The Government is blocking a law change that would better protect builders and construction firms from losing money on Government projects, National’s Building and Construction spokesperson Andrew Bayly says.
Mr Bayly introduced an amendment to the New Zealand Infrastructure Commission/Te Waihanga Bill into Parliament on Wednesday, which Labour, NZ First and the Green Party all voted against.
The amendment would have required the new Infrastructure Commission to review selected tender processes of government agencies and councils to ensure they met best practice.
The commission would have been tasked with looking at risk allocation. Its results would also have been made public so that any learnings would be available to other parties.
“Government agencies are still seeking to impose inappropriate contracts on building and construction firms, which mean contracting parties are exposed to most of the risks associated with the project,” Mr Bayly says.
“The burden this is placing on the industry was a recurring complaint at last week’s Constructive Forum, organised by the NZ Registered Master Builders Association.
“Under current legislation, all risks associated with government contracts are meant to be identified and allocated to those parties best able to manage them. Unfortunately, this does not happen in reality with most of the risk ending up with the builder or construction firm.
“In the event of failure, this can adversely impact sub-contractors – the most vulnerable people in the construction industry.
“My proposed amendment would have delivered a practical response to this undesirable practice but the Government, regrettably, voted it down on Wednesday night.
“The construction industry is crying out for solutions to this problem, not the petty politics it’s getting from the Government. Urban Development Minister Phil Twyford and Building and Construction Minister Jenny Salesa have both been missing in action on this issue.
“National, meanwhile, is being proactive and supporting the 250,000 people employed in this important industry, which is being let down by the Government’s inaction.”
The Government needs to show more support for pre-fab home manufacturers to help undo KiwiBuild’s damage, National’s Building and Construction spokesperson Andrew Bayly says.
“The news that Canterbury-based Welhaus Limited and its sister company Welstruct have been placed into liquidation does not auger well for the pre-engineered, panelised homes market in New Zealand.
“Also known as offsite manufacture (OSM) or modular construction, this method of house building has been tipped as a solution to deliver on the Government’s KiwiBuild promises.
“Although there have been soothing words of encouragement from both the Minister of Housing and Minister of Building & Construction, little tangible support has eventuated.
“What is required – and quickly – is the development of a National Standard to get around councils applying different ways of consenting this form of modern modular manufacture.
“If the Government is serious about supporting a New Zealand-based home modular industry then it should also be placing some orders.
“Many companies have spent hundreds of hours applying to become an accredited OSM contractor to KiwiBuild and, as yet, it does not appear anyone has been awarded a contract.
“Surely with all the delays plaguing KiwiBuild, the Government would be showing some urgency.
“Offsite manufacturing is an increasingly viable option, but these types of factories require committed manufacturing volumes to help cover the expensive capital cost of establishing these highly-mechanised manufacturing processes.
“It’s time for the Government to stop procrastinating and get on with it.”
It is outrageous Inland Revenue has decided to raise the interest rate it charges taxpayers on unpaid and underpaid tax, while cutting the rate it pays those it owes money, National’s Revenue spokesperson Andrew Bayly says.
“Inland Revenue says the interest rate charged on overdue tax will rise from 8.22 per cent to 8.35 per cent. At the same time the amount it pays to those who pay too much tax will fall from 1.02 per cent to 0.81 per cent. This runs contrary to what has been happening with bank interest rates, particularly over the past 12 months.
“Inland Revenue is now charging a lot more than the banks on what New Zealanders owe it, and paying a lot less than the banks on money it owes taxpayers.
“Charging more on money owed by taxpayers is outrageous when we have an environment of exceptionally low interest rates.
"The interest rate Inland Revenue charges taxpayers should be getting smaller, not bigger. Instead it has been steadily increasing in Inland Revenue's favour.
“That is patently unfair to taxpayers and cannot be justified. Neither can paying taxpayers an interest rate of 0.81 per cent on money owed when the banks pay short term deposit rates of up to 3.25 per cent.
“It is particularly hard to swallow as it comes off the back of Revenue Minister Stuart Nash’s confirmation that Inland Revenue won’t be paying back an estimated $42 million overpaid by KiwiSaver investors in PIE tax.
“So now we have a Government who is short changing Kiwis if it pays back what it owes you at all.”
Findings from the latest BDO Construction Survey Report paint a bleak picture of the industry, National’s Building and Construction spokesperson Andrew Bayly says.
“Many of the findings align with anecdotal evidence I heard at the KiwiBuild/Build NZ Conference held earlier this week in Auckland.
