Fletcher Building will fall within construction supply investigation

The government plans to look at the cost structure of the building industry in much the same way it investigated competition in the electricity sector.

BUSINESSDESK: Fletcher Building, the country's biggest listed company, will come under officials' gaze as the government embarks on a study of the construction sector as part of its wide-ranging response to making housing more affordable.

Finance Minister Bill English told reporters at a post-Cabinet press conference in Wellington the government plans to look at the cost structure of the building industry in much the same way it investigated competition in the electricity sector a few years ago.

That is in response to a Productivity Commission report on ways to make housing more affordable for low- and middle-income earnings.

"I think if you look at the building materials markets it pretty hard not to look at Fletcher's," Mr English says.

"We wouldn't want to pre-judge there's a problem, but it gets raised by everybody and as part of the comprehensive approach to housing affordability it's probably best to be better informed about whether those markets are working correctly."

The study is one of several the government is undertaking as it looks at ways to make New Zealand's housing supply more responsive to demand as a means to curb excessive increases in property values.

Mr English says the review of the electricity sector had led to a more competitive environment among power companies, and "maybe that's possible in the building industry, I don't know".

In August, the Auckland-based Fletcher reported a 17% drop in construction earnings to $50 million though its backlog of building work had climbed to $1.09 billion at the end of June from $764 million a year earlier.

The shares fell 0.7% to $7.07 in trading today.

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