Adam Smith v "The Future of Housing"

I spent a day yesterday at a trade show and "Future of Housing Summit," replete with politicians and panellists full of observations about "The Future of Housing." And my mind went back to Adam Smith's famous observation:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

If I had taken a bingo card with me that included the words "government," "sustainability," "climate," and "social housing," I would have won not just a meat pack but the whole cow.

Suffice to say that almost every panellist but one were calling for government to not just "put a finger on the scale" to correct some perceived "market failure," but even a whole hand, if they could. The politicians themselves by contrast simply threw word salad at the assembled throng -- obscuring Chris Penk's one actual announcement.  TOP's Daniel Eb was the exception, who casually informed us all that the job of government is to determine how society should be made up.

The one difference to the panoply of paternalistic panellists was one Vincent Holloway of the boutique Brooksfield Homes, in answer to the question "What needs to be done to fix productivity and waste in construction?" His quick answer: "Remove Regulations!"

If I told you that my clapping was the only applause in the room, you will get some idea of those there assembled. You won't be surprised to hear that there was much more applause from the floor for the idea that we should all "join Institutions" so we can lobby governments and assemble together more often.

At least they knew enough to gasp when Mr Eb spewed forth.

"Chris Penk asked for a conversation. The adult answer is to have one."

"What [PM Luxon] does not appear to understand is that the nuclear issue reaches well beyond the Bomb. Nor does he seem aware of the actual limits of New Zealand’s 'anti-nuclear' legislation, which does not prohibit the peaceful use of nuclear energy at all. But the more troubling thing is the arrogance of trying to close a conversation down.

"This article challenges that dismissal — a dismissal aimed squarely at the modest proposal of his own Defence Minister, Chris Penk [who suggested it would help to distinguish nuclear propulsion from nuclear weapons when we think about our nuclear-free position]. It may well fail to change the Prime Minister’s mind. But if he reads it, he might at least be better informed. ...

"What the law actually says
"The New Zealand Nuclear Free Zone, Disarmament, and Arms Control Act 1987 does three principal things: it bans nuclear weapons, it bars nuclear-armed and nuclear-propelled vessels and aircraft from our territorial zone, and it forbids the dumping of radioactive waste at sea.

"What it does not do — and never did — is outlaw land-based nuclear power, nuclear research, or the use of radioactive isotopes ... [for] nuclear medicine ... 

"The safety story we got wrong

"[I]t is the fear that has driven the policy. Most people’s sense of nuclear risk is anchored to three events — Chernobyl, Three Mile Island and Fukushima — and in each case the popular memory is worse than the record.

"No one died from radiation at Three Mile Island. At Fukushima the reactor releases have been linked to a single confirmed radiation death, with the overwhelming majority of that disaster’s toll caused by the earthquake, the tsunami and the chaos of a panicked evacuation.

"Chernobyl was a genuine catastrophe — but it was the product of a uniquely flawed Soviet design operated with its safety systems switched off, a machine and a culture no modern regulator would permit.

"When you stop reasoning from headlines and start counting bodies per unit of energy, the picture inverts. Oxford’s 'Our World in Data' project, drawing on peer-reviewed modelling, puts nuclear power at roughly 0.03 deaths per terawatt-hour of electricity once Chernobyl and Fukushima are included — comparable to wind and solar, and on the order of hundreds of times safer than coal, which kills around 25 people per terawatt-hour, mostly through everyday air pollution that never makes the news.

"Put differently, nuclear causes something like 99.8 per cent fewer deaths than coal and around 97 per cent fewer than natural gas. The source we have feared most turns out to be among the safest we have ever built. The deaths we don’t count — the steady toll of fossil combustion — are the ones that should frighten us. ...

"The demand that changes the math
"For years the nuclear debate could be treated as a luxury argument, a matter of preference among abundant options. That era is ending, and the reason is electricity demand of a kind the grid has not seen in a generation. Artificial intelligence and the data centres that run it are the most visible driver....

"[T]he policy direction is now broad and international. ... Global nuclear generation reached an all-time high of about 2,667 terawatt-hours in 2024. The major energy-modelling bodies — the IEA, the OECD Nuclear Energy Agency and the IPCC — broadly agree that reaching net zero by mid-century is harder and costlier without a substantial expansion of nuclear, not easier. Treating nuclear as the enemy of climate action gets the physics exactly backwards.

"Why this time can be different: Small Modular Reactors
"The strongest historical objection to nuclear is not safety but cost: the giant bespoke plants of the past ran years late and billions over budget. The most promising answer is a change of strategy — building reactors small, standardised and in factories rather than enormous and custom-built on site. Small Modular Reactors aim to turn nuclear construction from a series of one-off megaprojects into something closer to manufacturing, with the cost discipline that repetition brings. ... Small Modular Reactors will not, on their own, meet all the new demand — honest advocates concede as much — but they reopen the door that cost overruns had slammed shut. ...

