Ambition Without Capacity; Australia Circa 2026?
Treasury’s 2026 Intergenerational Report is a long document with a message for SME business that is camouflaged in big sentences. That message is – SME’s are not a part of the big picture!
What Canberra has promised
- Up to 420,000 new homes over the next decade, under the $47 billion Homes for Australia plan.
- More than $150 billion of data centre investment by 2030, on the industry estimates Treasury cites.
- Around $90 billion investment in renewable generation, storage and transmission.
- Defence spending lifted to approximately 3 per cent of GDP.
- A care workforce projected to grow by a further 23 per cent by 2035.
Every one of these commitments is a building task or a labour-related task. None of them builds itself.
What the same report concedes
- Australia now builds about half as many dwellings per construction hour worked as it did 30 years ago.
- Australia’s Labour force participation peaks in 2039–40. After that, an ageing population removes workers faster than it adds them.
- Data centre construction will, in Treasury’s words, “increase competition for capital and resources”.
- The renewable target requires faster environmental approvals than we have today.
- Fewer firms are entering the market.
- Industry concentration is rising.
- Small businesses are creating jobs more slowly than large ones. Now, about two-thirds of small businesses employ no-one but the owner. and if you exclude those traditional owner-worker businesses, the SME makes up only 15% of all employers.
Put plainly, scale is gaining ground and the small operator is losing that same ground.
The paradox
Place those facts beside the Government’s ambitions, set out in the same report, and a paradox emerges: the Government’s initiatives cannot be delivered inside the constraints the Government itself describes.
The same electrician cannot wire a data centre, a substation and a first home in the same week. The same apprentice cannot be trained twice. When Government funded programs and contracts outbid SME’s for the fixed pool of tradespeople, materials and capital; they do not add capacity. They simply raise their price.
And who pays that price? The small builder quoting a fixed-price residential contract; and the family trying to buy the home that contract was meant to deliver.
Time and again it has been proven houses cannot be built by Government Departments. They are built by small builders, their subcontractors and their suppliers, the very firms the Intergenerational report ignores (other than pointing out that the ranks of SME businesses are thinning out).
A plan that relies on a shrinking base of small operators, while increasing its funding for large scale contracts is not a housing strategy. It is a helium filled balloon.
Action plan for SME owners
- Know your numbers. Understand what your business is worth today, not what you hope it will be worth.
- Reduce your dependency on yourself. A business that cannot run without its owner is a job, and buyers price it accordingly.
- Choose your contracts. Where public demand is driving input costs up, fixed-price work carries even more risk now than it did during Covid just five short years ago.
- Speak up. Tell your local member which regulation costs you the most time, and put a number on it.
The question for debate
Can a government promise more homes, more power, more data centres and more defence all at once, while the pool of builders shrinks?
Is the Government – through its IR and Tax laws planning in anticipation that we all must sooner or later be the employees of Mega-Corp?
I would welcome your view.
If you would like to know where your business stands, call me directly on 0401 308 385.
