News Research

HomeBuilder grants’ ‘effectiveness’ reviewed

The government’s HomeBuilder grants, handed out during the pandemic, “overheated” the residential construction industry, a review has found.

The KPMG review of the HomeBuilder program done on behalf of the Treasury found the up to $25,000 grants for home builders and renovators stimulated the sector as it was intended to do, however, arguably too much.

The program, introduced in June 2020, issued 137,755 grants towards renovations and new builds, marking $2.1 billion in grant payments.

The review confirmed the grants added towards a surge in new properties on the market putting, which contributed to a spike in construction costs, on the back of an already stretched sector hit by acute labour and material and land shortages.

“Despite mixed perspectives on the need for HomeBuilder, it was understood that there was a national imperative for financially stimulating the sector given the impact of the COVID-19 pandemic,” the review stated.

“The [grants’] effectiveness is evidenced by the stimulatory impact it had on the sector where demand for financial support far exceeded initial expectations.”

However, jurisdictions identified that “overheating occurred in the residential construction industry”.

The review found some jurisdictions “were not appropriately consulted in the design” before it had been signed and implemented, which created “implementation challenges” such as dealing with public inquiries and meeting expectations.

A key lesson learned from the report was the need for “the Treasury to consult earlier with jurisdictions to leverage their grants administration expertise” particularly prior to public announcements, it stated.

Minister for Housing and Homelessness, Julie Collins, said while it was a “good idea” at the time, the program wasn’t “implemented well by the former government”.

Ms Collins said the money would have been “better targeted” towards social and affordable homes, flagging the government’s current commitments.

“We have the Accord that was announced in the Budget which is collaboration between local government, State Government, Federal Government, the construction sector, capital such as superannuation, community housing providers” Ms Collins said.

“I think the point is if you have to invest taxpayer money we need to add to supply.”

Given construction is beginning to slow, with the Australian Bureau of Statistics revealing an almost 30 per cent drop in new builds for the year to June 2022, Ms Collins said there needs to be a whole sector collaboration approach to boost housing supply.

“We do know the construction sector is dipping a little bit now and we expect it to dip more in the second half of next year,” Ms Collins said.

“We are talking and collaborating with the sector and industry to do everything we can to try and meet that gap in demand that will come, particularly as interest rates have been increasing, and we expect that demand to come off.

“What we need to stop is some of the stop start of the construction industry and have it more slowly increase in a sustainable way over time.”

Leave a comment

Your email address will not be published. Required fields are marked *