The Great Building Industry Scam

The final release of the Hunn report on leaking buildings does more to indicate the philosophical make up of Mr Hunn and his cronies than it does to objectively address any problems of inadequacy within the building industry.

When engaging Mr Hunn to write this report, the Building Industry Authority (BIA) said “we engaged the Overview Group led by Don Hunn to give us a thorough and independent analysis of the possible causes of the leaky building problem and recommendations for resolving it.” Unquote.

Note that the BIA is a government quango stocked with career bureaucrats, and is in the gun for its role in “the leaky building problem” it employed Mr Hunn to investigate. In other words, its own role in the problem is under question. Note also that Mr Hunn is another career bureaucrat, and a member of numerous quangos himself. The selection of Mr Hunn and the other members of the Overview Group are highly questionable and surely deserve scrutiny: the ability of career bureaucrats and second-rate university lecturers to understand, let alone critique, the dynamic freewheeling building industry is questionable - even could their independence be relied on.

Predictably, the recommendations that this Overview Group eventually make is to call for more regulation for an already ailing building industry. And who would oversee this increased regulation? The career bureaucrats at the BIA of course!

The Overview Group has also stated: “a light handed approach to building controls may have had the effect of not providing sufficient protection for consumers.” How would we know? Contrary to popular wisdom, “a light handed approach to building controls” is not what we have had for the last decade! At best we could conclude that the present over-regulation has been far from successful.

I speak as a residential builder in Auckland, and speaking from experience I am under no illusions Far from ‘suffering’ from a light-handed approach, the industry is severely OVER-regulated and this over-regulation is a major contributor to many problems in the industry - including the leaky buildings issue. For far too long the authorities have assumed control over the industry via building regulation, RMA, Health and Safety regulations, Permit Application, inspection criteria etc., etc., etc. All this in the name of ‘protecting the consumer.’ However, as the leaky buildings issue has eloquently demonstrated, this protection has been illusory. The consumer has manifestly NOT been protected. In fact, the unfortunate consumers are left wondering where to lay the blame. They can’t sue the government for their “all-care-and-no-responsibility” policy – just try suing the government! -and are now faced with a career bureaucrat recommending even tighter control by regulators (even more ‘care’) with all responsibility handed over to those being regulated.

In Wellington, this sort of thing apparently passes for wisdom.

Building Permits and inspections By assuming responsibility for building design and construction through permit applications and subsequent inspections, the authorities have removed the onus away from architects and draftsmen to provide job-specific detail for issues such as water-tightness, and have instead assumed that responsibility themselves. Builders also have been relieved of their responsibilities because their knowledge of possible problems is not considered imperative, as long as the due inspections are passed. This third-party involvement by the authorities has muddied the waters of responsibility. It has effectively protected shoddy builders who can claim to have passed all inspections - and thus deny responsibility – while passing responsibility for these problems on to … ? Well, you tell me, but the sound of Bill Porteous and his fellow bureaucrats at the BIA washing their hands has been thunderous over the past few months.

The outcome for the consumer is the exact opposite to the authority’s stated intentions.

Consider, for example, the case of the Building Research Association (BRANZ) to whom all new home-owners pay a fairly substantial compulsory levy. (This will no doubt come as news to many new home-owners.) BRANZ is another quango, charged by the BIA and the Building Act with issuing appraisals of building materials on which designers and builders are entitled to rely. The BIA has now decided that BRANZ appraisals should not have been relied on, and anyone who might have relied on them is probably to blame for being foolish enough to rely on them.

What will happen to BRANZ following the Hunn Report? Expect to see them given an even greater budget, and to see the compulsory levy that funds them to be increased. In Wellington, rewarding those who fail also passes for wisdom. Just remember the budget increase enjoyed by the Department of Conservation after it killed thirteen teenagers at Cave Creek.

