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Significance of industry cannot be overstated

Significance of industry cannot be overstated

RMBA president Simon Barber welcomed delegates to the second Constructive Forum with a thought-provoking speech that addressed a number of issues facing the sector. 

 

It is my honour to welcome you to Constructive, as the President of the Board of the Registered Master Builders Association.

I would like to acknowledge the Minister for Finance and Minister for Infrastructure Steven Joyce and the Opposition Spokesperson for Building and Construction Phil Twyford, who both have taken time out from the hustings to participate in Constructive 2017.

The Registered Master Builders has a proud history in New Zealand. Master Builders have been laying the foundations in this country for over a century.

The name is perhaps synonymous with the Master Build guarantee which has been on the market for over 25 years. By our reckoning, our guarantee was issued for half the residential single dwellings built in this country last year.

As the President of the Registered Master Builders Board, the Association’s purpose is straightforward — it is about helping our 4000 members build better businesses.

For those of you who attended day one, the presentations from Hazelton Law, Lara Tookey from Massey University and Nigel Latta were in keeping with that purpose.

Nigel’s presentation on the younger generation emerging in the construction workforce was thought provoking. And it was our honour to have Mayor Phil Goff to officially welcome Constructive participants to the city of Auckland.

You really only have to look at Auckland’s skyline to appreciate how much things can change, even in such a short period of time. The city will be a hive of activity over the next five years.

Over that period Auckland will host the America’s Cup and, globally, all eyes will be on Auckland when the city hosts world leaders at the Asia Pacific Economic Cooperation (APEC) summit in 2021.

At the outset, I would like to put on record my sincere thanks to the speakers and panellists who have given up their time to contribute to the only “all of industry” Forum dedicated to lifting the performance of New Zealand’s construction sector.

In particular, I want to pay tribute to Simon Miller, Managing Director and Partner from the Boston Consulting Group. He has come here from Australia especially for the Forum, to tell us about Boston’s work with the World Economic Forum.

 

Glimpse into the future

The multi-year project identifies best practice emerging overseas, and provides a glimpse into how the construction sector might look in the future.

But what becomes obvious from the reports they have produced so far is that fragmentation, over-regulation, poor collaboration, poor procurement practices and workforce issues are not exclusive to New Zealand, but manifest themselves globally too.

Some may have seen the figures we highlighted to market this Forum. These underline how central the sector is to New Zealand’s economic performance.

The equivalent of nearly 10% of New Zealand’s GDP is generated by the construction sector, and 10% of employment is generated by the sector.

Of the number of businesses in New Zealand’s economy, 10% are related to the construction sector.

The significance of the sector cannot be overstated yet, as an industry, we struggle to identify, let alone speak as one on issues of common interest.

Fragmentation and division makes us less effective as a sector which, by any measure, is central to the economic performance of this country.

That is why I welcome Minister Steven Joyce and Opposition Spokesperson for Building and Construction Mr Phil Twyford here to tell us about how New Zealand’s demand for construction can catalyse change.

Their views are important. Much has been said and written about housing affordability. It hits close to home for us in the sector — it is confronting for us when we hear that buying a home is proving more elusive.

To be blunt, and I am certain that all builders will agree with me, there are times it does feel like the bureaucracy do their best to frustrate our efforts to build homes.

A recent survey of our members revealed the average time taken to get building consents approved was almost twice the statutory limit of 20 working days.

This was consistent with an independent inquiry into the Tauranga City Council building department’s performance, which found that the actual time it was taking to process consents was 41 working days — more than eight working day weeks!

 

Problems are hardly new

What is alarming is that these problems are hardly new. These are well documented in a suite of reports from the Productivity Commission, Rules Reduction Taskforce and, more recently, from the Auckland and Wellington Mayoral Housing Taskforce.

The Business Growth Agenda 2017 talks about streamlining consents, reducing compliance costs and removing regulatory barriers that drive up costs of construction. It records this as being “in progress”.

Yet every year we keep coming back to these perennial issues. Lessons from how construction was ramped up in the aftermath of the Christchurch earthquakes is an exemplar of what can be done when there is the will. But it has yet to be replicated elsewhere in New Zealand.

At the end of the day all we want to do is build more and build well. As a sector we very much live and breathe on the supply side of the equation.

