Rates decision condemned

PROPERTY News

Peak bodies covering construction and commerce have roundly condemned last week’s surprise rates rise by the Reserve Bank. Master Builders, Queensland’s peak body for housing and construction, described the ruse as “another major blow to Queensland’s construction industry which is struggling with the affects of the financial crisis”.
Master Builders director of housing policy Paul Bidwell said that while there have been glimpses of recovery since the global financial crisis, they have not been sustained. “It’s baffling how the Reserve Bank of Australian (RBA) made this decision about the national economy when the housing sector, which is the part of the economy that historically drives recovery, is still clearly struggling,” he said.
“Construction is a major contributor to Australia’s economy. It is responsible for more full time jobs than any other sector in Queensland.
“We have seen how six ‘quick fire’ rate rises from October 2009 to May 2010 dampened demand in the construction industry.

“By any measure, [the] decision to raise interest rates is the wrong decision. “The key to improvement is consumer confidence, underpinned by stable interest rates. This rate rise will most likely kill off any hope of short-term recovery.” T
he weak state of the industry was highlighted in the results of the latest Master Builders Survey of Industry Conditions released last week. The report shows that the residential sector slumped in the September quarter with 60 per cent of the businesses surveyed reporting weaker trading conditions and reducing staff levels.
“Conditions in Queensland’s residential and commercial sectors are still well below satisfactory levels and are forecast to remain weak in the short-term,” Mr Bidwell said.
The Chamber of Commerce & Industry Queensland (CCIQ) said the RBA had gambled on Queensland business resilience.
“The RBA decision to lift official interest rates to 4.75 per cent was a very bad outcome for the Queensland economy,” said CCIQ President David Goodwin.
“Queensland businesses have held significant fears over what another interest rate rise would do to what is at present, a fragile Queensland economic recovery.
“Interest rate rises are one of the major factors holding back economic growth in Queensland,” Mr Goodwin said.
“As a consequence of the RBA's decision, consumers will be less confident about the immediate period ahead, particularly as we head into Christmas.
“As the purse strings continue to tighten for Queenslanders this decision will detract from sales and business profitability.
“This was an important decision that will unfortunately undermine business confidence, investment and employment.”
The decision to lift rates additionally fueled further demand for the Australian dollar that was already hurting Queensland exporters and tourism operators.
“The Gold Coast, Sunshine Coast and Far North Queensland regions will be particularly disheartened with [the] decision as they continue to experience embedded sluggishness in their respective economies,” Mr Goodwin said.