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Free Market Failure

Written By: - Date published: 9:38 am, February 27th, 2010 - 56 comments
Categories: business, capitalism, housing - Tags:

It’s time for the National Party to issue an abject apology to the nation… for the 1992 Building Regulations that directly led to the astounding public crisis we now face.

Building and Construction Minister Maurice Williamson told the Weekend Herald the official $11 billion figure – which experts believe is half the true cost – was about what the Government spent each year on health or education.

“It’s simply ginormous. A Government who’s running very large surpluses would still struggle to find the money to help with this.

“But a Government who’s running deficits – and has a forecast track of deficits for many years out – has to just sit there with its head in its hands, saying, ‘Well, I just don’t how to do this’.”

Herald

Further down the article we find that the $11b number bandied about over the last few months was a lie; an independent PWC report commissioned by the govt put the cost at $23b, stating that 90% of homes built between 1992 and 2005 would fail badly. They determined that this affected some 89,000 homes at an average cost of $300,000. And that does not include all the commercial, industrial and public buildings that will also fail. Of course the Nats baulked at this and more or less halved the number they put out to the public at the time.

The vast majority – between 80 and 100 per cent – of homes built with monolithic claddings (seamless-looking sheets finished with paint or plaster) would fail within 15 years.

That style of building accounted for the majority of the 150,000 odd buildings erected in the 17 year period concerned… and most of them will fail, if not already, then very soon. Spending $300,000 on each to remediate/demolish and rebuild is a potential total cost in the range of $30-40b. Given that the acknowledged number attached to this crisis keeps on doubling every year or so, this projection is not unreasonable.

The govt cannot and will not be able to afford this. It will have to come out of ratepayers pockets, or the losses born directly by those ratepayers unfortunate enough to have been conned into buying one of these timebombs. $40b spread over roughly 1m urban ratepayers, over 20 years, is an average increase of $2,000 pa … on top of existing rates. So much for tax cuts.

The Minister in a rare moment of candour admits this:

If they have to face the true liability of what’s working its way through the system now, you will see rate increases in some of those areas of proportions that would make your eyes water.”

As I recall the changes to the Building Regs were controversial at the time, National was clearly warned that what they were proposing was a recipe for disaster, and that disaster has arrived with bells on. What I want is an apology from National, an admission that their incompetence created this mess.. and an open repudiation of the failed ideology that underpinned it.

56 comments on “Free Market Failure”

  1. Descendant Of Smith 1

    I’d like to see an apology from all those crap developers and builders who built the rubbish. Private enterprise at it’s worst.

    Of course some people were stupid enough to buy these homes as well.

    • RedLogix 1.1

      Of course some people were stupid enough to buy these homes as well.

      Tempting to say that, after all personally I was always aware of the issue (all the units I have built were in permanent materials and my favourite by far is Timbercrete)… but then most people don’t have my level of technical education and experience.

      Labelling them ‘stupid’ is really just ‘blaming the victim’.

      • Herodotus 1.1.1

        I am aware of good builders who also broght what has turned out to be crap developemnts in Takapuna, Orewa, Manukau. So if sound builders were buying them what could be expected from the average Joe Mugg?
        I have heard comments over the last 10+ years of boring Brick & Tiled ‘burbs at least the buildings accepted that water will get in and have a system that allows for it to also get out naturally.
        And to JD I agree yet the JH and CHH and the likes have got away with it, also CVHH for selling under spec timber for trusses, and for $250m sales they get slapped with a $1m fine. Greatto see Karma working as Tui would say NOT !!

    • DeeDub 1.2

      You really can’t blame developers for sticking to the letter of the new laws at the time, can you? Isn’t that what regulations are there to control? Or slacken control in this case?

      As for the buyers, surely they had a right to trust and expect that the government wouldn’t do anything that would allow the erosion of building standards just to make cheap get-rich-quick developments easier for shonky developers? ie. “Everyone is building ’em this way and the government says that’s fine so………..”

      captcha: collapse

    • prism 1.3

      Smith
      “Of course some people were stupid enough to buy these homes as well.”

      Smith is a surname that implied a competent tradesperson. You are bringing the name into disrepute with your own stupid remark. Of course people had no concept that they were buying shoddy gimcrack housing and that they couldn’t trust so-called experienced builders and entrepreneurs to build to what has been an expected standard.
      They also did not comprehend that government could be so lax, irresponsible, short-sighted and ideologically driven that they would introduce laws that would encourage such shit to happen.

