Image: The PM and Alan Pollard during their ‘fireside’ chat at the 2005 CCNZ conference in Tauranga recently.
In a polished performance, Prime Minister Christopher Luxon was relaxed and self-assured at the CCNZ conference in Tauranga in front of 600 delegates who might not have been as convinced of the ‘bright future’ of civil contracting as he was.
“Shovels are going into the ground this week, as our infrastructure programme gets underway,” Luxon told delegates, who will presumably be doing the work, while claiming an “unprecedented opportunity” with the $6 billion worth of projects his ministerial colleague Chris Bishop previously announced.
While Luxon has been giving the impression that projects are imminent, his audience has faced the commercial realities of past years waiting for projects to start. CCNZ President David Howard’s welcome understated this earlier at the conference when he conceded, “This year has not been easy.”
The Teletrac Navman CCNZ 2025 construction industry survey also calls for; “Continuity between successive governments; accountability to deliver a pipeline of projects”; however, a political panel the following day delivered anything but.
This lack of continuity is a problem that besets the country and anyone building infrastructure. For example, in an interview in late 2017, Transport Minister Phil Twyford happily mothballed all National’s roads of national significance, except for the Manawatu Gorge replacement highway (now operating).
When the two sides of the political spectrum have such different views about roading, Luxon’s vision of bipartisan support for infrastructure and long-term plans to attract a wave of international investment stands in sharp contrast.
Asked how realistic cross-party consensus is, Luxon said that one should find common ground on how to structure public-private partnerships. If New South Wales can do it, so can we, and the solution is to make projects less political.
Sounds wonderful, but the political panel the following day wasn’t as convincing. Representing National, Labour, Act, NZ First, and the Greens, respectively, Chris Penk, Kieran McAnulty, Simon Court, Andy Foster and Julie-Ann Genter agreed on the need for cross-party consensus on the infrastructure pipeline – but only if all agree on any one MP’s opinion on our country’s priorities. Impasse.
The Chief Economist at Simplicity, Shamubeel Eaqub, was scathing in his economic update to delegates. “The biggest mistake of the present Government was to stop projects. There was no reason to do that when we have a huge infrastructure deficit. Politics gets in the way.”
An industry panel also expressed the sector’s sense of frustration. Jim French from Teletrac says; “We might get three years … and then what happens? That’s why there is a lack of confidence.” How do we break that cycle, he asks.
Luxon defended his Government’s project pipeline. “We inherited a pipeline of phantom projects that were announced but not delivered.” These included dropping the $14 billion NZ Battery Project, “the slow tram to nowhere”, as National’s Judith Collins called the Auckland light rail project, and the projects from the Key/English-led government that Labour upheld.
And, every time a government changes, it is at the expense of proposed major infrastructure projects before the industry faces a new string of projects.
Luxon has the answer to that problem, which CCNZ CEO Alan Pollard put to him during a ‘fireside chat’ on stage following the PM’s conference delivery.
Pollard also pointed out that with any major project, vocational education needs to support the industry. How, then, do we convert a workforce of 40,000 into 97,000 over the next 30 years? Labour’s vocational centralisation is gone, and it is back to local institutes and polytechnics. A vocational pathway is obviously needed at secondary schools to open doors for teenagers into civil construction.
The PM’s solution to our boom-and-bust cycles is to, “get the scaffolding we see in other countries in place”. By this, he means the policy, regulatory and planning framework to lock in the pipeline of work that everyone has been talking about for years and decades.
Much of this has been said by previous governments, so what makes the present National-led coalition different? Three things, Luxon says. “We are making sure there is a 30-year plan.”
Then there are the city and regional “deals”, which lock in 10 years of projects, at $500 million of investment a year, with better co-ordination between central and local government to avoid the “Punch and Judy show” of fighting over funding.
Third, the government’s National Infrastructure Funding and Financing (NIFFCo) will attract foreign investment into structured funding and financing of projects. Luxon says 110 overseas entities attended an investment summit that he led in March this year. Whether this will be at the expense of local contracting is a question on everyone’s minds.
Still, Luxon is relentlessly positive. “We have turned a corner. The future for civil construction is bright and it starts now.” His optimism is based on having spent the last 30 years studying other small, advanced countries – Ireland, the Netherlands, Singapore and Denmark being among them – and why they are wealthier than we are, and he thinks he now has the answers.
Our problem is, unsurprisingly, “economic productivity”. Despite having talented people, “we have failed to lift our collective standard of living; we have to work smarter”.
“We need a world-class education system, more science, technology and innovation. That’s how we get higher-value products and services.”
And the size of the prize is huge. Every billion dollars of investment converts into 4500 jobs, so $6 billion equates to tens of thousands of jobs and “real opportunities for these thousands of Kiwis”. This lifts productivity, along with reliable roads that link markets.
Another fun fact: construction has a value of $17 billion a year, or six percent of our GDP, and employs, directly and indirectly, 300,000 New Zealanders.
Luxon also says that the coalition’s “water done well” water service policy has switched centralised control back to local government, with controls. This means, “Councils will not be able to run down below-ground assets, to build above-ground assets”
On regulatory reform he says: “This is the most important part. This is an enormous and complex piece of work.” The Government will introduce a planning bill and a natural environment bill by the end of the year.New Zealand will move from 1100 different zone classifications to a figure similar to that of Japan, which has 12.Planning will become a “paint by numbers exercise”.
Of 149 listed fast-track projects, more than 50 are now before the Environmental Protection Agency, of which three-quarters are infrastructure or urban development projects.
Pollard ended his ‘fireside’ questions with; “it’s election year next year; what can we expect for a second term of government from National?”
“It will be accelerating big time,” Luxon continued with his unfaltering optimism, “with boosts to exports, education, health, the energy system, and infrastructure.
“The Asia-Pacific is a market that wants New Zealand products and services, including in engineering. We have abundant natural resources and hugely talented, world-class people.”
Conference delegates were very impressed with the fact the PM showed up himself to spread the Government’s optimism. But, in the end the proof will be reflected in the actual project activity that pulls the industry out of doldrums.
As for the future – it is obvious that our industry’s well-being will rely on a ‘continuity of project pipeline’ beyond the 2026 election. As for ‘productivity’, it will take a major revolution in employment entitlements in this country and project budgeting to equal the likes of Singapore. That is unless we are expected to rely on the employment of overseas investment and foreign contractors.
Parting words from Jeremy Sole- a final column