Effects of fiscal policy on the Australian construction industry

HOSPITALITY
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Construction sector 1
Effects of fiscal policy on the Australian construction industry
Notably, fiscal stimulus has positively impacted Australia’s construction industry.
Worth noting, the Australian construction sector is among the top employers of the working
population hence its significant contribution to the country’s gross domestic product. Essentially,
the fiscal policy comes in the form of increased government expenditure and taxes. Specifically,
the period between July 2008 and 2009 experienced an economic downturn due to the global
financial crisis. The crisis affected all sectors of the economy, the construction sector included as
illustrated in the graph below (Bill 2010). This downturn prompted the Australian government to
inject a financial stimulus package to the construction sector which leads to an increase in output
and increased employment and revenue from the sector between the years 2009 February to May
2010. The first stimulus package was implemented in October the year 2008 under the Economic
security strategy.
Worth noting, the Australian government introduced the Tax Cuts and Jobs Act in the year
2017. According to the Associated Equipment manufacturer and equipment dealers association,
the current tax reforms will boost investment in the construction sector. This means increased
revenue and employment opportunities in the construction sector due to increased investment
flows. The reduction of corporate tax encourages investment thus leading the creation of more
employment opportunities. However, there is an increased cost of purchasing heavy building
equipment owing to the current tax reforms. This might negatively affect the construction
industry output because expensive machinery might reduce the output of construction companies

Construction sector 2
due to high operating costs. Directly or indirectly taxes affect the operation costs of construction
companies through taxes on building equipment and machinery and taxation on the construction
firm’s profits. Overall, financial policies affect the performance of all sectors of the economy and
the construction sector in Australia is no exception.
(Bill 2010)
According to some economists, the imposition of a carbon tax on the industry will
negatively affect the revenue. From the standpoint of construction operators, the tax will lead to