Event: Denita Wawn interview with Nadine Blayney, ausbiz TV
Date: Monday 31 October 2022, 10.30am AEDT
Speakers: Nadine Blayney, host ausbiz TV, Denita Wawn, CEO Master Builders Australia
Topics: Inflation, building and construction, Budget, industrial relations
Nadine Blayney, host ausbiz TV: Denita Wawn, CEO of the Master Builders Australia joins the program for her take. Welcome, welcome to ausbiz. Thanks so much for joining us. Can we start with the Budget. Obviously, the building associations were in full support for this national Housing Accord. What does it mean in practicality?
Denita Wawn, CEO Master Builders Australia: Well, the important issue is that we had forecast that we were going to run very, very short of the planned 200,000 new homes per year for the next five years which is that magical million number that the Treasurer talked about last week. And so, what that means is that if we did not resolve some of the barriers to construction over that period, we were not going to meet the housing needs for Australians. And as a consequence, we needed to look not so much at demand but the long term sustainable supply barriers that predominantly occur at a state, territory and local government level which has meant that the feds have utilised the Accord as a mechanism to start those serious conversations that the industry has asked for a long period of time.
Nadine: Okay so that is what? Freeing up land, that is…what exactly?
Denita: It’s all about making sure that we can build homes and that we’ve got ready supply. So, it does mean freeing up land. So major impediments around planning and zoning. Particularly for the middle rings of our larger cities where there are significant restrictions on using brownfield sites for redevelopment. Another big area is around developer charges and taxes that means that simply it does not stack up to put a development in certain locations. There’s also frustrations and we’ve heard this around the country on delays in getting things approved – development approval delays by up to 12 to 18 months and people are simply not able to afford it; building approval delays, occupancy delays, the list goes on. All of that costs money and it means a development is higher risk. So as a consequence, less people go into the market because they are not willing to have low returns based on the development costs and the likely risk including delay. So, we want to resolve a lot of those impediments and also provide an opportunity while we do that in looking at how all groups including private investment can look collaboratively together around affordable housing as part of that mix in resolving these long term problems.
Nadine: Yeah, but then you throw in the rising cost of materials, you throw in labour shortages, rising cost of labour and it just spells nightmare scenario for those trying to get into the housing market or those already in the housing market that are trying to do any improvements. Do you see any waving in some of those pressures?
Denita: Yes we do, and it’s important to note that the Accord deliberately starts in 2024 so we can see some of the stressors currently in the market stabilise. When it comes to materials the shortage of materials has dissipated, the prices have still stayed high and we see them stabilising. Unfortunately, with higher inflation we can’t see them declining. But nevertheless, there can be some level of certainty that we haven’t had now for a number of years where builders can do in with contracts with a fairly good idea with what’s happening with prices which certainly has not been the case during the pandemic where we saw sudden escalations of anywhere between 20-30 per cent that was simply not foreseen. The bigger issue is staffing shortages and that has been a perennial problem pre-pandemic. It has got worse and obviously that is the reason why it’s important. Particularly coming out of the Jobs and Skills Summit, that we focus not only on training Australians in jobs where we know there are shortages, but we also look at migration. And it was good to see reports come out today saying that we think that the backpacker numbers are going to hit pre-pandemic levels by Christmas which means certainly our reliance on backpackers to help us in the industry is going to be slightly eased as a consequence. Likewise, the Budget last week we saw an increase in skilled migration numbers and we hope that we will see also greater flexibilities on how we can provide people jobs in this country. So, a mixed bag of opportunities to resolve those problems while we hope that the governments get a clear plan together to look at those supply side pressures as well.
Nadine: Okay. Well, you’ve set out the list of what you’d like. What would you give the Budget from a Master Builder’s point of view out of 10?
Denita: Well, look obviously we are pretty happy with it. It’s tackling an issue that we have been frustrated with for a long time. So, we have given it a seven out of 10. There are some issues around industrial relations that were fleetingly touched on in the Budget but became more of an issue later on in the parliamentary sittings last week. But a good mini budget and that’s what we have got to remind ourselves. It was a mini-Budget, not a full Budget that we will see in May.
Nadine: Okay now the other, I guess just point of interest, we do see and expect the RBA to lift rates by 25 basis points tomorrow. Are you starting to see any impact of rising rates across the industry at all?
Denita: Well, we’re obviously concerned that we’ve got this hit on inflation meaning that people are not willing to go into housing contracts because of the cost implications of rising inflation. But that of course there is an issue as the RBA is fighting inflation in the impact of rates and what that does in terms of the housing market. We are definitely seeing a slowdown in contracts being signed. But we think that’s more because of the inflationary pressures as opposed to interest rate pressures that are still fairly low in comparison to previous decades. So, our preference at the moment is to really see a fight on those inflationary pressures but equally not see rates go so high that it is significant barrier to people going into new homes or renovating their existing homes if they need to borrow money. We know it’s a juggling act for the RBA. We acknowledge that and it’s making sure they get those balances right.
Nadine: Thank you. It’s been a pleasure to speak with you. Appreciate getting your point of view.
Denita: Pleasure, thank you.
National Director, Media & Public Affairs
0400 493 071