News

19 December, 2013
Construction Sector Workforce Plan for Greater Christchurch

Building and Construction sector leaders with support from the CSG have played their part in working with the Canterbury Earthquake Recovery Authority (CERA) and the Ministry of Business, Innovation and Employment (MBIE) to develop the Construction Sector Workforce Plan for Greater Christchurch. Rebuilding Christchurch brings with it a range of challenges for industry and businesses as well as administrators in the public sector. This Plan as set out represents a collaborative effort to deal with some of those challenges.

View the plan here (PDF 0.8MB) »

12 November, 2013
CSG release Housing Affordability Workshops report

Housing Affordability Workshops – an update of BRANZ research into the component costs of housing in New Zealand

Housing Affordability Final Report – recommendations and conclusions – CSG (PDF 1.08MB) »

E626 New house price model updated April 2013 - BRANZ (PDF 1.08MB)»

14 October, 2011
Construction Report highlights Building Industry’s Economic Potential

Seeks policies for smoothing volatility to avoid “near catastrophic” bust

The Minister of Building and Construction, the Hon. Maurice Williamson, is flanked by Richard Aitken, Chairman of the CSG, (right) and John Shewan, Chairman of PricewaterhouseCoopers, at the Auckland launch of the report “Valuing the role of Construction in the New Zealand economy” prepared by PricewaterhouseCoopers for the CSG.

The potential for New Zealand’s building and construction industry to lead the country out of its current unemployment malaise and significantly lift domestic economic performance is highlighted in a comprehensive report “Valuing the Role of Construction in the NZ Economy” released today.

Commissioned by the Construction Strategy Group (CSG) and prepared by PricewaterhouseCoopers, the report is a definitive review of the place of the industry in the nation’s economy and sets out policy measures to smooth out the “boom and bust” cycles which have characterised the sector’s performance in recent decades.

Signalled in the report is a warning that an approaching potential boom period for the industry arising from the recovery of Christchurch, weathertight building remediation and pent-up demand for new housing, especially in Auckland, could be followed by a “near catastrophic” bust if past volatility patterns continue.

The report says the sector’s low productivity is reflected in remuneration – it is the fourth worst paid across New Zealand.

“This implies the sector’s employees are relatively more vulnerable, with less stored wealth and consequently a greater reliance on social services if they lose their jobs. Furthermore the sector employs a relatively young workforce and higher numbers of Maori and Pacifika – demographic cohorts characterised by higher levels of unemployment and lower educational attainment. In other words the sector’s volatility threatens those already at highest risk.”

“It is crucial that the recommendations made in this report be implemented in advance of the Canterbury-led boom ending, to bring about the systemic changes that will reduce the likelihood of the bust being as harsh.”

Highlights of the report include:-

  • The construction sector accounts for one in 12 jobs, over the past decade contributed one in seven new jobs and a dollar invested in the industry generates three dollars in economic activity.
  • It suffers boom-bust cycles far stronger than those experienced by other sectors usually associated with fluctuating fortunes.
  • A direct result of this volatility is poor skills retention and low labour productivity growth.
  • The approaching boom offers an opportunity to address this volatility through government-industry partnership and government actions as a buyer of construction services and influencer of private sector behaviour.

The report says that as a buyer of construction services, the Government can:

  • Improve capital forecasting to provide certainty in planning for the sector.
  • Invest counter-cyclically, thus removing pressure from overheating, and support as necessary.
  • Broaden the approach to procurement, using whole-of-life costs, PPPs and alliancing where appropriate.
  • Build scale in procurement, possibly through regional procurement bodies, creating certainty.
  • Build closer procurement relationships between central and local government.

As an influencer, it can:

  • Enable new funding tools such as tolls, fuel taxes or congestion charges.
  • Broaden the basket of monetary tools and objectives.
  • Streamline the Resource Management Act and consent processes even more.
  • Reduce speculative investment through leveling the playing field between asset classes.
  • Be more responsive to immigration trends, to keep a steady flow of skilled people coming into the country.

“The Christchurch rebuild, earthquake strengthening and the remedial work on leaky homes raise the prospect of the largest construction-led boom in history. They also raise questions, including:

  • Do we currently have enough skilled people to do the work?
  • How do we ensure the greatest building boom ever is not followed by the greatest building bust?”

