Let’s break building barriers

Another View

If there is one industry New Zealand should have in abundance it is house building. We can grow forests for timber, we pride ourselves on DIY, we have thousands of young people who are not in work or training for employment, and we have a desperate housing shortage.

The new Government has embarked on an ambitious KiwiBuild programme to provide 100,000 affordable houses within 10 years but it faces severe limits on the capacity of the building industry to supply enough houses at any price.

One of the contributors to the high cost of houses here is the cost of building materials, largely imported. The reasons for those costs were examined in our Property Report yesterday and they sound highly questionable.

The main excuse is our population size and distance from foreign suppliers. It is strange that these things do not seem to add to the costs of home appliances and many other imports that sell at internationally competitive prices here.

We also hear that a market of our size is easily dominated by two big suppliers who can set prices and use trade discounts to discourage builders from importing materials more cheaply. And it seems very few building firms have the capacity to do their own importing or even hold their own inventory of timber and other materials. Building Industry Federation chief executive Bruce Kohn points out that merchants double as a storage depot for all our selfemployed builders “operating with a dog and a ute”.

It appears to offer a yawning opportunity for competitors to come into the market.

What is to stop an entrepreneur from challenging the existing duopoly of Fletchers and Carter Holt Harvey by employing enough builders and other tradespeople to take on projects of the scale the Government is planning and importing the materials independently? The Government’s forest planting and regional development plans also offer more scope for the manufacture of materials here.

Perhaps the Government should also be putting more investment into training of builders and related trades, ideally through apprenticeships rather than purely polytech courses. Apprenticeships earn incomes sooner, and subsidise the rapid expansion of smallscale building firms.