    • Draco T Bastard 1.4

      Of course some people were stupid enough to buy these homes as well.

      Can’t blame the buyers. As I’ve repeatedly said, the free-market requires one of either two things: Everyone to be omnipotent or to be highly regulated. The first is impossible so that leaves us with the second. The regulations are there to ensure that everybody is working with the same, and correct as known at the time, information so that people can trust what they’re buying without having to do a degree at university and a full research thesis on what they want to buy. A legislated decrease in standards is what lead to the leaky homes syndrome.

      National shouldn’t just be apologising for it, they should be paying the bill – all $40b.

  2. And like that’s going to happen.
    What still disgusts me is that the real problem has still not been addressed. We’ve had it’s the untreated timber, it’s the builder , it’s the style, it’s the councils, it’s the everyone else stupid but not the real reason. Cladding, cladding, cladding. It’s the cladding stupid.

  3. Having just arrived from the UK and bought a ’50s house for renovation and extension I couldn’t believe what my builder was telling me about untreated timber. It was so patently stupid that I said, “no way”, and made sure ever stick of timber he used was treated despite the relatively small extra cost.

    Perhaps while they are about it National will also apologise for the 1999 power industry reforms which have led to nice fat capital gains and dividends to the holders of power co. shares (disclosure: I made sure I grabbed all that I could afford at the time, thanks Max) ever escalating power prices and regular power shortages.

  4. Anthony Karinski 4

    Fat chance.

    Btw Labour should apologise for starting the whole mess back in 84. Without that, NZ wouldnt be where it is today. Saw Goff was unrepentant for the whole thing in an interview a while back claiming that even during the ravages of Douglas Labour always had the working class in mind. Tosser.

    • >>Anthony Btw Labour should apologise for starting the whole mess back in 84

      But this was the response to Muldoons admin.

    • prism 4.2

      Anthony K Can’t blame Labour for a law brought in by National who were very pleased to take over from Labour who were left by Muldoon with a collapsing economy while he refused to hand over the reins like the little dictator he was. When National got in they drove the changes further and harder.

    • Anthony Karinski 4.3

      I’m not saying National is not to blame for this particular crisis. But Labour is implicit as they got the ball rolling and prepared the ground for National to take things along further. In all honesty the same Labourites (among them Goff) would in all likelihood have implemented a similar policy had they stayed in power, as it fitted their ideological mantra.

      What gets me is that Goff can be so caught up in his own ego that he still claims he did it for the good of middle NZ. If that’s typical of the insight and humility he’s capable of he’s certainly not fit to run the country. Why not own up to his mistakes and on the back of that ‘profound’ insight stick it to JK and the nats. “I did this, this and this wrong and it stuffed up our country like this, this and this. I’ve learned from my mistakes and would do this, this and this instead of JK who is still repeating my mistakes” Instead he just wobbles along. Opposed to the super shitty, opposed to the gst hike etc. Will he do anything to change it if he ever forms government? Shifty, shifty and no definite answer. Fail.

      He could have offered an opposing outline of how he sees the new super city, how he would have structured and implemented it if Labour was the government – consultation, referendum? and used the media to drive a clear and definitive wedge between the nats and labour. “70% of aucklanders prefer labours alternative super city plan versus nats etc”. And make some god damn commitment as to what he will do to change the super city if he gets to govern. All quiet and uncertain on the left front.

  5. Stacktwo 5

    Great post, Redlogix. Another crack in National’s teflon, which will fail completely in much less than the life of a leaky building.

    But, Smith’s Descendant, I wouldn’t blame the buyers. Not everyone has studied building technology, and Mr and Mrs Average should have been entitled to trust the “experts” – they couldn’t even google their decision making as we can now.

  6. vto 6

    Treated timber? I hate the stuff. Anyone remember the formaldehyde (sp?) or whatever it was a couple decades ago in flooring? Seeping out and poisoning the inhabitants?

    Think it wont happen with the timber in the walls of your childrens bedrooms? All that heinous poison no going anywhere? The people that handle the stuff have to dress like spacemen to avoid poisoning.

