ID :
194326
Mon, 07/11/2011 - 17:48
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Shortlink :
https://oananews.org//node/194326
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Carbon to raise building costs: industry
The cost of building a new home will rise under the carbon pricing scheme, with the lowest emission building products suffering the greatest price rises, the building and construction industry says.
Jobs in the home building sector are also expected to be lost under the government's scheme, as local building product makers struggle to maintain margins because of competition from cheaper imports.
Australia's largest brickmaker, Brickworks, says materials that generate lower emissions, like bricks and tiles, will become more expensive relative to high-emission products such as steel, aluminium and cement.
Brick and tile manufacturers aren't included among the emissions-intensive, trade-exposed industries. This is unlike steel-makers and oil refiners, which will receive transitional assistance for 94.5 per cent of the carbon price.
"We compete with imported products, we compete with steel and other products that have 94.5 per cent credits, while we have none," Brickworks managing director Lindsay Partridge told AAP.
"Products with higher emissions are now going to be cheaper than products with lower emissions."
Brickworks expects the $23 per tonne carbon pricing scheme to cost the company $12.8 million in earnings before interest and tax in 2012/13.
"Higher emission products should not be cheaper because of the tax than lower emission products," Mr Partridge said.
"It is Brickworks intention to increase prices to fully recover the cost of the tax with price rises of up to six per cent," Mr Partridge said.
The Housing Industry Association (HIA) says Australian building products makers will have a tough time competing against imports from non carbon-taxing countries.
"Building materials and products, such as kitchen cabinets and benchtops, windows and doors, and wall linings and finishes, will increase in price or be sourced from overseas, or both," HIA chief executive Graham Wolfe said.
Morningstar analyst Ross McMillan said building materials producers faced increased competition from imports and shrinking margins as a result of the carbon pricing scheme.
"Import competition is going to be one of the biggest issues they face, particularly while the Australian dollar is high and you have a situation where there's not a lot of new home construction," Mr McMillan said.
Despite receiving a partial tax offset, cement and lime producer Adelaide Brighton said it may need to increase imports to remain competitive.
"In light of the impost of the proposed carbon tax and the strong Australian dollar, Adelaide Brighton will continue to evaluate its domestic footprint compared to the potential enhancement of import flexibility," the company said.
Adelaide Brighton said it expected the carbon scheme to cost $5 million in profit after tax in 2012/13, the first full year it takes effect.
Moody's senior analyst Maurice O'Connell said the outlook for building products and construction companies was negative, given the slowdown in residential construction.
Boral, which produces plasterboard, timber and clay and concrete products "would find it difficult to improve earnings in this environment", Mr O'Connell said.
The HIA said policies were needed to place new energy efficient housing within reach of the average home buyer and incentives were required for homeowners to make their homes more energy efficient.
Jobs in the home building sector are also expected to be lost under the government's scheme, as local building product makers struggle to maintain margins because of competition from cheaper imports.
Australia's largest brickmaker, Brickworks, says materials that generate lower emissions, like bricks and tiles, will become more expensive relative to high-emission products such as steel, aluminium and cement.
Brick and tile manufacturers aren't included among the emissions-intensive, trade-exposed industries. This is unlike steel-makers and oil refiners, which will receive transitional assistance for 94.5 per cent of the carbon price.
"We compete with imported products, we compete with steel and other products that have 94.5 per cent credits, while we have none," Brickworks managing director Lindsay Partridge told AAP.
"Products with higher emissions are now going to be cheaper than products with lower emissions."
Brickworks expects the $23 per tonne carbon pricing scheme to cost the company $12.8 million in earnings before interest and tax in 2012/13.
"Higher emission products should not be cheaper because of the tax than lower emission products," Mr Partridge said.
"It is Brickworks intention to increase prices to fully recover the cost of the tax with price rises of up to six per cent," Mr Partridge said.
The Housing Industry Association (HIA) says Australian building products makers will have a tough time competing against imports from non carbon-taxing countries.
"Building materials and products, such as kitchen cabinets and benchtops, windows and doors, and wall linings and finishes, will increase in price or be sourced from overseas, or both," HIA chief executive Graham Wolfe said.
Morningstar analyst Ross McMillan said building materials producers faced increased competition from imports and shrinking margins as a result of the carbon pricing scheme.
"Import competition is going to be one of the biggest issues they face, particularly while the Australian dollar is high and you have a situation where there's not a lot of new home construction," Mr McMillan said.
Despite receiving a partial tax offset, cement and lime producer Adelaide Brighton said it may need to increase imports to remain competitive.
"In light of the impost of the proposed carbon tax and the strong Australian dollar, Adelaide Brighton will continue to evaluate its domestic footprint compared to the potential enhancement of import flexibility," the company said.
Adelaide Brighton said it expected the carbon scheme to cost $5 million in profit after tax in 2012/13, the first full year it takes effect.
Moody's senior analyst Maurice O'Connell said the outlook for building products and construction companies was negative, given the slowdown in residential construction.
Boral, which produces plasterboard, timber and clay and concrete products "would find it difficult to improve earnings in this environment", Mr O'Connell said.
The HIA said policies were needed to place new energy efficient housing within reach of the average home buyer and incentives were required for homeowners to make their homes more energy efficient.
