New Zealand Labour Party

Commerce Commission inquiry needed into building supplies monopoly

The Commerce Commission must stop dragging the chain and urgently investigate the anti-competitive practices in the building industry that are driving up the cost of building materials, says Labour's Housing spokesperson Phil Twyford.

“Competition in the building materials market is essential to lowering building costs, according to the Productivity Commission’s analysis. But Knauf Plasterboard has said it is reviewing its position in New Zealand after posting a loss in its first nine months after struggling to break through the building materials monopoly.

“Fletcher’s subsidiary Winstone Wallboard has 94 per cent of the market. That’s bad for the building industry, for home buyers struggling to afford a new house and the rest of the property market.

“Plasterboard is 41 per cent more expensive in New Zealand than Australia, meaning it would cost $12,000 for a standard house in New Zealand compared to $8000 in Australia.

“The Government has been talking a good game but has totally failed to tackle the market monopoly. In November 2013 Nick Smith said: ‘The industry needs a shake-up through increased competition and greater transparency to ensure Kiwi families can get access to more fairly priced building materials and homes’. 

“But in reality the Government has only paid lip service to competition in the building industry and hasn’t taken action to make it easier for new companies to enter the market. It’s clear that Nick Smith isn’t the man to make changes.

“Knauf found it took too long to get its products approved by BRANZ and once it finally got a contract for the Canterbury rebuild, it appears to have struggled to get a foothold at all.

“It follows problems faced by Elephant Plasterboard that has already complained to the Commerce Commission.

“This is a systemic issue across the industry with all materials. The Commerce Commission must investigate the competition problems facing the industry as a whole. It will be the only way to get the Government to act,” says Phil Twyford.