“While certain aspects have improved, one of the biggest concerns is that about half the industry participants cannot provide a performance bond as security. This means these builders cannot move on to a new job until previous committed bonds are released.
“This lack of liquidity, or financial capacity, is borne out by the issue of delays in receiving payments from developers and head contractors. In the 2018 survey, only 4 per cent of respondents said delays in receiving payment was an issue; this year it was 20 per cent.
“The industry is wrestling with issues like patchy forward order books, difficulty accessing and retaining good staff, unreasonable transfer of risk, and increasing cost of compliance.
“But the real problem is that there is too much talk and not enough action from the Government. Minsters have gone missing and builders are crying out for real solutions rather than hearing about the establishment of working groups and industry accords.
“This is, unfortunately, contributing to the industry’s mental health issues. A recent Site Safe report found building and construction has one of the highest suicide rates of all industry groups.
“This is an industry crying out for leadership. Unfortunately, the Government is heavy on platitudes and light on delivering concrete solutions.”
The woefully inadequate funding in Budget 2019 to make buildings earthquake-safe will do little to help owners and could put lives at risk by ensuring some buildings aren’t brought up to code any time soon, National’s Building and Construction spokesperson Andrew Bayly says.
“The Government’s response to this issue has been slow and poor. All we have heard from Building and Construction Minister Jenny Salesa and Finance Minister Grant Robertson has been soothing words but nothing concrete.
“The Botched Budget allocated a paltry $10 million for capital grants and a $13 million operational grant to administer the Earthquake Prone Building Regime. That’s hardly a meaningful contribution.
“The Government seems not to understand how much is at stake, given about $3.5 billion will be needed to bring earthquake-prone apartment buildings up to New Building Standards (NBS) in Wellington alone.
“When I questioned Minister Salesa in Select Committee this week, she labelled the $10 million Budget allocation a ‘good start’. Yet a recent meeting of inner-city Wellington apartment owners estimated the average cost of bringing many of their apartments up to NBS would be about $450,000. It’ll take a nano-second before that $10 million in capital grants is swallowed up.
“The lack of funding is of particular concern for rural towns where much of our traditional architecture is on display. In these smaller towns, rental returns aren’t sufficient to justify the expensive upgrades necessary to meet quake-safe standards.
“Building owners are now having to face the hard question – do we upgrade or demolish? Unfortunately, this Government is offering them next to nothing in terms of support.”
Revenue Minister Stuart Nash needs to take some responsibility for New Zealanders overpaying tax on KiwiSaver and ensure they are reimbursed, National’s Revenue spokesperson Andrew Bayly says.
“The Minister has known about people overpaying tax on their investment (PIE) income since July last year. This followed a group of financial planners stating they estimated default KiwiSaver account holders had overpaid to the tune of $70 million.
“New Zealanders shouldn’t pay any more tax than necessary. Historically refunds were not made because the system couldn’t cope with them, however the new IT system doesn’t have this restriction.
“The Minister says that repayments can’t be made because a piece of 2004 legislation prevents it. Mr Nash has had multiple opportunities to change this given there are up to four tax bills a year, including one before Parliament at the moment where the change could have been made.
“Inland Revenue is responsible for those who have been underpaid and they should not be made to pay this back.
“It was remarkable that the Minister could not say at Select Committee just a week ago the extent of the overpayment. It’s patently unfair that Kiwis have been taxed more than they should have. It has only come to light as a result of pressure on Inland Revenue. This is a Minister who is not leading but responding to pressure.”
Today’s announcement that the High Court found Engineering New Zealand made an error of law when it dismissed disciplinary proceedings against Alan Reay, whose firm designed the CTV building in Christchurch, is welcomed, National’s Building and Construction spokesperson Andrew Bayly says.
“Those who do substandard work should be held liable. The CTV building in Christchurch has been rated as one of New Zealand’s worst engineering failures and those in the building and construction sector will welcome a process that will hold people accountable for their work.
“This is a good outcome for the families of the CTV victims but it is also important for improving the standard of professional engineering. An issue that must be clarified through this process is ensuring responsibilities are clear between a supervising engineer and a more junior colleague as it is unacceptable to have neither accepting accountability for a design.
“I commend former Building Minister and engineer Dr Nick Smith for pursuing this matter through the courts by lodging this successful judicial review in March 2015. Dr Smith was frustrated that the Institute of Professional Engineers dropped its investigation after Dr Alan Reay resigned and pushed for this legal action to have this decision overturned.
