Raising the tide for contractors

Six months into his new role at Infrastructure NZ, Paul Blair talks to MARY SEARLE BELL about where he’s come from and where he plans to take the organisation.

In August last year, Infrastructure New Zealand appointed a new CEO to lead it. And while new to the role, Paul Blair is not new to the industry or organisation.

While his background is banking – he was GM of institutional banking at BNZ for seven years prior to his latest position – he served as a director of Infrastructure New Zealand for four years from late 2014.

“It’s not as big a leap as you may think,” he says.

“In my role at BNZ I looked after the bank’s biggest clients, which included a number of very big contracting firms such as Fulton Hogan and Downer.

“Before that, I was client director – energy, utilities and infrastructure for the bank, so I have a solid background in the sector.

“In the end, it’s all about relationships – building trust and providing thought leadership.”

So, for Paul, while the focus of his work has shifted, the people he’s working with are very much the same. However, his financial knowledge will be put to good use.

“I think my core strength in this role is that I understand the critical issues of the construction sector, in conjunction with the ‘broad church’ of finance, engineering and politics.”

Now [late 2019], nearly six months into the role, he has a solid grasp on the goals of Infrastructure New Zealand and understands the challenges and frustrations the construction and contracting sector face.

“Sometimes, constructors are right at the end of the value chain; after the politicking, designing, planning and consenting.

“Our job at Infrastructure New Zealand is to raise the tide for all members, including contractors,” he told Contractor.

“In 2018 we heard from all our members that procurement was a huge issue – that the Government doesn’t understand construction and how the industry works. Ultimately, that the government’s approach to buying services from the industry is unsustainable.

“What the industry needs is longer contracts with sustainable risk and return, as this will provide certainty around future work and therefore allow appropriate investment in people and machinery.

“Our 2018 report ‘Creating Value Through Procurement’ was co-funded by Construction Strategy Group and Civil Contractors. This report ultimately led to the Construction Sector Accord – a shared commitment between government and industry to transform the construction sector.”

The accord, which was signed in April 2019, acknowledges the challenges facing the sector and signals a shared commitment to transform the sector.

This included a commitment to a more visible pipeline of work and procurement practices that are fair, efficient and predictable.

A second key piece of work for Infrastructure NZ has been the formation of the Resource Reform Coalition.

Paul says his organisation, together with the Employers and Manufacturers Association and the Property Council, funded the Environment Defence Society to see whether the Resource Management Act was achieving its core job of protecting the environment.

“The answer was ‘no’,” he says.

“This led to the Resource Management Review Panel, chaired by retired Appeal Court judge Tony Randerson.”

The panel is tasked with producing reform proposals by mid-2020, including drafting of key legislative provisions. So far, it has identified the main issues to be addressed and options for reform. It is currently calling for feedback to inform its final report.

“The aim of the Randerson review is to get a better fit between protecting the environment and the needs of people and the economy,” says Paul.

The association is also working on a ‘pipeline of transactions’, to give clarity for projects at all stages in the process.

“We would like to see the Provincial Growth Fund superseded by a $6 billion Regional Development Fund – this will be available to all regions of New Zealand to accelerate economic development.

“We envisage a collaboration between central and local governments.

“This bottom-up approach to projects will mean more community buy-in and will bring projects together faster and get quicker results.

“Local councils will group together to make a spatial plan for what makes most sense for their region. The central government will then provide funds to implement this regional spatial plan.

“For example, there may be a good port, but adequate roading links are needed, or there could be a significant housing development which needs schools.

“What’s good for the region – if aligned with central government goals – is good for the country.

“The Regional Development Fund will stitch together local government, which has land use powers, with funding from central government, to achieve the top-down results for the government.”

However, Paul does say that if the government does give a funding grant, best practice procurement and demonstration of local government capability is imperative.

“More power needs to be given to local and regional government. At the same time, they need to show capability and capacity.

“To this end, we suggest they undergo Treasury’s Investor Confidence Rating in the same way that public sector agencies do. The rating each council receives could dictate the level of funding sign-off it gets.

“We want to grow capacity and provide certainty for the whole industry – not just the big guys. One idea is that the grant could stipulate, say, 30 percent of the work is to be undertaken by local contractors.”

This very much ties in with Infrastructure NZ’s strategy to strengthen and futureproof both the industry and NZ Inc.

Signed off in December last year, the strategy focuses on thought leadership, stakeholder influence and exceptional member mobilisation. The strategy is to change policy to get better infrastructure outcomes for the country.

“New Zealand has $300 billion of assets in the infrastructure space – 18 percent is privately owned, 44 percent owned by central government, and 38 percent by local government.

“However, local government only gets 10 percent of the total tax revenues to fund these assets,” Paul stresses.

“We’re under-funding local infrastructure.”

With an election looming in 2020, Paul’s association has set a list of its top five priorities.

“The first is to establish a national vision – a ‘top-down’ campaign to set out what we want the country to look like in 2050. Slotting in behind this is the ‘bottom-up’ regional spatial plans to boost growth.

“Priorities three to five focus on urban development, mobility (transport for both people and freight), and urban water, each with the aim to improve affordability, quality, and economic and environmental outcomes.”

Sounding rather like a politician on the campaign trail, “Let’s get New Zealand moving again,” says Paul.