Reflections on 2020 show a united sector
The final Towards High Performance webinar for 2020 saw four members of the Construction Sector Accord Steering Group (ASG) reflect on the past year, and discuss how the Construction Sector Accord is working with the sector to undertake change.
The transformation of the construction industry is a work in progress, with the sector continuously learning from the past.
Prior to April 2019, when the Accord was officially launched, the industry was fragmented and underperforming. A range of systemic problems – such as high-profile building collapses, unclear regulations and skills shortages – were having implications not just for the sector, but the wider New Zealand economy.
The Accord was established to 'change the rules of the game'. Jointly developed by Government Ministers, agencies and construction sector leaders, it was an unprecedented and bold step towards strengthening the partnership between government and industry.
Priority areas include improving culture and leadership, growing workforce capability and capacity, improving health and safety, and establishing better procurement and consenting processes.
Essentially the Accord is a joint commitment from government and industry to work together to transform the construction sector and bring about much-needed change.
The resilience and cooperation of the construction sector is encouraging
Minister for Building and Construction Poto Williams joined the webinar to state that despite the past year being incredibly challenging, the construction sector showed resilience.
"The sector came out of lockdown level four in a confident state and will continue to be a driver for New Zealand’s economic recovery in the months and years to come. We need to share the lessons we learnt so we can build back better and ensure our construction sector remains strong and resilient for all New Zealanders," she says.
Meanwhile, Naylor Love Chief Executive and ASG member Rick Herd says the Accord played a massive part ensuring the industry was well-represented during the lockdown.
"The sector was in need of support from the Government and had protocols to implement across the nation. The way it was handled is an example of what cooperation can do," Rick says.
"We need to understand what could have gone wrong during the lockdown if we hadn’t had those collective voices in the room. I think things could have gone wrong in respect of price-cutting. The fact there was leadership within the industry saying that price-cutting wasn’t accepted, and that we expect contractors to maintain margins was an important message across the industry."
Positive change in behaviours is crucial
Rick says it is time the industry stood up and made changes in behaviours, which includes everything from learning how to provide better customer service, to lowering costs, and making the industry more attractive and sustainable for anyone who wants to join.
"For example, we need to understand what a good contractor organisation looks like, and I don’t believe from the behaviour I’ve seen, that many know what a good one looks like," he says.
"You need to look at health and safety performance, an organisation's staff turnover rates, and how they are training their people. All of this information makes up strong organisations that are sustainable for the long term."
In Rick's 47 years in the construction industry, it is the first time he can see change within the industry, thanks to the work of the Accord.
"The biggest lesson so far is that with the power of the whole industry we can develop change. It will take a while to change the overall culture – but we have started that journey."
Working together to achieve results
Property Council of New Zealand Chief Executive and ASG member Leonie Freeman reflected on the pandemic and found two broad issues to learn from.
She spoke positively about the Accord presenting a united front for the industry and providing direct access to government officials and ministers during the early months of the pandemic.
"If we hadn't had the Accord, then we would've run the risk of each different group within the industry all trying to talk to government. Getting the construction sector back up and running at level three was really positive," she says.
Keeping our workers safe
The pandemic has taken a toll on people’s lives professionally and personally, but the construction sector has always seen high rates of mental health issues even before the pandemic hit.
Chair of the Construction Health and Safety NZ Group (CHASNZ) and ASG member Roger McRae says the industry has a lot of factors that can contribute to mental health issues.
"There is market volatility, projects can get stopped at short notice - it's always been known as a boom and bust industry," he says.
"There are long working hours, many that are at short notice to make up for time lost due to weather, and people can face financial penalties for not making commitments."
CHASNZ has partnered with MATES in Construction – which focuses on mental health and suicide prevention in the industry - to reduce this dreadful statistic.
Roger says the Accord has provided a valuable platform for communicating the mental health initiatives that MATES is leading across the industry.
"It's great that MATES was in place, because the demand for its services ramped up dramatically during the shutdown period and has not let down since," he says.
"Right now MATES is looking to employ more case managers as funding allows.
"Keeping people who work in the construction industry safe and healthy is one of the bigger challenges facing the industry. CHASNZ is committed to working with the Accord and government to raise awareness of wellbeing and to see everyone go home every day."
Construction industry has a lot of change ahead
Construction Sector Accord Transformation Director Dean Kimpton says, "This Government has signalled their strong support for the Construction Sector Accord, and the work needed to maintain construction momentum and respond to the impacts of Covid-19."
"As government and agencies continue driving an ambitious construction and infrastructure programme, the Accord's role in supporting a collaborative high-performing sector will be crucial."
