Construction Industry Council Strategic Retreat

The building and construction sector is a key part of the economy.

Thank you for inviting me today.

These are difficult and challenging times for the building and construction sector - in fact for all of us.

It's a privilege to be here with you, leaders of the sector grappling with this challenge.

The building and construction sector is important to the New Zealand economy. It contributes more than 5 per cent of GDP.  The total capital spend in the building and construction sector is more than $20 billion per annum.  It can play a pivotal part in lifting us out of the recession.

We need to continue to invest in skills and capability and we need to lift productivity. It's important the sector retain critical mass and skills to be able to respond to the upswing when it comes.

As you know the housing market has corrected, and is likely to continue to do so for a while yet. The commercial sector is adjusting now.  But demand will return to the market. We need to be ready for when it does.

Lets have a quick look at what do the consent numbers show?

• The number of building consent for new housing units authorised in December 2008 was 1,127 units. This is the lowest monthly total since January 1987. The trend for the number of authorised new housing units each month, including apartments, has fallen 49 percent since the June 2007 peak.


•  For the year ended December 2008, the authorised number of new dwellings, including apartments, fell 28 percent to 18,456 units. This is the lowest annual total since the August 1993 year.


• The value of these new dwelling consents fell from $6.4 billion to $4.9 billion over the year to December 2008.


• For the year ended December 2008, the value of consents issued for residential buildings fell $1.5 billion (20 percent), while the value of for non-residential buildings rose $322 million (7.7%), compared with the year ended December 2007

What this Government can do is to improve the overall building and housing system so that it delivers better outcomes for New Zealanders and supports the sector.

This means a focus lifting and maintaining skills and capability across the sector

This means completing the reform process albeit with changes.  I want to make some changes to simplify and streamline stuff around licensing and also the consenting process.

This means using twenty-first century technology to make the "boat go faster"

We will do this through:

Amending  the Building Act 2004 to cut red tape, drive down costs but maintaining quality

• having another look at what needs to be consented and providing better information and education on the building code and how to achieve or meet performance standards without "regulating everything that moves"


• removing unnecessary building control regulation and increasing focus on information and education


• simplifying building licensing rules, providing recognition for trade qualifications, making it easier to get licensed but not dumbing it down


• support councils to work smarter using technology to do so


• leveraging the same technology to reduce design and building costs - investigate the potential for an on-line national consenting system to reduce costs, and get consistency across the country.


• helping consumers take better informed decisions about building their homes and choosing the products they need

 Boosting the economy with an investment in infrastructure.

The Government has fast tracked $500 million worth of publicly-funded building projects in the latest in a series of initiatives under the Government's Jobs and Growth Plan.

About $100 million worth of fast-tracked projects will start before June 30 this year.

The $483.7 million spending brought forward include:

• Education - $216.7 million of spending, including five new schools, school refurbishments and maintenance and ICT infrastructure improvements.


• Transport - $142.5 million of spending, spanning five large state highway projects and a programme of smaller, regional roading improvement projects.


• Housing - $124.5 million of spending, allowing Housing New Zealand to upgrade and renovate 10,000 more state houses, and build 69 new state houses over the next six months.

The Government economic stimulus package also includes:

• a $480 million helping hand of tax and regulatory assistance for small and medium businesses;


• sweeping reforms of the RMA; and


• a programme of income tax cuts over each of the next three years.

Other key priorities in this portfolio

Getting more leaky homes fixed.

The Government is looking at an alternative approach to weathertightness with greater emphasis on getting homes fixed - less on process and more on outcomes.

Re-assessing risk and liability.

It's time to look at the issue of the allocation of risk in relation to who carries what risk and how this is managed

The current joint and several liability regimes drives risk-adverse behaviour by councils because too often they are the last man standing

Developers and builders need to stand behind their work and put things right where needed.

I have asked my officials to prepare advice on:

• whether various parties are currently bearing an appropriate level of risk?


• whether territorial authorities are bearing too much risk, and whether some developers and builders are bearing too little given their ability to use shelf company structures)?


• There is a question around what is a reasonable level of risk for consumers to bear. How to can we improve consumers' access to good information and advice so they can make good decisions when buying or building a property?


• whether consumers would benefit from access to a greater range of options and products for managing risk such as home warranty insurance products?

Targeting research to produce results.

The Construction Industry Council has a critical part to play along with BRANZ and the Department to ensure that the sector gets its share of research funding by having a fully informed view of the research needs ahead of it.

In conclusion

The sector has already stepped up with leading a Taskforce on Sector Skills and Productivity and the Taskforce on Urban Intensification.

At times like this leadership is critical and the Construction Industry Council has a key role to play in the sector.

I wish you well with your discussions at over the next two days.