    Avoid treated timber. It is a future poisoning hazard…

  7. Adrian 7

    Formaldehyde is a naturaly occuring component of timber, thats the “keroseny” smell you get in some wood, the problem with it was that monoclad hermetically sealed houses didn’t let it disperse into the atmosphere as it has done since the first tree fell over. Nothing to do with treatment, boron (ironicly) treatment is needed to stop borer eating your house down. Or you could use rimu.

  8. Bill 8

    I know!

    Why not retrofit all the leaky buildings with impermeable plastic and then the moisture won’t get in and…oh

  9. Adrian 9

    Boron( gasp, chemicals again) by the way, is a naturally occuring component of earth. If you want to avoid chemicals for Gods sake don’t go gardening or grow anything in it.

    [Arsenic is also a naturally occuring element. Feel free to consume liberally. Lay off the dumbass threadjack. RL]

    • RedLogix 9.1

      is a naturally occuring component of earth

      So is arsenic. Feel free to consume liberally.

      Lay off the dumbass threadjack.

  10. randal 10

    hey rdlgx.
    they need to apologise for everything.
    when national was in power in the nineties they buggered everything they touched as they blundered about in a fever pitch or irrationality that somehow meant money for all their mates.
    they buggered the : schools, the airforce, the police, the universities, everything.
    congratulations to the people who held off settling their leaky houses because now they can grill the perpertrators who cooked the whole thing up in the first place.

  11. r0b 11

    I was planning to do a post on this – but glad you beat me to it – yours is much better! “What I want is an apology from National, an admission that their incompetence created this mess.. and an open repudiation of the failed ideology that underpinned it.” Damn right.

  12. Herodotus 12

    There is no mess and accroding to Helen in 2002 this issue has ben overplayed and is not that grea, this was followed up in the remainder of the last govt by their action or more pertinently their lack of action. I see that some what to point the blame at Nat yet where was the motive to change anything from Lab, as according to est 1/10 up to 1/3 of all houses built within the Lab time in govt will not stand the test of time. This is a sorry state whereby yet again NZ is the loser from very poor politicians on all sides and govt agencies e.g. Branz NZ. The issue has grown so great that there is no real solution to remedy the issue for those trapped within the system.
    Where were the authorities re CHH and the timber , I would think on a risk-reward basis to con the market for $250m and incur a $1m fine just shows how govt agencies work for us !!

    • RedLogix 12.1

      There is no mess and accroding to Helen in 2002 this issue has ben overplayed

      And at the time pretty much in line with the official information available. HC would have been unwise to have strayed too far from that advice, especially in a matter in which she had no direct expertise. More broadly speaking I was dissapointed that the Labour Cabinet, Ministry Officials and the industry as a whole chose the very conservative line they did in the face of contradicting evidence … for so very long.

      • Herodotus 12.1.1

        No at the time many within the industry were extrememly aware of the issue and that it was far greater than initial reports. Many including govt would have been aware of this but did not want to acknowlege the fact just hoping above all hope. Sure building standards were changed (perhaps not for the best) but where is the comeback on Branz and the manufacturers and their claims on their product. There is a rumour that certain asuie coys that their records displayed flashing sales did not marry up with metres of cladding sold.
        With section sizes reducing there is a compulsion for houses to be built 2 levels to comply with site coverage rules. Most houses the 2nd level is plastered as the cost to build in brick is prohibitative. Sure many that dont leak will have weaknesses but these will be managed by the likes of having eaves, and the ground floor being brick and cavities.
        NZ runs despite what Wellington does, unfortunelty “NZ” will work away around this inspite of the many obstacles that are put in place. Perhaps this is another reason for a true version of self rule !!!
        If a house leaks treated timber does not solve the issue, it just prolongs the time before the effect of water is noticed. How is ot that pre 60’s wooden houses still survive outside the widow frames rotting away, many cases in central Ak before timber was conditioned, admittwly they did use some great native timber to build not this soft Rad Pine.

        • RedLogix 12.1.1.1

          No at the time many within the industry were extrememly aware of the issue and that it was far greater than initial reports.

          These things take time and for every expert pointing out the potential magnitude of the problem, there were several others covering their self-interest by minimising it. By 2004/5 Labour of course DID recognise the problem and the 2005 Building Act introduced substantial changes in a direct response to the problem.

          Now of course everyone in the industry is moaning about ‘compliance costs”.

