“THE official interest rates for the second month running is to be welcomed and we urge lenders to fully share the reduction, especially for home loan and small business customers,” Master Builders Australia’s chief economist Shane Garrett said. 

“However, interest rates are only one ingredient of the economic growth recipe and progress must also be made in other areas to get the economy growing more quickly.

“We need to see the Parliament pass the Government’s full program of income tax cuts to put more money in people’s pockets and the confidence to spend,” Mr Garrett said. 

“Fast tracking the construction of infrastructure projects would provide a kick start for growth and boost confidence in the construction sector and the wider economy. 

“Small firms are the lifeblood of the Australian economy. To complement the rate cut the Government should continue loosening the burden of red tape and regulation, allowing small business to operate more freely,” Mr Garrett said.

www.masterbuilders.com.au

ends

THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the Prime Minister’s announcement that the Australian Government will take a fresh look at reinvigorating our workplace relations system.

“The Federal Government’s intention to review the workplace relations system is encouraging for the small business sector,” Ms Carnell said.

“The overwhelming view among small businesses is the legislation is far too complicated, particularly for those with less than 20 employees and no expert HR or legal departments.

 “We have already identified a number of simple steps to tackle the overly complex industrial relations system for small businesses that would make a real difference to the sector," she said.

“A key priority should be a review of the Small Business Fair Dismissal Code, to ensure there are adequate provisions to protect small business employers from an unfair dismissal claim when they have made every effort to do the right thing.

“We know that the current protections in place are not doing the job that was originally intended," Ms Carnell said.

“If this and other recommendations are implemented, it will level the playing field for small business who want to do the right thing and empower the Fair Work Ombudsman to deal with businesses that don’t.

“A clear and simple workplace relations system would be more user-friendly and give small business the boost in confidence they need to hire workers.  

 “We look forward to working closely with Attorney-General and Minister for Industrial Relations Christian Porter on the much-needed simplification of Australia’s workplace relations."

www.asbfeo.gov.au

ends

INDUSTRY superannuation funds stand ready to work with the Federal Government to drive productivity and help solve the nation’s energy crisis.

In a new discussion paper, Modernising electricity sectors, Industry Super Australia chief economist Stephen Anthony highlighted some of the challenges facing Australia’s energy network, and makes the case for industry fund intervention.

“While the climate debate rages on, Australia’s ageing energy infrastructure continues to fall further and further behind the rest of the world. Much of the heavy industry has already gone, costing jobs and driving power costs up even further,” Mr Anthony said.

“The failure to achieve a consensus framework for emissions abatement, coupled with the subsidisation of renewables has seen wholesale prices triple over the decade and volatility reach stratospheric levels.

“If this policy inertia continues, regulatory uncertainty will continue to rise, allowing some investors to capitalise on price movements and maximise public subsidies to game the market. Something has to give and this is where industry super funds come in.”

Industry Super Australia chair Greg Combet said industry super funds have the purpose and the capital to partner with government to drive productivity and develop long-term solutions to otherwise intractable economic problems.

“In the event of continued stand-offs on energy policy making, far-sighted industry super funds can play a role,” Mr Combet said.

“With the best interests of their members at heart, industry super funds have the purpose, and the capital, to work with the government to develop a long-term solution as investment partners.”

Mr Anthony said the consideration for investors and government shouldn’t be one of renewables versus coal, but what the right mix of technology is now, and into the future.

“There is no single simple solution to Australia’s energy trilemma right now. There is no reason to exclude any of the major technological contenders – solar, wind, combined-cycle gas, pumped and even nuclear – from the current or future energy mix,” he said.

“The existing fleet of baseload generators need replacing, while there must be an agreed pathway to progressively phase out coal-fired generators.

“This is where industry funds can contribute. They can pre-empt future government decision-making to fill potholes in grids, replace existing network capacity, or develop innovative financial products that better helps to manage risks both here and overseas,” he said.

“Industry funds stand ready to help – but if action isn’t taken, we risk failing generations of Australians.”

The report can be accessed at https://www.industrysuper.com/assets/deb18ac10c/Modernising-Electricity-Sectors.pdf

ends

THE RISK of poor demand for high-rise units is increasing as recent major issues in their construction impact the market.

In fact, RiskWise Property Research CEO Doron Peleg said the impact of the current situation with Mascot and Opal towers, combined with the NSW Government’s promise to conduct “the biggest shake-up of the construction industry that this state has ever seen” could be so great it would likely result in a structural change in demand of units in high-rise buildings.

He said as experts believe thousands of high-rise buildings could be at risk of cracking due to systemic issues in the building and construction industry, as well as recent fears of combustible cladding, the effect could be far reaching as investors look for other, safer, opportunities. He added that NSW Government’s plan to employ a building industry commissioner to look at accountability, transparency and the quality of buildings under construction was likely to have a major impact on the cost, and consequently, on the dwelling types, configuration and the target audience.

“Due to cracks showing in high rises such as Sydney’s Mascot and Opal towers, the uncertainty that more will become apparent in other buildings and the need to replace cladding in thousands of buildings, all of which could amount to billions and billions of dollars, its highly likely the demand for units will well and truly drop,” Mr Peleg said.

“Also, these high-profile issues have created a huge ‘reputational damage’ across the entire industry, as the typical buyers often struggle to understand the quality of the development and might chose instead of avoid exposure to such investments.

“If you combine these recent quality issues with financial losses from investment in high-rise units, this could amount to a permanent structural change in this demand for units in high-rise buildings.

“We already have significantly reduced levels of demand due to restrictions on foreign investors, credit restrictions, banks refusing to loan to self-managed super funds and local investors looking elsewhere.

“Add to that the high level of unit oversupply and it’s possible to see how structural changes could occur in a sense that the overall demand for off-the-plan dwellings will shift from units to house-and-land packages.

“Another potential impact could be that other state governments will follow NSW and introduce very high standards and supervising of new dwellings. That might create a situation that in order to have a feasible project, developers might need to build smaller developments, at a materially higher cost per square metre.”

He said developers were already struggling to meet pre-sales and / or sales targets in areas where there were high levels of stock and many had not proceeded to commencement.

Units in the pipeline for the next 24 months Australia-wide equate to 8.4 percent of current stock, while in Sydney, only 6 percent (121 units) of stock sold in the three months to December and in Melbourne, 9 percent (230 units) sold (Urbis).

HIA also reports sales for off-the-plan properties were down by 16.4 percent from last year during the three months to January nationwide.

“Given the existing demand for off-the-plan units in high rises is already low, high-profile events such as those in the Mascot and Opal towers, will only have a further impact,” Mr Peleg said.

“Without demand from investors, and other buyers, you don't have pre-sales or sales and the entire development is at risk. 

“The key message here for developers and construction lenders is that there is greater supply than demand for investment properties, which are mainly aimed at renters, so it follows that the focus should be on properties that are suitable for owner-occupiers and appeal to families.

“Generally, developers are seeking high profitability but that doesn't really work now because the risks are significantly higher, and the losses could be very substantial. So, it is better to focus on smaller unit blocks with larger apartments in areas that are popular amongst families.

“The quality issues and new requirements from the NSW Government that are likely to be copied by the other states, might lead to greater costs and higher risks, particularly for high-rise developments. In addition, it’s likely insurance premiums for developers would also go up.”

He said while it was “a bit early” to determine definitively if there would be a structural change in demand for units in high rises, there remained red flags and risk indicators developers needed to take into consideration before proceeding.

“You cannot simply ignore these risks and, at least in the foreseeable future, the focus should be on family-suitable properties,” he said.

www.riskwiseproperty.com.au

ends