New Zealand Housing Minister Nick Smith and Commerce Minister Craig Foss announced proposals to change antidumping duties and reduce tariff concessions to reduce the cost of imported building materials and lower the cost of house building. Source: Interest.co.nz
The Government is also taking steps to avoid “industry capture” of a key organisation involved construction related research and building materials product appraisal.
The proposals came in an options paper produced by the Ministry for Business, Innovation and Employment (MBIE) in response to the Productivity Commission’s inquiry into housing affordability.
Submissions are sought on the proposals by December 18.
“Building materials costs are too high and can be as much as 30% more in New Zealand than in Australia according to the Productivity Commission. The industry needs a shake-up through increased competition and greater transparency to ensure kiwi families can get access to more fairly priced building materials and homes,” Smith said.
“Our market study has flushed out some very real issues in the building materials industry. I worry that high duties on some imported building products, combined with limited competition in New Zealand is allowing excessive margins by building product manufacturers.
“I also have concerns over a lack of transparency for consumers over what benefits builders are getting from using certain products,” Smith said.
The options paper comes after the Commerce Commission announced inquiries into Fletcher Building’s dominance of the plasterboard market and potentially anti-competitive practices in Auckland’s timber supplies market, which is dominated by Fletcher Building and Carter Holt Harvey.
Foss said the options paper was the second round of consultation for this study, with an Issues Paper released in May.
“This paper identifies a range of barriers that could impact competition and productivity in the residential construction sector. The barriers appear to lead to a bias towards the continued use of ‘tried and true’ brands, products, methods, and systems.
“This impedes the ability of new firms to enter the market and of existing firms to innovate,” Foss said.
Smith said bringing down the cost of building materials was an important part of the Government’s work to improve housing affordability.
“We are taking action on a range of fronts including freeing up land supply, reforming the RMA, reigning in council development charges, keeping interest rates lower for longer, investing in skills and productivity, and supporting first home buyers through changes to Welcome Home Loans and the KiwiSaver First Home Deposit Subsidy,” Smith said.
The options paper describes the barriers to competitive and productive outcomes in the residential construction sector as identified through the previous consultation on the Residential Construction Sector Market Study: Issues Paper.
It presents a suite of potential options to reduce or remove the barriers.
Through this consultation, the Ministry of Business, Innovation and Employment (MBIE) is seeking further evidence of the barriers as well as feedback on the benefits and costs of the options identified.
This feedback will inform decisions on which options to implement. In the paper there are 11 specific “issues” identified and 24 suggested “options” are given.
