Interview with Stephen Cenatiempo, 2CC

Event: Interview with Stephen Cenatiempo, 2CC
Date: Monday 6 May 2024, 7.40am AEST
Speakers: Denita Wawn, CEO Master Builders Australia
Topics: Housing; productivity; industrial relations

E&OE

Stephen Cenatiempo, host 2CC: Well, this is frightening. Despite the Government’s investment in housing as, well they call it an investment in housing, 80 per cent of the additional new homes that could have been built will never see a shovel hit the ground according to Master Builders Australia CEO Denita Wawn. She joins us now. Denita, good morning.

Denita Wawn, CEO Master Builders Australia: Good morning as always Stephen.

Stephen: That’s a pretty damning assessment. 80 per cent of these additional homes will never see a shovel hit the ground. Why?

Denita: Well, it’s all to do with productivity or a lack of it. Unfortunately, while the Government has made good inroads into housing investment that policy is going to be thwarted by other policies of the Government that means that we find it too difficult to build. We’ve got a shortage of people. That has a significant impact on the capacity to build. We’ve had a lot of industrial relations laws, and that figure doesn’t even take into account all IR laws. We still haven’t modelled the latest round, and of course, we’re still seeing material costs go up. So, as many of your listeners would know at the moment, if you want to build a home it’s about 40 per cent more than pre-COVID and that combined with materials, labour shortages and just slowness generally. So, we’ve got to make sure that governments when they are looking at policies, they don’t look at them in isolation; they take a holistic approach.

Stephen: Well, I want to look at those three issues for a moment. So, a prolonged labour supply. Again, it’s not the kind of thing you can snap your fingers and fix. I know we could be importing skills, we’re not, we seem to be… the highest immigration rates in years but we’re not bringing in the right trades and skills in. Material price growth again that’s something that can’t be addressed quickly. The only thing that the Government really can make a difference within the short term is industrial relations reform and it’s not likely to do that either.

Denita: No. Well, the Federal Government has taken into account three lots of reforms to IR. We say all three are a backwards step in terms of improving any productivity and in fact it thwarts productivity. So, our view is that we need to significantly reconsider the Government’s consideration of all of these industrial relations laws and what they may have for a next term of government. So, certainly, we believe that when you take into account the latest changes, which we haven’t in our modelling, we’ve also got EBA negotiations for large builders going on at the moment. Now the figures that they are suggesting come into fruition we will have another step down on productivity and at the least time we can afford it. If we’re going to meet all these 1.2 million homes, we need to ensure that many of them are medium to high rise and as such we need the large builders as well as small resi builders.

Stephen: We’ve seen quite a number of builders go under in recent times. What is this forecast going to mean well not only building head contractors but for tradies and small subcontractors?

Denita: Well, I think the really sad thing at the moment Stephen is there’s a huge amount of work and our forecasts show that there is massive amount of work not only in residential but commercial and civil over the next five years but at the moment business conditions are just not conducive to building. And at national meetings last week we heard many builders, good builders, saying they are not tendering work, the money doesn’t up and those who are tendering for work at finding it simply too hard to build at a profit; they’re lucky to even break even. So, things have got to change. They’ve got to change for the builder, they’ve got to change for the subcontractors. And in many instances, this is about risk and government should be best practice in terms of their model as a model client and they should be sharing some risk load rather than passing it all to the builder. And then the builder then in turn has to manage that. So, things have got to change and that’s certainly a focus of our attention for the rest of the year.

Stephen: Denita, as always, good to talk to you this morning.

Denita: Thank you. Good morning, Stephen.

Media contact:
Dee Zegarac
National Director, Media & Public Affairs
0400 493 071
dee.zegarac@masterbuilders.com.au