Builders want more action to protect growth

HOME building industry leaders have called for more federal government action to curb inflation as it reveals its “grave concern” about the impact of upcoming interest rate rises.

Master Builders Australia (MBA) responded emphatically to last week’s Reserve Bank (RBA) decision to lift the cash rate target by 50 basis points to 1.85 per cent.

The August rise is the third consecutive jump of 50 basis points, with further increases expected as inflation continues its upward trajectory.

MBA chief executive officer Denita Wawn said the latest rise strengthened the peak body’s call for Canberra to pull all economic levers it could to ensure ongoing growth.

“In the residential building sector, builders who have borne the brunt of inflationary pressure for many months now face reduced demand for new homebuilding,” Ms Wawn said.

“We understand the severity of the challenges we face and the need to normalise monetary policy, but interest rates are a blunt instrument, and we don’t want to see a situation where the Reserve Bank is left on its own to tackle inflation.

Ms Wawn suggested initiatives such as accelerating migration, increased digitisaiton and supporting more women into secure, well-paid construction industry jobs as ways Australia could boost productivity and growth.

In response to the rate rise last week, federal Treasurer Jim Chalmers indicated the government would take a cautious approach to addressing rate rises.

“My responsibility is to make the Reserve Bank’s job as easy as possible. That means not splashing cash around unnecessarily,” Mr Chalmers told Canberra media.

“It means dealing with the supply side issues in the economy where we can so that we make the job of the Reserve Bank easier, not harder.”

RBA governor Philip Lowe said the central bank would likely continue rate rises this year, depending on Austrlaia’s economic outlook.

“The Board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path.”

“The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.

“The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.”