“115 people lost their lives in the collapse of the CTV building. We owe it to them to hold those responsible to account for the building’s flawed design. We need to ensure every possible lesson is learnt by the engineering profession in order to minimise any future risk.”
Auckland will suffer a transport heart attack if improvements aren’t made to the Mill Road corridor, MPs for Papakura and Hunua Judith Collins and Andrew Bayly say.
“The $1 billion Mill Road transport project is vital to meet the needs of the increasing population and business development in the Franklin area, and the pressing need to create additional capacity for the motorway network,” Ms Collins says.
“National had promised to turn the road into a major arterial transport route into Auckland. But the Government’s decision to slash road funding has put this long-signalled upgrade at risk.
“In order to fast-track this project, the previous National Government announced the Mill Road project as a state highway, removing the responsibility from Auckland Council.
“This would have provided funding certainty for this important project through the National Land Transport Fund and free up capital for Auckland Council to reinvest in other high priority transport projects.
“It also meant the Government could use the ‘fast-track’ provisions of the Resources Management Act to consent this entire motorway within nine months. Under the current arrangement, it will take years just to get the additional consent for the extension to the Southern Motorway.”
“Upgrading the Mill Road corridor project is fundamental to the growth of the South Auckland region. It will help improve road safety, support future growth areas and improve access to new employment opportunities in Drury South,” Mr Bayly says
“It would also provide an alternative north-south corridor in case of a major disruption or emergency on other southern arterial routes.
“The Government has instead stripped back the project, despite the upgrade promising resilience to the only part of the Auckland motorway that is vulnerable. It would have also facilitated the growth of a major industrial development and help address the south’s infrastructure deficit in terms of road access.
“Transport Minister Phil Twyford’s decision to reassess Mill Road adds up to a lack of certainty, further delays and additional costs. The longer the Government delays the worse the situation becomes for our constituents.”
Building and Construction Minister Jenny Salesa has no real idea of why the building sector is in crisis, National’s Building and Construction spokesperson Andrew Bayly says.
Mr Bayly asked in Parliament’s Question Time today technical questions to Ms Salesa regarding Government construction procurement and whether construction costs would increase as a result of enforcing whole-of-life costing.
“Unfortunately, the only outcome of the emergency meeting Ms Salesa convened on Monday to address issues surrounding procurement was a statement that she would make sure Government agencies adhere to the procurement guidelines.
“But after being questioned in the House today about which Government agencies she was talking about and what procedures she will put in place to make sure they stick to the guidelines, she had no substantive answers.
“It is clear that the Minister is insufficiently aware of what those guidelines entail.
“What we have here is a Minister who can’t answer technical questions central to the procurement issue. She needs to know her stuff.
“Even more crucially, she also needs to recognise and deal with the underlying causes of the problems dogging the industry.
“Government procurement makes up around 18 per cent of the vertical construction sector.
“And while procurement is essential – and some agencies do it well, and some agencies don’t - it’s not the only pressing issue facing the construction industry.
“It is also suffering significant impact from increasing consenting costs and lack of skilled labour as well as problems with the rules around building product standards.
“The Minister needs to understand those underlying problems are even more critical than procurement.
“Her lack of knowledge around the crucial issues is the most disturbing aspect of this whole scenario.”
The Government’s decision to suspend certificates for combustible cladding similar to that found in horrific Grenfell Tower fire is welcomed by National Party Building and Construction spokesperson Andrew Bayly.
Today the Ministry of Business Innovation and Employment announced it has suspended of six aluminium composite panel (ACP) CodeMark certificates. The Grenfell Tower residential high-rise fire in London killed 72 people after cladding on the building combusted.
“It has taken the Government too long to take action given that a report damning the certification of these aluminium composite panels in New Zealand was delivered to the Government in November last year,” Mr Bayly says.
“This is a good decision and also acknowledges the work of others to bring this to the attention of the Government.
“However, the suspension continues to raise the issue of the integrity of the CodeMark system which is the highest standard of certification of new products able to be used in New Zealand.
“In particular, it also raises issues around Brisbane-based CertMark which issued this particular set of ACP certifications, but also prepares approximately 50 per cent of all new product certifications in the New Zealand market.
“There is still a range of substandard materials coming into New Zealand, including substandard electrical cabling which has been used in multiple Auckland apartments, structural steel and plumbing ware, and shower glass that doesn’t meet safety requirements.
“Building and Construction Minister Jenny Salesa must address the integrity of CodeMark and I will continue to hold the Government to account to ensure that it learns from overseas experience and keeps New Zealanders safe.”