Australian building and construction firms have made an unequivocal statement that the carbon tax will have a negative impact on their business after its introduction.
In a nationwide Master Builders survey of 526 builders and contractors operating in the commercial, residential and engineering construction sectors, no fewer than 88 per cent of those polled believe that the tax will hurt their business over the next 12 months.
Against a backdrop of deteriorating conditions in the industry and decade-low housing start volumes, opponents of the tax argue its timing is most unfortunate.
“The timing for the carbon tax’s introduction on 1 July 2012 could not come at a worse time for the building industry,” Master Builders Australia chief executive Wilhelm Harnisch says. “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.”
Harnisch says the industry is trying to come to terms with a number of unknown factors, including how to deal with supply cost increases and how they can be recovered in new and existing building contracts.
He adds that new homebuyers are delaying purchasing decisions as they assess the impact of the tax not only on the cost of housing but also on the cost of living in general.
“Housing is already highly unaffordable in many parts of Australia – not just capital cities, but also many major regional areas,” Harnisch says. “The last thing homebuyers need is the cost of new home ownership, and of living, to increase.”
Pointing to the survey results, along with Treasury modelling indicating that the tax will reduce output in the industry to the tune of 5.6 per cent by 2050, Harnisch dismisses federal government assertions that the tax will have little effect on building and construction.
“This is at odds with consumer behaviour and consumer confidence – and it is at odds with Treasury’s own modelling,” he says. “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.”