Construction Sector Accord - launch of Transformation Plan 2022-2025

I am delighted to join you today for the launch of the Construction Sector Accord Transformation Plan 2022-2025.

I would like to acknowledge my colleagues – the other Accord Ministers, the Accord governance and sector leadership, the CEOs of Government agencies, and leaders from the construction sector.

The construction sector builds the foundations for Aotearoa New Zealand.

It builds our hospitals, our schools and our homes and provides critical infrastructure such as roads, rail, pipes and lines.

The Construction Sector Accord began three years ago as a joint commitment from government and industry to work together. It was initially developed to transform the construction sector by addressing systemic challenges plaguing the sector, such as a poor health and safety record, short supply of skilled workers and low productivity.

But as the sector dealt with the turbulent challenges of COVID-19, the Accord played a key role in maintaining a viable construction sector during the pandemic.

And it–has  become a vital forum for government and industry to tackle the critical issues of the day together.

It has been invaluable for Ministers to regularly hear directly from industry on how government policy impacts your projects and your businesses.

Under the first Transformation Plan, the Accord made significant progress in the industry’s transformational journey.

It delivered on initiatives aimed at:

standardising health and safety requirements

increasing transparency and fairness in contracts

boosting apprenticeship numbers as our Government invested to support over 43,000 apprentices as a COVID response, and committing funding in Budget 2022 to help another 24,000 apprentices.

and helping lift the digital capability and financial awareness of business owners.

The fact the Accord reached so many of its milestones is despite the ongoing disruptions caused by COVID-19 is a great achievement,  

The Accord has built credibility in the sector and become the ‘go-to’ forum for dialogue between industry and government.

The Accord and Transformation Plan have directly contributed to behaviour and culture shifts in the construction sector.

By putting in place fundamental building blocks, the Accord is now in a position to lead the industry and government partnership to take bolder steps forward together.

The construction sector can still be much more productive and embrace technology and new methods of construction to revolutionise the way we build.

We must support businesses to lower carbon emissions, adapt and be more resilient in the face of climate change.

We must also work to incorporate te ao Māori, including in how we grow the Māori construction economy.

The forward Transformation Plan 2022-2025 being launched today, builds on the momentum we’ve achieved so far and accelerates further change in the sector.

It includes a new framework, including an updated vision, mid-term goals, focus areas, enablers and initiatives.

The Accord’s refreshed vision is of ‘A thriving, fair and sustainable construction sector for a better Aotearoa New Zealand’.

This vision is supported by six mid-term goals:

1.       Increased capabilities of leaders to drive change

2.       A more skilled and diverse workforce that is future ready

3.       More thriving people and organisations

4.       Greater Māori construction economy success

5.       Reduced waste and embodied and operational carbon

6.       Increased productivity through innovation, technology, and an enabling regulatory environment.

In total, the plan contains 36 initiatives to achieve the Accord’s mid-term goals and work towards the Accord’s vision.

Initiatives target a wide range of groups, including small and medium-sized enterprises, current and future sector leaders, the existing workforce and potential new entrants, Māori businesses, and public and private clients.

I would like to acknowledge the guests here today from across the sector who collaborated on this plan.

Your contribution to this plan’s development shows the Accord continues to be a true partnership between government and industry.

It’s a partnership that is crucial to meeting the challenges New Zealand faces, as we turn around a housing crisis that was decades in the making.

Our Government believes that everybody deserves to live in warm, dry housing, whether they own or rent.

That’s why we have overhauled the fundamentals of the housing system, that started with our ban on overseas speculation.

We’ve cut red tape on building more density in our urban areas where more people want – and deserve - to work and live, and there are more changes are on the way through Resource Management Act reform.

We are rebuilding the public housing sector after a long period before we came into Government where there were mass sell-offs and no new housing was being built. The pipeline of Government-funded activity underway – which is delivering over 18,000 public and transitional housing places by 2024 – most of them new builds – is providing certainty to the construction sector, and ensuring people live in healthy, warm housing.

It’s also transforming neighbourhoods - including in five Large Scale Projects here in Auckland, with upgraded three waters infrastructure and enhanced liveability.

We’re also enabling more new affordable and market homes as we know the only way to get out of this housing crisis is to build our way out.

