Govt called on to smooth road for valuable construction sector

Photo / Paul Estcourt

The building and construction industry could lead the country out of an unemployment malaise and lift domestic economic performance, a study says.

A report on valuing the role of the sector was released yesterday after the Construction Strategy Group commissioned PricewaterhouseCoopers.

It called for volatility to be smoothed out and said the Government played a crucial role, saying the sector is valuable to New Zealand yet is hurt by boom-and-bust cycles.

"This is a time of opportunity for the sector with the rebuilding programme in Christchurch, earthquake strengthening nationwide, leaky-building rehabilitation and a shortage of housing stock. However unless the sector's volatility is addressed, there is a danger that this time will be wasted," the report said.

The Government should work with industry to create economic-growth strategies, remove red tape, lift skills and create a growth-enhancing tax system, it said.

It called for the Government to invest counter-cyclically to remove pressure from the sector as well as enable new funding tools such as tolls, fuel taxes and congestion charges.

The Government should also reduce speculative investment through "levelling the playing field between asset classes and be more responsible to immigration trends to ensure a steady stream of skilled migrants".

"The sector provides the backbone of New Zealand's investment and has powerful impacts of the rest of the economy. Yet it is vulnerable with a high number of small businesses and low labour productivity and earnings.

"A downturn in the sector places disproportionately large numbers of young adults with lower levels of accumulated wealth and low earnings at risk of losing their jobs."

Building big

Construction sector:
* Employs 154,400 people.
* 42,245 people in related sectors.
* NZ's fifth-largest sector.