Unblocking the infrastructure pipeline

Alan Pollard, CEO, Civil Contractors NZ

Wherever I travel across our branch network, the overwhelming issue that is at the top of members’ minds is the uncertainty of project work ahead.

Following the 2023 election, with the Coalition Government unbundling many of the previous government’s reform programmes (three waters and resource management reform for example), central and local government clients paused spending on much of their capital and maintenance programmes, pending a clearer understanding of what the Coalition Government’s infrastructure plans meant for them.

This hasn’t been a gradual decline, but a rapid reduction in projects coming to the market. It has caused members to reassess their business models. Many have restructured or downsized as the impact of this uncertainty bites hard.

This not only puts the viability and sustainability of the civil construction industry at risk, but it also poses a huge risk to the Government’s future infrastructure plans – scaling down can happen very quickly, but scaling up when the projects finally come to market will take some time.

The lack of infrastructure project work has also had an impact on our industry partners, such as professional services firms, hire companies, recruitment specialists and the like. The severe impact of this downturn will affect all communities at some level.

Periods of economic recession also create significant challenges for industry associations. I know my team are frustrated we can’t achieve a quick resolution to the lack of work in the market for our members.

We would like nothing more than to be able to magic up project work. But the role of associations is to protect and promote the interests of its members, and we cannot get involved in the commercial arrangements between client and contractor.

To that end, CCNZ has been advocating on members’ behalf for an immediate economic stimulus to bridge the gap between the current work shortfall and the large programme of work that is ahead, once it gets underway.

We have been advocating at three levels.

First, we advocate to central government on the need for clear direction on what the infrastructure programme will look like, and when and how it will come to market. We know the country has a large infrastructure deficit (about $210 billion) from the Infrastructure Commission’s 30-year strategy.

The Coalition Government’s policy statement on land transport includes a large increase in funding for road and rail capital and maintenance. The Coalition’s election manifesto included an ambitious infrastructure investment target. But, including line items in a plan does not constitute a commitment to bring those to market any time soon – contractors know too well that projects can be debated for decades.

So, for immediate stimulus we have suggested to the Government a few things. First, to bring forward asset maintenance and renewals (we were pleased to see $3 billion allocated to road maintenance and renewals in the 2024 budget).

Second, to provide short term emergency relief from the consenting process (this was successfully deployed during the cyclone response so there is nothing to stop it being deployed now).

Third, to simplify the procurement process (a large drain on productivity comes from inefficient or unwieldy procurement processes).

And fourth, to fund training for our underutilised staff to prevent them from leaving. The benefit of this approach is that when the project tap finally gets turned on, we have a highly trained and competent workforce available for project delivery.

Our advocacy in this space has included meetings and communication with Chris Bishop (Minister for Infrastructure and Resource Management), Simeon Brown (Minister of Transport, Local Government, and Water), Shane Jones (Minister for Regional Development) and others.

At a second level we advocate directly with clients, be they central government departments and agencies, or local government authorities. Our advocacy here is about the need for these clients to bring projects to market to support their local contractor communities.

Most council long term plans have provision for infrastructure investment, and it is imperative they come to market quickly.

This is not about the mega-projects. How we conduct the day-to-day work is what’s critically important in this space – and also what is often overshadowed by the latest politically motivated ‘flagship’ infrastructure announcements.

At a third level, we identify how our advocacy can have a direct benefit to the client, or where we can advocate together – for example advocating for more certainty (think the transition from Three Waters to Local Water Done Well), alternative funding mechanisms, and access to the $1.2 billon regional development fund.

In the end we need the same outcome; councils need to deliver basic facilities, be they roads, electricity, telecommunication networks or water services, to their ratepayers, while contractors need this work to sustain a healthy civil construction industry.

It makes sense to collaborate where we can. For effective advocacy with government, officials, and clients, the power of the collective voice cannot be underestimated. Individually, many businesses and even smaller industry associations, struggle to get the ear of key decision or policy makers. But collectively, that all changes.

So, where it makes sense to do so, we work closely with other likeminded industry associations. We have taken that approach on labour reform, on immigration, on the future of vocational training, on the current lack of work, and on infrastructure investment and financing.

CCNZ will continue to work hard to achieve good central and local government decisions that provide some confidence and certainty for our members and partners. If we are to avoid decline, those decisions must be made with urgency.