          The simple fact is that our building industry is economically locked into pinus radiata, which in the long run is entirely unsuitable for anything other than non-load bearing internal partitions and trimmings.

          Personally I’m very scathing of much of NZ’s building industry….competency, integrity and value for money are in short supply… but ultimately it was the 90’s National govt that was responsible for the 1992 Building Act. It was that govt which failed at the helm.

          While the individual Ministers and officials responsible for this debacle are long gone, the bankrupt ..gimcrack… thinking which lead directly to it, is back in power.

          • Herodotus 12.1.1.1.1

            I still remember when this story broke Tim Manning appearing on Holmes TV1, pity this is still not available it was great viewing of the issues and how the industry was to be fixed, funny thing is that all the parties are still there except Branz and the likes of Mr Manning

  13. Frank Macskasy 13

    Over thirty years ago…

    Electricity, telephones, and rail were all state-owned.

    We built huge hydro power stations and lines to carry electricity
    around the country. We didn’t have massive power blackouts.

    We built phone lines from Stewart Islnd to Cape Reinga; the system was
    run by the post office – and it worked! (And no, I can’t recall the
    Post Office taking a month to set up a new phone. I wonder where that
    story came from? Telecom?)

    Our power and phone bills were bi-monthly and did not cripple our bank accounts.

    Our railway system ran on time and didn’t break down with monotonous
    regularity. We employed tradespeople to service the lines, carriages,
    and stations. There were actually SIGNS at each station, so passengers
    knew where to dis-embark.

    Then, in the late ’80s and ’90s, we sold the whole lot off to private
    enterprise (or turned them into several SOEs) – because “competition”
    was good. Prices would drop. Service would be more efficient.

    What we got was;

    * rising prices

    * breakdowns

    * less service

    * and automated machines telling us, “Press 27 if you want your arse scratched”.

    Once upon a time, we built all this infrastructure.

    Today, we can’t even build “Party Central” on Queen’s Wharf in Auckland.

    In other words, we can’t even organise a piss up anymore…

    • Ag 13.1

      It’s not as if we cannot afford it. People would rather spend the money on things like cars and plasma screens, and, across the English speaking world, have voted against parties that propose to restore the tax rate to a sane level.

      In the end the blame lies with the voters, who have had several opportunities to signal a return to sane policy, but who wished to have their cake and eat it too. Now we’ll get another few years of the electorate living in denial and refusing to sanction the increases in taxation required to get out of this mess. We need a proper government and proper public services. These things are necessary and cost money. Anderton was one of the few politicians honest enough to point this out in public.

    • Every word you have said is true Frank I well remember when my State advanced morgage was allowed our house was built to a very high standard.
      The building inspector was dreaded by even the best builder. Our builder called him “Your Friend ” and indeed after nearly fifty years our inexpensive “Working Class” house is the envy of many. Still in good condition . Now the houses I see are expensive ,way beyond the average wage earner and sheer crap.The next Labour government would do well to bring back some form of State Loans again with the same stringent building conditions.

      • A Nonny Moose 13.2.1

        “The next Labour government would do well to bring back some form of State Loans again”

        With the same 20% interest rate, while you’re getting all reminiscent for the “good old days”?

        • D14 13.2.1.1

          >With the same 20% interest rate, while you’re getting all reminiscent for the “good old days’?
          Nope, we had a 3% state loan and 14% second mort. in about 1983

  14. Descendant Of Smith 14

    When I said some people were stupid I actually meant “some people”. I didn’t mean to imply all people or even a majority of people. I know quite a few people who against all prevailing advice went for the lower cost cheaper option when other good builders gave them good quality advice and in some cases told them directly the houses they were looking to buy would have problems of this sort..

    I fully accept their were other people who were not given advice and who were reliant solely on their builders.

    I also have family who were in the building trade during the time that these buildings were built and have never built a leaky building in this way and actually refused to do work in many of these developments because of the lack of expertise and skill and the way the subcontracting was being carried out.

    They continued to maintain high standards regardless of any government regulation.

    I don’t see however that those who purchased these properties should take no responsibility either. Buying a house isn’t like buying a DVD player from a video shop and some care needs to be taken.

    It would be nice if the people who actually built them were held to account and were made to fix their shoddy workmanship.

    • RedLogix 14.1

      It would be nice if the people who actually built them were held to account and were made to fix their shoddy workmanship.

