Thursday, September 08, 2011


In the past year, a series of earthquakes has devastated our second largest city. But with the recovery supposedly well underway, you'd expect the building industry to be working flat-out fixing all those houses and building new ones, right?


The building sector is in the worst slump in a decade, with a big dive in the number of homes being built to an 18-year low.

Statistics NZ figures show the amount of building work fell 6.6 per cent in the June 2011 quarter, after adjusting for price and seasonal effects. Activity was down to the lowest level in 10 years.

Home building activity fell 12 per cent in the June quarter. It has now fallen 24 per cent in the latest year, to the lowest level in 18 years.

This can be put down to one thing: policy failure by the government. They have allowed the insurance industry to refuse to insure in Christchurch, effectively stalling the rebuild in its tracks. The building industry is a big driver of economic growth, so the entire economy will pay the price. Meanwhile, the skilled and highly mobile workforce we need for the rebuild will up sticks and move to Australia to find work.

Heckuva job, Gerry. Heckuva job.

The government has some levers it can pull here. For example, it could compulsorily acquire AMI under the terms of its bailout, seizing control of 90% of the Canterbury insurance market. It could then use that control to provide insurance cover for the rebuild, and to push the rest of the industry into doing the same. But that sort of bold intervention is contrary to National's "do nothing" economic ideology. And instead so they'll leave Christchurch in ruins, and the economy to burn. After all, they have jobs (not to mention taxpayer funded houses, travel and everything else). As for the rest of us, well, we're just not their concern.

Wouldn't it be nice to have a government that actually tried to do something about our problems, rather than sitting on their hands and doing nothing?