"Have the conversation
"[T]he Prime Minister ... should be willing to think, and to let the country think alongside him. ...

"We would be Luddites to turn our backs on the nuclear [energy] option without so much as examining it. Chris Penk asked for a conversation. The adult answer is to have one."

~ The Halfling from his post 'A Nuclear Conversation: A conversation the Prime Minister would rather not have'

One step forwards, three steps back.

"Oops." Luxon-led policy-making takes a tumble

It's a rule in politics. The devils is not always in the details. It's often that the details reveal the real devilry.

If the large print ever giveth, then the small print will surely taketh away.

Let's look at a few examples in an area I know something about: Building.

*** Building Minister Chris Penk seems a jovial character but unfortunately he knows little about his subject area. His first move was to promise faster building consents. Exciting. Encouraging. Mighty work.

Here's hist first step: "requiring councils to submit data for building consent and code compliance certificates every quarter." There are no other steps.

He adds "hope" to the idea of anything being faster. Council inspectors "must" issue building consents in a timely fashion, he insisted.  And yet every council inspector ever employed knows how to legally delay a consent application. In fact, if you fine a council for being legally overtime, they'll just legally delay applications for even longer to give themselves some head room. Which is what they've done.

Score One for the Grey Ones.

*** Another move by Building Minister Penk was "remove barriers to overseas building products." At least, that's what it said in the headline. His idea, sensible enogh on its face, is that if enough similar jurisdictions to ours have passed a product (places like Canada, US, UK, Europe, Australia etc.) then that product would be deemed to pass here too.

Yay? No, not so fast.

First move by the Ministry who oversees these things was to rent several new floors in Wellington.  Because their idea of this (and it is they who are running it) is to set up a committee who will consider, one at a time, every morsel of regulation passed anywhere at any time to decide of we might be so lucky to have it here. 

So far, in the three months since introduction, they'e okayed some taps from Sydney. Next year, they might look at concrete codes in the US. Done properly, with due consideration, this will take most committee members through to retirement.

Score One More for the Grey Ones. 

** And then the Minister for Regulatory Reform (sic) stepped up to announce a new measure to "liberate" builders and designers. For years, some of us have suggested that instead of applying to councils for permission to build (which asks for more knowledge than council employees really have, and puts ratepayers on the hook for the risk should they fail) we instead use insurance companies to take the risk.

You know, like if you build a hot rod or street racer instead of a bog standard car, then you ask the insurance company to take the risk, and they use their acumen to discern the risk, and charge you accordingly.  

This allows for good design, with risk properly underwritten. 

But you see that word above: instead.

Rather than placing the risk and the onus on designers and builders and insurers instead of on councils and ratepayers, the Minister for Regulatory Reform is doing this as well as. So it's no more "liberation day" than were Trump's tariffs: we end up getting the worst of both worlds: councils assessing risk, and insurers granted a monopoly charging like wounded bulls. And the ratepayers? Still on the hook.

So it's Several More there for the Grey Ones.

** It's like education, where a "regulatory review" by the same Minister for Regulatory Reform intends to "clarify" and "simplify" Childhood Education's overwhelmed sector. One imagines a quick fix might be going back to say, 1996, when things were working tolerably well, and just before regulations began piling on and classrooms and centres became over-regulated, under-performing, and wholly unaffordable for parents.

Instead, the "reform" begins by (and I quote) "establishing a new statutory role, the Director of Regulation, with responsibilities for performing key regulatory functions in the Early Childhood Education system." Which means another red carpet rolled out in yet another floor of a new office building in Wellington.

Back of the Net with another great effort by the Grey Ones.

*** It's a bit like the "cap" on rate rises. 

Let's stop rate rises!! Yay!! Well, not so fast. 

We know that the "cap" will be supplemented for weepy boomers with top-ups for water use, for mayors who plead public transport debts, and councillors who claim infrastructure shortfalls. We also know that the minister "responsible" ( I use the world loosely) is happy with "soaring" council debt, just as long as the effects and the headlines are only felt after he's gone.

Not to mention that the "cap" includes a minimum rate rise as well!

Yes, a minimum. By law, councils must increase rates by at least 2% every year.

It a sop, not a cap.

Grey Ones score again.

** And not to mention that the new-fangled means by which councils can "fix" their bloody awful traffic problems—traffic jams being a clash of capitalism (in the form of car production) confronting socialism (in the form of too few roads). The "new" solution is a tax. A new tax to be called "congestion charging," which will of course not replace any other tax but just be added to all those under which we are already burdened.

