BUDGET 2014: Imported building products get a leg-up with duty cuts

Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.

Launch Radio player

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)


Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

NZ Market Snapshot

Forex

Sym Price Change
USD 0.6649 -0.0033 -0.49%
AUD 0.8917 0.0017 0.19%
EUR 0.6047 0.0043 0.72%
GBP 0.4275 -0.0016 -0.37%
HKD 5.1563 -0.0304 -0.59%
JPY 81.0130 -1.0840 -1.32%

Commods

Commodity Price Change Time
Gold Index 1163.5 -2.500 2015-07-02T00:
Oil Brent 62.6 -0.180 2015-07-02T00:
Oil Nymex 56.9 -0.010 2015-07-02T00:
Silver Index 15.6 -0.015 2015-07-02T00:

Indices

Symbol Open High Last %
NZX 50 5841.5 5872.6 5841.5 -0.01%
NASDAQ 5024.3 5027.5 5013.1 -0.08%
DAX 11082.0 11123.2 11099.4 -0.37%
DJI 17763.3 17825.5 17757.9 -0.16%
FTSE 6630.5 6630.8 6630.5 -0.67%
HKSE 26349.8 26402.8 26282.3 -0.83%
NI225 20476.7 20557.5 20522.5 0.08%