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Saving the construction industry

Phil Twyford says he will draw up an “action plan” with the beleaguered construction industry to address its deep-rooted problems, Thomas Coughlan reports.

Yesterday was construction and infrastructure day for New Zealand’s politicians. Auckland played host to the Infrastructure NZ symposium, while Wellington hosted a construction industry forum.

Housing and Transport Minister Phil Twyford shuffled between them both, trying to shore up confidence in an industry in the grip of a bout of pessimism after a wave of company collapses.

In Wellington, Twyford announced that he would seek to create an “action plan” with industry to try and solve its deep-rooted productivity problems.

Speaking to a room of construction industry professionals he said the Government would work with industry to resolve the problems that led to the collapse of large construction companies, including Ebert Construction which went into administration earlier this month.

Twyford rebuffed an appeal from Judith Collins to include Opposition MPs in the plan’s development.

Addressing construction pessimism

Earlier in the day, a survey of industry confidence revealed that a net 52 percent of construction firms believe the industry is performing poorly or terribly. The survey also showed construction industry confidence in the wider economy is declining.

Twyford said the Government’s policy agenda, from its construction pipeline to potential changes to the tax code, would disincentivise real estate speculation and smooth out the boom and bust cycle.

“Whenever you talk about the construction industry all roads lead back to the boom and bust cycle,” he said.

Twyford also touched on the issue of procurement, which has been identified as one of the main causes for the collapse of construction companies in New Zealand.

Race-to-the-bottom procurement has meant companies bidding for construction contracts at prices lower than could realistically be delivered.

Twyford said Building and Construction Minister Jenny Salesa was developing a “whole system” approach to Government procurement.

He reaffirmed a recently announced policy to ensure that Government (which makes up 19 percent of vertical construction procurement) adheres to its own procurement guidelines set by MBIE.

Rick Herd, Chief Executive of Naylor Love told the conference construction companies also needed to manage risk allocation more effectively between themselves and their clients.

“If that client wants unbalanced risk that client is one you can’t afford,” he said.

National to push RMA reform

Meanwhile, National is gearing up to push for reform to the Resource Management Act - despite at least two failed attempts to tweak the legislation during its time in Government.

Opposition leader Simon Bridges told the Construction NZ forum that Judith Collins and Andrew Bayly would lead work on an RMA reform bill to be ready for 2019.

Bridges offered a mea culpa of sorts, saying the former National-led Government should have reformed the Resource Management Act in their first term.

Collins said the proposed reforms would “return a concept of property rights to owners of land, this is a radical concept that we’ve had for hundreds of years”.

“We’re going back to it,” she said.

Collins acknowledged that sometimes the desire to assert property rights and the need to promote housing could conflict.

She said the previous Government had learned from the Christchurch and Kaikoura earthquakes.

“A lot of it worked much better when we cut straight to the chase and decided what it is we want to end up with,” she said.

She acknowledged that the response to the Christchurch earthquake had brought house prices down, but would not commit to saying her RMA reforms would achieve the same effect.

“It is not an easy job,” she said.

Twyford was doubtful about National's pitch.

“These characters had nine years to improve the RMA all they did was make it more expensive and more complicated,” he told the conference.

“For the last four years we offered to support RMA reform that would have freed up planning restrictions that stopped our cities growing, they never took us up,” he said.

He said the problem was the way the RMA was being used, noting that if the legislation were torn up, it would probably need to be replaced by something very much like the RMA.

“That makes me think the real agenda is to weaken the environmental protections in the RMA,” he said.

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