Construction sector braces for hammer blow

There is still a solid pipeline of work keeping the construction industry busy but work is expected to dry up in the second half of the year.

Housing Minister Julie Collins said the sector was still stretched thin because of labour shortages and supply chain issues but demand was expected to taper off by mid-2023.

She said the government was looking to assist the construction industry once it worked its way through the backlog of work triggered by COVID-era grant programs.

"What we want to do is to fill that gap with more social and affordable housing right across the country," she told reporters in Adelaide.

In the October budget, the government announced a national housing accord to build one million new homes over five years starting from 2024.

Work to bolster stocks of affordable and social housing is under way, with Ms Collins announcing a new 130-plus affordable build-to-rent project for key workers on Adelaide's city fringe.

The $70 million project will be funded by commonwealth and state loans and grants, the minister said on Wednesday.

Elsewhere, new population data shows the COVID-19 pandemic wiping more than one million people from Australia's 10-year population forecasts.

The population will be about four per cent smaller than expected in a decade because of the slowdown in migration related to COVID-related restrictions, as well as a blip in the fertility rate.

Record low migration during the pandemic will also feed into a lower birth rate as there will be fewer migrants to have children.

Treasurer Jim Chalmers said the news Australia's population would be slightly smaller and older was concerning, especially with the trend towards an ageing population.

"As the economy recovers from the worst of the pandemic, crippling skills and labour shortages are holding our businesses and our economy back," he said.

Dr Chalmers said the government was tackling the workforce shortages on multiple fronts, including allowing parents to work more, training Australians to fill skills gaps and improving the migration program.

ACT independent senator David Pocock raised concerns about the inequities caused by an ageing population and the burden felt by younger generations.

He said the government should reconsider the design of the stage-three tax cuts in light of the new population data.

The legislated tax changes, due to begin in 2024, will flatten the tax structure for people earning between $45,000 and $200,000.

The cuts are expected to cost the budget about a quarter of a trillion dollars.

"Intergenerational wealth disparity is growing," Senator Pocock said.

"We need a long-term plan to address it, together with how we fund the services our community relies on from Medicare to the pension, Austudy and support for the most vulnerable."