Master Builders Australia - Raising Rates: Rba's Risky Strategy

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2nd December 2009, 10:35pm - Views: 872





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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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