27 Oct 2017

Govt urged to avoid 'boom-bust cycle' with infrastructure

7:13 am on 27 October 2017

The new government has been told it must not chop and change practices to have any hope of meeting ambitious development goals set for New Zealand in the election campaign.

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The construction industry has been left frustrated by politically-motivated changes. Photo: 123.rf

Contracting companies at a conference organised by Infrastructure New Zealand said consistent policies would contrast with years of politically motivated flip-flops that often left businesses high and dry.

The comments at the conference - which started in Wellington yesterday - came on the day the new government was sworn into office pledging to electrify rail and build 10,000 houses a year.

Infrastructure New Zealand said more development like this was a good idea.

But chief executive Stephen Selwood said for that to happen, New Zealand had to put politics-based boom-bust practices behind it, once and for all.

"Projects are suddenly sprung up on the industry unexpectedly," Mr Selwood said.

"There is a boom while that goes through and suddenly there is no money or priorities change and the tap is turned off.

"What that means is the industry gears up for boom-bust cycles."

Mr Selwood said to develop New Zealand infrastructure, companies needed to order materials, train staff and sign contracts long-term, and for that, they needed a secure pipeline of projects stretching into the future.

But that was not how things were done by many companies in New Zealand.

"They don't invest for the long term, they gear themselves so they can ramp up staff as needed on short-term contracting methods, and then drop them off when the bust comes through.

"If we are going to go forward, building a long-term pipeline of projects is essential."

Basic shortages

Roading and development company Fulton Hogan is also convinced of the need for certainty.

Head of construction Domenec De-Fazio said an assured pipeline of work was essential.

He added the work to be done right now, even without Labour's new plans, included $36 billion in upgrading infrastructure that was at least 50 years old.

That raised worrying questions around a shortage of workers and basic materials.

"Over the next seven to eight years, Auckland is going to be circa 71 million tonnes short of aggregate to deliver on our ambitions in terms of infrastructure," he said.

"So it puts some challenging questions to us on where are we going get this aggregate and it raises some consent issues as well."

Call for confidence

Peter Silcock, who runs umbrella body Civil Contractors New Zealand, said contracting companies competing for the controversial - and now-abandoned - East-West motorway link in south Auckland could have spent as much as $100 million on lawyers, engineers and others so far.

He said his members need to be assured they're not throwing away good money.

"With the change of government, we're having a change of emphasis more towards public transport and the industry is certainly prepared to build public transport as well as roading.

"But it's around that confidence going forward, and if our members have confidence then they'll employ the people and we'll make sure the work gets done."

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