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Fears supply strain stress will continue in 2023

December 30, 2022 BY

Construction supply chain pressures will result in slowed activity in coming months, peak advocates warn. Photo: UNSPLASH

PEAK building lobbyists remain frustrated at ongoing supply chain pressure which they say will soon slow down the industry and risks increasing inflationary pressure.

Mater Builders Australia have pointed to rising construction costs and declining building approvals as worrying trends that threatened to put a handbrake on the sector in 2023, with wide-reaching economic impacts.

Latest Australian Bureau of Statistics data released this month indicate that construction volume was up 2.2 per cent during the September quarter, but declines in building approvals in recent months will likely see that figure drop in coming months.

New home approvals were down 6 per cent in October as the cost of new dwelling construction had risen 20.4 per cent in the past 12 months.

MBA chief executive Denita Wawn said the figures highlighted the need for measures to address supply-side challenges.

“Governments at a state and territory level must double-down on their efforts to address issues that continue to frustrate the industry like lengthy delays in approvals for land title, development and building applications, and occupation certificates.”

Economic output increased on the whole in the September quarter; a 0.6-per-cent rise marked a return to pre-pandemic figures after gross domestic product had spiked 5.9 per cent in the previous 12 months.

But Ms Wawn warned that coming challenges meant policy-makers shouldn’t be complacent, and said increased investment and productivity gains in construction could help improve current economic constraints.

“While there are signs of easing in some materials and labour constraints that have increased the cost of goods and services for consumers, more can be done to put downward pressure on costs and improve productivity.

“The large economic footprint of the building and construction sector means that better productivity in our industry will flow to many corners of the whole economy and benefit the living standards for ordinary Australians.

“For example, improved productivity in the building industry would have favourable effects on housing affordability.

“Better housing affordability outcomes would also boost Australia’s international competitiveness by taking pressure off wage inflation, with investment, exports and job creation all likely to see benefits.”