This webinar was recorded on 9 December 2020. It includes speakers from the Accord Steering Group including Rick Herd, Graham Burke, Leonie Freeman, and Roger McRae.
Watch the full webinar(external link) - https://vimeo.com
This video is a direct recording of the webinar, which includes footage of the speakers as they talk. There is also video footage of sector participants speaking to camera interspersed throughout this webinar.
Everybody, and welcome. Thank you for joining us today for this final webinar of our 2020 series: Towards High Performance. Now many of you will know this, but just to recap the Construction Sector Accord was launched in April, 2019 as a joint partnership between the Prime Minister and the court ministers and industry leaders. Prior to 2019, the industry was characterised as fragmented and under performing. Many of you will have seen that. We had a range of systemic problems, such as high-profile company collapses unclear regulation and skill shortages. These were all having implications, not just for our sector but for the wider New Zealand economy. So the Accord was established to change the rules of the game and transform the sector. Jointly developed by government ministers, agencies, and construction sector leaders, it was a bold step toward strengthening the partnership between government and industry. Priority areas included improving culture and leadership, growing workforce capability and capacity, improving our health and safety, and establishing better procurement and sending processes. Essentially the Accord is a joint commitment between government and industry to work together to transform the construction sector. And of course bring about much needed change. The Accord Steering Group also responded with some real urgency to COVID-19's impact on the construction sector. Just days after the country went down into lockdown the group pioneered a construction sector COVID-19 response plan. Since then the Accord has proven its value time and again as a platform for industry and the government to share responsibility and achieve improved outcomes for all New Zealanders. In fact, I would go as far as saying it's seen as a benchmark for what can be achieved when we work together, industry and government. So today you're going to hear from five members of the Construction Accord Steering Group, talk about the challenges the sector faces, the impact of COVID-19, and provide updates on progress of the Construction Sector Accord and share some lessons learned. There'll be plenty of time for questions at the end. So it's now my pleasure to introduce the Honourable Poto Williams, Minister of Building and Construction.
I'm very pleased to welcome you to this webinar about lessons learnt and reflections from 2020. I'd like to acknowledge everyone attending today's webinar, including industry leaders from the Construction Sector Accord and members of the construction industry. Without a doubt this has been an incredibly challenging year for everyone. COVID-19 has impacted all of us in a number of ways, both personally and professionally. Despite these challenges, I'm encouraged by the resilience of the people and the businesses that make up our construction sector. The sector came out of alert four lockdown in a confident state, and will continue to be a driver for New Zealand's economic recovery in the months and years to come. This is why today's conversations are so important. We need to share the lessons we've learnt, our highlights, and the challenges we face so that we can build back better and ensure our construction sector remains resilient, strong, and sustainable for all New Zealanders. We know there is more work to be done, so it's important that we continue the collaboration and leadership we have displayed throughout 2020 and to the year ahead. I'm sure you'll learn a lot from today's webinar and I'm pleased to be here to support this important conversation as we look forward towards 2021.
Thank you, Minister. I know that everybody has really appreciated the thoughts that you've shared. I'm now going to introduce members of the Accord Steering Group. First up is Rick Herd, Chief Executive of Naylor Love. And Rick is also the recent chair of the Vertical Construction Leaders Group.
