Federal Budget 2023 - Quick guide for the built environment
The 2023-24 Federal Budget provides a range of signals that can help inform your approach to business and professional development. It delivers fantastic fuel for strategic minds, framing opportunities for growth and providing indicators to prepare for changes ahead.
There’s a whole lot in a Federal budget and we know that it is difficult for business owners to sit down and find the time to sift through all the commentary.
Here at New Doors, we have reviewed and compiled the best and most built-environment-relevant sources of information to make thinking about the future of your business easy. Links to all the sources we have drawn from are provided so you can click on those to drill down deeper into any topics of interest.
Net Zero Authority
The newly announced National Net Zero Authority has been created to reduce national emissions and help industry, communities and workers manage the shift to a low-carbon economy.
The authority will be enshrined in law. It will seek to make Australia’s energy transition more coordinated, orderly and fair, and ensure regions and industry seize the huge economic opportunities on offer.
According to the federal government, the new authority will have three main jobs:
support workers in emissions-intensive sectors to transition to new jobs and learn new skills
coordinate programs and policies across government to help regions and communities attract and take advantage of new clean energy industries
help investors and companies take up opportunities in the net-zero transformation
Source: Australia finally has a Net Zero Authority – here’s what should top its agenda, May 2023
The recent changes to the Australian Building Code are likely to be just the beginning. Businesses operating in the built environment can expect rolling changes towards a net zero target in coming years.
A National Adaptation Plan
The Australian Government has committed to delivering Australia’s first National Adaptation Plan, which will be informed by a National Climate Risk Assessment. This will help bring Australia into line with other OECD countries and builds on the climate risk investments made during the October Budget. The announcement of $28 million for the National Climate Adaptation and Risk Program puts Australia on firm footing globally to deliver adaptation priorities – and additional investments in future Budgets
Source: Deloitte, Federal Budget 2023-24, Climate Action
Adaptation of the pre-existing built environment towards lower emissions and climate resilience will likely form a key pillar of the plan and has the potential to drive an industry around the upgrade of existing building stock. Some jurisdictions are ahead of this curve, for example; the Victorian State Government has the Built Environment Climate Change Adaptation Action Plan 2022-2026.
Defence
The Federal Budget identifies that it needs to save $7.8 billion and find $19 billion to proceed with the Defence projects it deems are necessary.
This may mean some short term pain for businesses involved in projects already underway. The Defence Strategic Review completed in April this year said that 21 projects will be rescoped. Six projects involving upgrades and refurbishments to offices and bases will be delayed while six other projects will be scrapped.
Source: The Urban Developer, Federal Budget 2023: What Developers Need to Know, May 2023
However, the opportunities in this sector remain immense. The Australian Department of Defence has one of the largest real estate portfolios in Australia, valued at $64 billion.
It owns 394 properties, including 72 major bases, leases another 530 and has stewardship over 3 million hectares of land across five world heritage areas.
Defence funding for 2022-23 is projected to reach $48.6 billion, an estimated 2.11 per cent of gross domestic product (GDP).
And according to March 2023 updates, estate and infrastructure programs have been upped by more than $500 million to $3.3 billion this year.
Source: The Urban Developer, all to Arms: Opportunities on Rise as Defence Beefs Up, March 2023
Housing
Social and affordable housing
The Federal government will Increase the guaranteed liabilities of the National Housing Finance and Investment Corporation by $2 billion.
In addition, the Federal Government will build one million, well-located homes from 2024 through the National Housing Accord, on top of existing election commitments. This funding will incentivise superannuation funds and other institutional investors to make investments in social and affordable housing by covering the gap between market rents and subsidised rents.
These initiatives will support a strong and ongoing pipeline of work in the social and affordable housing sector.
Market housing
Siblings and friends will be able to team up for first homebuyer programs and initiatives.
This will open up the market to a different type of buyer, allowing those who may have been unable to afford housing alone to pool resources.
It means architects and developers will need to consider designing homes to meet the needs of this segment with occupants wanting separate bedrooms and a degree of independence within their shared asset.
It seems likely developers will need to start prioritising two-bedroom units and houses to take advantage of this emerging market segment.
Source: The Urban Developer, all to Arms: Opportunities on Rise as Defence Beefs Up, March 2023
Student Housing
Net migration into Australia will reach 400,000 in the year ahead – a significant rise from the previous estimate of 235,000. Foreign students are estimated to account for almost half of the net migration intake. While this is a positive for the education sector and labour market supply, it will likely put significant pressure on the housing/student accommodation market. Media reports suggest that the government will implement tax changes to support and incentivise the build-to-rent sector.