And if history is any guide, may help finish off Auckland's CBD altogether.

I'm pretty sure that's a total victory for Grey.

 With this government, as with every other in recent times, it's always one step forwards, and three steps back. Too many ministers with too little nous giving too much help to the unproductive to whom too many of us must seek permission before we can do anything.

I look forward to this afternoon with trepidation.

Removing barriers to overseas building products, one subclause at a time [updated]

BUILDING MINISTER CHRIS PENK IS surely mistaken (or misled) if he thinks he is going to see a quick remedy to high
building costs from his announcement, already signalled, that building products from overseas may now be used in New Zealand.

The problem, you see, is that regulations here around our approvals process make it prohibitively expensive to obtain official approval for any materials, local or imported, so that most would-be inexpensive imports just don't happen. (Around 90% of products used in building or building components here already are imported, but they're generally not the primary ones requiring approval by the grey ones.Why pay upwards of $250,000 to have your primary Euro-component approved here, when it's already selling like hotcakes in your Euro markets.) 

So Penk's idea is that materials or systems already approved by the grey ones in similar jurisdictions and standards environments to ours (such as Australia, Canada, UK, US and Western Europe) can be cited in documentation to the grey ones here— and then, with some fingers crossed, be approved for use in buildings here without the otherwise burdensome cost of obtaining formal approval upfront.

Cheaper materials: cheaper houses.

Nice idea. Shame if a bureaucracy somewhere were to ruin it.

The programme will be run by MoBIE. 

I attended a webinar run by MoBIE dicks recently outlining how they intend to run it. They called it 'Removing Barriers to Overseas Building Products.' Try not to laugh as I relate their intentions.

First of all, they've started a committee. And several working groups. Large ones. Large enough, I imagine, to fill at least one floor. It will be these newly-appointed bureaucrats that will decide which standards/regulation of which similar jurisdictions will be considered for approval by these bureaucrats. And this will of course take some time. 

First of all, of course, they have to meet to define regulatory criteria. And to issue new acronyms (things like BPS, BPIR, etc.)

This is how bureaucracies work.

The committee/working groups will then make recommendations to the CEO of MoBie which standards/regulations he may recognise. May. Those deemed unobjectionable are then added to something called Building Product Specifications — a "new regulatory instrument." [UPDATE: The inaugural Building Product Specifications document has just dropped today, but dn't get excited, it's simply a compilation of standards/regulations already cited in the NZ Building Code. Enjoy.]

Following which, MoBIE's dicks will then publish a "Recognition Notice" detailing which new standard/regulations have been recognised. Once a standard/regulation has been so recognised, it will then be added to the Building Product Specifications document.

They hope ("always hoping, hope is vain") to issue their first "Recognition Notice" by year's end. That will be for one regulation/standard from one jurisdiction for one building material or system. For which the Notice will be once piece of "evidence of compliance with the New Zealand Building Code."

Still, once that Notice is published, building importers may then decide to bring in a building material or system; builders and building designers may offer the imported product in plans and specifications based on it being "Recognised" as evidence it complies

Did you follow all that?

Note the process here: it's MoBIE who decides to decide. Not builders, not building designers, not building materials scientists or building materials importers — all of whom have a large interest in the process — and nor is it the building minister. No. It's MoBIE's dicks who decide to initiate the process,  and it's they who will grind slowly through all the world's standards, regulations, codes, guidelines, approval systems, benchmarks and norms, deciding which of them they might like to spend time taking through their process and (eventually) recognise.

So we can see how this is good for bureaucrats employed within MoBIE. 

But how does all this help builders, building materials importers, would-be building owners, and me as a building designer? 

Well, nothing at all will help until at least the start of next year, when the first "Recognition Notice" might (might) have been issued for the Australian Watermark Scheme — so importers et al can start taking advantage of Australian plumbing and drainage products.

And after that, the committee/working group/bunch of overpaid bureaucrats will then begin to meet and consider whether or not  the American Society for Testing and Materials (ASTM International) and the European Committee for Standardisation (CEN) may be considered for recognition.

Don't wait up.

They may be some time.

UPDATE:

Email from MoBIE this afternoon: 

"The newly released Building Product Specifications document lists 130 [already-recognised] product standards, including US, European and other international standards alongside New Zealand equivalents for products like plasterboard, cladding and insulation. ...
    "Soon [sic] other pathways will be in place for the Minister of Building and Construction to endorse overseas standards, and for MBIE to formally recognise certain products certified overseas as complying with the Building Code. Updates about these pathways will be made soon [sic]."

Nailing those targets

A target

It's nice to have a target. If you don't aim, you won't hit. 

Or that's the argument coming from the Blue Team about their just-announced targets.