I appreciate there is a fixation on addressing demand in this country which, in principle, I have no issue with. Where things become problematic is when it invariably veers towards clamping down on immigration.

It is important to ensure that New Zealand’s skills and migration programme delivers the talent we need now.

Proposed changes to the temporary skills visas seem to be odds with delivering a responsive construction workforce, which is why the Government’s move to modify their proposals in response to concerns raised by businesses, including the Master Builders, is to be welcomed.

To be clear, I am strongly of the view that we must always look onshore before looking offshore. It is forecast that 50,000 jobs need to be filled in the sector over the next five years. It would be fantastic if we could fill these roles locally.

The BCITO does a fantastic job of helping shape New Zealand’s skills and training system so we can churn out the builders we need in New Zealand.

Their pilot of a hop-on, hop-off approach to qualification is innovative. It is a logical response to a construction labour market which is screaming out for certain skills, right now.

It is not to say we will not need the more fulsome carpentry qualification in the future. This will always be required. But what it does highlight is that we, as a sector, will need to be creative about how we address capacity and capability issues in New Zealand.

That includes how we attract the necessary talent from overseas when their skills are in urgent demand in New Zealand.

I am pleased to announce that the Registered Master Builders Association is working closely with global recruitment company Haines Attract and the Ministry of Business Innovation and Employment to replicate for the construction sector a recruitment drive for talent known as LookSee.

The programme was run earlier this year in Wellington, attracting 48,000 expressions of interest for roles in the IT sector at the likes of Xero, TradeMe, Datacom and Weta Digital.

As a country, I would argue there needs to be a much more mature and strategic conversation about how we deliver more sustainably on this country’s housing and building needs.

The highly cyclical and volatile nature of the sector is hardly new. Yet very little has been done to take the edge off the peaks and troughs.

The Government, as regulator and purchaser, will be part of this. The Government as regulator and as the largest procurers of construction in New Zealand can be pivotal in improving certainty of the built environment in this country.

Providing the sector with greater visibility of their building pipeline, streamlining procurement practices and building less adversarial relationships with major contractors are all useful measures.

The sector thrives on certainty as this, ultimately, generates the confidence for businesses to invest in their business and their people — which all flows through to the economy.

But it is incumbent on industry to play its part too. I am proud to be part of a sector which touches on where we live, work, learn and play.

However, the sector has underperformed on health and safety. Some people in this room today will not like hearing that.

I fully recognise that the new health and safety rules evoked mixed reactions across building sites in New Zealand. Rest assured, I heard these first hand from my staff!

However, the cold hard reality is that, as a sector, we are the second worst for workplace harm and fatalities.

It is why the chief executives of major contractors and SiteSafe should be commended for the leadership they have shown in formally agreeing to standardise their approach to on-site health and safety.

The parties to the agreement reads like a who’s who of major contractors in New Zealand, including Leighs Construction, Hawkins Construction, NZ Strong, Arrow International, Russell Group, Dominion Constructors, Fletcher Construction and Naylor Love.

Let me say unashamedly they are all members of the Registered Master Builders Association. The initiative epitomises the spirit of collaboration that needs to be replicated across the sector.

This is exactly the kind of spirit of collaboration that needs to be at the heart of our discussions today. If the industry is to move forward meaningfully we all need to play our part.

We will need to be open to change, transformation and innovation which is starting to make waves overseas.

I acknowledge change will be hard for a sector that is notoriously slow to adopt change. But we can choose to either get out in front of these changes or risk being left behind.

I would like to mention the work of BRANZ and its chief executive Chelydra Percy in spearheading work on a framework for New Zealand to view possible transformative initiatives.

Constructive 2017 is about moving the debate forward and building a consensus view of how the sector can change the way it operates and collaborates.

By being here today, we have all taken the first step in answering the call. With that, I would like to wish everyone well for what I believe will be a Constructive day.

It is in that spirit that I would like to thank supporters Carters, ITM, Bunnings and PlaceMakers, and partners Building Research Association of New Zealand (BRANZ), Institute of Professional Engineers New Zealand (IPENZ), Ministry of Business Innovation and Employment (MBIE), Building and Construction Industry Training Organisation (BCITO), New Zealand Institute of Architects (NZIA), Earthquake Commission (EQC), and the New Zealand Building Industry Federation (NZBIF).

Without their support and contribution events such as these simply are not feasible.

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