Friday, 4 May 2007

HOUSING: For a few thousand more

Over the last few years market conditions, gold-plated regulations, consent delays and local authority contributions have between them added thousands and thousands and thousands of dollars and months of delays to the cost of building a house -- in the last eight or so years more than doubling the cost of building a new home, and more than doubling the time it takes for a consent -- and now the government wants to add "just" a few thousand more. In fact, they insist that you spend just a few thousand more --at least five thousand more according to the Master Builders Federation, and even more delays.

Why? One very simple reason, says our Leaderene:
"The Labour-led government," says Labour leader Helen Clark, "believes that New Zealand should strive to be the world's first truly sustainable nation."
'Sustainable' meaning, in this and every case, both "energy conserving" and "ever more expensive."

Bear in mind that this new increase is on top of the more than 300% increase in the cost of land in NZ cities and towns that have been over-zoned and zoned and ring-fenced by planners under the RMA -- and in the midst of what can only be called a housing affordability crisis.

Does it even make sense as a measure? Well, for my part, I like to encourage clients to super-insulate because it makes a better place in which to live; I like to design houses for the sun because that makes that house a better place in which to live -- but the key word here is encourage. Not force. People are entitled to make their own bloody choices about what it's worth to them. They're entitled to consider their own circumstances when making their own decisions.

Imposing yet another cost and more delays on new houses that are already seriously unaffordable -- that are already over-regulated, over-zoned, and experiencing enormous delays in consent processing -- and all in the name of today's buzzword, sustainability, is just bloody stupid.

As always there's a lesson here: there's something to learn about what this new buzzword means.

As John Br├Ątland explains "sustainable" fundamentally "is a notion of... disciplining our current consumption" -- the "discipline" coming about by enforced sacrifice. Public control of industry and resources in the name of "sustainability," he explains, "is not only contradictory but also self-defeating." We can see that, can't we. Robert Tracinski explains that for environmentalists, the campaign for sustainable development is not motivated by a legitimate desire for development but a respectable veil behind which their anti-development, anti-industry, anti-technology philosophy can hide.
Thus, they tell us that there is something called "sustainability," a magic mechanism that will [allow continued] prosperity -- even as the environmentalists restrict the only known conditions for prosperity: free trade and industrialization.
There's nothing magical about "sustainability" that allows us to evade reality -- to think we can prosper while restricting all the conditions that make prosperity possible. The very idea is ludicrous. The idea for example that "energy efficiency" is a substitute for energy production in any industrial nation -- as that nation strives, in the Prime Minister's fatuous soundbite, "to be the world's first truly sustainable nation" -- is just another attempt to evade reality.

Consider for example that in the last dozen years the only thing that's grown faster than the cost of new housing has been the hysterical protests against building new power stations -- as new power plant after new power plant has been refused consent or has had conditions added to consents to make those plants unworkable and increased energy production impossible, we've been continually told that we must all make sacrifices to sustainability, and specifically to conservation of energy. As George Reisman explains, you don't need to look too hard to see either the foolishness of the notion that you can substitute conservation for production, or the the anti-industry philosophy that is concealed behind environmentalists' anti-energy fetish:
The environmental movement has been doing its utmost to sabotage energy production since the 1960s, long before it was able to latch onto the prospect of global warming. Its opposition to atomic power has nothing to do with global warming, nor does its opposition to the construction of dams to provide hydro-electric power. Indeed, if global warming and the consumption of fossil fuels, which it alleges is the cause of global warming, were really its concern, it would be a leading advocate of atomic power and of the construction of new and additional dams to provide hydro-electric power...

The only sources of power that the environmental movement is willing to allow are wind and sunlight. The first is subject to the proviso that birds are not killed by flying into the propellers of the windmills. The second makes no allowance for all of the times when sunlight is blocked, i.e., in cloudy weather and at night, when the sun has gone down.

Environmentalists like to say that there is a third alternative source of energy: conservation.

“Conservation” as a source of energy is a contradiction in terms. It is not a source of energy. Its actual meaning is simply using less energy. It is a source of energy for one use only at the price of deprivation somewhere else. Moreover, the logic of conservationism is not consistent with using energy saved in one part of the economic system to expand energy use in other parts. Those other parts are also supposed to conserve, i.e., to use less energy rather than more.