But when their aims are all calibrated towards a date of 2030 — just far enough away not to be politically challenging — can we really take them seriously?

And even if you do aim, doesn't it matter what you aim at?  The Soviets knew all about setting (and meeting) production targets, didn't they. Set a target for a large number of nails, for example, and you'd get many, many very small useless nails. Set the target by weight, by contrast, and you get many fewer much heavier nails. Or one very, very big one.

Manager of a Soviet nail factory being awarded

the Order of Lenin for exceeding his tonnage

There's something that Christopher Luxon could learn there about his own targets: that their very specific focus look to be just as easy to get around.

• "95 per cent of patients to be admitted, discharged, or transferred from an emergency department within six hours," says the target. How easy would it be to "triage" patients before they officially arrive at ED to reduce the number appearing there.
• "95 per cent of people wait less than four months for elective treatment," says Luxon's target. Again, easy to reduce the number permitted elective treatment.
• "15 per cent reduction in the total number of children and young people with serious and persistent offending behaviour," says the naive target. Yet how easy it will be to simply redefine what "serious" and "persistent" look like.
• "20,000 fewer people who are victims of an assault, robbery, or sexual assault," says the wish list — and you'd damn well hope it were achieved. But aren't we already seeing the word "victim" politically redefined?
• "50,000 fewer people on Jobseeker Support Benefit," says the hopeful headline. Hard to "create jobs." Easy to simply create a new benefit for which those 50,000 might be "entitled."

I'll leave the remaining four for you to do as an exercise. You already get the point. Despite Luxon's comical business-speak about "chunking down" and "laddering up," even in their relative modesty these are pious hopes, not real targets. (Since he's so focused on business-speak perhaps he could read about Goodhart's Law while he's chunking up, often stated as: "When a measure becomes a target, it ceases to be a good measure".) And in their specificity they (like Building Minister Chris Penk's naive hope for quicker Building Consents simply because he's set a new target) could even make their targeted problems worse.

So perhaps it's a good thing that we have to wait until 2030 before any rubber really hits the road.

How the anti-building bureaucracy works

 

HERE'S A BRIEF UPDATE for you on how the anti-building bureaucracy works to confound eager new ministers.

Bright-eyed building minister Chris Penk has just posted a gushing self-satisfied presser promising faster building consents. "The government," it says, "is taking steps to reduce delays and speed up building consents."

Exciting. Encouraging. Mighty work.

What are those steps? you ask.

Here's the first step: "requiring councils to submit data for building consent and code compliance certificates every quarter."

There are no other steps.

That's it.

Minister Penk has confused a singular with a plural.

But what about that singular step of his. Will "requiring councils to submit data for building consent and code compliance certificates every quarter" in some way "reduce delay and speed up building consents?"

Even in Minister Penk's carefully-worded boast, which many a building minister has promised before him, he can only advise that "this added scrutiny will provide greater certainty for the sector, encourage best practice and drive innovation that will help reduce delays and let Kiwi builders get on with the job."

Greater certainty! Best practice! Driving innovation! Reducing delays! Splendid!! How? Somehow. Apparently.

All he can promise, apparently, is hope. Beyond that hope, which is as eternal as some building consent applications, Minister Penk's intended causal chain for reducing delays is not entirely clear.

LET ME ADVISE MINISTER Penk of something that every Kiwi builder and everyone in the "sector" who's ever applied for a building consent already knows: that any self-respecting building processor knows how to "stop the clock" so judiciously that they're able to ensure that almost every consent will appear to have been processed swiftly and efficiently. And they can "stop the clock" simply by asking a question, however stupid. ("Please draw a detail of the backsplash for the hand basin"; "please draw nosing detail for lower stair"; "please provide a dimension for something we all already know";"please provide yet another piece of technical literature from the manufacturer"; "please provide engineering for item already covered in the Building Code" etc.) And it's not just one question — these official "requests for further information?" can often be encyclopaedic!

And they legally delay the whole process. It may have taken a year or two on the calendar to process (yes, even some simple building consents can take that long) but with some careful, cool and efficient stopping of the clock, so that most of the delay-days aren't counted, even that drawn-out unforgiving process can be made to look swift and efficient. (Even more incentive when some of the council processors are employed by the hour to dream up and send out these questions.)

Applications for building consents must, says the Building Act, be completed within 20 working days. All this questioning and encyclopaedic compilation of paperwork however ca easily keep the "official" tally of days down to the prescribed twenty. 

But all this time-wasting costs money — and more pressure from Ministers like Mr Penk will not do a single thing to reduce delays and let Kiwi builders get on with the job. Instead, it will only encourage more stupid questions from council's consent processors so that their "data for building consent and code compliance certificates every quarter" will look spick and span.

These days, as they say, the building is often the easy part.