Housing-Cost Analysis Put Before Conference

Press, Volume XC, Issue 27367, 4 June 1954, Page 7

Housing-Cost Analysis Put Before Conference

(New Zealand Press Association)

WELLINGTON, June 3. “As builders and sub-contractors have been accused by politicians, the press, and the public of making excess profits on housing, it is time a statement on costs should be made public,” said a statement by the president of the Master Builders’ Federation (Mr R. H. Davis) to the executive committee of the National Housing Council today. He said that his pricing would be criticised, but it was based on average prices over several areas. After breaking down the cost in full detail he arrived at a figure of £2748 9s 8d for a State house regarded as an average of its type. “An examination of the schedule will show an absence of any excess profits,” said Mr Davis. “As State houses of a comparable size and specification at prices below £2750 are being let by the department all over the country, one can easily see that builders and sub-contractors are not making an easy living.” State Pricing The department, he added, admitted that its pricing only showed a 5 per cent, profit margin, yet it continued to “grind down the prices” of State houses to an uneconomic limit where it had difficulty in getting builders to accept contracts. Was that the way to build more houses and reach the target of 20,000 houses? he asked. Mr Davis assessed his labour costs on a 44-hour week and included the average payment “for margin of skill,” an allowance of 3d an hour above award rates. In pricing the sub-trades only the actual materials required for the work were included, and the labour hours were considered average. “The builder is allowed an expenditure of 1338 productive hours, considered an average,” he said. “Good men in highly-organised teams could make a saving on these hours, while organisations taking longer require some investigation, into their methods and a reorganisation of their employees. “As wage increases have failed to reduce man-hours, some other incentive scheme based on production with the full support of our tradesmen might enable this total to be reduced.” “What’s the good of an analysis of a hypothetical house?” asked Mr W. F. Molineux (Carpenters’ Union). He asked for details of an actual house. There was no objection to that, said Mr Davis, but he was not in favour of supplying actual costs at an open meeting. Architects* View Mr W. E. Lavelle (architects): There seems to be a feeling in the community that builders are having a riotous time. Well, the field is open and everybody can get into it. But the fact of the matter is we haven’t got enough builders. Mr Molineux: We don’t want any more builders in Wellington. There are three and a half carpenters for every one builder. These men carry him.

I don’t think this inquiry goes far enough. The material supply should be gone into as well. I believe the Government itself is the only body competent to set up a commission into the costs of houses. That commission should make inquiries right back to the forest. I still think builders make excessive profits, but I think others make them, too. Mr R. A. Ross (builders) said the cost of a house about 1926 was four or fiye times the annual salary or wage. That was still so, but presentday houses were much better. Mr T. N. Dickson (builders) said that builders were “picked on from North Cape to Bluff.’’ Builders were “just getting a little bit tired of unenlightened criticism,’’ he said. Price rises in the building industry could stand any comparison with rises in the price of food, clothing, and other items. Tabled with Mr Davis’s report were Comments on it by various organisations. Some of these were:— Auckland Bricklayers* Union.—“We do not consider the builder is receiving any more than a reasonable profit. We cannot say the same for sub-contrac-tors, particularly painters and plumbers, and also suppliers of material, particularly timber merchants, cement manufacturers, and suppliers of shingle and sand.’’ The union said the man hours allowed for some of the processes carried out by sub-contractors were excessive. New Zealand Institute of Architects. —“With an award rate of 5s 3d an hour the analysis establishes an effective hourly cost of 7s 4|d. This is more than 40 per cent, higher than the award rate, and represents a significant disclosure of on-costs applying to labour in New Zealand which are not generally applicable in other countries. When such on-cost element is reflected throughout all labour involved, both directly and indirectly, on building houses, including the labour content ’of materials brought to the job, it becomes a major item of total cost. For instance, if it can be accepted that 70 per cent, of the total cost represents labour costs, such 70 per cent, would amount to approximately £1920 of the house analysed.’’ New Zealand Plumbers’ Union.—The 159 hours set aside for plumbing work was “fantastic.” The union said a house as described in' the plan should not need any more than 80 hours of plumbing. The ,Mihister of Housing (Mr W. Sullivan), discussing the question of costs, said a key problem in any analysis of building costs of a house was the number of man-hours. He said builders would base their cost estimates on averages, but some foremen could do much better than that target. “And very often the man that does that doesn’t get what he ought to get in the way of pay,’’ he said.