Builders fear negative business impacts from carbon tax
A new survey of the building and construction industry has found a massive 88 per cent of those polled believed the carbon tax will hurt their business over the next 12 months.
This comes as the building and construction industry continues to confront a further deterioration in business conditions, reflected in today’s devastating dwelling commencement figures.
“The timing for the carbon tax’s introduction on 1 July 2012 could not come at a worse time for the building industry” according to Wilhelm Harnisch, CEO of Master Builders Australia – peak organisation for the building and construction industry.
“Industry is trying to come to terms with a host of unknown factors. This includes how to deal with supply cost increases and how they can be recovered in new and existing building contracts.
“Further, new homebuyers are delaying their decisions as they assess the impact of the carbon tax. This confirms other surveys that show consumers are already exercising even greater caution over fears of increased cost of living. The increased cost of home ownership and of living flowing from the carbon tax will only make matters worse.
“We are already getting loud and clear messages from the building industry, that work in the pipeline is at very low levels and profit margins are low to non-existent. Builders and contractors have no capacity to absorb any cost increases incurred as a consequence of the carbon tax.
“Housing is already highly unaffordable in many parts of Australia – not just capital cities, but also many major regional areas. The last thing homebuyers need is the cost of new home ownership, and of living, to increase.
“The Federal Government has tried to assure the building and construction industry the carbon tax will have little to no impact. This is at odds with consumer behaviour and consumer confidence - and it is at odds with Treasury’s own modelling,” Mr Harnisch said.
Treasury’s carbon tax modelling indicates that the carbon tax will reduce the gross output in the building and construction industry by 5.6 per cent by 2050. This impact is considerably higher than negative impacts on mining and manufacturing, which are anticipated to go down 4.3 per cent and 2.8 per cent respectively.
“While the percentage reduction sounds small, it equates to just over $24 billion in lost output in cumulative terms, between 2013 and 2020.
“The Federal Government response so far has been to downplay the negative impact of the carbon tax on the building and construction industry. We call on the Minister Combet to open to dialogue and work with industry during the transformation period,” Mr Harnisch said.
Industry nervousness is reflected in the results of the survey conducted by Master Builders in May. The survey included 526 builders and contractors operating in the commercial, residential and engineering construction sectors.