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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