Registered Master Builders Association New Zealand Constructive Forum 2023

Tēnā koutou e nga maata waka.

Kia koutou te mana whenua tēnā koutou

Ngā mate huhua o te waa, haere, haere, haere atu ra.

Hoki mai kia tātou te kanohi ora e tau nei,

Tēnā koutou, tēnā koutou, tēnā tātou katoa.

Ko Megan Woods ahau, Minita o te Karauna.

Tēnā koutou i runga i te kaupapa o te rā.

nō reira, tēnā koutou, tēnā koutou, tēnā tātou katoa.

Good morning, and many thanks to the Chief Executive of Registered Master Builders Association, David Kelly, for hosting me today.

The Constructive Forum 2023 demonstrates your continued commitment to promoting a high-performing, resilient, and sustainable building system, and so I would also like to take this opportunity to thank all those present for your significant contributions to the sector.

Here in New Zealand, the crucial need for good, affordable housing was sadly not a priority for many successive governments. There is no question that the housing crisis has been decades in the making.

But for the last 6 years, this Labour Government has started to turn the tanker around and we are beginning to see the green shoots of change.

New Zealand simply does not have enough housing for it to be affordable and available to everyone who needs one.

It is why we have undertaken the biggest systemic changes in the last forty or more years, to ensure more new housing is built.

It is why we have overhauled planning rules to encourage more density in our urban areas where people want to live and work.

It is why we are investing billions in infrastructure like pipes and roads to get land ‘build ready’ to enable new housing.

It is why we equipped local authorities with the ability to undertake long-term borrowing to ensure they can develop the infrastructure they need to sustain and grow their communities, and why we work with them to have coherent spatial planning.

It is why we are investing in land development to get a mix of public, affordable and market housing built.

The future of the construction sector is critical to the success of New Zealand, and the Government remains committed to supporting the sector to adapt, thrive, and succeed. 

2021 and 2022 were record years for the number of dwellings consented reflecting confidence in the sector, with a high of around 50,000 new dwellings per annum by the end of 2022.

We are now coming out the other side of this period of extremely high construction activity, and we are seeing a downward trend in consents.

Developers have been reporting difficulties obtaining the presales they need to access finance and commence construction, and some developers and builders have begun ‘right sizing’ their businesses.

The recovery from the North Island extreme weather events will be both a challenge and an opportunity for the sector. 

While the pipeline of work ahead is uncertain, the scale of repair and rebuilding required across the commercial, infrastructure, and residential sectors is significant.

But alongside this, during a downturn, it’s crucial that Government is an active partner and not just a spectator. This is why we have put in place a range of tools to address these challenges and help support a stable pipeline ahead.

In August last year, we successfully launched the Build Ready Developments pathway under the Affordable Housing Fund.

This pathway is a targeted response to secure affordable housing in planned developments where there is an unmet housing need and to make sure affordable projects that were at risk of not going ahead – still go ahead.

The Government is also supporting the demand for new houses through changes to the interest deductibility rules, to encourage residential property investors to invest in new builds over existing homes. There is a reason we have a housing crisis; not enough new housing – particularly new affordable housing has been built.

These policies are deliberately targeted to grow housing supply and investment options, whilst helping to support a secure pipeline work for the construction sector.

The Government is also doing its part continuing with a strong line of work in our public housing build. We are building more state houses per year than any Government has since the 1950s. By the time 2025 rolls around, we are on track to have delivered over 21 thousand public and transitional homes. This is compared to The last National government which ended up with 1,500 fewer public homes than it started with, and bled $576 million in dividends out of the public housing system.

We are also striving to make it easier to build in urban areas through the National Policy Statement on Urban Development and the Medium Density Residential Standards.

These changes remove overly restrictive barriers to development to allow growth ‘up’ and ‘out’ in locations that have good access to existing services, public transport networks, and infrastructure.

A key reason that we supported the MDRS rules was to enable more housing where it’s needed – in urban centres and allow for growth. What we ar seeing with the National Party’s u-turn brings with it deep uncertainty for councils, the developers who would build those houses and the aspiring homeowners that would live in them.

Labour wants a stable residential pipeline through forward thinking infrastructure investment. Initiatives like the Housing Acceleration Fund, which includes the Infrastructure Acceleration Fund and the Māori Infrastructure Fund, are all helping to unlock land for thousands more homes.

