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Cost of living inquiry opening statement


Speaker: Denita Wawn, CEO Master Builders Australia
Event: Select Committee inquiry into cost of living
Delivery: Monday 19 February 2024, 12.15pm AEST, Gladstone QLD
Topic: Cost of living; housing crisis; inflation; labour shortages

***Check against delivery***

Thank you Chair.

Master Builders Australia is the national building and construction industry group representing all sectors of the industry from residential, commercial to civil construction.

Over the last 130 years, we have represented the 445,000 thousand businesses and 1.3 million workers that make up our industry. The industry holds the largest share of businesses in the economy and contributes to over 10 per cent of GDP.

Cost of living is deeply intertwined with the performance of the building and construction industry.

We know that when the building and construction industry is strong, the broader economy reaps the rewards. For every one dollar invested in our industry, three dollars is returned back into our communities.

The industry helped keep the economy afloat during the height of the pandemic, proving its resilience in delivering infrastructure and housing projects throughout the period.

Today, the industry is being called on again, to help get Australians through the housing crisis.

Polling has shown that cost of living is the number one concern for Australians and within that cohort housing is the top issue.

Housing costs, whether in the form of rent or mortgage repayments, constitute a substantial portion of household expenditure for the majority of Australians.

There has been an over-reliance on mortgage holders and renters to do the heavy lifting in our battle against inflation.

We now find ourselves in a chicken and egg situation. As mortgage holders are forced to pass on rising interest rates to their tenants, we are adding to the inflation challenge in the rental market.

In 2023, rental inflation rose by 7.3 per cent. On the other end of the housing spectrum, the cost of purchasing a new home for owner-occupiers over the same time period rose by 5.1 per cent.

Both of these are well above the overall inflation rate of 4.1 per cent.

From social and community housing, rental properties and owner-occupiers – supply is the common constraint regardless of where we live across the country.

Addressing the inadequate supply of housing is paramount, and it requires concerted efforts to reduce the cost and time it takes to build new homes.

The overall cost of building materials is over 33 per cent higher than before the pandemic and the final cost of building a new house has increased by almost 40 per cent.

Master Builders is a signatory and strong supporter of the Federal Government’s Housing Accord and believes the target of 1.2 million homes is not an ambition but a must.

We commend recent measures taken by governments to improve housing policy outcomes, such as releasing more land for residential development, establishing the Housing Australia Future Fund and Housing Australia, commencing planning reforms, and maintaining important investor incentives like negative gearing and the CGT discount.

However, there is still much work to be done to ensure we get the right homes in the right place.

With the Accord starting from 1 July 2024, we are concerned that there is not enough movement as we inch towards the starting gun.

It is essential that policies are implemented to support the businesses and tradies tasked with delivering this goal.

Productivity lies at the heart of our industry’s success. Yet, we are confronted with challenges such as shortages of tradespeople, high building costs, construction delays, cumbersome regulatory frameworks, and the cumulative impact of productivity-sapping industrial relations changes.

To address these issues effectively, we continue to advocate for measures that enhance productivity, support sustainable practices, and streamline regulatory processes.

Labour and building material costs are primary drivers of project expenses, and while recent data show a deceleration in building product costs, labour shortages remain a pressing concern.

To address these challenges, we have put forth a comprehensive set of policy proposals for consideration in the upcoming Federal Budget, aimed at bolstering our industry’s workforce and supply chain.

From improving career education in schools to promoting greater female participation in the industry, to streamlining migration pathways for skilled workers and enhancing apprenticeship programs, these initiatives are essential for ensuring the long-term viability and affordability of building and construction projects.

By implementing the policy recommendations outlined in our submissions, we can mitigate cost pressures, enhance housing affordability, and improve the overall standard of living for all Australians.

Thank you for your attention and we’re happy to answer any questions.

Media contact:
Dee Zegarac
National Director, Media & Public Affairs
0400 493 071

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