I've been delighted to be part of the Accord. I've been in the industry for 47 years now. And during that time I've heard it said on numerous occasions, how tough an industry it is, how unsustainable margins are. This was the first opportunity in my 47 years in the industry where we've got an opportunity to make some change. And I'm seeing that change starting to develop through the work of the Accord. The work that Dean mentioned in respect of COVID-19 and our ability to take work done by Site Safe, Civil Contractors New Zealand, and the like, from the protocols that were developed and distribute those across industry supported by government, the private sector, contractors, and client organisations, and have that accepted as an example of what cooperation can do. However, we need to also understand what could have gone wrong during the Accord if we hadn't had those collective voices in the same room. I think things could have gone a lot worse in respect of price cutting. The fact that there was a leadership in the industry's client organisation was saying we don't expect to see price cuttings. We expect contractors to maintain margins and maintain sustainability has been an important message across the industry. And that is probably the biggest lesson we should take from this, that as a power of the whole industry we can actually develop change. That change is gonna take time. We can't expect an industry as diverse, fragmented as ours to change in a hurry. So we need to be patient and recognise that while we're seeing positive change it's gonna be a long time before we change the overall culture of our industry. Having said that we are already seeing positive change coming through government organisations, such as education in particular, which is delightfully now looking at non-price attributes as a primary driver and selection of contractors. And it's not only education, we've seen the same from corrections and health departments, DHBs are slowly changing to that same end. We're seeing some real positive leadership from government in respect of the selection policies for procurement. And I'm expecting through the leadership of the likes of the property council and Leonie Freeman and her team that we'll see those same sorts of behaviours coming through from the private sector clients. But as an industry, and I'm talking to contractors when I say this, it's time that we actually stood up as an industry and while we are seeing change in behaviour from our client organisations we need to change our own behaviours. We need to learn to provide better service, reduce costs, make a more attractive, sustainable industry for people who wanna join us, and improve health and safety. We need to learn actually how to manage a risk far more effectively than we have in the past, which has been evidenced by the failures of organisations that are only too well-publicized. I don't need to go on more about that. We also need to understand what a good contractor organisation looks like. And I don't believe that from the behaviours that I've seen, evidence a lot across industry that a lot of contractor organisations don't know what needs to be a good contractor organisation, what their staff turnover rates are, how many people should they be training, and how should they be training their people? What's the health and safety performance? What should be their equity ratings? So all those sorts of information that make up a strong construction contractor organisation that's sustainable for the long-term which will develop strong balance sheet, will invest in innovation, will invest in research and development, will take care of the people, train people and make career opportunities far more widespread and satisfying, and ultimately beneficial for the whole of the construction industry. We need to recognise that 10% of New Zealand employees are employed by our industry. All the more reason why we need to put a lot of effort in. So that's my lot. And thank you very much. And I look forward to answering some questions later in the webinar.
And now I'd like to introduce Graham Burke. Graham is Chair of the Construction Industry Council and Vice President of the Specialist Trade Contractors Federation.
Thanks Dean. Look, I couldn't agree more with the things that Rick's just said. Talking about COVID, you know, COVID was an unprecedented disruptor both in economic and social terms. It's, you know, we've never seen it in our history before we we've gone from absolutely flat out. We've never seen activity at the levels we did in late 2019, early 2020 and having to shut the whole industry down, basically, within a period of 48 hours was no mean task. I think the industry actually fared really well and and it's a credit both to the industry but definitely to the work of the Accord and the interface that they created between industry and government. The Wage Subsidy certainly helped. And whilst, you know, there's been criticism that it was far from a perfect system, it was just amazing to see the money pushed out there to businesses of all sizes so quickly, and businesses in New Zealand were the envy of those around the world where we've seen people struggling for cash flow and jobs being shared out of the system, at levels that, you know, have never been seen in the history of the world. So further, further into the crisis, we had the Accord negotiating resolution of contract issues that resulted from cessation of works. Now that was, that was a godsend for many people in the industry, it meant that cashflow continued and it saved litigation across dozens, hundreds of cases. Rick's already mentioned the level three protocols. And, you know, once again that's attributed to the industry to CHASNZ to the Accord and the government agencies that feed back. So that not only did we manage to collaborate, to develop protocols that everybody could work to but it meant that the government accepted them. So we were able to adopt them unanimously and they were accepted by the regulators. So that was absolutely fantastic and a great part of work to get us back on day one. Whilst we've had all this disruption from COVE, the sector is also looking at a major upgrade of our vocational education system with the review of vocational education programme. The Accord is strongly involved. Bill Newson and myself are co-leaders of the Developing People Work stream. We're both involved with the development of the new construction and infrastructure, WDC, and we're also been involved with standing up the Construction and Infrastructure Centre of Vocational Excellence which is being established at the moment and will be operational in the first quarter of next year. The ConCOVE, as we call it, has got the, that's got five projects that broadly match the same objectives that the Accord has. So we're really looking forward to results of that coming out over the next few years. The Accord work streams are looking to address the longstanding structural challenges that the construction sector faces. And we're also looking at those new challenges. Obviously COVID was something that nobody anticipated probably not until February or so of this year. And then we've got these building issues like building for, or growing issues I should say, like building for climate change, which we can't duck and the industry has to adapt and modify our behaviour and our outputs so that we can meet the demands that are so important if we're going to meet climate change objectives. Well that in mind, it was great to see our first beacon project launch this year. The water care beacon, which encompasses the enterprise model is a great piece of work. It's a combination of several things. It's a new innovative business practise with long-term contracts and programmes. They're looking at a major reduction in carbon across their construction activities, actually reducing cost at the same time for the client and improving safety and wellbeing across their sites as well as improving the resilience of the contracting businesses that are part of the project. So just in summary, I think it's really vital that we maintain the collaborative culture that we've developed during the response to COVID. They say never waste a good crisis but we've never seen the industry and government come together to the same degree as we have this year. So we need to continue that. We need to embrace that principle of the Accord that sees we need to be bold. We've got to resist that race to the bottom, whether things continue to go along okay or whether we see a decline in the economy. But that race to the bottom doesn't help anybody. We've gotta focus on value to the client rather than just that bottom price. And as Rick says, we've gotta keep control of our costs. We've got to build a resilient and a sustainable sector. I look forward to answering questions later in the session. Thank you.