At the same time, Te Waihanga – New Zealand Infrastructure Commission – is working hard to enhance the National Infrastructure Pipeline. This is an essential tool which aims to provide the market with the information and confidence needed to plan and deliver work.

For too long Governments have kicked the can down the road when it comes to investing in resilient and essential infrastructure.

Treasury last year estimated the cost of addressing the current deficit - and stopping it getting worse - at $210 billion over the next thirty years.

Over the past five years, we have invested $45 billion in infrastructure projects – and in Budget 2023 have committed   a further $71 billion over the next five years to help fix the infrastructure deficit.

Building on developments made in the recovery effort from cyclone events, the enhancements to the National Infrastructure Pipeline will help to provide an overarching view of construction demand and workforce needs, and ensure we’re better prepared for future events and shocks.

Te Waihanga is also leading the development of the Infrastructure Priority List, which will foster additional confidence and transparency across the sector.

It has the potential to be a game-changer – standardising the process to assess infrastructure proposals, ensuring value for money, and building an enduring project consensus from a very early stage.

The Infrastructure Priority List will also help to provide confidence across the sector to better plan and invest in building and training our workforce, as well as devoting the resources needed for new technologies and equipment.

Aside from these efforts to support the stability of the construction pipeline, the Government is also taking steps to address other long-term challenges facing the sector, such as the industry’s long-standing workforce shortages.

In May, we also announced the extension of the Apprenticeship Boost scheme to the end of 2024. This extension will enable an estimated 30,000 apprentices to start or continue being supported by employers.

The Construction Sector Accord is also progressing work to upskill leaders and build the capability of small-medium businesses, including a young leaders programme to support the next generation of construction leaders, and a mentorship programme to connect Māori working in construction to experienced Māori leaders.

Migrant workers can also play an important role in addressing workforce shortages as they can take hard-to-fill roles and help upskill our domestic workforce.

The Government has made broader changes to immigration settings to allow this. Under the Immigration Rebalance, the construction sector can access:

  • the Accredited Employer Work Visa which will be open for all migrant construction workers;
  • a green list that makes it easier for employers to hire and attract migrants for high-skilled, hard-to-fill construction roles; and
  • a construction and infrastructure sector agreement to provide access to specified lower-paid roles that meet a certain wage threshold.

One of the things we can do to innovate to get more houses built is through the greater use of Offsite manufacturing.

Kāinga Ora has already set a goal to increase the number of offsite manufacturing solutions they use by a minimum of 20 per cent year on year for the duration of the public housing plan. In order to drive further uptake of offsite manufacturing at scale, the Government will look to encourage other government agencies to consider setting a goal to increase the number of offsite manufacturing solutions by a minimum of 10 per cent year on year.

There needs to be a greater understand of OSM across Government and what its benefits are. OSM can help create greater cost certainty and can through involving contractors early can reduce delays and costs associated with delays.
Of course another area where we need to innovate and key priority for the Government is adapting to the challenges facing the building and construction sector due to climate change.

The extreme weather events experienced earlier this year clearly demonstrate the importance of reducing our emissions, planning for climate change, and increasing the building system’s resilience to its impacts.

Late last year, the Government also announced significant changes to embed climate change at the heart of the Building Act 2004.

This will include an array of proposals which deliver progress on key building and construction actions in the Emissions Reduction Plan and National Adaptation Plan, including provisions for energy performance ratings and waste minimisation plans.

We are also seeing Adaptation of construction technology. Using Building Information Modelling and asset registers to support climate goals. For example, organisations are using such technologies to measure embodied carbon within their buildings.

This work progresses alongside other initiatives to help the system better understand potential climate change hazards, and how to prepare for them more effectively.

Let me be clear though. I know that there is a lot going on for the sector and this has to be a collaboration. We will continue to work closely with you to get the right balance, working collaboratively to design new regulations that are impactful, feasible, and cost-effective.

I would like to conclude simply by recognising that, while there are several challenges facing the sector in months and years to come, there are also opportunities.

The building landscape is evolving, with innovative designs, technologies, materials, and processes all presenting new avenues to respond to strategic challenges on the horizon.

Thank you all for inviting me to speak today, and for your ongoing mahi as key participants in the sector.