Forecast shows national infrastructure pipeline needs work

30 Jul 2018

Kiwi civil contractors warn that while a recent construction forecast looks to steady the ship, the current course risks an underwhelming response to major challenges and losing talent to a booming overseas infrastructure markets.

The National Construction Pipeline Report 2018 forecasts future building and construction activity across New Zealand, covering a six-year period to 2023.

Civil Contractors New Zealand (CCNZ) Chief Executive Peter Silcock said while marginal increases in infrastructure investment are planned and may give contractors confidence to invest for future growth, more is needed to tackle challenges resulting from increased severe weather events, population growth and chronic underinvestment in New Zealand’s water infrastructure.

“While it’s good to see steady long-term growth, a lot of this is coming from increased residential development. Marginal increases for major projects simply aren’t enough to tackle the challenges we’re facing in our water and transport infrastructure.”

Mr Silcock said CCNZ was also concerned transport infrastructure construction expenditure would reduce in the short term as design, consenting and preparatory work for new projects over the next two to three years would be needed to prepare for the Government’s shift in focus from state highways to light rail and rapid transit.

“Most of the work on the ground won’t begin for several years. This is a serious concern for contractors. Planning and consenting work for major infrastructure projects needs to start now for work intended to start in 2023.”

Mr Silcock said while promising language features heavily in the report, it remains to be seen how this will be put into practice across local government, where a substantial gap between intentions and activity can often be seen and work on the ground rarely matches forecasts.

He said the Office of the Auditor General had repeatedly raised concerns around local government spending less than projected on capital projects, including new infrastructure and major upgrades. In the 2015/16 audit results, local authorities spent only 70 per cent of what was budgeted for capital expenditure, with little improvement in the 2016-17 results.

Any reduction in projects on the ground would come at a critical time when infrastructure work on Australia’s east coast is booming, and New Zealand looked set to lose talent and capabilities across the Tasman if projects were not moved forward to bridge the lull in project work.

Despite these concerns, contractors welcomed the the report, which placed a focus on consistent workflow and development of skills – important factors for contractors in planning future investment in their people, plant and systems, Mr Silcock said.

“It’s great to see appreciation of key concerns such as the need for steady workflow and industry training pathways coming through so strongly in the National Construction Pipeline Report. These have been major concerns for the industry and if they can be addressed correctly, we will have a future to look forward to.”

The report can be viewed online at www.mbie.govt.nz/info-services/building-construction/skills-innovation-productivity/national-construction-pipeline.

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