4 Oct 2018

Crackdown in construction industry to overcome 'boom-bust'

8:06 pm on 4 October 2018

The government plans to crack down on its procurement in the construction industry in a bid to get rid of a culture of price undercutting.

Builder inspector checking a construction site works.

Photo: 123rf

The crackdown, announced in Auckland this morning, is part of its roadmap to address skills and labour shortages in the construction industry.

Minister for Building and Construction Jenny Salesa announced the Construction Skills Action Plan in front of a Housing New Zealand development in Otara.

"For many decades our sector, which employs one in ten people in Aotearoa, has had a boom-bust issue. It gains people and skills in boom times and it loses them during down times."

Ms Selesa said the plan could be broken down into six priority areas: Leveraging government procurement, establishing jobs and skills hubs, growing construction careers, expanding skills for industry, mana in mahi, and further changes to immigration settings.

"These initiatives work together to increase the profile of construction, the number of people entering it and the businesses in investment, training and development."

The government expected to secure 4000 more construction workers in the next three years.

Ms Salesa said an additional 1500 people would be trained while working on government infrastructure projects.

Economic Development Minister David Parker said getting tough on government procurement was a key priority.

He said some contractors undercut their competitors by not paying to train their workers and offering the cheapest tender.

These same contractors then poach staff off employers who had invested in training when they won the contract, Mr Parker said.

"It's completely wrong that they can do that at the moment and you should ask yourself, why hasn't this been fixed previously and is that one of the reasons why we have got a shortage of homes in New Zealand, and one of the reasons why the cost of construction keeps going up?"

Mr Parker said the change meant head contractors would have to up their game.

This sentiment was echoed by Jeremy Sole, the chief executive of The Electrical Training Company, who said it would create a sense of certainty in the industry.

"I think it's time that there was a reset in the construction industry.

"There has been a race to the bottom, and lowest margin, and you've seen the impact of that right across the sector."

Warwick Quinn, head of the Building and Construction Industry Training Organisation, said small firms needed to be encouraged to take on apprentices.

"We know for small firms taking on an apprentice is not a small ask and we know in the first 12 to 18 months it cost them money. So they're often loathed to take that on because of the cost.

"We think if a little bit of an incentive is [introduced] that might change their attitude towards it."

National's building and construction spokesperson Andrew Bayly said the plan was frustrating and flawed.

"To wait 12 months for what I see as a plan to create a plan to deal with the issue of building, or attracting new skills in the sector, is incredibly disappointing ... again we've got nice, lofty statements but nothing there."