Building site safety rules adding $100m p.a. to housing costs, says NZ Initiative

Thursday 16th July 2015

The government's safety campaign to reduce falls from a height may be raising the annual cost of home repairs and additions by as much as $100 million at a time when housing affordability is a major issue, according to a new report from the New Zealand Initiative.

The libertarian think tank says the Ministry of Business, Innovation and Employment did not quantify the costs of its "ill-justified" campaign to reduce workplace falls and the regulation is flowing through to climbing house prices in Auckland, as well as adding thousands of dollars to the cost of new homes and alterations, according to economist Bryce Wilkinson's "A Matter of Balance Regulating Safety" report. The tougher regime ignores workplace accident rates are falling and isn't the right priority for workplace safety concerns.

"People must balance safety costs against other costs - such as food, clothing, fuel, education and health care," Wilkinson said. ""Greater spending on scaffolding and nets means less spending by households on something else that they consider important."

The cost to a small scale builder complying with the campaign by MBIE's new health and safety regulator, WorkSafe, could raise the cost of a small roofing job from $4,000 to a $6,000, Wilkinson said. Extrapolating from that, if half of New Zealand's 1.8 million dwellings need a roof job every 12 years at an additional cost of $2,000, then the annual cost burden on householders is $150 million over 12 years, according to the report.

"The proactive campaign targets builders, roofers, painters, electrical workers and decorators deemed to be at high risk of falling from less than three metres while working on a roof, a ladder, or an unsafe working platform," Wilkinson said. "Yet all workers have good reason to care about their own safety. A significant number are self-employed. Also, bosses of small businesses commonly work alongside their workers and have personal and financial reasons to reduce the risk of injury to employees."

The regulation existed under the Health and Safety in Employment Act 1992, but became a priority for MBIE in 2012 with safety inspectors visiting worksites and enforcing rules around the risk of falls from heights under three metres. Wilkinson argues the balance of regulation isn't right. Workplace safety reform was toughened up in a knee-jerk "'something must be done' response to Pike River Mine disaster in 2010, he said.

"Unfortunately, actions dominated by emotion and good intentions can have unintended consequences that could make people worse off overall, not better off," he said. "Arguably, the more emotional the issue, the greater the need for rational analysis."

The government's tougher approach to workplace safety ignored that the incidence of serious work related injuries had been declining in the decade to 2013, he said.

"This declining trend raises the question of the need for ever more costly regulation for the workplace in general, let alone home construction in particular, in order to achieve the government's targets," Wilkinson said. "Given the costs, the burden of proof should surely fall on the agency seeking to impose the costs."

Wilkinson says the data for serious injuries and fatalities doesn't support workplace accidents as a priority. In 2013, of 10,606 serious injury and fatal accidents, 447 were in workplaces. Of 5,271 falls, 1,677 were by people under the age of 75. Meanwhile, in 2014, the Accident Compensation Corporation received 198 claims due to falls in homes while doing house construction (workforce), and 225 from people classified as 'non-work do it yourself (working age)'.

The report points to two public policy reasons behind why New Zealanders may be prone to taking undue risks. The introduction of ACC, which saw the ability for Kiwis to sue each other for personal injuries abolished, removed a "pervasive mechanism for penalising negligence". ACC levies on employers may also not reflect occupational risks, with one option to re-introduce competition for work account insurance.

BusinessDesk.co.nz

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