Media Release
1
December 2009
RAISING RATES: RBA’s RISKY STRATEGY
Statement by Wilhelm Harnisch, Chief Executive
Australia’s peak building and construction industry association, Master Builders Australia,
warned of risks to the building and construction industry arising from today’s decision by the
Reserve Bank of Australia to raise the official cash rate by one quarter of a percentage point,
the third consecutive monthly increase since rates bottomed at 3 per cent earlier in the year.
Mr Wilhelm Harnisch, Chief Executive, Master Builders Australia, said “The RBA is
embarking on a risky strategy considering the still weak state of the economy, confirmed by
the Government’s latest Mid Year Economic and Fiscal Outlook released a few weeks ago.”
Mr Harnisch
said, “Mixed
messages on the economy are coming from the RBA and the
Government as the interest rate sensitive building and construction industry continues to
struggle its way to a recovery.”
“It’s confusing to have the Reserve Bank
working against the Government’s fiscal stimulus
through higher interest rates.”
Higher rates put at risk
the benefits flowing from the schools program and social housing
initiative that are working to prevent a collapse in the building and construction industry.”
“The credit squeeze remains a serious problem as investor-driven commercial and
residential projects are put on hold.”
Mr Harnisch said, “Higher interest rates will dent home buyer confidence and could pull the
rug out from a housing market still lacking momentum as investors stay on the sidelines.”
“As well as financial constraints, sluggish investor activity
and the phasing out of the first
home owners boost scheme, residential builders now face higher interest rates.”
“Rate rises can only
weaken incentives for investment-related residential building and will
therefore exacerbate Australia’s chronic housing supply short-fall.”
“Master Builders Australia has stressed for many years the need to remove cumbersome and
costly planning requirements and solve the problem of state and local government developer
charges
and the rate rise will put pressure on all levels of government to
overcome the
chronic housing shortage.”
For further information contact:
Wilhelm Harnisch, Chief Executive: Office (02) 6202 8888
Peter Jones, Chief Economist: Office (02) 6202 8888
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