      Which flies in the face of how modern buildings are built. These days the ‘builder’ hardly ever actual lifts so much as a hammer. It’s almost all done by others from the site works, the foundations, the framing, the roofing, the windows, the cladding, the fitout and painting… all subcontracted.

      Usually these subbies are poorly paid and are total strawmen when it comes to attempting to sue them or hold them to account for their specific failings in workmanship. How do hold someone accountable for a $300k failure when they were only paid something like $5-20k for their portion of it?

      Worse still because the building process is deeply inter-dependent on the performance of many systems and other people, the whole exercise degenerates into a round of endless fingerpointing.

      • Descendant Of Smith 14.1.1

        I’m seeing I have to be very particular with my language today – obviously the smithing comment also refers to word smithing.

        I did think it was self evident that by people who built them I meant the actual firms/builders paid by the owner to build their house rather than the individual workers. I don’t think it is usual practice to have the workers of a firm personally liable.

        • RedLogix 14.1.1.1

          I don’t think it is usual practice to have the workers of a firm personally liable.

          You miss the point; these tasks are not done by the builder’s employees, rather they are independent sub-contractors.

          Attempting to sue even the builder, who may have made only $15-30k on the build, is not likely to yield a satisfactory outcome… assuming the company still exists or he hasn’t shot through to Aussie. If was a case a few dozen buildings going wrong in the ordinary way, you would have a case to hold individual builders responsible, but with a crisis of this scale it’s very hard to pin down any one party in the chain, designer, builder, specifiers, sub-contractors, inspectors…who could realistically make things right. No-one standing has pockets deep enough.

          In my mind the most directly culpable parties by far were the big building suppliers like Hardies who aggressively marketed these faulty systems despite abundant evidence from Canada that they would not be satisfactory. As usual with capitalism, they’ve privatised the profits and socialised the losses.

          But overarching this still remains the fact that it was a National govt, blinded by an ideology that ‘the market would sort it all out’… who set in place the regime under which this took place.

    • RedLogix 15.1

      Yes… that’s an aspect I left out in the interests of brevity.

      The problems with these building methods were well known from Canadian experience, especially in Vancouver, well before 1992.

      National could never have used the ‘no-one knew’ excuse.

    • RedLogix 16.1

      Peter Cresswell clearly knows a lot about the industry, but his conclusions are pre-formed by his libertarian viewpoint. His argument is demolished by two of his commenters, but in essence Cresswell’s argument that the crisis was caused because of regulation and by implication would not have happened if there had been no regulation at all… is just so much drivelling tosh.

      The average person has no inkling of modern building materials and science. In all complex societies we rely on specialists and we cannot enter into contracts on symmetrically informed basis. We rely on specialists telling us the truth.

      By 1990 it was apparent that the Building Codes and Regs needed updating to cope with the rapidly changing materials and methods being pushed by various big industry players, Hardies, CHH and Fletchers being the main culprits. It was argued that the ‘free market’ knew best and that the old prescriptive NZ3604 Code that mandated a limited palette of methods and materials was too ‘bureaucratic’ and restrictive.

      In its place a whole new regime that ‘described’ the desired outcomes was put in it’s place. Fundamentally this was a good idea; but as with all National govts the implemetation was a fuck up. It relied on the average Joe Public being able to trust what the information being given to them by specialists, and the gatekeeper was meant to be BRANZ.

      Unfortunately BRANZ was always an underfunded little outfit, stuck out in the backwaters of rural Porirua, with modest testing resources and less regulatory clout. Although dedicated staff did a lot of good work in many areas of research; fundamentally the big industry players seemed to have bulldozed rings around them. In particular it is very hard to understand how some Approvals were issued for systems that even at the time the was good evidence to suggest were suspect.

      This disaster occured on National’s watch. It rates even bigger than the sale of NZR and Telecom in terms of it’s deleterious effect on this nation. Only Muldoon’s raping of Labour’s first Superannuation scheme ranks higher in terms of it’s impact.

      Time they got to wear it.

      • Quoth the Raven 16.1.1

        And your conclusions are not pre-formed by your bias. What I get from your comment just been and PC’s arugment and his personal experience was that this issue is far more complex than the simple story people have put forth about ‘deregulation’. I would hope that is the image most people would get if they read around with an open mind.

