Overregulation is the Problem in the Building Industry

The Coalition of Losers campaigned on solving the housing crisis, claiming that they would build 10,000 houses a year for 10 years. It took 18 months for them to fail spectacularly, but many people, both inside and outside of the construction industry knew perfectly well that they would never come anywhere near to achieving their promises. That is because Labour, whilst shouting their promises from the rooftops, had no idea of the issues involved in the construction sector these days.

They have no excuse for not knowing; previous Labour governments have been partly responsible for the regulations that hamstring the construction industry today. But they were either too stupid, too arrogant or too naive to worry about details. They thought that the previous government was simply dragging its heels and that housing problems could easily be fixed.

Now they know differently.

Belief is powerful. It can also be beautiful; the way a child has complete trust in their parents or the unfailing certainty of Warriors fans that next year is our year.

It is also resistant to reason; something that becomes self-evident to anyone who has spoken to a New Zealand First voter.

For many, a blind adherence to an outdated idea, like astrology or the gender pay gap, is harmless.

When combined with political power it can cause problems. We are seeing this in the unravelling of KiwiBuild.

Labour believes that capitalism is to blame for the lack of affordable accommodation. Because the magic capitalist economic machine thing didn’t make enough houses Labour convinced themselves that what was needed was government intervention.

In 1974 we cranked out nearly forty thousand consents for new homes. Sadly, it was also during this period that central and local governments began to exert a growing micromanagement in the sector, culminating with the New Zealand Town and Country Planning Act 1977.
Housing has never recovered. Now it is impossible to build anything without complying with the Resource Management Act, Building Act, local land use rules and a local council consent process that is designed to drive builders into insolvency.

The cost of compliance increases almost every week. Councils are constantly looking for something new to levy charges for. It adds a huge cost onto the building of every house. It is madness.

Government meddling has mired the building sector in maple syrup. Nothing can be done fast and nothing is ever done cheap. You need insulation, natural light, double glazing and enough room for two plants and a hypoallergenic cat. By law.

No one builds cheap houses because it is illegal to do so.

Phil Twyford should have known this, but either he didn’t, or he chose to ignore it. If he had had even an inkling of the problems associated with the building industry, he would have set about changing the Resource Management Act as soon as Labour got into government. The fact that he didn’t do so meant Kiwibuild was doomed to failure from Day One. The fact that he would never have got it past the Greens was a minor issue; they had already prostituted themselves to Labour, so it is not as if they would have had anywhere else to go.

When new housing minister Dr Megan Woods began her parliamentary career in 2012 she told Parliament: “I believe in the power of an active New Zealand Government and State to make a real difference in people’s lives, and that is why I am here.”

Woods is a true believer, having served her political apprenticeship under Jim Anderton. She is in charge of central government’s most ambitious infrastructure agenda since Think Big.

Her problem is that she cannot build affordable housing under the current regulatory structure. Worse, if she was to change the regulatory structure there would be no need for KiwiBuild as private firms would build cheap houses faster than the State ever could.

Belief is powerful, but as Dr Woods is about to fund out, you need more than that to build houses.


When John Key got into government in 2008, one of the election promises was an overhaul of the RMA. They never did it… they didn’t even try in their first term, (when they had the political capital) and, when they decided to give it a go in their third term, they had peacocks for coalition partners and it simply couldn’t be done.

I blame National for not reforming the RMA when they could have done so, but I hold Peter Dunne entirely responsible for the current building crisis. He could have allowed RMA reform in the last term of the previous government… but he thought that grandstanding was far more important. Thank God he has been put out to grass. He let his ego get in the way of looking after his voters, and that, as we all know, is political suicide. However, we are all still paying the price of his arrogance.

The Coalition of Losers could have shown themselves as lesser losers by learning from this disaster, but they chose not to. Instead, they just told the country that the previous government had indulged in ‘9 years of neglect’. Megan Woods is going to find that particular mantra will come back to haunt her. Unless someone reforms the RMA really soon, it will be ‘3 years of neglect’ called out by National at the next election.