Aussie banks and retailers have warned they will lose tens of millions of dollars in revenue if they cannot sell their red glass windows to the public as soon as possible.
Key points:RBC warns it is already facing a “massive shortfall” in red glass sales due to a shortage of new windowsRBC says red glass could be a huge revenue generatorAustralia’s national debt could reach $US2.8 trillion by 2023 if interest rates remain unchanged, the bank said.
“Our forecasts for red glass in Australia’s housing market over the next decade are based on a $US300 billion shortfall in sales of new red glass,” RBC’s chief economist, Richard Harrison, wrote in a note to clients.
“The cost of replacing existing red glass is already well beyond the $US100 billion we estimate will be required to cover the shortfall.”
Red glass could represent a massive revenue generator for Australian banks and retail investors.
“The warning comes as the Federal Government announced on Monday that it will require new home builders to install red glass on all new homes and to install a “fair” minimum of three red glass-clad windows.”
In this way, the Government is ensuring that Australia’s economy is strengthened in the face of rapidly rising household debt,” Treasurer Scott Morrison said.’
It’s a problem’RBC’s Harrison said the new rules could force retailers to close their doors to customers and close their windows in some cases.”
He said that retailers may have to “close their doors for a time” if red glass was not available to them.””
We estimate the cost of these measures could be around $US400 million in 2020, a significant burden for many Australian retailers.”
He said that retailers may have to “close their doors for a time” if red glass was not available to them.
“If the new supply is not available, the risk of a sudden supply outflow could arise and this could reduce the supply and price of new products for Australian consumers,” he wrote.’
Trying to get through the cold’Retailers have struggled to get the red glass to the market and the Government says that will be a challenge in the long term.
“A number of retailers are already facing significant challenges as they try to get their supply to market in time to meet demand,” Agriculture Minister Barnaby Joyce said.
Mr Joyce said he expected retailers to be “very disappointed” if the new rule is not in place before Christmas.
“I’m going to be very concerned about retailers having to go through this period of cold weather,” he told ABC Radio Canberra.
“There is a lot of uncertainty around how retailers are going to respond to this challenge.”
He noted that “very, very cold weather” would not be the only thing that retailers will have to contend with.
“We’re going to have a huge amount of demand for Australian packaged food products, and there’s going to need to be a very large amount of domestic manufacturing capacity,” he added.’
We’ll have to keep up with demand’Australian consumers have been frustrated by rising prices in the past and many of them are planning to shop at least a couple of days a week.
But Mr Joyce said that the new red light requirements would not affect Australians.
“It will not impact retail, it will not affect people who are looking to go out and buy food, they will have their shopping,” he explained.
“When they do come into a store and see the red light, they’ll have their options and they’ll choose what they want to buy.”RBC said that as demand increases, “it is likely that retailers are also facing increased supply constraints” due to the Government’s new rules.
“But, as the demand for new products continues to grow, it is likely retailers will also face increased demand for red light signals, which could potentially lead to additional supply constraints,” the bank wrote.
“Therefore, it may be appropriate to consider the supply constraint and supply demand of the Australian economy in light of the current uncertainty about the implementation of the new regime.”