Drywall conspiracy theories

So it looks like a bunch of smaller construction companies could go bankrupt because there's no drywall in New Zealand. 

There are two basic stories about the current mess.

People on the left point to tying arrangements between the big NZ drywall manufacturer and construction companies, or vertical integration between that supplier and retailers.

What about vertical integration and limited supplier of gib in NZ? Is it regulation or unregulated monopoly?

— Julie Anne Genter (@JulieAnneGenter) May 20, 2022

Theories around vertical integration and monopoly regulation as cause of the problem here are ludicrous. If your theory of tie-ups and discounts and all that requires that local construction companies prefer to go bankrupt rather than use foreign drywall, your theory is just a non-starter. What, is Fletcher's going to go around and start shooting builders who use foreign drywall? 

The underlying problem is as it has been for ages. Councils are very reluctant to sign off on use of unfamiliar materials used in unfamiliar ways because councils can bear 100% of the downside cost if any defect or problem down the track leads to litigation. 

When NZ standard methods use drywall as bracing element, it needs drywall built to that standard. Most other places don't do it that way. They use other bracing solutions. Don't ask me what those are; I'm an economist, not a builder, Jim. But other solutions are then going to be non-standard, and will make for hassles in consenting, because of liability issues facing councils. 

The problem might now be bad enough that developers will front the fixed cost of proving up alternative methods to councils who don't want to bear that risk. But it would be better if we could get councils out from under joint-and-several liability, either by capping their liability to a small proportion of the total or by making them only proportionately liable. I prefer the latter - if they are grossly negligent, then high damages can be fair enough. But otherwise, they shouldn't be facing high liability. 

It can be tenable to argue that the whole thicket was allowed to develop because it benefitted a local company. That's at least debatable! But in the same way that the internet interprets censorship as damage and routes around it, open borders would allow builders to route around those issues - if we eased the darned regulatory institutions that prevent them from doing so. 

If you hate local monopolies, and you're not talking about a natural monopoly, the solution isn't going to be monopoly regulation. It's going to be tearing down stupid constraints against imports so that local dominant firms face vigorous competition from overseas suppliers.

I hope that the Commerce Commission strikes to the root here in its eventual report. I'd also hope that the construction sector could put together some new standard methods using foreign drywall and pitch those methods across all councils in a bit of a hurry, so that it isn't builder-by-builder going council-by-council. 

Heck, you could even imagine central government helping here. There are a few Urban Development Authorities around. Could any of them start signing off on some new methods that use North American standard drywall, to start building confidence among other Authorities?