The objective of the environmental movement is and always has been simply the destruction of energy production.
That is what lies behind sustainability. When energy production decreases and housing gets ever more expensive -- as you're asked to make sacrifice after sacrifice -- to produce ever less and to "conserve" ever more -- just remind yourself that this is what sustainability really means. Sacrifice.

And that you lot keep voting for it.

LINKS: Drier homes will drive up building costs - NZ City
Toward a calculational theory and policy of intergenerational sustainability - John Br├Ątland, Quarterly Journal of Austrian Economics [34-page PDF]
'Sustainable development's unsustainable contradictions - Robert Tracinski, Capitalism Magazine
The buzzword for this morning is sustainability - Not PC
It’s About Energy, Not Climate - George Reisman
Everyone's got an energy strategy: What we're short of is energy! - Not PC


  1. The thing that annoys me most is when they use dodgy numbers to justify it. The next is the lazy journalists who lap it up and do nothing in the way of research to question it. It took me perhaps 20 minutes to find this information.

    The BRANZ HEEP survey has been measuring energy use for 10 years in New Zealand homes.

    The 2006 survey found that the top 20% of houses use about 14500kwh of power a year while the bottom 20% use about 7000kwh. That is all forms of energy.

    But about 1/3 is hot water and 1/3 other items such as appliances and lighting. The remaining 1/3 is space heating. And it is only space heating that is being targeted by these changes and the Govt says you will save about 30%. So you will be saving 1/3 of 1/3. So rough maths:

    14,500/3= 4800; 4800/3=1600.

    Sounds impressive. You could save 1600kwh if you were one of the largest power users.

    So what would that cost? MED has the numbers

    Average New Zealand price including lines charges is 20c/kwh. At 20 x 1600 that is a saving of $320…. What? Where is this $760 - $1800 a year coming from? To save that you would have to be paying 50c-$1 per kwh.

    (I won’t even bother arguing that 20c/kwh is not relevant given that you don’t save on lines charges if you save power.)

    So for the extra (disputed) $5000 being touted the payback would be 15 years! And 32 years for low use customers at a saving of $156. That doesn’t include use of money calculations or energy cost increases. That’s worse than solar hot water’s payback.

    Note the Govt are promoting this with numbers around improvements to house costs rather than power use by typical homes. Wonder why?

    Perhaps you could comment Peter on the realism of the cost estimates. Actually scrub that, an architect is the last person who would know….;-)


  2. Good post anon.

    The only part of your analysis that I trhink could be improved is that you should be discounting future savings to calculate payback time (faced with a choice between $1 today and $1 in 32 years, no consumer would rationally wait) means payback almost certainly never occurs.

    I heard the $5000 is light as well.

    To me it is unbelievable that this government, by selling this regulation on its economic merits, thinks consumers essentially walk past $20 bills on the footpath, and need to be regulated to pick them up. The more plausible explanation is not that consumers ignore what is in their own interests but that the assumptions behind the analysis supporting this regulation is missing something. If their analysis can really be dismantled in a few paras as anon has, then it is a shocking example of how fast and loose our leaders play with other peoples' money.

  3. Matt

    As I said I haven’t done an NPV, mainly cos I can’t….

    Did some more checking, MED says an average house uses 8000kwh and that the average non lines portion of electricity bills (ie the actual current which you can save) is 13c/kwh. That means an annual ‘saving’ on govt figures of $178 and a ‘payback’ of 28 years for an average customer.


  4. I just posted this letter to the ed of the Waikato times....

    Dear Ed,
    Contrary to expressed desire yet in devilish harmony with every restriction on development, the latest regulations imposing insulation on new housing must also drive up the value of existing homes. Home ownership will be less attainable for the working class, not that Socialists ever gave a damn about private property!
    This is not simply part of the price we’re paying for Clarks signature on the Kyoto protocol, It is a butt covering exercise camouflaging the governments inability to supply the energy we need to maintain our standard of living, the direct consequence of their RMA which crushes developments like ‘Project Aqua’ Hydro generation scheme, etc.
    Unlike free enterprise that sees increased demand as opportunity for economic growth, the incompetent state under the guise of saving the planet and us from ourselves passes oppressive regulation to squash demand, as can also be seen happening in regard to healthcare and traffic congestion. Instead of respecting our liberty and supplying more hospitals, roads and bridges, they are hell bent on banning our luxuries, and forcing us onto busses, which is also part of their green “Agenda 21” and Kyoto.
    I see the Kiwi dream turning into a Soviet nightmare! Where’s the Vodka?
    Tim Wikiriwhi


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