In this opinion piece, David Kelly, chief executive of the Registered Master Builders Association, says New Zealand cannot afford the seven years it took the construction sector to recover from the last downturn – and heralds a key forum to prevent that happening.

Falling confidence in the economy, off the back of surging inflation and sharply rising interest rates, is heralding an end to the long building and construction boom.  

But the sector has been here before. 

Boom-bust cycles

For nigh on five decades, the construction industry has faced a succession of boom-bust cycles. After each cycle, we somehow expect it to be different the next time, but the cycle keeps on repeating because, as a country, we haven’t learnt from our past mistakes.  

While lessons from the past can seem straightforward, they have proved elusive to achieve. This time we are determined to avoid a repeat, so we will be examining strategies to minimise the downturn’s impact on the sector, its workforce, and for New Zealanders wanting to build.  

Given the arch-pressures facing building and construction, it has never been more important for the sector to hear from leading voices across residential and commercial sectors in Australasia, as well as from government on how to successfully navigate our way through this toughening period.  

Forum for strategies

That’s why Constructive 2022 is a not-to-be-missed forum to be held in Rotorua on August 25-26. 

Its theme is: “Insights for Building New Futures: lessons from the past, strategies for the present” and it will showcase the sector’s best thinkers grappling with the extreme conditions being experienced.     

Constructive 2022 will pose the crucial strategic question facing the government and the sector: how to maintain continuity of supply through down cycles? 

This is undoubtedly a strategic question because decades of uneven housing policies have fuelled the boom-bust cycle which has historically beset the sector.   

Now is the time to act and do things differently. 

Ever since the 1970s, perverse disincentives for council planning and consenting processes have grown. Ad-hoc, incremental government policy changes since then have treated symptoms rather than causes, and acute infrastructure financing limits for councils has seen public policy largely driving the dysfunction of the housing market.           

This reinforces the crucial role of government. It is, after all, a significant player in the commercial construction market, building hospitals, schools, libraries, social housing, and other public amenities.  

Both the government and the sector have roles to play, and at Constructive 2022 we will be hearing from the government and the opposition about their plans for the sector’s next crucial phase.   

With greater predictability and less volatility over time, central and local government and developers would be able to better plan what type of houses to build and where.  

Taking a strategic view, by viewing housing as critical infrastructure, would constitute transformative public policy and would help an already stressed sector through the looming cyclical downturn. 

That is how we will move from reactive, catch-up policymaking responding to market inequities, to proactive leadership that can better anticipate the tough challenges faced.  

We know that during the last downturn, it took the sector seven years before its workforce recovered to pre-bust numbers. In that time, our housing and infrastructure deficit reached crisis point. 

The country cannot afford for this to happen yet again. 

Building and construction is a significant contributor to the national economy, so its performance matters. It’s currently the third-largest contributor to gross domestic product (GDP), at about $20 billion per annum and it sustains more than 540,000 jobs.  

With 95 per cent of building firms employing 10 staff or less, our workforce is deeply embedded in communities right across our cities and regions. They are responsible for building our homes, schools, and hospitals. 

Construction has therefore been doing its bit to help New Zealand recover from the historic disruption that Covid-19 has wrought. It’s been challenging, and the situation has been daunting for our workforce. 

But while we adapted as well as could be expected during the pandemic, current economic conditions place the sector and its workforce on the precipice. 

We need to act now, before it is too late – and Constructive 2022 represents the premier vehicle to help shape the strategies both the government and the sector need to help build a new and more resilient future. 

For more information on Constructive 2022 go to www.constructive.org.nz

Registered Master Builders is the voice of the building and construction industry, representing quality built environments where we live, work and play.