Thanks Graham for sharing. And now I'd like to welcome Leonie Freeman, the Chief Executive of the Property Council of New Zealand.
Thanks Dean. And it's great to be here. Like Graham and Rick, I'm also delighted to be a part of the Construction Sector Accord and we all know the importance of a united property sector. We have a complex ecosystem that we all are involved in, so we need everyone working together if we want to achieve the results that we're talking about. When I reflect on 2020, I first of all start from the viewpoint of I hope we don't ever have another year like it, but once I get past that, and I think about reflections there are probably two broad issues that come to mind. In terms of COVID and when it hit in March, there was some real positives for our sector that came a lot through the existence of the Construction Sector Accord. We already had a united, coordinated group representing our sector and that gave us access together to ministers, to government officials, and all the different groups, public and private sector together, all focused on, how do we get through this situation? And I think that if we hadn't had the Construction Sector Accord we would have run the risk of every one of the different groups representing different parts of our sector, all trying to communicate with government by themself. So I think that that in itself was really positive and we saw some great things that came out of that. I mean, to get construction back going at level three was really positive. And I know, you know, for example, some of our members and I was just talking to Scott Pritchard who's the new Property Council National Chair yesterday, who was responsible for the Commercial Bay development in Auckland. And they were something like six days away from opening when COVID hit, so for them to get back up and level three was pretty positive, and that came a lot from all the work from CHASNZ and all the people on the Construction Sector Accord to get those protocols in place. And Rick's touched on a number of those as well that we were able to introduce, you know, shorter payments for contractors to get the, keep the whole ecosystem going. So I think that side worked well. On our other side with some of our property owners, like our shopping centre owners, obviously they played a key part during level four and all the subsequent levels because many of the shopping centres were open. And whilst we didn't quite get it working at level three, by the time we got a little bit further down the track we had good coordinated access into government agency. So all the protocols, for example, if you think back to click and collect or when food courts opened and all that sort of stuff we were able to help develop, or largely develop, a lot of those protocols that we provided to government. So I think on that side that sort of thing worked really, really well. And the construction sector was to the forefront. I think on the other side, it's worth just discussing perhaps the areas that didn't work so well because I think it's not as a criticism but I think it's we as a whole property sector need to take some learnings. And I remember particularly in the early days we often heard the government talking about that we're going to build a way out of this crisis. And, you know, we know that typically the private sector development typically do about 80% of development in New Zealand and the public sector do about 20%. We did a survey in May of this year, which indicated that 70% of all the commercial industrial projects that were in the pipeline prior to COVID were now considered uncertain. And that was about 50% for residential. So that was a really significant, you know, amount of projects that were sitting in that pipeline. And we know that we need those projects coming through to feed the construction sector. So our stance at the time was, you know, to corporate liberation and to to get all the parties in that property ecosystem working together. And I think part of the thing that isn't well understood is how our whole ecosystem works. I think we'd done well on the construction but not necessarily as well on the, how that comes from, from our property owners, and developers, and things like that. Because one of the challenges that we had was we were trying to keep the ecosystem going, keep a little bit of money in supporting businesses by, you know, suggesting and recommending a subsidy for rent similar to the wage subsidy. Now, the government chose not to do anything about supporting tenants 'cause that was our focus as a way to support tenants. They chose to provide no support for landlords and tenants, and we were told to encourage all our landlords and tenants to come to some agreement. And that's really what the vast majority did. And, you know, as far as we were aware probably 90 to 95% of landlords and tenants came to some suitable arrangement during that. What then really concerned us a few months later was that the government then stated that they intended to intervene, drafting legislation which would potentially impact every commercial lease in the country by inserting a clause requiring a fee reduction in rent where the business had suffered a loss of revenue. Now, again, the issue for us was that this proposal was made with no consultation with industry and little consideration of the sanctimony of commercial agreements. And we think that commercial, that government intervention and commercial leases is unprecedented and dangerous territory. It would be similar to the government interfering with fixed interest rate contracts or the ability of utility providers to charge for their services. And I think one of the issues that happened as a result of that is it delayed the ability of tenants and landlords to get on with things and move forward. Because as soon as that started to be debated everything, you know, got held up. It also created a lot of unnecessary stress in