Alan Pollard, Chief Executive, CCNZ, reflects on the past year in the civil construction industry, and forecasts what is needed for positive change in the year to come.
Almost two years into my tenure as Chief Executive of Civil Contractors NZ, the critical importance of a safe, healthy, and progressive civil construction has never been more obvious.
Our industry employs around 65,000 people and undertakes about $12 billion in capital and maintenance project work each year. Our members build and maintain horizontal infrastructure such as roads, bridges, tunnels, dams and power stations, water networks, telecommunications and electricity cables, sport and recreation facilities and national defence facilities such as air bases.
These are services a modern and developed economy must have to compete efficiently in world markets, and to deliver high living standards for all New Zealanders.
Civil contractors literally shape the earth around us. We play a critically important role in shaping the health, wealth and well-being of our communities and our environment.
In 2023’s Contractor Perspectives column, I reflected on the core strategic priorities in our CCNZ Strategic Plan, and the importance of our national advocacy and lobbying role to ensure government law, regulation, and policy supports, rather than hinders, our industry. And, I reflected on how the impact of the Government response to the pandemic negatively impacted infrastructure investment, workforce availability, and business costs. At that time, we were also concerned about the potential consequences of government reforms, including Three Waters, Resource Management, climate change and the labour market.
Leading up to the 2023 election, it was a case of “some things change, some stay the same”. Each year we survey members, in partnership with Teletrac Navman, to gauge the mood of the industry and understand the key challenges impacting project delivery, productivity, and performance.
Consistently, two key issues have headlined the feedback: the importance of a well-defined, committed, and funded pipeline of work; and access to a skilled and reliable workforce.
Last year, Infrastructure Commission (Te Waihanga) released its infrastructure strategy highlighting a $210 billion infrastructure deficit over the next 30 years.
Budget 2023 delivered by the previous Labour Government provided $71 billion over the next five years for infrastructure capital and maintenance, and $6 billion for weather related resilience. And, the Government Policy Statement on Land Transport provided an increase in funding for capital and maintenance projects across roading, rail and other transport modes.
But, promises don’t get things built. Only a committed and funded programme of work will provide our members with the confidence to invest in the people and technology that will be needed to undertake the infrastructure works.
During the election campaign, we saw (and continue to see) the bizarre situation where there is so much infrastructure capital and maintenance investment needed and promised, but central and local government have paused their programme decision making, either delaying or cancelling planned projects.
Uncertainty over the election result, and likely undoing of the incumbent government reform processes, led to a “wait and see” approach to investment. This does not support a healthy and competitive contractor market and risks our ability to deliver on those projects once decision-making ramps up again as confidence returns.
What has changed is that we can control work programmes, but we can’t control the weather. Early 2023 saw Northland, Auckland, Waikato, Coromandel, Bay of Plenty, Gisborne, East Coast and Hawke’s Bay severely impacted by severe weather events.
Our members took on another important role, effectively becoming first responders as the storms hit, helping to save lives, protect property, and ensure the safety and stability of affected roads and other infrastructure. Those communities were grateful for this support, and I am proud to be part of an industry that values and cares so much about the communities contractors belong to.
The impact of these storms will be felt for years to come, with the civil sector being front and centre in the recovery and rebuild programme.
Throughout the 2023 election campaign, the (now) National/Act/NZ First Government highlighted an ambitious programme of work, particularly in the portfolios relating to infrastructure, transport, water, resource management, workforce, and resilience to severe weather events. CCNZ has reached out to the new Ministers holding those portfolios that affect us most, expressing the industry’s enthusiasm to work with them on how their vision for the country will be put into action. Pre-election, we had the opportunity to engage with key people while they were in opposition. We are confident they have the motivation, capability, and experience to support our critical civil construction sector.
More detailed engagement with the industry is needed on critical reform programmes, particularly around the direction the country’s water reforms will take under the new Government.
Most contractors are positive about the work ahead, but need more detail on where and when future projects will begin construction so they can prepare their businesses and ensure they have the right equipment and capability on hand. So, that leaves us in the situation where contractors know there is a massive amount of work to do, but people and equipment sits idle while we await direction from funders and decision makers – it’s another case of ‘shovels at the ready, but when does the work start?’.
Short term solutions are needed, it’s true. At CCNZ, we are working to inform the policies that influence our members, and in the coming years, we will look to bring issues to members’ attention and resolve them before they can have significant impact on businesses.
We already engage in comprehensive national consultation through input to legislative reforms and regulations. But, one area of increased focus in the coming year is participation in consultation with local authorities, and supporting our twelve branches across the country to provide practical perspective on how infrastructure construction can be delivered.
We must articulate how the industry works to those outside it, or civil contractors will face regulation from those who do not understand the practicalities. In this way, we can match the increased focus on local delivery we anticipate. And I am thankful to members that take the time to share their perspective with us and raise awareness of the challenges they would like resolved.
Part of the issue is that contractors work on closed-off sites that aren’t accessible to the public. This means that what happens on site is not well understood by the public.
It’s CCNZ’s responsibility to raise public awareness amongst industry outsiders, so Kiwis can better see the awesome work contractors do to improve the country’s quality of life.
We can’t forget it is people, and not promises, that build our transport and water networks. This is why CCNZ champions programmes such as Civil Trades certification and our EPIC career promotion.
So often though, this work is obscured by a whirlwind of disagreements about funding and land use. New Zealand’s historic approach to infrastructure planning and investment has been highly political, and therefore short term, and focused on where people disagree. New Zealand’s central and local government electoral cycle is only three years, while our local government planning cycle is 10 years. Yet, infrastructure investment is intergenerational. For the sake of our future as a first-world country, we need a cross party approach to infrastructure that endures political interference or posturing.
We also need the new Government to be more innovative with funding solutions for infrastructure works. They have inherited an economy in poor shape with mountains of debt that has funded largely unproductive programmes, which will derive little future return. Local government will need support as it faces significant infrastructure needs without the rating base to fund them or the balance sheets to support additional debt.
Most commentators appear to agree we need to move away from an excise tax-based funding system for roading to one including a more universal road user funding solution.
It is encouraging that the new Government is willing to explore private funding opportunities. I believe this must be considered if we are to address our infrastructure challenges in a timely way.
Businesses are struggling with very high operation and finance costs coinciding with delayed investment commitments. The new government needs to act quickly to restore business confidence.
I am optimistic that a new approach will deliver real change to infrastructure investment and programming, and more recognition of the needs of the people and companies that construct civil infrastructure. I hope that this time next year I can write about the positive tangible changes that have supported our industry, our communities and the civil contractors that work tirelessly to build this country.