The closure of international borders, the slowdown in the global economy plus the troubles intending migrants face overseas to complete necessary checks to take up residency in Australia are all expected to weigh on the movement of people.
Mr Morrison, who said migration of between 160,000 and 210,000 was generally needed for Australia to maintain its GDP-per-capita growth, expects total migrant numbers in 2020-21 to slump to 34,000.
The Prime Minister said the drop in migration was one of the “concerning economic figures” facing the government.
“It’s going to be one of the real impacts of this crisis, because our borders aren’t opening up any time
soon,” he said.
Ordinarily, the sector would rely on cuts in official interest rates to drive activity in the construction sector.
Official interest rates and mortgage rates are at record low levels. Even with such cheap financing, the Reserve Bank expects housing investment to fall by 17 per cent in the year to the end of June with only a modest lift in the second half of the year.
Wages growth, which would also normally help drive a lift in construction, is also forecast to slow a record low rate of 1.5 per cent by year’s end.
Treasurer Josh Frydenberg and Housing Minister Michael Sukkar are working on a housing construction rescue plan although no final commitments have been made. It’s also been an issue discussed by the national cabinet.
The government is expected to focus on supply side measures with a grant to buyers of new properties under consideration.
Both the Housing Industry Association and the Property Council are backing a $50,000 grant for buyers of new homes as a way to bring forward construction and get trade staff back to work. The Rudd government offered grants of up to $21,000 for new homes during the global financial crisis.
HIA managing director Graham Wolfe said the combination of coronavirus lockdowns, the hit to consumer confidence and the collapse in migrant and international student numbers all meant the construction industry was facing turmoil without support.
He said an upfront grant would provide stability to the sector in the short term while governments worked on social housing construction plans for early 2021.
“The grant needs to be substantial, it needs to go to people quickly so they can pull forward construction and so we can start laying slabs soon,” he said.
Mr Wolfe said getting a return of migrants and students would be vital to the industry.
“There’s a lot of people, salt of the earth people, without work at the moment and we need a pipeline of activity to get them started again,” he said.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.