2014 Federal Budget
What does the 2014 budget mean for the business of architecture? Many of the cuts will have a direct impact on sectors architects are active in, while the much-promoted infrastructure spend is unlikely to bring much opportunity for architectural businesses.
The Federal Budget, delivered on Tuesday, 13 May, will have significant implications for the architectural industry. While the ACA and its advisers are still working through all the ramifications the budget will have on business, we want to share some key points with members immediately.
Impacts for practices
Impacts on individual practices will partly depend on the sectors they are most engaged in.
On the whole, commentators agree that the budget favours the corporate sector. Architects with a focus on this section of the economy may be able to navigate the impacts of this budget with more ease than those operating in other sectors, especially the public and community sectors.
Most architectural practices come under the definition of “small business”. Commentators have mixed opinions on the impact of the budget on small- and medium-sized businesses.
The 1.5% business tax cut and paid parental leave scheme are both in the contingency reserve.
The increase in funding to infrastructure is to be welcomed. However, Cassie McGannon, policy fellow at the Grattan Institute, points out that “infrastructure spending will decline in real terms over the next four years and rail is hit the hardest”, and that none of the projects identified are classified as ready to proceed by Infrastructure Australia.
The definition of infrastructure in the budget is very narrow, with a predominant focus on roads and little investment in public transport.
This is likely to mean that all the majority of the work will go to a few big civil firms, with very little flow on to architects, builders and trades. (This is in contrast to the BER, which directly benefitted the architectural industry despite mixed experiences of it implementation.) These concerns are shared by other commentators.
The ACA reiterates the importance of proper planning and sustainable procurement. It is clear that infrastructure spending has the best effect when construction is preceded by a careful process of design, analysis and costing. This ensures that the community reaps the greatest benefits from the spending.
Higher education faces significant cuts and funding to schools is also reduced – with a $4B reduction in funding across the education sector and no significant change to this until 2018.
This is an area for concern, and practices that have specialised in education projects may need to strategise carefully.
Health, housing and social services
These sectors face substantial cuts, which is also likely to impact on the availability of work for architects with expertise in these areas.
The National Rental Affordability Scheme is going, which will have a significant negative impact on the supply of affordable housing, an area that many architectural practices have been becoming increasingly engaged with.
The Housing Help for Seniors pilot program has been abandoned.
The following coverage includes insight into what the budget means in sectors relevant to the built environment industries.
Michael Bleby interviews Ken Maher and Shelley Penn in the Financial Review regarding the focus on roads and the impacts on long-term economic growth. This is behind the FR paywall.
The Conversation has collected comment from five infrastructure experts, most of whom are also concerned about the focus on roads.
Business Insider coverage pointing out that, “in the near-term, the infrastructure commitment is quite modest”.
Fifth Estate provides an overview of the budget from a sustainability perspective, and canvases opinion from the Australian Conservation Foundation, Property Council of Australia, Retirement Living Council, Consult Australia, the Climate Institute, Environment Victoria, The Australian Academy of Science, Local Government Association,
Another industry overview. This time Architecture and Design’s David Wheeldon talks to the Master Builders Australia, the Housing Industry Association, Consult Australia, Canberra architect Glen Dowse and Urban Taskforce CEO Chris Johnson.
Interview by Rebecca Thistleton with AFR property editor Robert Harley on what the budget means for the construction industry.
Michael Bleby writing in the Financial Review.
Robert Harley in the Financial Review, with comment from a range of players in the development industry.
Joanna Mather reports on Grattan Institute concerns about the absence of rigourous cost-benefit analysis in the proposed infrastructure projects, arguing that this is essential before committing to projects. Also in the Financial Review.
Willow Aliento interviews Peter Barda of ACIF on the Fifth Estate. A pre-budget interview, which includes advice to businesses on “how to deal with a rapidly changing landscape”.
Cameron Jewell on Fifth Estate.
Roy Green, Dean of UTS Business School, writes on The Conversation about the negative impact on business of the cuts to research and development initiatives and programs.
The Property Council’s brief to members about the budget is accessible to all.
Infographic: federal budget at a glance