Wednesday, 9 September 2015

Construction payola?

Are building materials suppliers jigging the market through payola?

Michael Morrah at 3News argues that exclusive deals, perks for builders, and quiet incentive deals lock particular suppliers into some of the main domestic material manufacturers. They're arguing conspiracy.

But can this really make sense?

The documentary opens with Ngai Tahu Property's complaint about market dominance by the big material suppliers. But I doubt anybody in New Zealand is better placed to import containers of better and cheaper wallboard from abroad than is Ngai Tahu.

Why isn't Ngai Tahu Property importing those materials to build better houses at cheaper prices?

The real problem noted in the Morrah report are Council practices that make it very difficult to use materials other than those produced by the dominant firms, even where they meet the same standard, and the certification processes that work to block parallel importation. Discussion begins at around the fifteen minute mark. They don't note that some Council reticence might be due to the change in liability rules around the leaky buildings lawsuits: if Council is ultimately on the hook for any failures of building materials, don't be surprised if Councils wind up being ridiculously risk averse.

Fix the regulations that set up barriers to entry against foreign products if you want to reduce construction costs.

It would be interesting to see a treaty claim asserting iwi rights to build houses as they see fit and to route around dumb regulations.

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