$10,000 for tradies won’t ease housing shortage anytime soon

Scott Kuru January 28, 2025 5 min read

KEY POINTS

The Prime Minister says a re-elected Labor government would offer a $10,000 incentive payment to construction apprentices in a bid to boost the workforce
Industry body Master Builders says that currently, around 50% of apprentices involved in construction do not complete their training, often citing low wages
The announcement comes as new figures reveal that, at the current pace of home building, Australia will fall short of its 1.2 million new homes target by mid-2029

Prime Minister Anthony Albanese has unveiled one of his first election pledges ahead of the coming Federal poll, promising that if his government is re-elected, apprentices in construction trades like bricklayers, electricians, plumbers and carpenters will receive payments of $10,000 each to complete their training.

The aim is to retain more tradespeople in an industry where there’s a shortage of skilled workers, exacerbating the slow supply of new homes.

The initiative was launched as new figures from the Australian Bureau of Statistics underline just how far Australia is falling behind in residential construction to meet the needs of a fast-growing population.

The details

The construction trades apprentice allowance would be given to young people living away from home in 5 increments of $2,000 on top of their normal wages, as they complete significant milestones in their training.

The idea is to incentivize tradies to keep on the tools, with Master Builders Australia estimating that currently only 50% of apprentices in construction actually complete their training.

The government estimates the incentive package will cost $626.9 million over four years.

Launching the initiative during a speech at the National Press Club in Canberra, Prime Minister Anthony Albanese said first-year carpentry apprentices earn just two-thirds of the Australian minimum wage.

"That's before you buy things like tools, safety gear, clothing and boots," he told his audience.

"Many apprentices have said they could earn more stacking shelves at the supermarket, and too many leave training because they simply can't afford to stay."

Master Builders Australia CEO, Denita Wawn, welcomed the announcement, describing it as “great news and a good start”.

However, she was cautious when asked how many more tradies the incentive payments might see complete their training.

“We know that a similar incentive for electrical trades with new energy incentives has only seen about an additional couple of thousand apprentices come on board.

“So, it is incumbent upon us, as an industry working with the government, to look at the full array of the package of opportunities for people who are thinking about a career in building and construction and selling that as a package.

“There's more to be done.”

Construction statistics

A new data release from the Australian Bureau of Statistics underlines just how much more needs to be done if the government wants to have any chance of meeting its ambitious five-year target of building 1.2 million new homes.

The Building Activity, Australia data release contains a breakdown of construction during the September quarter of last year - the first three months of the National Housing Accord.

TotalDwellings

The data shows that during July, August and September of last year, construction commenced on just 43,250 new homes.

While this is an improvement on the 38,000 homes commenced in the September quarter of the previous year, it’s well below the rate of 60,000 homes a quarter that would need to be started to have any chance of meeting an average annual target of 240,000 new homes.

“Based on the current trajectory, only 173,000 homes will be commenced during the first year of the National Housing Accord period, 67,000 short of that necessary to meet the annual targets,” Tom Devitt, the Senior Economist at the Housing Industry Association, said.

“The September quarter result is less than three-quarters of the required build rate. This is simply too slow out of the blocks.”

PrivateDwellings

Mr Devitt was particularly critical of the slow pace of new commencements of apartments and townhouses, which Federal and state governments hope will form the bulk of new housing in “in-fill” developments as distinct from new “greenfield” locations over the 5 years of the National Housing Accord.

“Higher density housing development is running at its lowest levels in over a decade and has been particularly constrained under the weight of uncertainty in tax settings, skilled labour shortages and regulatory imposts,” Mr Devitt said.

“A significant pick-up in multi-unit starts is urgently required to meet the housing demand of recently elevated net overseas migration.

“This market segment is crucial to making inroads on housing affordability and improving homeownership rates for first-home buyers.

“At a minimum, it is necessary for the volume of multi-unit starts to double from current levels to contribute sufficiently to the 240,000 homes per year needed to achieve the Government’s housing target,” he said.

However, don’t expect hundreds of new high-density apartment projects to come on line soon to ease the housing crisis, with specialists in this area pointing out current interest rates, red tape, taxes and charges mean they currently don’t make financial sense to build.

Melbourne apartment developer, Maxwell Shifman, has pointed out that in his city, median unit prices range from $480k in Melbourne's West up to $670k in the Inner East, rising on average 0.8% during 2024.

“These (figures) are a proxy for the price the market expects to pay for a new unit, for which the median is likely to be a 2-bedroom apartment,” he said.

“Compare those prices with the replacement cost a developer needs to charge for a new apartment in these same areas and there is a 40-50% gap.”

Maxwell Shifman claims the replacement cost of a new 2-bedroom apartment in Melbourne is now approaching $1 million.

“Buyers should pay more for a new dwelling than an old one, just like a new car costs more than a used one,” he said, “but until that gap shrinks - closer to 20% or 25% - apartment sales will be fraught and new projects won't get built.”

The take-out

There’s no argument that incentivising tradies and addressing the alarming drop-out rate of apprentices in the building industry is an important initiative to address chronic labour shortages in residential construction.

However, as the ABS statistics and Maxwell Shifman show, it’s only one part of a complicated picture that is conspiring to prevent enough housing from being built in Australia at a time when our population is expanding.

And don’t expect that to resolve itself anytime soon.