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Prime Minister launches new Construction Sector Accord alliance

A new construction alliance called the Construction Sector Accord has been established to tackle the issue of affordable housing for New Zealanders.

Five ministers, including Prime Minister Jacinda Ardern, have announced the creation of an "accord" they hope will end the country's litany of sub-standard building.

The prime minister told Stuff the new Construction Sector Accord was an important step in plans to make homes more affordable.

"Ultimately, for the average person looking to buy a home, or currently renting a home ... the pressure on our housing market in particular is all around supply," she said at the accord launch in Manurewa on Sunday.

Construction Sector Accord

Prime Minister Jacinda Ardern with ministers Jenny Salesa, Phil Twyford, and Iain Lees-Galloway at the Construction Sector Accord launch at a Manurewa building site on Sunday.

"We know that we need more houses. We know we need to build houses quickly. This accord focuses on technological improvements we can work on to improve productivity."

Ardern and ministers Jenny Salesa, Phil Twyford, David Parker and Iain Lees-Galloway said the accord called on the industry and government to work together to tackle systemic problems that have beset the sector.

"Its not the only thing," Ardern said.

"But it is an important part of the mix when it comes to addressing the housing crisis.

"This is us acknowledging that the industry has a role to play in helping to address the housing crisis."

Fletcher Construction chief executive and Accord Development Group chairman Peter Reidy told Stuff the accord would involve public and private sector partners working through a 6-9-month plan to gauge what accord initiatives were working, and which ones were not.

The accord comes after a wave of problems including high-profile building company collapses, poor-quality builds which led to households facing billions of dollars of leaky building repairs, and skills shortages.

 

 The accord could even save lives – as ministers said the stress faced by people working in the sector may be a factor behind the industry's relatively high suicide rate.

"The wellbeing of New Zealanders is intrinsically linked to safe, durable and affordable homes, buildings and infrastructure," Ardern said.

The construction industry is the New Zealand's fourth-largest employer, but the government signalled the era of light-handed regulation was at an end and builders faced stronger building regulation.

Part of the accord would be aimed at "rebalancing risk" in the building sector.

In recent years there have been a series of massive losses on large construction projects resulting from construction firms taking on too much financial risk.

Ebert was the latest construction company to go broke, failing in July 2018 despite a booming Auckland construction market.

Even in boom times construction companies are going bust.

Fletcher Construction also made huge losses on construction projects, including on the Christchurch Justice Precinct for the Ministry of Justice.

The accord would also lead to change on the much-criticised consenting system, which is blamed for New Zealand's failure to build enough homes, which had forced home prices in Auckland to unaffordable levels.

Reidy said the accord group, which counted construction industry leaders among its members, provided a "platform for change".

Peter Reidy was chief executive of KiwiRail before joining Fletcher Construction.

"The accord recognises that the way the construction industry, its clients and government have behaved in the past has created systemic problems that are having an impact on the New Zealand economy and the wellbeing of New Zealanders," he said.

"It commits those working in, and with, the industry to start treating each other differently, so we can replace the current adversarial culture with one based on respect, trust and shared responsibility."

He said: 'We're agreeing to uphold new standards of behaviour and to be held accountable if we don't."

Reidy said construction employed 250,000 people and accounted for 7 per cent of GDP, contributing nearly $15 billion to the economy in 2017, a figure expected to reach $41b in 2023.

 

Jenny Salesa (Minister for Building and Construction), Phil Twyford (Minister of Housing and Urban Development), Phil Goff (Auckland Mayor), Prime Minister Jacinda Ardern, Aupito William Sio (Minister for Pacific Peoples), Labour MP Michael Wood and NZ First MP Jenny Marcroft outside a new Kiwibuild home in Papakura last year.

He said previous industry, client and government approaches had led to systemic problems like a focus on lowest cost over quality, uncertainty about the pipeline of upcoming work, and a culture of shifting risk rather than managing it.

"These, and other, problems had played out in things like construction company collapses, problems with building quality and skills shortages."

"They had left individuals within the industry struggling to cope with the pressure, and likely contributed to the relatively high rates of suicide and injury in construction," Reidy said.

"New Zealand is not alone in having these problems. These are big issues in the construction industry globally."

The Labour-led government won power promising more affordable homes.

It is in the process of establishing a New Zealand Infrastructure Commission, to encourage long-term planning.

Auckland Mayor Phil Goff said the accord had "picked up" on recommendations from his Mayoral Housing Taskforce.

HISTORY OF NZ BUILDING FAILURE
The deregulation of the building sector led to the nationwide leaky building scandal, which left tens of thousands of households facing huge bills to fix their homes, and defective apartments.
* 1970s: Technology innovation starts putting pressure on traditional building regulation.
* 1987: The Building Performance Guarantee Corporation was decommissioned. It ended the government's stake in ensuring sub-par homes were not built.
* 1988: Ministry of Works and Construction was disestablished reducing the importance of government engineers in managing the construction industry.
* 1992: The Building Industry Act 1991 was introduced. It set "performance criteria", freeing builders to use any technology they liked. The act said the "cladding" of a house must last just 15 years, and the structure 50.
* 1990s: Light-handed regulation meant little oversight for builders and developers.