Source: Commonwealth Bank, 2023/24 Budget Preview: Setting fiscal policy in a high inflation environment, May 2023
Infrastructure
In advance of the Budget, the Government announced a review of Australia’s Infrastructure Investment Program covering $120 billion in land transport projects, which is due to conclude in August 2023. The review is a key influence on the Budget, with prudent investment and project delivery a key focus, reflecting challenges in managing both:
Current high inflationary and supply chain pressures in the construction industry
Challenges in existing major project investments, for example with significant cost increases and delays to the Snowy Hydro 2.0 and Inland Rail projects.
Source: Deloitte, Federal Budget 2023-24, Infrastructure
Federal infrastructure minister Catherine King confirmed that projects currently under construction will continue.
However, Australian Construction Association chief executive Jon Davies says the axing of projects has the potential to cause more uncertainty and financial pressure within the industry.
Source: The Urban Developer, all to Arms: Opportunities on Rise as Defence Beefs Up, March 2023
Notably, Victoria’s Suburban Rail Loop will not be affected by the review (The Age, Federal funding for every Victorian infrastructure project - bar Rail Loop - in doubt, May 2023).
The Budget demonstrates a move away from significant expenditure on new and existing mega projects in favour of management and delivery of existing core programs, and targeted co-investment with states on smaller-scale transport, urban development and other social/cultural infrastructure projects.
Consequently, we see the Budget having the following potential impacts:
Industry actors should not expect new multi-billion-dollar transport projects coming to market. Instead, businesses should prepare themselves for a more diverse range of infrastructure projects which aim to resolve energy and climate, health and defence needs
State Governments will likely need a renewed focus on demonstrating the nation building significance of their projects to receive Commonwealth support.
Source: Deloitte, Federal Budget 2023-24, Infrastructure
National Urban Policy
The Australian Government will once again listen to experts, convening the Urban Policy Forum to advise the Minister on the latest thinking in innovation, planning, property, design and sustainability.
A new Cities and Suburbs Unit (CSU) will be established to deliver this work, including the State of the Cities reports, which provide an accurate and up-to-date picture of life in our cities. The CSU will also have oversight on National Cabinet urban planning matters to be discussed in Planning Ministers’ Meetings.
Capital works funding programs
The Thriving Suburbs Program is being funded with $200 million over two years from 2024-25 to provide merit-based and locally driven grants that address shortfalls in priority community infrastructure in urban and suburban communities.
The $150 million urban Precincts and Partnerships Program will support transformative investment in urban Australia based on the principles of unifying urban places, growing economies and serving communities. This program will fund both the development of precincts through facilitating planning, design and consultation, leading to business cases for investment-ready proposals, as well as a stream to support delivery of larger scale precinct projects.
Funded projects
Australian Capital Territory
$199.1 million for the National Gallery of Australia to provide building upgrades and maintenance
$175.8 million allocation for National Collecting Institutions projects, including refurbishments to the National Museum of Australia, Museum of Australian Democracy, National Archives of Australia, National Film and Sound Archives and the National Portrait Gallery Museum.
Tasmania
Tasmania will receive over $305 million in funding for the Macquarie Point Precinct and University of Tasmania Stadium to contribute towards urban renewal initiatives.
Queensland
Queensland will receive over $3.4 billion in funding over 10 years to deliver venue infrastructure for the 2032 Brisbane Olympic and Paralympic Games. This includes:
$2.5 billion to fund the development of the Brisbane Arena
A capped investment of up to $935 million towards 16 new or upgraded venues as part of the Minor Venues Program.
Cairns Marine Project: The Australian Government is providing $230 million over 5 years from 2023–24 towards the delivery of 2 major construction projects in Cairns. This includes a major expansion to the Cairns Marine Precinct (with an additional $30 million committed in this Budget) and a new Central Queensland University campus in the Cairns CBD (King, Wood & Mallesons, FEDERAL BUDGET MAY 2023-24: INFRASTRUCTURE, May 2023)
Northern Territory
Keep an eye on:
The Government will provide $1.7 million to update the Our North, Our Future White Paper on Developing Northern Australia. This will be used to identify opportunities to address new and emerging geographics and economic challenges in the region
Victoria
The Australian Government is providing funding of up to $65 million to support projects including the Shipwreck Coast Master Plan, Great Ocean Road projects and projects in the Geelong city centre. (King, Wood & Mallesons, FEDERAL BUDGET MAY 2023-24: INFRASTRUCTURE, May 2023)
