The Housing Industry Association (HIA) has issued a stark warning about the potential for increased housing costs if the federal government does not extend the current fuel excise relief and the pause on heavy vehicle road user charges. These measures are set to expire on 30 June, a move which the HIA argues could trigger another wave of rising costs in housing materials.

Jocelyn Martin, Managing Director of HIA, emphasised the critical role that fuel excise relief has played in stabilising costs across the construction supply chain. “Home builders are still absorbing the last wave of material price hikes into fixed-price contracts. They simply don’t have the capacity to take another hit,” she stated. Martin highlighted the ongoing challenge of elevated diesel prices, noting that the removal of the relief could exacerbate these issues further. “Fuel excise relief has been critical in containing costs across the construction supply chain. Removing it now, while diesel prices remain elevated, will push costs higher again.”

The HIA has projected that the end of the relief would result in more than a 10 per cent increase in diesel costs, which would directly affect the construction industry through various channels such as transport, logistics, and on-site activities. “Fuel is a core input – from earthmoving equipment and freight to tradies moving between jobs. When fuel costs rise, everything rises,” Martin explained. This increase would inevitably contribute to the overall cost of delivering new housing, a concern that is particularly pressing given Australia’s current housing demands.

The call for action comes at a time when the construction industry is grappling with multiple pressures. These include a 4.75 per cent increase in award wages, tax changes driven by the federal budget, and more complex superannuation obligations set to take effect from 1 July. The HIA has urged policymakers to consider the broader impact of rising transport and logistics costs on housing delivery, especially as the nation seeks to ramp up the construction of new homes.

“At a time when Australia needs 1.2 million new homes, the policy settings are moving in the wrong direction,” Martin said. She pointed to Treasury’s modelling, which indicates that federal budget decisions could result in 35,000 fewer homes being built over the next decade. “Government cannot afford to pile further costs onto an industry already under severe strain,” she warned.

While the federal budget has promised longer-term infrastructure commitments, the HIA argues that these will not alleviate immediate cost pressures or boost short to medium-term supply. “The industry needs relief now, not in a decade,” Martin asserted. She suggested that a further three-month extension of the fuel excise relief would be a practical, short-term measure to help the industry absorb existing cost increases and prevent another price shock. “Letting it lapse risks delivering another avoidable shock to builders, tradies and ultimately home buyers,” she added.

Despite fuel costs being just one component of overall construction expenses, they remain a significant factor for businesses involved in the delivery of new housing and residential infrastructure. “While fuel costs represent only one component of overall construction costs, they remain an important consideration for businesses involved in the delivery of new housing and residential infrastructure,” Martin noted. The HIA plans to continue monitoring the impact of changing fuel and transport costs on housing construction activity and supply.

As the deadline for the end of the fuel excise relief approaches, the HIA’s warning underscores the delicate balance policymakers must maintain to support an industry already under considerable strain. With the potential for increased housing costs looming, the call for an extension of the relief measures highlights the urgent need for targeted interventions to stabilise the construction sector and meet Australia’s housing demands.