Red tape cuts growth

Brickworks boss hits tax, regulations amid $52m loss

Brickworks boss Lindsay Partridge says state governments have “their hands in the cookie jar” with hefty land taxes on manufacturing sites and has cast doubt on the federal government’s target of building 1.2m homes over four years.

Mr Partridge said labour and raw materials shortages and a sclerotic building approval regime would make the government struggle to even build 800,000 homes. “Tell ‘em they’re dreamin’,” he said of the housing target.

Speaking after Brickworks reported a loss of $52.1m in its first-half results on Thursday, Mr Partridge – highly agitated by the taxes, red tape and bureaucracy saddled on Australian businesses – said the bricks and housing materials company had lifted prices by 10 per cent last year and would likely seek another 10 per cent hike in the next 12 months – driven by costs that consumers would have to carry.

He sheeted home much of this pricing pressure to taxes, particularly land tax.

“Our margins are under pressure and some of the things we can’t control,” he said. “Unfortunately the government has their hands in the cookie jar and thinks it is a good idea to tax the cost of production.

“And this all feeds through, and to put land tax on manufacturing sites – you really need your head read because you are not going to get any payroll tax if the business doesn’t stack up because you have killed the business with your land tax.

“The government thinks it is smart because it can hide its taxes in the cost of production but in reality all that means is you are going to keep on driving up the cost of production.”

Turning to the federal government’s aims to build 1.2m new homes, Mr Partridge said he initially, and politely, described this as a “nice aspiration” but he now sees it as “dreaming”.

“They would be lucky to get 800,000, they will be onethird short at least,” he said.

On the outlook, Brickworks expects low levels of new housing approvals will see sales of its building products continue to soften for the next six months, but record immigration and population growth should eventually deliver a new building boom.

Brickworks, which also operates one of the largest brick operations in the US, will in the meantime restructure its operations to deliver savings of $1.2m a month from February to the bottom line and has lifted prices for many of its products.

It was a different story in the US, however, where market conditions have rebounded. These mixed fortunes as well as a drop in value for its industrial property assets saw Brickworks swing to a loss of $52.1m for the half year to January 31 against a profit of $354.4m a year earlier.

Brickworks declared an interim dividend of 24c per share, up from 23c, and payable on May 1.