New independent modelling shows the building and construction industry will suffer billions of dollars in losses because of the Government’s carbon tax, according to Master Builders Australia.

Wilhelm Harnisch, CEO of Master Builders Australia said: “The reduction in construction output, relative to business-as-usual in 2020, would be likely to be of a similar order of magnitude to that projected for the mining industry."

"The loss in building and construction industry value added could be as high as $3.6 billion in 2020 or just over $24 billion in cumulative terms between 2013 and 2020 as a result of the introduction of a carbon tax.

“The modelling, by independent consultants The CIE, shows building and construction costs will increase by between 1.4 and 2.0 per cent by 2020 due to price increases in key emission-intensive inputs such as steel, aluminium, cement and glass.

“The report importantly calculates the rising-cost of the carbon policy, reflecting a steadily increasing carbon price, and the progressive winding down of the various compensation packages and exemptions offered to other industry sectors.

“The latest findings confirm earlier projections by Master Builders that the cost of a modest new house will increase by at least $5,000. This increase will come on top of recent increases in mandatory energy efficiency stringencies for new housing that has added another $10,000 burden on new home buyers to overcome.

“The increased cost impact of the carbon tax on new housing has been generally accepted by the Government’s own modelling but what is not generally understood is the cost impact of the carbon tax on the broader community.

“Community facilities and infrastructure such as hospitals, schools, medical centres, aged care facilities and roads are not immune from increases in construction costs whether as a result of large wage rises or a price on carbon.

"This will have a direct impact on governments’ capacity to deliver much needed public infrastructure. Governments will be forced to either deliver less, or increase taxes and charges in response to increased construction costs.”

Harnisch adds: “The carbon tax is clearly a negative for the building industry. The escalating nature of the carbon tax combined with the industry’s long supply chain and low margins means that the resultant increased costs will be passed on to the consumer. There is nothing in it but pain for homebuyers and for small businesses in the building industry in particular.”