Event: Interview with Chris O’Keefe, 2GB
Date: Thursday, 17 August 2023, 4.15pm AEST
Speakers: Chris O’Keefe, host 2GB; Denita Wawn, CEO Master Builders Australia
Topics: National Cabinet, housing supply, industrial relations, building costs
Chris O’Keefe, host 2GB: Well the building industry welcoming these new targets, as you’d expect. Master Builders Australia are understandably thrilled and their CEO Denita Wawn is on the line live. G’day, Denita.
Denita Wawn, chief executive Master Builders of Australia: Hello Chris.
Chris: 1.2 million homes. Fine, it’s not realistic though, is it?
Denita: Well, we think so but you’ve really hit the problem square on. The reason why we can’t build that many at the moment is because of all of those constraints that you’ve just correctly described. And the whole part of the decision yesterday is about giving incentives to state and territory governments to actually unpack and unravel all of that regulation to make it quicker for building approvals, quicker for occupancy certificates, more flexibility in planning, cutting down the developer charges and so forth. Now, we know that proof will be in the pudding and we’ll need to make sure that the states and territories do it. They should be doing it regardless of whether they’re getting incentives from the Federal Government or not. But be that may, the incentive is now there on the table. We’ve been calling for federal intervention like this for over five years because we say that we’re not going to resolve housing shortages in this country until such time as all those supply constraints are removed.
Chris: Is it really fixable? I’m a bit cynical about this. Is the housing supply shortage really fixable by any government?
Denita: Chris, you may be cynical. I’m a highly positive person. The important thing for us is that governments are now fessing up that supply is the problem. It’s taken us… I’ve worked for Master Builders now for seven years. It’s the first time ever I’ve actually heard every single government in this country put their hand up and go yep it’s our problem, we’ve got to solve it. Now, to me working in politics for 17 years, I think that’s a good start, we’ve now got to hold them to account and they’ve got to get on with the job today.
Chris: Let’s just rewind one second. How do you propose the more supply that’s in the market, right, more homes in the market, that means that home values, logically, would tell you they would become more affordable for people. Is that fair to say?
Denita: That is.
Chris: Is it in anyone’s interests for that to happen? Particularly if you’ve got builders who’ve got a line of credit from the banks. They often put their own homes up as collateral. They don’t want the value of that home that is up against the loan to go down. They certainly don’t want the product that they’re on selling, the value of that product to go down. And the people who have built equity in their homes that they might be using to invest in investment properties. Well, they don’t want those values to go down. So, really, it’s in nobody’s interest to make housing affordable in Australia.
Denita: I think the important thing is getting the balance right Chris.
Chris: But do you take my point?
Denita: Oh totally get your point and that’s why you’ve got to get the supply and demand measures right. And I think the important thing that we’ve got to recognise is that we’re going to go up to 30-odd million people by 2030 which is not that far away and the numbers we’re talking about around 200-230,000 homes a year is simply to meet those current population trends. And so, there certainly won’t be a shortage of demand. The demand will still be there but it’s a matter of ensuring that those prices don’t go up. And we know that the prices of homes is predominantly because of the cost of land. It’s only been in the last couple of years that it’s the price of building that’s actually exacerbated.
Chris: Good segue. Good segue. Let’s talk about these potential tariffs then on imported steel and cement. If we’re talking about ensuring that your members, builders, can build these homes. 1.2 million of them over five years and build them affordably to make sure it’s economical for them too so they can get the bloody things up. Do you think putting taxes on imported steel and cement is a good idea?
Denita: Well, I don’t think any increase in taxes across the board is good whether it’s for domestic or international product. At the end of the day, it’s exceptionally expensive to build. We’re going to add a lot more expense as we push through the energy efficiency requirements and if we do that too fast that’s where the supply chain is just not going to be ready and the prices will increase even further. So, no tax is a good tax. More tax is not good. And certainly, we’re of the view that we need to ensure that the supply chain has got the capacity to respond to energy efficiency. And, of course, our biggest concern at the moment is all the industrial relations laws that Minister Burke is threatening to bring in which we say will also increase the cost of building. So, we can’t focus on one end of the spectrum when it comes to the cost of building and ignore the other or add costs to the other end.
Chris: Because if there’s some miraculous reason local councils all around Australia decide to approve 1.2 million homes, there’s no point if the builders can’t afford to build them.
Denita: That’s exactly right. And more importantly, the investor, particularly the mum and dad investors buying their homes, the person buying an investment property for rental, we’ve got to make sure that we keep that trend alive and if we price everyone out of the market then the country is in a very, very difficult position. So we’ve got to get it right.
Chris: Denita, I think that’s already done to be honest. I think that dream is dead. You ask anyone under the age of 25 who hasn’t got rich parents, they aren’t buying a house. They know that.
Denita: Yep, well, that’s what we’re hoping with these changes that we can get those prices down but not too down that all of us who already own are home aren’t too cranky.
Chris: It’s impossible. I feel sorry for the decision makers on this one because this is decades and decades of a you know what fight that they are trying to untangle.
Denita: Absolutely. You’re spot on but at the same time we’ve got to approach it somehow and the big issue for us at Master Builders is making sure that governments of all persuasions at all levels are pulling the right levers. And we can’t get good wins on one side and get some outrageous outcomes on the other. It’s all got to be consistent across the board.
Chris: Denita, I really appreciate you jumping on. Thanks so much for your time.
Denita: Please as always. Thank you.
Chris: And all the best to your members for what is a very, very difficult period for the construction industry. I know there are a lot doing it tough. That’s Denita Wawn from Master Builders. She’s the CEO.
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