Minister believes KiwiBuild will benefit small builders

Having set itself the lofty goal of building 100,000 homes over the next ten years, the Government is planning to take a multi-faceted approach to achieve its target

 Newly minted Housing and Urban Development Minister, Phil Twyford, says that the sheer scale of the Government’s planned development programme means that building businesses of all sizes will be able to reap the benefits.

“We’re going to be doing a lot of building, not only through KiwiBuild, but also by building more state houses and large-scale urban development projects, where we’re looking at redeveloping whole suburbs and communities,” said Mr Twyford.

“Our intention is to grow the industry and provide opportunities for firms to scale up. There may be opportunities for smaller businesses to put together consortia and bid for work, and it’s also possible that some people will bid for work and rely on subcontractors. I don’t think small-to-medium sized enterprises in the construction industry should assume they won’t get lots of opportunities out of KiwiBuild, because they will.”

Twyford said that claims made by the Reserve Bank of New Zealand that KiwiBuild would hurt private sector construction (which were based off Treasury advice) didn’t take into account all aspects of the policy.

“I think the Treasury’s concern was that there were land and workforce constraints that would hold back the programme, but we’re actually going to address those.”

Boosting workforce participation

 Twyford said that the Government is planning to invest heavily in building the construction workforce.

“We’re going to train people in trades and apprenticeships, bring in skilled workers from overseas and we’re also going to tender work to companies that can scale up using off-site manufacturing techniques, which are less labour intensive. We’re working on the details of that workforce development plan right now.”

He added that the Government is also planning to encourage young people into the industry through its Dole for Apprenticeships scheme.

“Instead of having them sitting around on the dole, that money will follow them through into an apprenticeship and be paid to an employer as a subsidy, which they will then top up to a training wage.

“There are fantastic career opportunities in the construction industry and we want to inspire young Kiwis into those jobs so they can get skills, build great things, start their own business and earn good money.

“We recognise that the industry is stretched right across the board, so it’s about all the trades and professions.”

While the plans were still being developed, he says it could include placing people with Building Consent Authorities to ensure they were able to keep up with increased demand.

On consents, he said the Government wants a planning system that aims to encourage rather than block building and that he has asked his officials to look into how that might be achieved.

Swings and roundabouts

With such ambitious plans to boost the construction workforce, there is a risk that the industry may be oversupplied with workers should it enter a bust period. However, Mr Twyford said the amount of building work and its timing would help prevent that from happening.

“We’re currently facing a shortfall of 71,000 homes and through our building programme, I think we can smooth out the boom and bust cycle – firstly by ramping up the level of production, then by maintaining it in a counter-cyclical way. I also think using the balance sheet of government to stimulate supply is a fantastic tool for us.

“A current example is where we have big banks pulling back from financing apartments and multi-unit projects, which is where we could come in and buy off the plan to de-risk and speed up developments. That’s a great opportunity to supply continuity and security to the industry and allow firms to plan ahead with certainty.”

 Working alongside Mr Twyford is the Associate Minister for Housing and Urban Development Minister and Building and Construction Minister, Jenny Salesa.

“Jenny’s role covers all of the regulatory and productivity issues relating to the industry, such as the Building Code and Building Act,” he said. “My responsibilities are more about homelessness, state housing, tenancy laws, KiwiBuild and our policy to establish the Affordable Housing Authority.”