Thursday, 26 October 2017

Let’s rain on Phil Twyford’s parade

Two big announcements were made yesterday in relation to building and housing. In New Zealand terms they don’t get too much bigger, yet they were totally at odds with each other.

The first was by Fletcher Building, the darling of the former government yet who contrived to lose a fortune on two large government projects, and several other smaller ones. The primary reason, Ralph Norris told disgruntled shareholders, was that "Our project management resources became stretched, impacted by the labour scarcity of the broader sector and our own rapid growth."

To break that down: as they took on too many projects they discovered

  • their own resources are too few to cover them all; and
  •  local labour was too hard to come by.

Keep these points in mind as you read Phil Twyford’s announcement yesterday, repeating in somewhat amended form his pre-election pledges, that he is going to build 100,000 homes in the next decade.

How can that be done with the severe local labour shortage? Easy, said Twyford.

The just-announced Housing Minister told the Herald labour, skills and land shortages in the over-stretched, under-delivering, under-resourced high-priced housing market were planned to be resolved by his regime which will change immigration laws and form public private partnerships with business like Fletcher Residential and Mike Greer Homes.

Do you see the problem?

I’ll make it easy for you:

PROBLEM ONE: Fletchers is already overstretched.
PROBLEM TWO: Local labour is hard to come by.
PROBLEM THREE: Mr Twyford will solve problem #2 by calling on the folk already struggling with problem #1

Tell me how he will square that circle.

Could you?

Could anyone?

Add to that his further and still unsolved problem, which is that his whole scheme to build and/or finance 100,000 houses in a decade within his stated fiscal envelope of $2 billion is financially untenable (i.e., that his numbers simply don't add up, as he himself admitted three years ago when I asked him) and you have a new minister flying a flagship policy with very real problems.