Talking about "regulation" doesn't really say anything. All laws, good and bad are regulation. There is regulation passed by businesses, and very few passed by citizens. When you cry about regulation, it is similar to crying about the water being wet or over having to breath. In modern society, very few things are done without regulation. Even basic rights that we take for granted, such as freedom of speech, are guaranteed in the US because there is a piece of regulation, passed more than two centuries ago, called "constitution".

> So when over-regulation drives up the costs, the appropriate response is to introduce new regulations to fight the other regulations?

Yes. The effort to reduce regulations on construction has failed. As such, retaliating against the beneficiaries of those regulations with counter-regulations is appropriate.

It's not pretty or efficient, this is a fight between different interests, not a group problem-solving effort.