Event: Interview with Ross Greenwood, Sky News
Date: Tuesday, 3 October 2023, 4.40pm AEDT
Speakers: Denita Wawn, CEO Master Builders Australia
Topics: building approvals, housing, industrial relations
Ross Greenwood, host Sky News: Denita Wawn is chief executive of the Master Builders Association and joins us now from our Canberra studio. Denita, always good to chat to you on these days. I mean, given what you’ve just heard from Phil O’Donoghue about the prospect of more interest rate rises, does that work against the Government’s target to build those 1.2 million homes over the coming five years?
Denita Wawn, CEO Master Builders Australia: Ross, we’re in a really big predicament here. It’s going to be hard to build those homes at an affordable price if we continue to see inflation sticking at too high a percentage. But equally, if we have higher interest rates, the private sector declines in their investment whether it’s owner-occupier or rental market. So, it’s a difficult position we’re in and that is why we shouldn’t just be relying on the RBA in terms of reducing inflation but also we need to be looking at fiscal measures including improving productivity in sectors such as ours. So, a difficult 12 months ahead. We’re forecasting that we will fall short this financial year and next financial year to meet those targets but they don’t officially start until 2025-26 financial year. So, we’ve got a bit of time to get our house in order.
Ross: Alright. So, who is going to build these homes? It’s not the federal government. That’s one thing that has got to be made quite clear. There’s got to be incentive to the industry to actually go and build these homes. There’s got to be a demand from consumers to actually buy those homes. This is the key because nobody is going to build a home unless there is going to be an incentive to make a profit to do so.
Denita: That’s right, Ross. We need stable interest rates. We need low inflation to bring private investors back into the market. We need a strong tax regime to encourage institutional investment into the industry. And we need those supply barriers removed that were the subject to agreement by the National Cabinet in August. We have said consistently for years and years until you remove the supply impediments which is better land planning, better housing planning, reducing the cost of development, and also more land whether it’s infill or greenfields, we need the councils, the state and territory government working collectively together. They’ve agreed to do that. We’ve now got to hold them to account.
Ross: But your industry also works under the threat of big changes in industrial relations given the fact that so many people, subcontractors and others, are working literally as contractors or subcontractors and therefore through ABNs and potentially in the future might end up trying to be forced into full-time employment.
Denita: That’s right Ross. It’s really disappointing that on one hand we’ve got a government who is working really constructively on housing policy, really constructively on skills and skills migration, we’ve had the White Paper, we heard Minister O’Connor today on skills and training but we’ve got this IR Bill hanging over our heads and we are of the view as are many other employer groups that this will take us back considerably. It will reduce productivity and it will mean that those 1.2 million, let alone the one million homes, over five years will be at peril. We say that the Government should be approaching this far more holistically. They need to withdraw this IR Bill and start from scratch and look at it in a way that we can maintain and improve productivity in our economy. Otherwise, we will still have this housing crisis in five years’ time.
Ross: Because you talked about productivity and one of the issues is if there are problems with productivity at that level there’s going to be ongoing problems with inflation and therefore the likelihood is that interest rates stay higher for longer which takes away the incentive to build.
Denita: That’s right. We’re really concerned around inflation. Particularly as we start seeing the first tranche of IR that came in last year. That’s only really now starting to get a head of steam. So our concern is around what prices will be included in the increases as a consequence of new EBAs being negotiated and that does not even take into account the current bill before government that we say will also restrict flexibility and remove incentives for people to be their own boss. So that is incredibly concerning when at a time when the industry is willing to work with the Government to actually achieve all the opportunities. We’ve got huge opportunities in our environment at the moment in terms of building for Australians but if we have high inflation, restrictive IR practices, we’re not going to achieve those targets by any stretch of the imagination.
Ross: Okay so then your reaction to the first decision of the Governor of the Reserve Bank and her board Michele Bullock today keeping interest rates on hold. That’s really what the industry would prefer to have. They would be the more favourable conditions going forward for home builders and therefore home buyers?
Denita: Well Ross, certainly, if we can have stable interest rates we think we’ll get more people back into buying new homes and signing those contracts. But equally, there is still some concern in the market that it’s too expensive to build at the moment because of high inflation rights. We saw building products, the last ABS statistics showed that some products went down but some went up so we are still having a slight growth in terms of building products overall. That is of concern. So it’s this big juggling act at the moment between inflation and interest rates. But both of them are having a disincentive in terms of investment in the housing market by any private investor or owner-occupier.
Ross: I’ll tell you what Denita Wawn always good to have you on the program. The chief executive of the Master Builders Association. Many thanks for your time.
National Director, Media & Public Affairs
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