Lately the Housing Affordability politicking has turned its attention towards building materials – manufacturing and supply and how the industry is contributing to high prices through what appear to be significantly more expensive materials than are available overseas. The questions have led to an enquiry that seeks feedback from the industry.
Whilst the likelihood is a low turnout on submissions due to fears of being black listed by the big suppliers it is interesting that much focus is upon incentives and price fixing and what happens within the building materials industry to fix prices high, maintain that equilibrium and shit out competition.
Section 4 of the enquiry questionnaire entitled: ‘competition impact of strategic conduct in construction markets’ notes the following issue.
Issue: Lack of Transparency of Strategic Practices
‘Strategic practices such as the provision of rebates or targeted discounts have the potential to constrain access to distribution channels for building materials. The lack of transparency around their use also means the benefits that result from them are less likely to be passed to end consumers’.
What this is about is such practices as ‘cover pricing’ – the act of having a face price but offering rebates and incentives, loyalty schemes between merchants and tradespeople as well as other schemes. Read more »