The Carbon Tax and the Residential Building Industry

How the Carbon Tax will impact on housing

The Carbon Tax is a mechanism to reduce Australia’s carbon emissions by putting a price on pollution generated by the top 500 emitters. The tax will start on 1 July 2012 at a rate of $23 per tonne of carbon or equivalent (CO2-e). The government plans to reduce emissions by 5% on the 2000 level, by 2020.

The residential building industry will be affected significantly by the tax, through increased costs of materials and energy, which will flow through to the price of homes.

Using the information we have had access to so far, HIA has previously analysed the impact of a carbon tax on building. At $20 per tonne, modeling shows a $5,000 to $6,000 increase on a house and land package.

HIA is now conducting further modeling based on the announcement made by the government in July 2011. This new analysis is anticipated to show an increase of 1.2% to 1.4% on the cost of a new dwelling, based on the HIA Standard Home.

A consequence of these kinds of increases is that jobs are lost in not only the building trade, but also the manufacturing sector that supports it. With many building products and processes not receiving any compensation, yet needing high carbon intensive inputs such as energy, the HIA expects jobs to be exported as local products become uncompetitive.

Not only will this be bad for our economy, but the carbon emissions will be simply sent offshore.

Carbon Tax and Residential Building (pdf 193kb)
Housing Industry Association Carbon Tax Member Alert (pdf 123kb)
Frequently asked questions about the Carbon Tax and Residential Building (pdf 128kb)

Australian Trade & Industry Alliance

The Housing Industry Association, together with a number of associations from other industries, have commenced a targeted national campaign on the proposed carbon tax.

We have combined under the umbrella of the Australian Trade and Industry (ATI) Alliance, which has recently launched an advertising campaign to provide Australians with the facts regarding the Carbon Tax and its impact on Australia’s exporters, businesses and consumers.

The campaign is led by the message ‘Carbon Tax Pain: No Climate Gain’. 

Alliance members believe the proposed carbon tax is the wrong climate change policy for Australia. We are all concerned that the proposed Carbon Tax will reduce business competitiveness, slow economic and employment growth and increase prices while failing to materially cut global emissions.

Alliance members believe that Australia must get carbon policy right.  A carbon pricing scheme that fails to include measures that preserve the international competitiveness of Australia’s export and import-competing industry during a period of uneven or limited international action will cost jobs, investment and increase the cost of living of all Australians.

The scheme design must recognise that trade exposed firms cannot pass on carbon costs to customers.  Trade exposed businesses operating in fiercely competitive global markets have no capacity to pass direct or indirect carbon costs on to their customers.

Australia should align its approach with that of other nations and ensure that the carbon pricing scheme does not compromise the competitiveness of Australia’s local, export and import competing industries.

Australian Trade & Industry Alliance Carbon Tax advertisement (pdf 125kb)
Australian Trade & Industry Alliance website