Last night, the Federal Government released an even more ambitious budget than the last, aimed at supporting Australia’s recovery across multiple sectors of the economy in the aftermath of the COVID-19 pandemic and technical recession last year.
In what represents two major advocacy victories for the strata sector, this year’s budget has delivered welcome news in the form of policy announcements concerning both the ongoing issue of insurance affordability in northern Australia and building upon the success of the HomeBuilder program.
For nearly a decade, insurance premiums in cyclone and flood-prone regions in northern Australia have risen by as much as 178%, compared to 52% elsewhere, with insurance becoming approximately 9% more expensive year upon year since 2011.
This burden for homeowners and businessowners in northern Australia has led to a systemic lack of choice among providers, and in some cases, lack of coverage, thereby hindering the ability for local economies and communities to effectively recover from natural disasters.
In welcome recognition of the facts of this matter, the Federal Government has announced the establishment of a $10 billion reinsurance pool, $40 million Strata Title Resilience Pilot Program, with the aim of reducing insurance premiums and increasing the capability to support and equip strata properties to deal with natural disasters; the programs are scheduled to commence in July 2022.
Additionally, $600 million has been allocated to provision resources through the National Recovery and Resilience Agency directed at mitigation and forward planning efforts in relation to natural disasters.
SCA have strongly encouraged the federal government to consult further with the strata industry in ensuring the effective rollout of these programs and resources, given the complexity surrounding underlying issues, as well as what implementation will mean in practice.
On the subject of building a foundation for recovery, another welcome announcement in this year’s Federal Budget is the extension of the HomeBuilder stimulus program for another 12 months, and the expansion of eligibility criteria to include off-the-plan apartments and townhouses, provided construction begins post-June 2020.
According to UNSW’s 2020 Australasian Strata Insights Report, approximately 25% of Australians reside within a property such as an apartment, townhouse, or other dwelling under strata title, with the strata sector’s total insured value nationwide worth more than $1.1 trillion.
What the extension of HomeBuilder to the strata sector represents is the opportunity for more and more Australians to build and own their dream home, given approximately 50% of dwelling unit builds in Australia are comprised of strata-titled properties such as apartments and townhouses.
What this also means is that the capability of strata to underpin a confident and robust construction industry, a crucial component of Australia’s economic recovery, has been well and truly unleashed.
Almost every owners corporation has a long-term maintenance plan to fulfil and incentivising the more than 300,000 strata schemes across Australia to engage with contractors based on previous experience will mean more work, and more jobs.
After all, this is a “jobs budget”, and one which brings welcome and unique opportunities for our sector to lead our economic recovery from the COVID-19 pandemic.
Author: Strata Community Association
Strata Community Association (SCA) is the peak industry body for Body Corporate and Community Title Management (also referred to as Strata Management, Strata Title or Owners Corporations Management) in Australia and New Zealand.