“Open up New Zealand’s building materials market and automatically approve overseas-certified products”? Can this really be implemented effectively after the election?

As is widely recognised, rising building material costs and lengthy approval processes have long hampered the healthy development of New Zealand’s construction industry, while material shortages and supply chain disruptions during the COVID pandemic made the problem worse

As election day approaches, political parties’ latest policy platforms have attracted widespread public attention. These include building material approvals, an issue of particular concern to those of us working in construction. National, for example, plans to reduce red tape in complex approval processes to allow more overseas building products into the market. The party hopes this will effectively lower construction costs and enable more New Zealanders to buy affordable homes.

This may look like a policy that benefits everyone, but people in the construction industry have raised doubts: the issue is not as simple as the party imagines.

National confident about construction industry reform

National housing spokesperson Chris Bishop

National housing spokesperson Chris Bishop said the party proposed the following:

Use digital technology and remote inspections to substantially shorten approval times. He explained that building compliance inspections are a major bottleneck in the approval process, potentially forcing contractors to stop work for days while waiting for an inspection. Remote inspections are standard practice in some other countries and would greatly improve efficiency.

Require Code Compliance Certificates (CCCs) to be issued within five days, with specialist teams only needing to handle building consent application inspections for buildings over 10 metres.

Review the Building Code and introduce a proposed risk-based consenting system that takes account of a development’s scale and complexity, as well as the builder’s qualifications.

Automatically approve overseas building materials already certified by internationally recognised bodies to increase competition in the market. He explained that products meeting European Union, United States, United Kingdom and Australian standards would automatically be approved for use in New Zealand.

The plan also promises to support attracting skilled construction workers to New Zealand through apprenticeships and immigration provisions, review scaffolding rules, and make promoting industry competition a primary objective of the regulatory system.

Related policies from other parties

In fact, problems in New Zealand’s building materials market have long attracted attention. On 18 May this year, when the Labour Government released its 2023 Budget, Housing Minister Megan Woods dropped a bombshell on the construction industry: a shake-up to address New Zealand’s sky-high building material prices. Woods and Commerce and Consumer Affairs Minister Duncan Webb jointly announced that the Government had agreed to implement 8 of the 9 recommendations made by the Commerce Commission following a year-long market study.

Among the 8 recommendations adopted, the following 3 reforms are particularly important to the future development of New Zealand’s construction industry:

The Government will create greater transparency in market pricing;
Provide more guidance on selecting alternative building products;
Use more products, including prefabricated products, from overseas manufacturers to change the competitive dynamics of New Zealand’s building materials industry.

To this end, the Government has begun monitoring and publicly releasing indicative prices for major building products, and providing builders and councils with more guidance and assistance when deciding whether to use equivalent alternatives. The Labour Government has pledged to actively encourage government agencies to adopt building products manufactured outside New Zealand, increasing their market share by at least 10% each year to improve construction productivity and competition in the building materials market.

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ACT is focusing on restrictions on housing and infrastructure construction. It says that, if elected, it will review all existing and new regulations to ensure they are reasonable, repeal the much-criticised Resource Management Act (RMA), and reform the Building Act. Its manifesto states: “ACT will remove restrictions on housing and infrastructure construction that hold back economic growth.”

“Bureaucratic approval processes under the Building Act and councils’ risk-averse approach have entrenched the power of a limited number of material suppliers, leading to the absurd situation of a nationwide plasterboard shortage in New Zealand. The Government responded by appointing a special taskforce to consider the issue, but the short-term solution is simple: require councils to accept safe alternative materials used by builders.”

The Green Party hopes to encourage developers to adopt higher energy efficiency and healthy building standards through a ‘development bonus’. In an interview, Green Party co-leader James Shaw said developers using universal access and design, and building to a 7 Homestar rating or higher, would receive a development bonus allowing them to construct buildings a third taller than otherwise permitted, provided they met the standards.

Industry figures unconvinced about opening up the building materials market

Building material issues have troubled the industry for years. Can opening up the market really resolve the problems facing New Zealand’s construction sector? Some industry experts say the issue is not as simple as the politicians imagine.

New Zealand Institute of Building chief executive Malcolm Fleming said that although National’s plan looked attractive and identified relevant industry problems and pressure points, a proper feasibility assessment was needed before deciding whether to support it. He acknowledged that implementing some of the proposals appeared far more complicated than initially envisaged.

He offered an example: “There are reasons why major building product manufacturers from Europe or North America have yet to establish production bases in New Zealand. In global terms, New Zealand’s market is too small and geographically dispersed, and high labour costs prevent many companies from providing comprehensive, long-term warranty services.” He said another issue that could not be overlooked was New Zealand’s distinctive climate. Windy areas and high ultraviolet levels, for example, require higher manufacturing standards for building products exposed to the outdoors, yet many products approved overseas cannot meet local requirements.

Fleming said there was no doubt that high building material costs had troubled the industry for years, and he was very keen to see more alternatives on the market. However, their performance and associated services needed to meet New Zealand market requirements. While he was also very positive about simplifying consent application processes, he opposed making the promotion of industry competition an objective of the regulatory system, because the system’s stability was crucial to the industry.

So, as someone involved in New Zealand’s construction industry, what do you think of National’s proposals? Join the discussion in the comments below.