PwC identifies the construction sector as New Zealand’s fifth largest, employing over 157,000 full time equivalents, or eight percent of the economy. But the eight percent generates only four percent of national GDP in a sector characterized by many small businesses. Construction-related services also employ a further 42,000 FTEs.

An increase in labour productivity within a sector that plays such a major role in the economy would be significant. PwC estimates that a one percent increase in labour productivity in the construction sector would add $300 million to the New Zealand economy.

The report says that New Zealand sits “mid-field” in a comparison of volatility alongside Spain, South Korea and Australia. While Australia had suffered even stronger volatility over the past 10 years this may be explained in part by the downturn in the construction industry immediately following the Olympic Games with so much construction having been put in place for the Games. However, the construction sector there has enjoyed growth in labour productivity which New Zealand has not been able to emulate.

It sees the New Zealand residential sub-sector as the major driver of volatility. Over the 10 years to 2010 an average of 21,700 FTEs were employed in residential building but at one point just 12,000 were employed and at another 32,000.

PwC consider government has a key role in ensuring forward certainty for the sector, allowing it to develop skills and boost labour productivity. It says government spending can only do so much and that while counter-cyclical Government-funded construction is a good way to assist the sector to smooth out boom-bust cycles, it is not a silver bullet.

It advocates the establishment of clear capital spending programmes beyond two or three years and counter-cyclical planning to bring major projects to market at periods of trough in the industry. The latter would enable central and local government to obtain lower prices and provide a steadier growth path needed by the sector so that training and career paths can be better assured and planned.

Among recommendations for enhanced procurement are a whole-of-life best value approach rather than a focus on lowest price tendering, opening up opportunities for private investment and improved allocation and management of risk.

A consolidation of procurement and procurement expertise is recommended, as well as an integration of central and local government project letting. Clearer protocols for how central and local government work together should be developed so that larger scale projects are handled less on a one-off basis and integration improved between layers of government where responsibilities overlap.

For further information:

Construction Strategy Group: Bruce Kohn Tel: (04) 386-2793, (021) 247-7748

PricewaterhouseCoopers: Marise Hurley, Communications Manager. Tel: (09) 355-8077, (021) 717-688

Note for Editors: The Construction Group (CSG) was formed in May, 2010 with a stated purpose to provide leadership and strategic direction to grow a productive, value driven professional building and construction industry. The CSG evolved from a series of strategic forums aimed at establishing a leadership group of senior figures involved in the industry and committed to give of their time to respond to challenges facing it. Members are Richard Aitken, Executive Chairman, BECA Group Ltd; Peter Gomm, Chief Executive, Mainzeal Property & Construction Ltd; Richard Harris, Director Jasmax Ltd; Mark Binns, Chief Executive, Fletcher Construction Ltd; David McConnell, Managing Director, McConnell Group; Gordon Buswell, Chief Executive, ITM; Chris Ellis, Chief Executive, Brightwater Group; Pieter Burghout, Chief Executive, BRANZ ; Mike Fox, Director, PrimeSite Homes Ltd; Richard Merrifield, Managing Director, R J Merrifield Ltd; Paul deBernardo, Managing Director, Aquaheat Industries Ltd.

2 September, 2011
Waterview contract offers lessons for central and local government planners

The timing of the Government's contract letting for Auckland‘s $1.4 billion Waterview roading project reinforces the construction industry view that counter-cyclical forward planning is critical to the achievement of best value for ratepayers, taxpayers and the industry.

A spokesman for the Construction Strategy Group (CSG), Bruce Kohn, said today that by agreeing the contract at a time when construction costs have rarely been cheaper, because of the recessionary state of the economy, the Government has achieved a financial coup.

”At least six highly specialised and competent civil contracting firms in Auckland went out of business in the past year because of a lack of work. Waterview represents a life saver in terms of employment and the health of the civil construction industry, as well as best value for money spent“.

”It represents a lesson that the CSG hopes will be learnt by a range of other central and local government entities when considering infrastructure, commercial and residential building and the provision of facilities for health and education“.

Mr Kohn said anecdotal evidence within the civil construction industry suggested tenders were regularly coming in for contracts at 20 to 30 percent below engineers‘ estimates because many firms were desperate for work.

