Does Labour Really Need To Be Imported For Housing?

The framing of where frictions lie in any market are an interesting insight into the minds of people far from the coalface.

RBNZ Deputy Governor Grant Spencer has let a real zinger slip out in a speech to the Property Council when he says:

“A more responsive supply side is key and will require: a responsive and innovative building sector; an adequate supply of labour, some of which will need to be imported; and a responsive planning and consenting process. The accord between Government and the Auckland Council is a positive step in this direction.

This is simply not necessary. The construction sector might have strong confidence at present, but there is an enormous amount of skilled labour pottering around on small projects and deciding not to move to Christchurch or Auckland because the wages on offer aren’t high enough or the cost of shifting is too high.

A sensible policy solution would be making it easier for under-employed construction sector workers already living in New Zealand to make the move to cities where there is higher demand for their skills. This would involve addressing longstanding issues around contractor-subcontractor relationships, health and safety regulations, trade licensing and how the self-employed are treated poorly by central and local government.

A lot of policy wonks have no comprehension of how hard it is to find reliable workers in the construction sector. For people selling their labour, it amazes me that their “costs of production” can’t be taken into account but any firm will use “higher costs” as a standard reason for raising their price.

The wages on offer in Christchurch and Auckland are not enough to entice under-employed workers from other regions unless they have no overheads – single guys are pretty much the target market.

Through importing workers from overseas to do this sort of work, you’re actually imposing costs on taxpayers. Why? Because the skilled construction worker who *needs* $30 an hour to keep his family fed and sheltered won’t have the cash to make the move to Christchurch or Auckland.

This means that over time, the already terrifying level of hysteresis in the construction sector with many skilled tradespeople deciding not to get licensed because they’re sick of all the fees they have to pay and a lot of less skilled construction workers who have been doing intermittent projects in the provinces, will result in long term unemployed people who cost tens of thousands a year in welfare spending.

Immigration is a good thing – but using it as a “quick fix” for an industry that has been completely gutted by council cardigan wearers, central government busybodies and imported “expertise” (British project managers not used to NZ conditions were top spruikers of leaky building related product) is sadistic in the extreme.

A better solution would be this: if you have experience in construction and move to Auckland or Christchurch and gain employment in construction, you’ll receive $2,000 in cash to help with moving and an $20,000 tax credit over 2 financial years.

Familiarity with NZ standards and practices is far more important than rushing something. Has everyone forgotten what one of the key drivers with leaky homes and buildings was? Smashing out projects fast because everyone involved in the project was making no money and wanted to get in and get out.

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