COMMENT: We’re fully focused on local government right now, as we get set for the final tweaks before our summit on Wednesday.
Tomorrow we’ll hear from speakers – and the audience – tackling a cross section of the most important issues on hand.
But not all.
One that deserves its own entire event is the quality of our homes and buildings because it’s local governments that most often need to pick up the pieces of failed ideologies.
Right now, we’re in the thick of the latest gimmicky ideology purporting to solve the housing crisis, the “pausing” or “freezing” of the National Construction Code.
Now those easy riders trying to dismantle the National Construction Code won’t have any impact at the top end of the market.
Well-endowed people will continue to demand ever better green, high quality and comfortable homes. This will give them dividends in energy efficiency, energy independence and even energy wealth creation as they sell their surplus sun-generated bounty back to the grid.
What is also certain is that those at the bottom end of the market who rely most on those pesky rules and regs to protect them will be left to weather it out on their own (literally). Half-built, half-arsed houses will be flicked to the poor sods who must pick up the cost of heating, cooling and travel to where the rest of the community conducts viable businesses.
But wait, isn’t there a model for this? The Pritzker Prize-winning Alejandro Aravena came up with a concept to build just parts of houses to relieve scarcity in Brazil – and leave the rest for later, when (if?) the occupants can afford it.
Just joking…or not. Are we already nearing the need for solutions that are appropriate for the favelas? In this amazing country – one of the world’s richest and indeed most lucky?
In this issue, Alan Pears one of the strongest most respected voices in the renewable energy and energy efficiency space, acknowledges the National Construction Code can be improved – as can most things.
But the blunt instrument of freezing the NCC is not the way to do it. Instead, he lists ways to achieve benefits that make ultimate sense.
Pears says we can save “costs, time and stress when delivering quality buildings quickly and cost-effectively that will not become liabilities as climate change plays out and social, financial and environmental consequences grow.”
It’s good – check it out.
Also noteworthy this week is the article on Tuesday by an economics professor Richard Holden who’s teaching classic demand and supply to his students and applying it to housing.
He says that building high quality expensive houses will eventually create a trickle down effect by taking pressure off when buyers choose the next tier down, with the effect cascading right down the line. His example? A $3 million house versus a $2.8 million house. He says:
And because a $3 million property in a given neighbourhood is a close substitute for a $2.8 million property in the same neighbourhood, it doesn’t matter which is built. It just matters that something is built.
And this logic of substitution cascades all the way down the price ladder. It might be the only part of economics where the term “trickle down” is actually right. It’s the total supply that’s key. This is something that [NSW premier] Chris Minns appears to understand.
Without concern for the fact that construction costs are high and still, no one knows how to make modular construction cheap – right now it’s quicker, and that’s about it. And without concern for the fact that his example of a household on $100,000 will never be able to afford to live in the suburb where regular houses sell in that range – because of land prices!
The cascade effect will stop dead at a figure that’s still out of reach for most people. The one kind of supply that will actually take pressure off the housing market is public housing. Leaving the private sector to get on with what it does best – housing for the well-heeled.
And we bet that a vast uplift in social housing will vastly improve productivity because people won’t have to be so absorbed in dealing with their housing needs.
And on another related note, the Australian Building Codes Board has just closed off the search for a new chief executive after its former CEO Gary Rake took over another senior government role in aged care as a deputy commissioner in the Aged Care Quality and Safety Commission.
Our enquiries into the ABCB suggest he will be well out of an organisation that has been hobbled, almost entirely with funding cuts and forced to twiddle its thumbs until 2029 with no visible proof of life other than in tidying up the filing cabinet a bit. Certainly, its critically important energy efficiency functions will be getting ready for the afterlife.
For the bottom end of the market anyway.