Import tariffs on a range of building products will be temporarily suspended from today – a measure which is expected to reduce housing costs and increase competition in the residential construction sector, Housing Minister Dr Nick Smith and Commerce Minister Craig Foss.
“The building materials covered by the tariff suspension comprise about 90 per cent of the cost of the material in an average new house. Currently, these materials attract tariffs and duties that add an estimated $3500 to the cost of a new home. These will be cut to zero per cent tomorrow for at least the next five years,” Dr Nick Smith says.
“The scheme includes a comprehensive list of materials such as roofing, cladding, framing, windows, doors, insulation, plumbing and electrical components, fixed cabinetry, paint and builders’ hardware and fixings,” Dr Smith says.
“New Zealand is a small market for building materials. While we would prefer as much content as possible is locally manufactured, we need the competitive pressure of imported products to ensure we are getting best value for money,” Mr Foss says.
“It is through competition and choice for consumers that we keep costs down.”
The tariff suspension comes off the back of the Budget 2014 initiative to temporarily remove anti-dumping duties for building materials, for which legislation was passed under Budget urgency in May. The temporary suspension of tariffs on building materials will reduce Crown revenue by $5.5 million each year, which was provided for in Budget 2014.
“Suspending import tariffs on building materials is consistent with this Government’s strong public commitment to address housing affordability, particularly given the need for building materials for the Canterbury rebuild and increased construction activity across the country,” Dr Smith says.
“There is no single magical solution to improving housing affordability. We are freeing up land supply, reining in development contributions, cutting compliance costs and investing in skills and productivity in the construction sector. It is about making a whole lot of changes like removing tariffs and duties that aggregate together to make homes more affordable.”
I have just one problem with this – that the removal of tariffs is temporary.
When we spend a lot of time and energy extolling the benefits of free trade to other countries we have to be open to imports ourselves.
Tariffs protect inefficient producers and add costs to everyone who builds something new or repairs something old.
Why not make the suspension of tariffs permanent?