Name: Institution: Instructor: Course: Date: Construction Economics: The Effects of Economic Policies on the Construction Industry in Australia The Construction Industry Building and construction in Australia is the fourth largest contributor to the economy. gross domestic product after insurance and financial services, manufacturing and mining. In the 2008-09 financial year, the industry contributed 6.8% to GDP, up from 7% in 2007. The carbon tax was introduced on July 1, 2012 and its implementation had an impact considerable impact on the country's building and construction industry. The carbon tax is a levy on fuels based on the percentage of carbon present in the fuel. Once burned, carbon is released into the environment as carbon dioxide. Increasing carbon emissions have been held responsible for increasing global temperature (global warming) and resulting climate change. The tax will have a deterrent effect on the release of carbon into the atmosphere. Companies will therefore strive to be more efficient in their use of carbon. containing fuels. The tax impacted the industry in several ways: effect on demand and supply; current and future construction projects and contracts; carbon responsibilities; and risk distribution. The building sector including residential and commercial buildings accounts for 23% of greenhouse gases emitted in Australia. It is a direct emitter in that it uses on-site machinery and generators as well as transportation services to move materials to construction sites. The construction industry is unique in that it does not directly contribute to carbon emissions, but uses materials, resources and services provided by companies that emit carbon and therefore indirectly contributes to emissions of carbon. The...... middle of paper ...... The industry, since the development of such designs and technologies, requires heavy capital investments in terms of required skill level, training of manpower work and investment in information technology and the latest engineering software programs. . - From the above findings, it can be concluded that the carbon tax will have a significant long-term impact on the construction sector and the economy in general. Suppliers will pass on the higher costs to the sector which is constrained by a price-sensitive consumer. In response, the industry will invest heavily in research and development with the aim of reducing construction costs by adopting technology that uses less carbon-intensive inputs. In the long term, the industry will experience structural change as current dominant carbon-intensive industries pave the way for more energy-efficient, low-carbon manufacturers..