”This re–emphasises our contention that through careful planning of forward programmes central and local government can achieve best value by ensuring they have major projects to let when times are tough. Delays in contract letting during difficult economic periods mean that often there is a rush of projects when the economic cycle turns up. This in turn leads to prices becoming inflated as contractors bid for scarce workers and resources to get through the welcome but potentially wasteful over heated demand“.

”At this point both major project, commercial and residential building prices are at advantageous levels for consumers. On the horizon is at least a mini-boom period through spending on Christchurch reconstruction, leaky home remediation and pent up demand for new housing in Auckland“.

”The industry does not want to see the hoped-for period of plenty promptly turn into a depressing construction drought, such as that it is now going through, when the upswing comes to an end. We hope central and local government will take on the lesson of Waterview – that mid-term and long-term co–ordinated project planning can smooth out the process to the benefit of all stakeholders.“

For further information: Bruce Kohn Tel: (04) 386-2793, (021) 247-7748

16 May, 2011
Skills initiative necessary to meet approaching challenges

The Government's $42 million package for training in building and construction related skills is a necessary and timely response to the challenges facing the industry, says the Construction Strategy Group (CSG).

The Chairman of the CSG, Mr Richard Aitken, said today that the projected huge increase of the industry workload – to meet the needs of reconstruction in Christchurch, leaky building remediation and normal demand – meant thousands of specialist trades people would be required.

”The Government's additional grants for tertiary and industry training will significantly help a build up in the ability of the training sector to meet the approaching demand.“

”There has to be some doubt whether sufficient new recruits can be trained in these specialist skills in time to meet the full industry need. For that reason it is usefulthat the Department of Labour is preparing a special immigration skills shortage list. Our hope is, however, that most of the need can be met from within the New Zealand labour market.“

Mr Aitken said the CSG had briefed the Government on the scale of the challenge facing the industry and was pleased to see an early response.

”There are immediate employment opportunities for those who acquire the specialist skills such as those required by qualified plumbers, drain layers, plasterers and painters. Professional fields of quantity surveying and engineering will also be on the lookout for new recruits. We hope there will be a positive response to these opportunities.“

For further information: Bruce Kohn Tel: (04) 386-2793

21 March, 2011
Building Industry collaborates with government to meet capabilities challenge

Click to view press release (30K)

24 February, 2011
CSG releases statement of position on Weathertightness

Click to view (37K)

10 December, 2010
CSG Chairman emphasises need for smoothing boom and bust cycle

Construction Strategy Group Chairman Richard Aitken has emphasised the importance of smoothing out the ”boom and bust“ cycles that impact on the building and construction industry.

In a speech at the launch of the new University of Auckland Centre for Infrastructure Research, he told an audience including Minister for Infrastructure, Bill English there was a lack of understanding of the effect of these cycles on the industry.

”This smoothing is important in protecting the longer term investment and skills development and capital investment that all help improve productivity,“ he said.

The Government-related capital works investment was significant in financially-constrained times in smoothing such cycles.

”Clearly it is helpful to have a longer term infrastructure strategy with priorities and in this respect the RONS (Roads of National Significance) statement was very helpful. As a result the infrastructure construction industry was well informed of the Government‘s priorities and could plan with certainty to help deliver them.“

”Certainty is important to planning and we are looking forward to the national infrastructure plan next year to help with our understanding of the Government‘s priorities.“

He told Mr English that the CSG looked forward to the National Infrastructure Plan next year to help with its understanding of the Government‘s position.

”We agree with the introduction of PPPs in this country. They are another option for infrastructure development that the country cannot ignore. A successful example of PPPs already operating in New Zealand is the Hutt Valley Waste Water Plant at Seaview which in its 10th year of operation is a great success.“

10 December, 2010
CSG welcomes new Centre for Infrastructure Research

The CSG considers there is a need for the Centre for Infrastructure Research at Auckland University and sees it as an opportunity for the construction industry and tertiary institutions to work together.

Welcoming the establishment of the Centre by the University of Auckland at a launch function at the Parliamentary ”Beehive“ yesterday, the CSG Chairman, Richard Aitken, said the Centre would fill a gap in grappling with New Zealand‘s issues of infrastructure development.