It’s why we have so much focus on additionality; whether that’s through:

encouraging Community Housing Providers to build more new housing  

The $350 million Affordable Housing Fund we announced in Budget 2022, which is now seeking registrations of interest for building affordable rental properties in key areas of New Zealand that have high housing needs

Or KiwiBuild opportunities for underwriting housing developments that include affordable homes; last week I announced changes to price and income caps to bring them  more in line with the market, and our other First Home Products. Within hours finance company NZMS said it had $600 million in funding ready for KiwiBuild

I also had the pleasure last week of announcing the first seven areas in the country to successfully secure Government funding for housing infrastructure like pipes and roads through the billion dollar, contestable Infrastructure Acceleration Fund, which is a part of the overall $3.8 billion Housing Acceleration Fund.

This investment lays the literal groundwork like flood protection work Rotorua, and roading in Omokoroa to enable new housing developments to go ahead.

The first tranche will enable over 8,000 homes to be built by developers teaming up with local councils and iwi, and I look forward to signing off and announcing more projects in the coming months.

I also kicked off a review last week, of the building consent system, which was established in 1991.

A lot has changed in how we design, procure and build and the review will focus on how to unlock productivity growth, stimulate urban development where it is needed, and make homes more affordable for all.

We also want to provide assurance to building owners and users that building work will be done right the first time, and ensure that buildings are well-made, healthy, durable and safe.

The building consent system needs to evolve as the sector continues to innovate and adopt new technologies and design methods. This is especially important as the effects of climate change will further impact the way we build in the future – energy efficiency and carbon emissions will become core considerations when building.

The recent supply chain constraints in the building industry have been writ large with what’s been happening with plasterboard, and the shortage of GIB; the dominant manufacturer in the market, and ubiquitously cited in building plans.

The team at the Ministry of Building, Innovation and Employment has over the last several months been working with Building Consent Authorities and the sector to issue guidance around where alternatives to GIB can be used, as minor variations to plans.

One of the first actions I took on getting this portfolio was to ask Fletcher Building to agree to not enforce their trademarks that protect the use of colours on GIB products which may present a barrier to importing alternative products.

The second thing I did was to form a ministerial taskforce with lead construction and supply chain experts to see what more we could do to get more plasterboard into the hands of builders.

We’ve tested different ideas and been able to get direct feedback from the sector and just over a month on, we’re seeing good progress:

Four alternative plasterboard products are able to be used as substitutes for GIB

These changes will be fully reflected in MBIE’s updated guidance next week to Building Consent Authorities on how to treat substitution of one plasterboard for another as a “minor variation” to the building consent. This ensures a quicker and more efficient process than requiring a formal amendment to the consent.

Step-by-step, practical information for plasterboard merchants and builders on how to substitute products is being released tomorrow

12 importers of plasterboard– four of them new - have 100 containers of product en route to New Zealand

And Kāinga Ora will be procuring alternative product for its retrofit programme, taking pressure off domestic supply chains and providing market certainty for alternative products.

The taskforce has been a great example of how government and the sector can work together under urgency to address critical issues.

I’m grateful to the members of the taskforce members who have been so generous of their time, knowledge and expertise as we find solutions to solve what has been a substantive issue for us a country.

Taskforce members agreed when we met last week that plasterboard constraints appear to be easing, and some larger developers have been able to get product into the country. It will take a couple more months before more product is widely available through merchants.

We know the supply shortage of plasterboard as a result of GIB manufacturer Winstone not meeting demand for its product which is the dominant brand, has been very stressful for builders.

I’ll continue to monitor this issue closely and work with the plasterboard taskforce to ensure we are pulling every practical lever we can to help resolve the current shortage.

 The Commerce Commission is due to report its draft study next week into competition in New Zealand’s residential building supplies markets. 

This study will focus on any factors that may be affecting competition of key building supplies used in the residential building sector. If the study finds consumers interests are not being looked after, we will look at what action needs to be taken.

Our Government knows how critical the private sector and construction leaders like yourselves are to successfully dealing with challenges such as the housing shortage, supply chain problems caused by the ongoing pandemic, global inflation, and playing a part in tackling climate change.

By moving forward with the Construction Sector Accord Plan Transformation Plan, I have great faith that we will not only be able to meet these challenges, but to thrive with a more productive, sustainable construction sector that will build a better Aotearoa, New Zealand.

So I encourage all of you to share the new plan widely with industry so they can contribute to this transformation journey.

I would also like to acknowledge the outgoing Accord Steering Group members, particularly Chris Bunny and Peter Reidy, who have done an excellent job as co-chairs during the last few years.

I welcome the two new chairs Andrew Crisp and Tracey Ryan and look forward to working with them.

I also look forward to continuing to see progress as the plan is actioned over the next three years and hear from members of the Accord on the transformation of the sector.

Once again, thank you for attending this at this launch of the Construction Sector Accord Transformation Plan.