A positive step for the sector

Infrastructure Commission and Construction Accord aims for a healthier industry

On April 14 the Government and construction industry leaders signalled a shared commitment to transform New Zealand’s construction sector.

Jointly developed by Ministers, Government agencies and industry leaders from across the construction sector, the Accord offers up a unique opportunity for industry and Government to partner on a range of commitments and initiatives to transform  the sector.

The Accord signals a long-term commitment between government and industry to collaborate on key work areas for a healthy construction sector, and also includes a pledge to hold each other accountable to the Construction Sector Accord.

Prime Minister Jacinda Ardern says the Construction Sector Accord is a new way for Government and industry to work together to create lasting, positive change in the sector.

“The wellbeing of New Zealanders is intrinsically linked to safe, durable and affordable homes, buildings and infrastructure. To meet the future needs of New Zealand, both Government and industry recognise that we need to work differently,” she says.

“Together we have identified the priority areas we need to work on. The Government will lead where it can have maximum impact such as better procurement practices, improved Government construction pipeline management, and stronger building regulations. Government agencies already have a significant programme of work underway to support these aims.”

Minister for Building and Construction, Jenny Salesa says, “The Construction Sector Accord sets out an agreed vision, the outcomes we want to achieve and the priority work areas we will be focusing on to address many of the challenges the sector is facing.

“Industry representatives have identified the need for enhanced leadership and collaboration within the sector. Better alignment will support the other industry-led priority work areas of improving businesses performance and promoting a culture of trust between all parties in the construction eco-system,” Jenny says.

“Industry and Government will work together on a further four priorities which are to expand workforce capability and capacity, rebalance risk, improve health and safety  and boost the supply of affordable and durable housing.”

Infrastructure New Zealand CEO Stephen Selwood says “Public and private collaboration on the Construction Sector Accord and bi-partisan support for the establishment of the Infrastructure Commission will deliver major benefits for infrastructure and construction outcomes if co-operation can be sustained.

“The Construction Sector Accord aims to transform the way the Government and the construction industry work together and that transformation can’t come soon enough,” Stephen says. “Uncertainty, skills shortages, injuries and contracting issues are making the construction sector a less attractive, productive and effective part of the economy. That’s bad for everyone, not  least of all the Government because of the direct role construction plays in delivering public services.

“The Accord signals recognition that clients have a major impact on the way the industry behaves. What everyone wants is a healthy construction industry which competes across itself to deliver value, rather than competing with its clients.

The NZIC will provide independent advice to the Government on infrastructure strategy and provide procurement support. It will develop a long awaited pipeline of public works which will give the industry greater clarity over future infrastructure programmes, priorities and investments.

“This forward work programme is essential to providing the market with the confidence to invest in the skills, systems and equipment which are desperately required to improve New Zealand’s construction productivity.

“But it must have bi-partisan support to succeed. New Zealand’s thee-year election cycle is too short for any one Government to reshape infrastructure policy.

“There needs to be broader understanding and agreement over the long term opportunities and challenges so that,  even if projects change in the short term,  we as a country do not lose sight of the bigger picture.”

RMBA chief executive David Kelly says the Construction Sector Accord represents a significant opportunity for the industry and gives clear commitments to the industry and New Zealanders that the construction sector is critical to the success of our communities and cities.

“Our industry employs over 250,000 people and contributes $15 billion per annum to the economy. Our importance will continue to grow with the 10,000s of homes, commercial, industrial, and retail buildings needed now and in the future. New Zealand needs a healthy and vibrant construction sector, and this is a positive step towards achieving that.

“The issues are clear and have been well debated. We are facing skills and labour shortages, poor risk management, unclear regulations, and a lack of coordinated leadership. This Accord represents a tangible agreement between the industry and Government to try to address these issues, and to hold each other to account.

“Together with Government, the construction sector has agreed a shared vision for the sector, identified the primary challenges, defined the new behaviours required, and the priority actions we need to take,” David says.

The Construction Strategy Group (CSG), which represents a broad spectrum of New Zealand’s major construction industry participants, welcomed the Accord, saying it marks a significant opportunity to address the complex, systemic challenges facing  the sector.

CSG chairman Geoff Hunt says the key outcome the Accord is intended to achieve is the enabling of a resilient construction sector ecosystem that delivers lower cost, higher quality more durable buildings and infrastructure.

For this to happen the industry needs the certainty of work continuity and margins to invest in training and technology to  grow productivity. A five percent lift in productivity would fund one new Waterview Project per year.

Geoff says in the CSG’s view the Accord is a very positive step that recognises that the industry cannot fix itself and that the procurers are a critical part of the problem and therefore the solution.

“Whether the Accord becomes a ‘game changer’ will be determined by the achievement of shared goals and outcomes in the transformational plan to be agreed with Government, together with improving the commercial viability of industry participants as part of a high performing New Zealand construction sector.”

He adds that it is certainly in the interests of both Government and industry to grow capability and capacity as part of fostering a workforce of qualified, competent and skilled people that will also help create more resilient businesses.

“We know that there is a growing bottleneck in the sector because of the short-fall of  tens of thousands of workers needed over the next five years. If this is not to be addressed through a considerable increase in immigration, the development of training of those entering the workforce will have to be accelerated at an unprecedented pace. This can only be done through partnership between the construction industry and Government.”

Civil Contractors New Zealand chief executive, Peter Silcock, says the Accord was a positive step forward for the whole construction industry, and specifically for the civil construction industry as its biggest clients were the public sector.

He says CCNZ had ensured strong civil construction industry representation in the development of the Accord, which focused on the key priorities of expanding workforce capability and capacity, rebalancing risk, improving health and safety and boosting supply of affordable and durable housing.

“The challenges we are facing as an industry impact on contractors, their employees, our construction clients and our society. It’s great we have made the first step towards a united approach with government.

“We need to rise to the challenge of doing things differently. We are looking forward to working with government and industry partners on the detail of the commitments, as well as a clear and defined plan for the accord to be implemented.”

Rather than being a ‘quick fix’, the Accord showed a high-level understanding of the need for real change.

He said it was hopeful new initiatives and entities such as the Accord and Commission would create a more positive environment for New Zealand’s construction sector.

Of prime importance were increasing certainty around the pipeline of work and overcoming the issues of risk  attribution and workforce shortages that had long undermined the health of the construction industry.

In the next stage of the Accord process, industry will work with Government to develop a more detailed plan for commitments to transformation.

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