NZ’s building industry: ‘It has never been more crucial for our sector to be functioning at full capacity’

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Registered Master Builders Association chief executive David Kelly.

By RMBA chief executive David Kelly

This year has certainly not been the year we expected it to be, and many of us will be pleased to see 2020 begin to draw to a close.

As we navigate the continued uncertainty and economic impact of Covid-19, it has never been more crucial for our sector to be functioning at full capacity.

A strong sector has substantial economic benefits for the wider economy, helping to stimulate our regional economies, provide jobs, and deliver the quality housing and infrastructure projects needed.

Learning from the past

While New Zealand is now officially in a recession, our sector continues to perform well.

Building consents are on the rise, many of our builders have strong order books into next year, and the government support package for training has encouraged a rise in apprentice numbers.

This pandemic is not like other recessions, and time will tell if further intervention is required.

We need to ensure we are ready to act if Covid-19 does impact private sector demand in residential construction as has occurred in previous recessions.

Between 2008 and 2011, house building declined by 50%, and the residential construction sector lost 25% of its workforce.

It took seven years for sector employee levels to recover to pre-Global Financial Crisis (GFC) levels. This had a major impact on New Zealand’s economy, and directly contributed to the housing deficit we are still trying to rectify today.

This was a discussion at our recent Constructive Forum, where the Finance spokespeople from the Labour and National parties, Grant Robertson and Paul Goldsmith respectively, outlined their political agendas for the sector.

With Labour now confirmed as returning to the Beehive, we have some insight into the work programme ahead.

New government priorities

We were pleased to hear that the Construction Sector Accord will continue to be a focus for the Government, and to be used as a way to collaborate with the sector.

Support for training apprentices will also continue, with the $1.6 billion Trades and Apprenticeships Training Package taking us through the next two years.

The Government has also announced a market study by the Commerce Commission on the cost of building supplies.

But perhaps one of the most substantial work programmes will be replacing the Resource Management Act. While, in principle, this has cross-party support, it will not be quick or simple — but it’s crucial for our sector.

Advocating for further regulatory change

There are other measures that we feel are also important if we want to avoid a repeat of the GFC.

This year, Registered Master Builders developed a policy paper, Building a Better New Zealand, which outlines our recommendations for Government action.

Our first priority is to improve building regulation systems. This is about rebalancing the building consent system to make it more efficient and easier to use, and to allocate risk more appropriately.

Rebalancing offers opportunities to establish more consistent national regulatory policies and systems, as well as providing greater clarity and certainty to the applicant and the Building Consent Authority (BCA).

The end result would see reduced time and financial costs, and quicker delivery of commercial and residential projects.

We are also advocating a review of the Licensed Building Practitioners scheme to improve its ability to support the wider building regulatory system.

Strengthening the entry and renewal licensing requirements and processes is critical to lift building standards and improve consistency across the scheme itself.

Our final recommendation provides tangible ways to stimulate residential construction demand.

To avoid another downturn, we believe we need to watch private sector demand closely, and the Government needs to be ready to intervene directly to support the sector, keeping businesses afloat and people in jobs if required.

We are discussing these proposals with many in the sector and across Parliament.

We look forward to continuing to work with decision-makers to deliver change which will mean a robust and resilient system that can deliver positive outcomes for all New Zealanders.

Our policy statement, Building a Better New Zealand, is available on our web site at masterbuilder.org.nz.

And we would value your views on this.