Effects Of Economics On The Construction Industry

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Construction Economics: The Effects of Economic Policies on the Construction Industry in Australia
The building and construction industry in Australia is the fourth largest contributor to the economy’s gross domestic product after insurance and financial services, manufacturing and mining. In the financial year 2008-09, the industry contributed 6.8% to the GDP, down from the 7% in 2007. The carbon tax was introduced on 1st July 2012 and its execution has greatly impacted on the country’s building and construction industry. The carbon tax is a levy on fuels depending on the percentage of carbon in the fuel. Once the carbon is burnt, it is released into the environment as carbon dioxide. The increased carbon emission has been held responsible for the increasing world temperature (global warming) and the subsequent changes in climate.
The tax will act as disincentive for releasing carbon into the atmosphere thus businesses will strive to be more efficient in their use of carbon-containing fuels. The tax has impacted on the industry in a number of ways: effect on the demand and supply; current and future construction projects and contracts; carbon responsibilities; and risk distribution. The building sector comprising of residential and commercial buildings account for 23% of greenhouse gases emitted in Australia. It is a direct emitter in that it uses onsite machineries and generators as well as transport services to move materials to construction sites. The construction industry is unique in that it does not contribute directly to carbon emission but it utilizes materials, resources and services provided by companies that emit carbon thus it contributes to carbon emission indirectly. Th...

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...he industry since development of such designs and technology requires heavy capital investment in terms of the level of skills required, manpower training and investment in information technology and latest engineering software programs.
From the above findings, it can be concluded that the carbon tax will have a great impact on the construction industry and economy in general on the long run. Suppliers will pass the higher costs to the industry that is constrained by a price sensitive consumer. In response, the industry will invest heavily in research and development in a bid to reduce construction costs by embracing technology that utilizes less carbon intensive inputs. In the long run, the industry will experience structural change as the current dominant carbon intensive industries pave the way for more energy efficient and low carbon content manufacturers.

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