The Gillard Government's controversial carbon tax bill made it through the lower house of parliament which means the nation's biggest polluters will be forced to pay for the carbon dioxide they release into the environment from July 2012. But with the opposition saying they will repeal the tax if elected many businesses are left wondering: do I plan for a carbon tax or not?

Understandably property developers are nervous but it's our view that construction costs won't be affected too much by a carbon tax. We're estimating in the first three years around a 0.5 - 0.8% increase in construction costs. Concrete and steel works will be most affected and its expected that in the short term these trades will have an approx. 5 - 10% cost increase. But as developers look to other opportunities such as importing materials from overseas we expect to see prices return to normal in 1 - 2 years.

Builders have begun to factor in the carbon tax in their tendering for building contracts signed now and beyond 2012. Some builders are stating exclusions for increased costs associated with a carbon tax but others will simply increase their trade costs in the tendering process to cover their estimated cost increases. We're recommending clients go with exclusion clauses so that costs can be more closely audited.

What's going to happen after 2015 is more unknown due to the fact that no one can predict who will be in Government then and what other outside factors may impact the steel and concrete trades here and overseas.

No matter what happens, Washington Brown will be sure to keep you updated. If you have a project you'd like to discuss please contact Tom Lander.