Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Fletcher affected by govt move to cut tariffs, Key says

Fletcher affected by govt move to cut tariffs on imported building supplies, Key says

By Suze Metherell

May 16 (BusinessDesk) – Fletcher Building, New Zealand’s dominant building materials company, will be affected by falling prices as a result of the government’s decision to cut tariffs on imported building supplies to improve housing affordability, Prime Minister John Key said.

The National-led government announced in the budget yesterday that it would cut tariffs and anti-dumping duties on building products to zero, in a bid to introduce more competition into the sector. The government, facing an election in September, is trying to reduce the cost of housing, which is being underpinned by lack of supply in earthquake damaged Christchurch, and increased migration driving up prices in the nation’s largest city, Auckland.

“Fletchers are the obviously affected party,” Key said on the sidelines of a post-budget Trans-Tasman Business Circle lunch in Auckland. “While this will reduce the price, and Fletchers will have to make their own commercial decision about what they do, we don’t think in any way it will challenge the viability of their plant.”

Shares in Fletcher, New Zealand’s largest listed company, touched a three-month low of $9.10. The shares recently fell 1 percent to $9.13, extending yesterday’s 1.2 percent decline.

A lack of competition for building materials is among reasons cited in a 2012 Productivity Commission report that found it costs as much as 30 percent more to build a house in New Zealand than Australia. The Commerce Commission is currently probing Fletcher’s plasterboard supply arrangements with building supplies merchants as its German rival Knauf struggles to get its products into stores.

Fletcher and Knauf have recently been in a High Court tussle over how insulation can be marketed in New Zealand after Knauf started selling its Earthwool insulation here, rivalling Fletcher’s Pink Batts product.

Key said the price of housing was a “perennial” issue for the country, and while house price rises aren’t surprising in a growing economy, the pace was concerning. Though demand could be controlled by higher interest rates, the government was committed to more houses being built to tackle supply constraints, he said.

As part of new laws passed last year, the government has agreed formal Housing Accords with Auckland and Christchurch and is in talks with local authorities in Wellington, Bay of Plenty and Queenstown in an attempt to boost the availability of affordable housing.

The government is trying to clamp down on what could be a $3.3 billion annual spend in on building materials over the next five to eight years in the state sector, as it deals with the fall-out of the Canterbury rebuild and the ongoing leaky homes saga.

“There’s plenty of work, and we think more competitiveness and competition in the building supplies area we think is a good thing,” Key said.

The government estimates the loss of tariffs would reduce the cost of an average house build by $3,500, at a cost to the government of $27.8 million over five years.

The three-year suspension of anti-dumping duties on plasterboard, reinforcing steel bar and wire nails will be effective from June 1, while the removal of tariffs is effective July 1. Key said today the changes could become permanent.

The duty cuts will include products such as plasterboard, reinforcing steel bar and wire nails, and tariffs will fall to zero for products such as roofing, cladding, insulation, paints, electrical and plumbing and fittings. Headline tariff and anti-dumping duty rates sit at around 5 percent for most of the products involved.

Other construction supplies likely to be affected include the Pacific Steel roofing business, recently acquired by Australian steelmaker Bluescope from Fletcher Building and Carter Holt Harvey’s building supplies arm.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Fairfax Moves To Create Modern Newsroom

Fairfax Media New Zealand continues its newsroom transformation this week, with a proposal to further organise its editorial operations into focused, local teams and specialist national topic areas. More>>

ALSO:

Dairy: Fonterra Forecast For 2015/16 Season

Fonterra Co-operative Group Limited has today reduced its forecast Farmgate Milk Price for the 2014/15 season to $4.40 per kgMS. Along with its previously announced forecast dividend range of 20-30 cents per share, the change amounts to a forecast ... More>>

ALSO:

BusinessDesk: SkyCity Lifts Minimum Convention Centre Investment To $430M

SkyCity Entertainment Group, the casino operator, has lifted the minimum it will invest in the Auckland International Convention Centre to $430 million and said total costs including land may be $450 million to $470 million. More>>

Statistics: Drop In Dairy Prices Leads Fall In Exports

Total goods exports fell $240 million (5.5 percent) to $4.2 billion in April 2015 compared with April 2014, Statistics New Zealand said today. More>>

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>


BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>

BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news