Rba's Risky Strategy For Building Industry

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2nd March 2010, 06:50pm - Views: 557





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Media Release




2

March 2010


RBA’s RISKY STRATEGY FOR BUILDING INDUSTRY


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 a further one quarter of a

percentage point, the fourth increase in six months after rates bottomed at 3 per cent in April

2009. 

Mr Wilhelm Harnisch, Chief Executive, said “The RBA is embarking on a risky strategy for

the building industry considering the still weak state of the economy

and the weak housing

recovery.”

Mr Harnisch

said, “Maintaining low interest rates is

essential if

the interest rate sensitive

building and construction industry is to play a positive role in Australia’s economic recovery.”

“A higher interest rate policy puts at risk a private sector led building recovery to complement

the benefits now flowing from the schools program and social housing initiative that are

working to prevent a collapse in the building and construction industry.” 

“The rate rise can only exacerbate the credit squeeze facing

builders and developers as

more 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 the private housing market as investors stay on the sidelines.”  

“The rate rise

will hold back much needed investment in new residential building and will

worsen Australia’s chronic housing supply short-fall.” 

“The rate rise will put even more pressure on all levels of government to confront the chronic

housing shortage.”  

“Governments should not wait until housing becomes more unaffordable and the

undersupply worsens before tackling the hard structural reform issues in the areas of

planning, developer charges and regulatory costs being planned for housing.”

“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.”

Mr Harnisch said, “This must be the number one issue for COAG in 2010.”


For further information contact:


Wilhelm Harnisch, Chief Executive: Office (02) 6202 8888

Peter Jones, Chief Economist: Office (02) 6202 8888







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