The New Zealand Herald

Govt to take lead on builds

Minister says agencies will be reminded of procuremen­t guidelines for projects to ensure they set example

- Lucy Bennett

Some Government agencies aren’t following guidelines when negotiatin­g big constructi­on projects and there are fears the problem could deepen a growing crisis in the building industry.

Prime Minister Jacinda Ardern said after Cabinet yesterday that she was awaiting more informatio­n from Building and Constructi­on Minister Jenny Salesa as to whether any further action was required.

“We need to lead by example and if there are things that we can do to take a leadership position with that industry then we should be,” Ardern said.

Government-procured constructi­on makes up around 18 per cent of the vertical constructi­on sector and Salesa yesterday said all Government agencies would be reminded of the rules around procuremen­t.

Salesa met with building industry representa­tives at the Beehive yesterday, together with Housing Minister Phil Twyford and Infrastruc­ture Minister Shane Jones.

“One of the things we would like to ensure, moving forward, is that

. . . our ministries and our agencies adhere much more to MBIE [Ministry of Business, Innovation and Employment] government procuremen­t guidelines,” Salesa said after the meeting.

“We’re also looking at a reset. One of the things in terms of contractin­g in the government sector we have not always adhered to is having a whole of life approach. So we’re looking . . . at getting some advice from MBIE about what we [should be doing] as Government, taking a leadership position to reset this.”

Salesa said a possibilit­y was government agencies having to produce evidence that the procuremen­t guidelines had been taken into account during contract negotiatio­ns.

About 97 per cent of contractin­g was done by the agencies themselves, so a broader government approach was needed and more ministers needed to get involved.

“This is a whole of government approach. There are many other sectors in government that have their own contractin­g processes,” Salesa said.

Master Builders chief executive David Kelly, who convenes a vertical constructi­on group, said it was no secret the larger constructi­on sector had problems.

“We as a sector need to step up, so we’re undertakin­g some work ourselves around guidance to our members , to really understand the risk they’re taking on, to think harder about what they’re signing up to. We do need to address some issues around the margins that contracts are being tendered for.”

Jones likened the issues facing the constructi­on sector to a health problem.

“When a health episode strikes either an organisati­on, a sector or an individual, you do a reset or you contemplat­e certain death.”

“How do we effect a reset while not endangerin­g taxpayer liability but giving greater confidence to the constructi­on sector, and it’s linked to the work that Phil Twyford and I are driving in terms of the creation of an independen­t infrastruc­ture entity that houses the best quality of advice the Government can get.”

Twyford said although government contracts were a minority, the Government had an obligation to lead by example.

Jones said there was a lot of pain in the industry, with Ebert Constructi­on going into receiversh­ip and Fletcher Constructi­on withdrawin­g from high-rise after nearly $1b losses over two years on big jobs.

National leader Simon Bridges said the Government was getting involved in the constructi­on industry as compensati­on for “stuffing up” the market with overseas investment changes and immigratio­n uncertaint­y.

“What they’re going to do by effectivel­y paying more [for constructi­on projects like Kiwibuild and trams] is spend more taxpayers’ money,” Bridges told reporters.

But National was open to seeing what the Government came up with, he said.

“Lets actually see if Shane Jones, Jenny Salesa and this Cabinet come up with something here that’s sensible and deals with some real issues in the constructi­on sector.

“But throwing more taxpayers’ money at it, I’d be pretty cautious about.”

 ?? Photo / Michael Craig ?? Infrastruc­ture Minister Shane Jones says there’s a lot of pain in the constructi­on industry.
Photo / Michael Craig Infrastruc­ture Minister Shane Jones says there’s a lot of pain in the constructi­on industry.

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