HIA SA calls for incentives to lure building material manufacturers

Builders have faced severe shortages of timber and other materials during Covid-19, prompting industry calls for incentives to revive local manufacturing.

Interstate and overseas manufacturers of building materials should be lured to South Australia with tax and other incentives, a major industry group says, in order to avoid the severe shortages that have caused major cost increases and project delays during Covid-19.

While federal stimulus during the pandemic has supported a boom in new homes across the state, the cost of timber, steel and other building materials has soared due to unprecedented global demand and rising freight costs.

In its pre-state election pitch to the major parties, the Housing Industry Association (HIA) says the loss of local manufacturing in recent years has left the housing industry reliant on interstate and overseas suppliers, with future disruptions like Covid-19 an ongoing risk.

The HIA says timber and other building material shortages during Covid-19 have exposed SA’s reliance on imported products.

HIA SA executive director Stephen Knight said incentives such as land tax, stamp duty and payroll tax concessions should be offered to manufacturers to set up operations in the state, in an effort to rebuild a local manufacturing base.

“There’s nothing new in any of that - there’s just a recognition that we’ve lost all of this and now we need to claw some if back,” he said.

“What’s exposed us over the last couple of years is that almost everything we use in building a home has to come from somewhere else.

“We don’t manufacture plasterboard here anymore - we used to have two plants. Even companies like Caroma have left South Australia in recent years.

“It has shown how susceptible we are to what happens interstate. We’re at the end of the supply chain and at the whim of a lot of other places with respect to building materials coming to us.”

HIA SA executive director Stephen Knight

In its pre-election document, the HIA renews calls for a state-based affordable rental program that offers incentives to developers of long-term affordable rental accommodation.

It also suggests there’s been too much of a focus on driving infill development instead of greenfield housing, and wants a new long-term housing plan to be developed to address future land supply and its impact on housing affordability.

“The affordability of land is really important and at the moment land is going up faster than building materials,” Mr Knight said.

“That reinforces the fact that if land’s going up so fast there must be a lack of supply and we need to consider how much land we have for housing and where it is.”

In one of its more radical recommendations, the HIA wants a five-year moratorium on additional regulations in the home building industry, to help builders bounce back from the challenges of Covid-19.

“Residential construction is continuously hit with regulatory change, whether that be energy efficiency requirements, design code changes - all of these things incrementally add cost to building and therefore affect affordability,” Mr Knight said.