Event: Denita Wawn interview with Ross Greenwood, Sky News Business Now
Date: Wednesday 2 November 2022, 4.30pm AEDT
Speakers: Ross Greenwood, host Sky News Business Now, Denita Wawn, CEO Master Builders Australia
Topics: Inflation, building and construction ABS data, Housing Accord, industrial relations
Ross Greenwood, host Sky News Business Now: Joining me now, the chief executive of Master Builders Australia, Denita Wawn. Denita, always good to chat to you. Let’s start with these latest numbers. Interest rates are going up, it’s clearly having an impact. Just tell me about what you’re hearing from your members about the economics of building homes in Australia right now.
Denita Wawn, CEO Master Builders Australia: They are really concerned. Obviously, our members have been busy but busy with a very exceptionally difficult time with rising prices both the materials and labour. Delays because of shortages of materials and also with just not be able to get the trades in at the right time. And so, they have been finding it really tough. We’ve forecast that the future was not going to look great and sure enough these ABS statistics out today show exactly that. The market is in decline and while there are some rosy parts of the market, nevertheless in detached housing which is really quite critical to meet our housing needs, things are not looking too good. So, difficult times have been held at now. But equally, the future is not looking positive. Hence the reason why we did support the federal government’s Housing Accord announcement in the Budget.
Ross: Just tell me, is there a tipping point in all of this? Because obviously, as costs rise, therefore the price of building and new homes rises, you’ve got the same thing as housing values coming down, there’s surely going to be a tipping point at which builders say it’s not worth the risk for us to go ahead and build these new homes because we cannot be certain that we’ll be able to sell them at the price we need to meet the costs.
Denita: Absolutely Ross. Couldn’t have said it better myself. We’ve got concerns, obviously, the clients are seeing increases in the cost of building while they’re also seeing the cost of interest rates. Developers, obviously, aren’t going to secure the builders in an environment where they aren’t getting the returns that they want. And in many respects, this comes back to the issues that we’ve been talking about for a long period of time, is that it’s not just the cost of building a home but also the cost of doing business around access to land and getting approvals. And that’s why we are saying the supply side metrics of this debate around improving planning, improving access to cost of, access to approvals happening on time and those sorts of things. All the things that cost an awful lot of money and increase risk in building need to be addressed so we can actually de-risk the industry and therefore build more homes.
Ross: Okay. But then the government with its plan to build a million homes, that starts in 2024 so two years’ time from now and then it goes out for five years. The big question, given what’s going on right now, is Australia could be almost half a million homes short in terms of what’s not being built with a rising population which is forecast in the Budget.
Denita: That’s right and the concern obviously that we’ve got is that we need to address this fast. We acknowledge that the government has addressed 2024 as a starting point. Why? It enables the industry to solve the labour shortages and the material impacts but equally it gives time for the federal government to negotiate with the state and territory governments about what this plan is going to look like actually in reality. And what mechanisms are they going to use to resolve those supply issues. So that is really quite crucial that they use that time constructively, that it doesn’t become a talkfest but rather actually changes are made, fundamental changes are made to ensure that we can meet the housing needs. And that means we have got to address these things sooner rather than later.
Ross: Which then goes to the industrial relations bill now going through which the controversial part of that is about having an industry-wide negotiation rather than an enterprise negotiation. Why does that so adversely affect the building and construction industry?
Denita: Well, it’s really quite simple, enterprise bargaining the concept of it, as supported by Prime Minister Keating, Hawke, Gillard and Rudd, was all about productivity improvements at the enterprise and that being reflected in wages for those working in that enterprise. Instead, there is a push for multi-employer agreements regardless of the circumstances of each individual enterprise and also not taking into account the variations in the volatility that see in our industry in terms of managing, as you say, increasing interest rates, increasing inflation and the like. So as a consequence, we say this was totally against basic market economics. It will increase the cost of doing business. That’s on top of the fact that the government is also continuing with their policy of removing the ABCC. And certainly, our statistics show that there will be a substantial increase in construction costs, including commercial construction, as a consequence of that decision. So, we’re very concerned that there will be rising increases in costs of doing business with no productivity offsets which will increase the cost of building houses more so than we anticipate and likely reduce demand even further.
Ross: Denita Wawn the chief executive of Master Builders Australia, always good to chat to you Denita and many thanks for your time today.
Denita: Thank you Ross.
National Director, Media & Public Affairs
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