Cost of Living and Retrofitting
Cost of living is the topic on everyone’s mind right now, and rightly so.
Increased interest rates, record high fuel and grocery prices, shortages of labour and interruptions to supply chains are having a massive impact on each and every Australian.
We’re going to take a moment to look at how the cost of living crisis is impacting the strata sector specifically, and an aspect that affects cost of living that might not be immediately apparent – retrofitting.
The strata sector in Australia, comprising apartments, townhouses and other types of commercial and retail residences has assets totalling approximately $1.3 trillion dollars. It employs, directly or indirectly, 10,000 people and draws on the services of tradespeople such as plumbers and gardeners, and professional services such as lawyers and accountants.
One of the most critical impacts on the sector has been felt by the shortages of labour and many supplies. As costs for building materials have soared and the time to complete jobs has grown longer, some strata committees have been finding it harder to justify repairs and afford bills. It has certainly meant that, along with everyone feeling the pinch, many proactive, future focused actions have been put on the backburner in the short term.
A focus on retrofitting and future proofing projects
SCA National pushed hard at the last federal election for recognition that the benefits that have flown from improved building standards and the solar revolution in single dwellings, also flow to strata residences.
The Albanese Government has pledged to install or coinvest in 400 community batteries and 85 solar banks across Australia. The plan to both encourage electric vehicle uptake and upgrade the electricity grid are important steps that, if managed right, could mean real gains for strata.
The economic benefits of improved energy efficiency are well known, and is carried out to improve the costeffectiveness of common areas by strata managers and firms with great regularity.
Strata properties offer some of the highest impact efficiency savings in Australia, as the guidance of a professional strata manager linked with an experienced and accredited service provider can quickly diagnose and remedy these types of issues.
Another area where retrofitting can improve not only quality of life, but the hip pocket, is retrofitting in regions affected by severe weather such as cyclones or floods.
The federal government has already committed $40 million to the Strata Titles Mitigation Pilot, but in a formal letter to SCA National the Albanese Government has promised more funding, especially in relation to ‘resilience’.
As SCA has worked hard to highlight, increased mitigation efforts, along with an effective reinsurance pool will drive down premiums and put money back into the pockets of those who need it the most.
Government funding and initiatives in this area are critical, as it allows the sector as a whole to move forward, rather than punishing those who act alone.
As we look on to the rest of the year, we turn our heads towards the Labor Government’s newly revised 2022-2023 budget, to be handed down in October. We can expect to see a significant contractionary policy stance implemented, to curtail what has been established to be wasteful expenditure on the part of the previous Government.
However, we can also expect to see the Albanese Government’s pre-election promises implemented, and the expansion of initiatives to further support Australians who are in the midst of this substantial cost of living crisis.
Importantly, this includes the Government’s ‘Safer and More Affordable Housing’ plan, featuring key policies such as the ‘$10B Housing Australia Future Fund,’ ‘Help to Buy scheme’ and the establishment of a National Housing Supply and Affordability Council, to target improvements in housing supply and overall housing affordability.
SCA is determined to ensure that throughout this process, the Government takes into consideration the needs of the strata industry, and recognises the scale of impact that addressing the issues facing the sector may have.
SCA will continue to advocate the Government, to establish that the proposed initiatives relating to strata remain both functional, and are fully conveyed. SCA aims to ensure that strata residents and owners are in a position to realise the full scope of the assistance that will be afforded to them.
Key cost of living stats
• Interest rates have lifted three times in three months to a cash rate of 1.35 per cent.
• Flagged by the Reserve Bank as rising to 2.5 per cent in the near future, projected by many of the large banks to go higher.
• Inflation is at 5.1 per cent to the March 2022 quarter, and is projected to go as high as 7 per cent.
• As of June 2022, the unemployment rate continued its decline to 3.5 per cent, its lowest since August 1974.
• Nearly a third (31 per cent) of employing businesses are having difficulty finding suitable staff.
• More than two in five businesses (41 per cent) faced supply chain disruptions in June 2022.
• Supply chain disruption peaked in January 2022 at 47 per cent of businesses impacted.