Small and medium scale building product manufacturers will be the hardest hit by the carbon tax, one of the nation's peak building industry bodies has warned.
The Housing Industry Association said there would be "immediate and inevitable" cost increases across a broad range of building materials, products, fixtures and fittings if a carbon tax was introduced.
"It will add an extra $6,000 or more to the cost of building an average new residence, placing additional affordability pressure on new housing activity, and adding an extra $43 per month to the family mortgage repayments," HIA chief executive - association Graham Wolfe said.
"That adds a further $12,800 to the total repayments over a 25 year loan.
"The market will look for alternatives and that rings alarm bells for Australian building product manufacturers."
Mr Wolfe said a carbon tax would make Australian-made and manufactured building products less price competitive.
"Put another way, imported building products will become more price competitive, more cost appealing, and that paints an ominous picture for Australian manufacturers and for those employed in the sector," he said.
"Understandably, the Federal Government has focused on the big emitting, trade exposed operations.
"But tens of thousands of potentially trade exposed Australian manufacturers have been forgotten in the debate,"
According to HIA statistics, the residential construction industry is in the midst of its worst downturn in decades.
Housing starts are forecast to fall 15 per cent across Australia to 143,400 in 2011, down from 168,700 in 2010.
