Path to recovery… PM Scott Morrison and Assistant Treasurer Michael Sukkar visit a building site.

THE federal government is working up a multi-billion-dollar scheme to construct residential housing as part of its strategy to stimulate the economy strategy and prop up the building industry as the nation emerges from the coronavirus crisis.

The scheme, confirmed on Tuesday by Prime Minister Scott Morrison, is being developed by Treasurer Josh Frydenberg and Assistant Treasurer Michael Sukkar.

“It’s an issue that has been a key topic of discussion amongst the premiers and chief ministers and myself,” Mr Morrison said.

Mr Morrison’s confirmation builds on various calls in recent weeks from Labor, the Greens, builder associations, the unions, and property and industry groups for a national construction initiative.

A government source said while the scheme would act as an economic stimulus, its principal aim was to ward off a crash in the construction centre and prop it up until the economy recovered and demand returned.

Mr Morrison again raised the issue of an extreme drop in migrant intake, estimated by Treasury at 85%.

“We’re looking at net overseas migration falling to 34,000-odd next year.”

Master Builders Australia chief executive Denita Wawn said one of the key proposals it had put to the national cabinet was a new home grant of $40,000 that would ensure up to 130,000 homes were built in the 2021 financial year.

“We are facing a decline in residential construction in 2021 of 30% and a significant reduction in jobs,” Ms Wawn said.

“There is no doubt there will be a drop in demand with lower migration and tourism but we are not concerned about the long term,” she said.

“Building and construction is shaping up to be one of the industries worst hit in the long term by the COVID-19 economic crisis. We know from previous downturns that it takes four times longer for our industry to recover than the rest of the economy.”

Earlier this month, the CFMEU and Master Builders called for the establishment of a $10 billion fund to build 30,000 new social housing units to head off the anticipated investment slump.

The CFMEU and the MBA, which ceased hostilities over a month ago to keep the construction industry operating, said investment in residential and business construction was expected to fall by 40% to 50%.

The call for 30,000 new social houses was made separately by the Australian Council for Social Services.

Property industry groups are calling for a $50,000 new home buyer incentive to drive construction.

(With comment from the Financial Review)