American novelist William S. Burroughs once said, “When you stop growing you start dying”.
And given the recent directive from the NSW Building Commissioner, that all developers, builders and certifiers will be rated on their record of building failures, finances, complaints, insurance claims and other such factors under a new tool, I can’t help but recount these words and wonder if the best way to atone for the errors of past practices is through generic and blunt instruments that stifle the chances of newer players from winning work through lower prices.
The announcement comes in the wake of the media and community hysteria around the Opal and Mascot Tower developments. For two rather unremarkable buildings, these developments have occupied endless column inches and dominated table-talk for the last six months. And on the face of it, these two residential towers deserve no attention as exemplars of a wider malaise of an entire industry; an industry whose success remains vital to the economic health and prosperity of this state.
Of course, there is always a cause for concern for any building exhibiting signs of structural failure. And of course, errors such as those are real and significant for all those affected. Such significant failures seen in these 2 buildings both have neither been common nor prolific, however. To my knowledge, not a single building in NSW has faced radical structural collapse in the last several decades. So, I can’t help but feel that this is somewhat of an overreaction from a State Government, that has resorted to easy solution that, even with the best of intentions will simply stop the free flow of a dynamic market and also contribute to even higher prices. Indeed, there’s is not combination of the current touted reforms, that can actually lower housing prices… it all increases it. Yes, there is perhaps more insurance (in principle) for a tired and frightened consumer, but they will pay for it.
Those of us in the building and planning sector know too well how insufferable onerous red tape and overregulation can be. Additional reporting and administrative burdens such as those suggested by the Commissioner will likely add to costs and slow things further. This is dangerous for new housing supply, and inevitably, will drive up costs for the consumer, who is curing for protection with purchasing their largest asset by value.
If as an unintended consequence, the new processes turn out to be burdensome, they will decrease productivity levels. And it will all be reflected in the price – if you want your house to be insured for a higher value, no problem. But your premium doubles.
For a young couple or family seeking to get a foot on the property ladder, this new system could spell another five years of scrimping and saving for that ever-growing and ever-elusive deposit. And while the development industry is buoyant and resilient, one can’t help but wonder whether the public are prepared to pay the extra costs that will inevitably be passed on to them, in exchange for the perceived benefits and protections this rating tool will supposedly provide.
As Adam Smith once implored, the “Invisible Hand” of Government to help the Free Market, I just hope that it doesn’t “choke” it.