    • Draco T Bastard 16.2

      Ok, so, after reading that the problem was cronyism, the wrong regulations caused by that cronyism, materials passed that shouldn’t have been also due to the cronyism and, finally, the break down of the apprentice system which stopped people learning how to build houses.

      Want to build a balustrade? The new Building Code told you (and still does) how you’re allowed to do it, right down to the size of bolts and the spacing of balusters.

      So anyone who can read can build a balustrade without going to an architect and/or a civil engineer? This guy, if he was actually supportive of a free-market, should be cheering this on.

      Want to specify the timber you’re going to build your house with? The standards specified under the new Building Code told you (and still do) what timber you’re allowed to use where. Want to install a cladding system? The new Building Code told you (and still does) what hoops you have to jump through before you’re allowed to.

      Use of Carter’s and Fletcher’s dry-frame timber in wall framing was allowed because a committee of the New Zealand Standards Authority decided that it should be (and sitting on that committee were representatives of, you guessed it, Carters and Fletchers) and because the boys from BRANZ issued an “appraisal’ declaring it to be fit for that purpose.

      This is where the regulations broke down and that was due to the above mentioned cronyism. The big commercial guys had representatives on the board of BRANZ and so sub-standard materials got passed. What a surprise.

      Now, what would have happened if the people who were supposed to be doing the research were actually doing the research and not taking the research by the producers at face value?

  15. reddy 17

    what I want to know is how has this not stuck with the Nats politically. and how has it not completely failed the ideology of deregulation and hands off?

    We still haven’t paid off the fuck ups from last time we had these pricks in. How long is it going to take (if ever) to fix up mined National Parks, ACC, primary schools, superannuation, kiwisaver etc etc…

    why are the councils getting pinged with it and not the Nats? it should be linked with the doing away of apprenticeships etc etc etc…as their unwanted legacy, that after 9 years and a affable smile has been forgotten.

    • Well you may ask Reddy , It has baffled me for years . Of course people have short memories and many do not have, and do not want, a grasp of politics. Having said that the reason this bloody awful lot get away with so much is the brilliance of Textor -Crosby . The excellent continuous positive publicity T/C manage for the Nats is mind-boggling . Even at electorate level. This combined with the Right Wing media give the Nats a big advantage.
      The problem looming up is that they will be working for the Political Right (if they are not already ) in the up coming Super City elections.
      Im hoping that our people are aware of this and are taking action.

  16. Chris 18

    RedLogix – are you reading my FB posts?

    • Chris 18.1

      RedLogix – are you reading my FB posts? I posted about this very issue at about 8.30am this morning, and one hour later you are writing about it. Glad to know that someone is reading my posts!

      • RedLogix 18.1.1

        No I posted independently, but I’ve commented on the thread. Interesting to see the indefatigable McShane still defending the indefensible.

        • Chris 18.1.1.1

          Well I’m pleased that someone else other than me can see what the real issue is; the nat’s by their blinkered ideology caused this 11 billion dollar problem – they should pay it all.

  17. JMK 19

    The leaky building issue is the best argument I’ve heard against unfettered free markets.

    But, fun as it is to watch politicians pass the blame to the other parties, as a leaky home owner all I’m really interested in is who has the best plan to fix the situation. I don’t see Labour coming up with anything on this at all – when they come up with a realistic plan, they will be a credible government in waiting. Until then, I’m not too unhappy with National’s approach to the problem – they have at least tried to quantify it!

  18. yep. I was just pretty much starting to learn to analyse politics for myself at the time, and I distinctly recall the contention at the time that ‘the market will sort it out’. Specifically, that builders and developers who built shoddy buildings would be punished by the market and that the invisible hand would take care of things.

    Invisible hand all right; Jesus H, they must be tired of laughing by now…

  19. handle 21

    RB, when you say “from Canadian experience” you are assuming the numpties believe in evidence. No sign of that in other areas like climate change, public transport, education and ACC is there? Leaky buildings are a classic example of the small government bollocks we were subjected to for 15 years in a very expensive experiment (and I agree with your other examples).

    Post-1999 Labour governments also knew about this and did worse than nothing. Disbanding BRANZ so there was no government agency left to sue was downright cowardly. Maybe allowing an unsustainable property boom was out of guilt?

