BUDGET - Imported building products get a leg-up with duty cuts

Thursday 15th May 2014

Concerns over the high cost of building materials see the government temporarily cutting tariffs and anti-dumping duties on imported building products to zero, as part of efforts to improve housing affordability.

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.

The changes appear likely to have their most marked effect on the country's largest listed company, Fletcher Building, and on Carter Holt Harvey's building supplies arm. Others likely to be affected are the Pacific Steel roofing business, recently acquired by Australian steelmaker Bluescope from Fletcher Building.

The cuts come as the Commerce Commission continues a long-running investigation into allegations of anti-competitive behaviour in the building supplies market, and the failure to date by multi-national plasterboard manufacturer Knauf to make inroads into the plasterboard market.

Knauf was chosen as a supplier to the Christchurch rebuild to provide competition in the plasterboard market, which is dominated by the Fletcher Building-owned Tasman brand.

Housing and Commerce Ministers Nick Smith and Craig Foss announced the changes in today's Budget, saying they should reduce the cost of building an average house by about $3,500 at a cost to the government in lost duties and tariffs of around $27.8 million over five years.

Housing affordability is a pressing economic and political issue, especially in Auckland, where demand is outstripping available housing stock and in Christchurch, where the rebuild from the earthquakes of 2010 and 2011 is taking longer than expected.

The three year suspension of anti-dumping duties on plasterboard, reinforcing steel bar and wire nails will be passed under urgency as part of the Budget, effective from June 1.

"A bounded public interest test will be introduced into the Dumping and Countervailing Duties Act 1988 following a public discussion document and consultation on the detail of the amendments," the Ministers said in a statement.

A zero concessionary tariff will apply to residential construction materials from July 1, to be reviewed in five years' time and will cover around 90 percent of the materials used in standard house construction, including roofing, cladding, framing, partitioning, windows, doors, insulation, plumbing and electrical fittings, kitchen cabinets and paint.

BusinessDesk.co.nz

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