KEY POINTS:
A construction industry leader is warning of huge fallout from the building downturn and calling for action on many fronts.
Richard Carver of Jennian Homes, which has built more than 10,000 places in three decades, wants the Government to address access to finance for building companies and house builders.
But he is also calling for his sector to become more professional.
Up to 60,000 jobs could be lost in the downturn, axing the futures of up to a third of the construction-related workforce, he predicted. The young would be worst-hit.
"Sadly the first to be laid off tend to be apprentices. This completely defeats the last 10 years' investment in building industry capability and training. For the first time in decades the industry was seeing the required number of young people enter the sector. Without incentives for companies to retain their apprentices, the future of the sector will be further eroded.
"We need to break the boom-bust cycle that destroys our industry. We can cope with up to 20 per cent of growth and falls but when we are facing 40 per cent plus reductions in work all we can do is lay off workers," he said.
Statistics NZ found new-house starts slumped to the lowest level in more than 20 years from this decade's peak of 25,506 houses in 2003 to 16,158 new houses built last year.
"Australia has recently increased their first home owner grant from A$14,000 ($17,540) to A$21,000. New Zealand should look to introduce a similar scheme or perhaps a shared equity scheme for home ownership with government.
"Changes also need to be made quickly to reduce compliance costs and regulations to reduce the over-burden on the construction industry and the consumer for local authority fees.
"Other issues such as access to quality land and ensuring the cost of labour and materials remains competitive also need to be addressed. The impact of the Resource Management Act also needs to be reviewed," Carver said.
The Government has announced its intention to overhaul the RMA and Prime Minister John Key and Infrastructure Minister Bill English pledged about $500 million worth of publicly funded building projects.
The projects, spanning the housing, transport and education sectors and spread widely around regions, are being fast-tracked to contribute quickly to the Government's economic stimulus programme.
Yet Carver said not enough was being done and he is warning of more house-building company failures, hard on the heels of the string of David Reid troubles.
"A number of housing companies have already failed and Jennian anticipates further company collapses fuelling unemployment figures. These failures also financially destroy suppliers and sub-contractors further contributing to job losses," Carver said.
He also took a swipe at his own sector, saying many people lacked skills.
"A key problem is the lack of professionalism and business acumen displayed by some home builders. Throughout the property boom, these builders have had large cash flows to manage, without the underlying business management skills or robust business practices to ensure that this cash was wisely controlled. They simply spend cash that they have not yet earned. Sadly too many builders are simply poor business people." he said. Carver wants an industry summit to discuss urgent action.
