms for collaborative assignments and submissions."

"Increase debt funding as interest rates will remain low for the next 12 months."

"Trying to diversify our services, and we are doing a lot of marketing. It's hard to make a living these days, we are working twices as hard to make half as much, and the market is so uncertain, and very competative. In order to compete we must compromise services,and I'm not in a position to do that as yet. I am questioning wheher to get out of the proffession all together given the conditions have been tight for so long, and doubt how much longer we can physically survive."

ACA members

The survey was open to all, and we aimed to get a broad a range of responses within the limited timeframe the survey was open for. We were pleased with the high proportion of responses from ACA members. The ACA will continue to advocate for better business conditions for all architects – and we encourage those who are not currently members to join us in this!

9 - Unnamed

 

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