Construction crisis talks promise ‘reset’
The Government is promising a ‘‘reset’’ for the troubled vertical construction industry, including a pledge to stop low-balling companies for projects.
Three ministers met with various leaders from the industry in crisis talks yesterday after the Ebert construction company went into receivership last week.
This followed Hawkins collapsing and Fletchers pulling out of the vertical construction sector completely – basically the building of taller buildings.
Infrastructure Minister Shane Jones, who attended the talks, said the industry was like a patient who needed a reset or ‘‘you contemplate certain death’’.
‘‘How do we effect a reset whilst not endangering taxpayer liability but giving greater confidence to the construction sector?’’ Jones said.
In response to the problems in the industry, Building and Construction Minister Jenny Salesa said she was taking a minute to Cabinet instructing Government agencies to more closely follow an already existing set of rules around procurement.
Central government contracts make up about 18 per cent of the industry’s output.
A ‘‘whole-of-life’’ costing model that sustainable costs in the long run instead of just up front would be emphasised.
Housing Minister Phil Twyford said too many agencies had followed a least-cost procurement model that had left some firms with too much risk in their projects.
‘‘Even though Government contracts are a minority of work that this sector does, Government has a responsibility to lead here,’’ Twyford said.
Height chief executive Warner Cowin welcomed the focus on whole-of-life costing. ‘‘That’s the trick to it, to understand the whole-of-life cost. If you buy something at the cheapest cost capital wise upfront it might not stay that way,’’ Cowin said.
He said the whole industry – both people buying contracts and selling them – needed some maturity.
Jones said it was important to ‘‘call a spade a spade’’ and acknowledge the sector was in real trouble.
‘‘There’s a huge duty on us to do nothing that worsens taxpayer liability, but also we are concerned. What are we going to do, outsource everything internationally if we can’t keep a robust and sustainable construction sector in New Zealand? Our Government is not interested in that,’’ Jones said.
Master Builders chief executive David Kelly, who attended the meeting with ministers, said Government could only do so much – the industry had to come to the table, too.
‘‘There’s been a general trend over a lot of time from a lot of clients to go to the least-cost model. Unfortunately far too many construction companies have ended up buying into that system.’’