Timber supply crisis forcing prices up 25 per cent, summit hears, as industry pushes for $6m funding lifeline

Homeowners are cancelling contracts amid a timber supply shortage with fear price rises could undermine the HomeBuilder scheme.

A $6m lifeline is needed to deliver thousands of tonnes of pine logs from Kangaroo Island to a Mid North saw mill to ease a crippling timber shortage that is leading to skyrocketing lumber prices which will be passed onto consumers, a crisis meeting has heard.

A major South Australian builder has also told a timber summit today that the HomeBuilder stimulus grant had led to builders “price gouging” and that customers have cancelled building contracts due to rising prices for materials.

Smaller and medium sized builders, who lack the buying power of their larger counterparts, were also under increasing financial strain amid warnings of a looming jobs “valley of death”, the summit heard.

South Australian primary industries minister David Basham will tomorrow meet with the federal government in Canberra seeking a $6m subsidy to transport 300,000 tonnes of fire-damaged Kangaroo Island Timber Plantations pine 400km to the Morgan Sawmill at Jamestown.

The logs, which it is predicted could produce enough timber trusses to build 10,000 homes, would otherwise be exported to India.

Kangaroo Island Timber Plantations’ chief executive Keith Lamb. Picture: Sarah Reed

Mr Basham will seek Assistant Forestry Minister Jonathon Duniam’s support to extend a bushfire-relief scheme to SA, which is only made available to fire-damaged timber plantations in the eastern states.

Morgan Sawmill owner Luke Morgan said if the logs were secured their operation could upscale production within two months to produce timber trusses, which could build 67.5 houses a month.

SA Best MLC Frank Pangallo called a timber summit amid industry fears the shortage could lead to job losses and business collapses.

The summit heard:

PRODUCT supply had consolidated to large builders;

PRODUCTION had stopped on some imported engineered timber, used for structural beams and floor frames.

COST of electrical cabling conduit had surged by 40-50 per cent;

SOUTH Australia had lost 30,000ha of pine plantation in the state’s South East in the past decade;

CONCERN that increasing build costs could push successful Home builder applicants above the $750,000 eligibility cap making them no longer eligible for the grant.

SA Primary Resources Minister David Basham

Will meet federal Assistant Forestry Minister Jonathon Duniam to seek $6m in freight funding for Kangaroo Island pine

Scott Salisbury Group’s Scott Salisbury said the construction cost of an apartment development he had priced in December had increased by 10 per cent.

“Prices are going through the roof,” he told the summit. “There’s a lot of negative outcomes for consumers, not just for the timber industry.

“The price rises are going to hit the builders really hard and we’ve got to carry that which we’ve mostly done ... my gut feeling is there’s going to be a lot of drama at the end of this.”

But he said there had also been a lot of “price gouging” of HomeBuilder customers.

He also told The Advertiser that clients had cancelled contracts owing to increased material costs.

Footers Structural Timber managing director Mark Footer said a major importer of structural timber was going to increase their cost by another 25 per cent in September.

“That points to a near doubling in price of imported fibre by the end of this year,” he said. “They are unheard of those price rises …

“I think Home builder was a knee-jerk reaction to what appeared to be an enormous crisis and a pit that we were all going to fall into this year … i’m not saying it’s a mistake but I’m saying its construction and execution has created substantial problems.”

Kangaroo Island Timber Plantation chief executive Keith Lamb rejected reported rumours that the timber was not good enough quality to build houses.

“We’re at the upper end of the range in terms of the density and structural properties of that timber,” he said.

Australian Subcontractors Association’s Josh Gloede said supply shortage could “knock over” small builders and subsequently subcontractors lose out”.

South Australian Forest Products Association chief executive Nathan Paine said the timber shortage could become the norm if policy settings on timber production were not addressed.