  20. handle 22

    Meanwhile, the invisible hand was too busy pleasuring dodgy developers and captains of industry.

  21. SPC 23

    I suppose in the end Phil Heatley found his inability to keep within the ministerial spending rules had one good point, it allowed him to escape this issue – and perhaps they needed someone really really right wing on this anyway.

    And has anyone wondered about the relationship between the super city in Auckland and leaky homes.

    One thing the super city does is bring in more ratepayers to share the cost of the local government expense.

    Another thing it does is bring in an easier course to offering these ratepayers a choice – a huge increase in their rates bill or slashing jobs – privatising services and selling assets to pay for their share of the leaky homes bill.

    With this precedent in place more of the cost of leaky homes can be offloaded onto councils nationwide – a super city in Wellington and generally slashing jobs and privatising services as the chosen (Auckland) model for affordability.

    If they are successful in that, it would be an easier course to affording a slashing of the top rate of tax for a certain few nationwide.

    Thus the link between the super city in Auckland, leaky homes and the May budget.

  22. Thomas 24

    Hi
    While I agree about free market ideals causing the problem 300K per house is a ridiculous overstatement. You could bowl and rebuild the overwhelming majority of houses built in the 90’s for much less than that. CHH and others should be made liable and the people trying to make their fortune out of “fixing” leaky homes should also be reined in. Customers are not totally blameless either. Many times we quoted on a building or renovation or said to customers do not do it this way it will need repairs or replacement within ten years. In most cases they would knowingly engage a cheaper builder who was prepared to cut corners. A comment was often made that “we will have sold the house within ten years” Don;t even get me started on botchups by owners or other builders we eventually repaired. Many good tradesmen have left for Australia because the “market” in NZ is rigged so real tradesmen cannot get payment commensurate with the skills required. Big companies with dodgy half trained employees get the contracts. They should be required to have a ratio of qualified to unqualified builders on site.

    • Draco T Bastard 24.1

      Many good tradesmen have left for Australia because the “market’ in NZ is rigged so real tradesmen cannot get payment commensurate with the skills required. Big companies with dodgy half trained employees get the contracts.

      Apparently, the going rate for a qualified carpenter ATM is ~$15+GST. If the companies can’t hire carpenters at that rate, which they can’t, they hire hammer hands and say that they’re carpenters. Quality isn’t any more a part of today’s buildings than it was in 1990s. The big companies are still selling dodgy materials (materials that are banned in other parts of the world), they still take no responsibility for those materials being worthless and no one in government is doing a damned thing about it.

      They should be required to have a ratio of qualified to unqualified builders on site.

      That would be a good start.

  23. RedLogix 25

    You could bowl and rebuild the overwhelming majority of houses built in the 90’s for much less than that.

    Agreed. There are a lot of questions to be asked around this process. Of course re-cladding in permanent materials is not always as simple as it appears. For a start there may well be a lot of structural remedial work to be done, then all the details around doors, windows, decks etc will need major re-work. The reality is that repairs are always far less efficient than building new; labour costs are probably 2-3 times higher.

    At the same time $300k is a very big number and if the govt actually pulled finger and put in place an organisation capable of training people, sourcing materials and generally facilitating the process I’d agree that it could be done for less.

    Trouble is, this bunch of shiny-arses in govt can’t build a cycleway and are even on track for a fail at the RWC piss-up.

  24. Armchair Critic 26

    Great post RL, very thought-provoking.
    “Trouble is, this bunch of shiny-arses in govt can’t build a cycleway and are even on track for a fail at the RWC piss-up”
    Not to mention acknowledging they made a mistake.
    The thing that has me absolutley stumped is the litigious approach to the issue. The whole thing seems to revolve around determing who, or which ideology, is to blame, as if knowing will fix the problem. It won’t.
    Looking for multiple parties to resolve the issue is, IMO, pointless. The developers are mostly long gone, councils do not have the ability to fund this, it’s really down to whichever government has the moral courage to do the right thing, and make up for this horrible combination of mistakes National foisted upon us. Otherwise the houses will rot around their owners, losing everything except their land value and ruining their owner’s health.
    I’m guessing the $23b is an estimate of the direct costs and does not include indirect costs.

  25. Free Market never worked and only allowed monopoly by huge corporations whereby huge bonuses were given CEO’s as a reward to those who came up with the scams that made the most.

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