Mike Hosking: Governments can't actually do much about the construction industry

COMMENT: So the Government and the industry got together over infrastructure. And the "learnings" appeared to be that Building and Construction Minister Jenny Salesa will be heading back to MBIE, to talk to them about 'whole of life' attitudes.

They want them to stick more closely to procurement guidelines. In very simple terms they will need to stop cutting corners, saving money, getting the best deal and build better.

Now there is nothing wrong with building better, because you get what you pay for.
But that's the problem with government, what they're paying for is paid for with our money.

And the argument, as put forward on my radio programme, was that by paying more, you set a higher standard, and by setting a higher standard you encourage others to follow suit.

I think that's where the logic started to fall apart a bit. The simple mistake they appear to have made is to think government can do anything about the construction industry at all.

The construction industry is the private sector, and the private sector is about bottom lines and profit, so there is no amount of government intervention that changes that.

Now we seem to be in agreement that margins are your issue. To get a job, a company bids at a level that may well tip them over, a government can't stop that, and ironically in many cases it's got nothing to do with quality.

Fletchers might be a good example: are you telling me the SkyCity convention centre that got them into all that trouble is a cheap and shoddy building? No.

The building is fine, Fletchers in their desperation for the work didn't do the numbers properly.

There are many apartment buildings going up or looking to go up. They will be very expensive, high end affairs. It is possible the developer sees the margin not the construction firm? But that doesn't mean, though, the quality isn't there.

In sitting down with a government you're asking them to put a stick through the spokes of the free market, and they can't do it.

Now here's where, though, we do need to worry.
If we all accept that price drives margins, and that in mass builds the margins are so thin it's tricky for constructors to do the numbers.

And who's building more than anyone? The Government.

KiwiBuild. How pray tell, with the Jenny Salesa advice of whole of life approaches, are they building 100,000 homes at dirt cheap prices, and with a quality that will last a couple of generations?

Answer: they're not. Quantity gets you certain savings, but there comes a point where cheap is just cheap.

So it's ironic to say the least that they can busy themselves talking about whole of life, yet at the same time be immersed in the exact same practices they seem so worried about - carrying the exact same risks for thousands of builders, contractors and small businesses.