Labour wants more transparency and competition in building material prices and will set an all-of-government target for prefab manufacturing of new construction projects.
Ministers Megan Woods and Duncan Webb published their response to the Commerce Commission's market study into Residential Building Supplies on Wednesday.
They accepted eight of the Commission’s nine recommendations and took three further to include a price monitor programme, a broader offsite manufacturing strategy, and issue guidance on how to substitute different products.
The Ministry of Business, Innovation and Employment will be tasked with monitoring and publishing prices of key building supplies and its impact on suppliers.
Woods and Webb said this would help the Government track competition and consider whether further intervention was required.
Builders, architects and building consent authorities will be given more guidance on how building products can be substituted.
It has been difficult for these groups to swap out a brand-name product specified in a design with a different product, which may have reduced competition and price sensitivity.
Woods said there had already been some success in this area with plasterboard guidance that was issued last year. She said there were now more types than just Gib and more competition.
The bigger initiative, which the minister hopes will shift prices, is about promoting the uptake of offsite manufacturing, or pre-fabrication.
The Commerce Commission recommended the Government develop an all-of government strategy to coordinate and boost offsite manufacturing.
Kāinga Ora had already set a goal to increase the number of offsite manufacturing solutions they use by a minimum of 20% each year for the duration of the public housing plan.
But Woods said the Government would encourage other agencies to consider setting a goal of increasing offsite manufacturing by a minimum of 10% each year.
“It shouldn’t just be a housing program, we should be looking at it for our schools, we should be looking at it in our defence building — there are a range of areas where we can grow this industry in New Zealand,” she told reporters on Wednesday.
Budget 2023 includes hundreds of millions of dollars to be invested in building housing for defence force staff and new classrooms around the country. Some of this could be prefab.
Land convent review
Commerce Minister Duncan Webb said a common theme throughout the last three market studies had been the use of land covenants to block competitors from setting up shop nearby.
“Time and time again, land covenants have come up. Competition is a driver of lower prices and better quality – good for businesses and consumers,” he said.
As a result, the Government will begin consultation on an economy-wide review into the use of restrictive land agreements that make it hard for businesses to enter a market.
He said these covenants had already been found in various sectors, such as building supplies, supermarkets, petrol stations, and even the meat processing industry.
“Now we’re going to look across the whole economy at how these agreements are being used and whether changes need to be made to level the playing field for new businesses,” he said.
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