A Laissez-Faire Approach State regulation of the building industry has muddied the waters so that no one knows who to blame when something does go wrong. Without the ‘muddiness’ introduced by state involvement, responsibility for problems that might occur would be sheeted home directly to those responsible, and without the pass the parcel contest currently being enacted so publicly in Wellington press conferences.

If the BIA and their cronies were not muddying the waters, and if a problem did occur because of a failure to design a building properly, it would be easy to ascertain the fault of the designer and - without needless bureaucratic meddling - the rule of law should apply. If a problem occurs because a builder introduces his own imaginative but disastrous construction details, fault also would be easy to place. If a private inspection service has certified the building as conforming to the owner’s chosen standard and it turns out later that the building doesn’t conform at all, then everyone would know who to blame. And if the issuer of standards was found to have issued standards that don’t do what they say they do, then there would be nowhere for that organisation to run and hide.

I submit that, quite frankly, the BIA and its related quangoes are both superfluous and an expensive and unnecessary intrusion into private agreements between clients, architects and builders. The authorities at best unproductive and expensive, and at worst an intrusive annoyance.

And if Mr Hunn truly thinks the building industry in the 1980s and early 1990s was typical of a laissez-faire approach, then he is most assuredly fooling himself. It most certainly was not.

Regulations and levies As is recommended in the Hunn Report, the government seems set on introducing compulsory registration for all builders. This approach will do nothing to improve general building practice - instead it will further remove responsibility from builders and architects and pass it to a new quango stocked with career bureaucrats. The illusion that ‘something will have been done’ will be total, but what will have been done is to introduce more of what caused the problem in the first place.

I have no doubt the registration of builders will involve some kind of administration levy which will add yet another unnecessary expense to the cost of building. Don Hunn himself concedes that the cost of housing will increase if his recommendations are adopted. But what’s that to him? Unlike the increasing number of New Zealanders desperately saving to make that deposit on their first home, Mr Hunn already enjoys a comfortable residence courtesy of many years of sucking on the state tit.

So costs will increase, responsibility will diminish further, and builders will be pinned down with more taxes, more levies and increased regulation - and the time lost in ensuring compliance with regulations (regulations that have already failed) will escalate. And as prices spiral ever higher, speed and economy will replace quality and ability as the prime focus for business survival for a builder. Good builders will have to charge themselves out at similar rates to incompetent builders if they want to get the work - as they have been required to do for the last decade. The registration levy will only exacerbate the situation.

Registration will not eliminate incompetent builders. It will instead add compliance costs and a new bureaucracy to a problem cause by compliance costs and bureaucracy, and incompetent registered builders will gain the protection of a new quango.

A Sense of Life It is thanks to state intervention that the building industry has in recent years become such a high cost and low-competency industry. To many, building has become just another means of attracting an income. But margins have become so tight that, in order to remain competitive, builders have had to forsake the quality of their craft in favour of economy of effort. A sense of pride in one’s work is increasingly rare. Many craftsmen have left the industry because the enjoyment has gone and they can’t compete with the short-cut cowboys. A good craftsman with a passion for his trade will often wish to enrich the industry he loves by teaching a young apprentice the art of his trade, thus promoting the high standards he himself values. Bureaucrats will never understand this, and for them it is not an issue. It is however their interfering and opportunism that has all but killed this vital tradition.

Building is a service that could be available to all. The problem is that because the government has its finger well and truly in the pie, only the well-off can afford to improve their lives by employing a builder.

Some builders are only worth $10.00 an hour and some are worth $40.00 an hour. In a lasses-faire industry these people will find their place in the market based on their level of skill. Those not-so-good builders will no longer be able to hide behind government protectionism. The sharks will also soon fall on their own sword. The beauty of the laissez-faire system is that people of all socio-economic groups will have opportunity to improve their personal environment and their lives by employing a builder that meets their budget. Instead, the state - in the form of Mr Porteous and Mr Hunn - are intent on putting this service further out of reach of those they claim to be protecting.

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