”We know this Centre will be one of excellence; one that promotes best practice, lifts standards, encourages debate and we wish it well. We will be supportive on an ongoing basis.“

6 December, 2010
CSG Chairman to discuss infrastructure needs with Minister

Construction Strategy Group Chairman Richard Aitken is to be a featured speaker at the launch of the Centre for Infrastructure Research established by Faculty of Engineering at the University of Auckland.

The keynote speaker for the function at the Banquet Hall of Parliament Buildings on Friday, 9 December, will be the Minister for Infrastructure, the Hon Bill English.

Following the Minister‘s speech, Mr Aitken will join him as part of a panel of experts to discuss infrastructure development needs and the challenges facing New Zealand.

The Centre will use a multi-disciplinary approach to support Government and industry with research and evidence-based decision making.

27 August, 2010
Accountability key message of Construction Strategy Group
Media Release

Accountability in the building industry is a key message promoted by the Construction Strategy Group (CSG) comprised of high level executives actively engaged in the sector.

The Chairman of the CSG, Mr Richard Aitken, Chairman of engineering consultancy, Beca Group Ltd, said today the extent of defective housing in the 1980’s and 1990”s highlighted a break down in quality performance.

“It is essential that all sectors in the industry, through builders, architects and designers to engineers, sub-contractors, developers and material suppliers, recognise the part that they have to play in lifting standards.”

“This means taking responsibility and accountability for the work we do in line with performance obligations entered into with customers and clients.”

When website (www.constructionstrategygroup.org.nz) was launched today, he said that members of the CSG were committed to lifting standards across the board.

“This industry is responsible for some five percent of GDP. Inherent in its business performance is a multiplier employment ripple through the economy when new homes and commercial buildings are being built at steadily increasing rates.”

“A 10 to 20 percent lift in new home construction above today”s recessionary levels will spark hundreds of much needed new jobs.”

“To get there we need better economic conditions and confidence in the industry’s ability to perform to promised levels. We aim to see that accountability is embraced and ingrained across the sector.”

Members of the Group and sectors in which they are engaged include: Engineering - Richard Aitken, Chairman, Beca Group Ltd, Manufacturing - Chris Ellis, Chief Executive – Building Products, Fletcher Building Ltd, Large Commercial Build - Peter Gomm, Chief Executive, Mainzeal Ltd, Design - Richard Harris, Chairman of Jasmax NZ, President of the New Zealand Institute of Architects; Distribution - Gordon Buswell, Chief Executive ITM, Infrastructure - Mark Binns, Chief Executive – Infrastructure, Fletcher Building Ltd, Research, Knowledge and Training - Pieter Burghout, Chief Executive, BRANZ Ltd, Chairman of the Construction Industry Council; Large Volume/Group Builders - Mike Fox, Primesite Homes and Chairman of the Registered Master Builders’ Federation, Medium and Small Builders - Richard Merrifield, R J Merrifield Ltd, Chairman of the Building Research Advisory Council; Sub-contractors - Paul DeBernardo, Managing Director Aquaheat Industries Ltd; Developers/Entrepreneurs - David McConnell, Managing Director, McConnell Group.

For further information: Bruce Kohn, Bruce Kohn Communications Ltd, Tel: (04) 386-2793; 027-247-7748

Hon Maurice Williamson 05 May, 2010
New construction industry strategy group
Press release from Maurice Williamson

Building and Construction Minister Maurice Williamson has welcomed the construction industry’s move to establish a high-level strategy group to address industry-wide issues.

“I understand construction industry leaders have been planning to establish a body for some time and the announcement of the establishment of this group today follows considerable work on its structure and composition,” Mr Williamson says. The construction industry strategic group will initially comprise of 11 high-level New Zealand executives and will be chaired by Richard Aitken.

Mr Aitken is the chair of Beca Group Ltd, one of the largest employee-owned engineering consultancy groups in the Asia Pacific region.

Mr Williamson says the construction industry has been somewhat fragmented in its approach to the big issues facing the sector, such as lifting productivity and improving skills

“This group presents an opportunity for the industry to present a thoughtful and united response to challenges facing the construction industry,” he says.