Industry agreement to fix building and construction sector

A new building industry accord is being hailed as a step-change for the construction sector.

The Construction Sector Accord, launched on Sunday with Prime Minister Jacinda Ardern and Auckland Mayor Phil Goff in attendance, calls on the industry, its clients and the Government to change the way they work together.

There have been a number of high-profile building company collapses, poor-quality builds and skills shortages recently.

Mayor Goff told Newshub he's confident the new agreement will step up the building of new homes.

Priority areas include stronger procurement practices and building regulations, which Goff believes will make a difference.

"I think this is a way of bringing industry together with Government. It builds on the recommendations of the Mayoral Housing Taskforce and I think it will produce constructive outcomes for Auckland and the country."

The agreement is intended to provide a platform to reinvent the construction sector, building industry leaders said.

"This accord provides a platform for change," said the Accord Development Group's chair Peter Reidy, also the CEO of Fletcher Construction.

The accord is designed to address issues from the way the sector has behaved in the past, which are having an impact on the economy and the wellbeing of New Zealanders, Reidy said.

The intention is to commit to start treating each other differently and replace the current adversarial culture with one based on respect, trust and shared responsibility.

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

In addition to outlining new ways of behaving, the agreement identifies priority areas for Government and industry to work on together. They include the way Government agencies buy construction work, the need to invest in upskilling the workforce and the need for the industry to improve its financial resilience.

The New Zealand Infrastructure Commission will be established to help improve procurement practices and encourage long-term planning.

The risks are too high for building companies under the current regime, Goff said.

"There are too many of our companies that are going under right at the time when you'd expect them to be thriving with the building boom underway."

The approach taken by the industry, its clients and Government had led to 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 had led to construction company collapses, problems with building quality and skills shortages.

Many in the industry have struggled to cope with the pressure, likely contributing to the relatively high rates of suicide and injury in construction, the Business Leaders' Health and Safety Forum said in a statement.

Construction is New Zealand's fourth largest employer, with around 250,000 people working in the sector, Reidy said.

It accounts for 7 percent of GDP and contributed nearly $15 billion to the economy in 2017. That figure is expected to reach $41b in 2023.