HIA says wage rise ruling will increase housing costs and hit small builders hardest

THE Housing Industry Association (HIA) has warned the 4.75% rise in minimum award wages will negatively impact the pace of new home builds and small builders will feel its impact the most.

“The Housing Industry Association is deeply concerned with today’s Fair Work Commission decision to increase the Minimum Award Wages by 4.75%, which will make it harder to deliver new homes at the scale Australia urgently needs,” HIA managing director, Jocelyn Martin said.

“The Fair Work Commission’s secondary determination to effectively abolish the C13 classification rate, the entry-level rate for some workers, will also add additional pressure on employers,” she said. “This is a blunt approach that should have been given more detailed consideration. 

“These decisions add yet another layer of cost pressure to a residential building sector already under significant strain arising from the Middle East conflict and the recent Federal Budget, risking further delays and reductions in housing supply.

“Today’s decision will be felt most acutely by small and medium-sized residential builders, who make up the backbone of the industry.

“Small builders operate on tight margins and fixed-price contracts. They simply don’t have the ability to absorb ongoing cost increases.

“Each additional cost impost, whether it’s wages, materials or regulatory burden, chips away at their capacity to keep building,” Ms Martin said.

“This decision will force some builders to rethink new projects, delay commencements, or in some cases exit the market altogether.

“This continued cost escalation across multiple uncoordinated government policy areas, is undermining national efforts to boost housing supply and affordability. You cannot increase costs on one hand and expect output to rise on the other.

“The cumulative impact of labour costs, taxes, planning delays and compliance requirements is creating a structural barrier to delivering new homes and eroding project feasibility,” Ms Martin said.

“Today’s decision will additionally place further flow-on effects for apprentices and workforce development.
“Small builders train the majority of the industry’s apprentices, but rising labour costs make it harder for them to take on and retain trainees.

“At exactly the time we need to grow the workforce to meet housing demand, decisions like this risk pushing us in the opposite direction,” she said.

“HIA recommended a 3.5% increase to the national minimum wage rate this year, with our submission stating this increased rate represents the outer boundary of what is fiscally sustainable in the current environment.

“If governments are serious about improving housing affordability and increasing supply, they must ensure policy settings support builders, not constrain them,” Ms Martin said.

“That includes reducing regulatory costs, supporting apprenticeships, and ensuring that decisions like this from the Fair Work Commission do not undermine broader housing objectives.”

www.hia.com.au

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