the marketplace. Now after weeks of lobbying, this legislation did not pass and instead they announced a voluntary mediation and an arbitration solution. But instead of getting particularly small and large property owners and developers back on to track to planning projects everything just set in a holding pattern and was delayed as a result of this. So I think the issue to take from this is what we can learn from it, because I believe that we need to change our story. And why did the politicians believe that on one side, they talk about partnering with our industry through the Construction Sector Accord, but on the other side, which is still part of our industry, they wanted to force changes with no consultation with our industry. Why were the property owners targeted, and yet others in the business sector remain unscathed? And I think as a collective group we need to think through a wider, sector-wide strategy what shifts the perception of property owners and developers and a lot of people in our sector, and sort of wealthy capitalists, you know, gritty, grubby developers, probably fat cats type thing, we need to improve the government and the public's understanding of the property ecosystem, that everybody in our sector understands because the development processes is the one that then feeds the construction sector. Now we know we've got a long way to go but we are all in this together. And it's really critical that we get some of these things right for the betterment of New Zealand. And we need to make sure that we can continue the pipeline of projects that need to come through to ensure we can support the fantastic construction sector that we have, and not only for our sector, but the betterment of New Zealand. So I just wanted to close by sharing the Property Council's purpose and vision statement which I think encapsulates a lot of what we all talk about which is, together shaping cities where communities thrive. Thanks very much.
Great to hear from your Leonie, thanks very much. And finally, let's hear from Roger McCrae. Roger is the Chair of the Construction Health and Safety New Zealand group, otherwise known as CHASNZ.
Good afternoon. I'm the Chair of CHASNZ and I've been involved in the construction industry almost as long as Rick, but I'm very proud to continue to be involved in the industry and to be a member of the Steering Accord, the Steering group. So the things that I wanted to talk to you today about was really about mental health in the construction industry. And I think one of the key challenges that our sector faces is the number of suicides. It is the highest of any industry in New Zealand. And there are a number of reasons why that is. And then these are my own views. Market volatility, the lack of clarity about work coming up, future work opportunities. Our sector is subject to change very quickly. Projects could get stopped at short notice. And historically our industry has been a boom and bust industry, and this needs to change, and it is one of the Accord initiatives. Another factor is the long working hours. Many in the industry work long hours often at short notice and often to make up for time lost due to weather and other factors. And they're up against deadlines with financial penalties for not making the milestone or commitment. The short term nature of the employment agreements.
Many in the construction industry are employed from project to project, and coming to the end of a project are unsure as to where their next work is going to be. There's also the contracting out of responsibilities. Contracting of responsibilities to sub-contractors and those further down the supply chain, many of whom are ill-equipped to manage the risks that are being passed down to them. And for small to medium size enterprise businesses in particular, it's really having the resources to be able to manage the risks, management of time, overcommitment of time, managing of invoicing and cash, and in many cases probably being too nice to the people that they're working for. Another factor is industry failures. And when contractors fail the impact is passed down the line to subcontractors, suppliers in the supply chain. And in the industry, unfortunately, there is just too much bad debt. So all these factors place stress on people in the industry and people clearly have different ways of dealing with this. So CHASNZ and MATES in Construction have developed a close working relationship and partnership and one which is led by MATES as the body that's leading mental wellness and reduction of suicide in the construction industry. And the CHASNZ CEO, Chris Alderson, is the Chair of the MIC, the MATES board. The Accord has provided a really valuable platform for communicating the mental health initiatives that MATES in Construction is leading across the industry and providing, and the Accord has been really helpful in communicating those key priorities. MATES has provided valuable mental health support even before the Accord during and after the Accord shut down and resumption of work. It was great that MATES was in place at the time of the shutdown because the demand for their services ramped up dramatically over the shutdown period. And it has not let up since, in fact as we stand now MATES are looking to engage more and more case managers as funding allows. So, we're in the industry, still gathering data on the extent of mental health problems. Historical Coronial files are being checked. And we suspect that the real number of suicides in the industry is much higher than the figures that are the official figures at the moment. And there's a lot of work going into identifying causes of suicides as they happen today. And one of the key challenges that we as people in the industry and industry leaders need to promote is the de-stigmatizing of mental health, and encourage people to speak up, ask for help, and to remove that barrier. So I just wanted to move on to the COVID 19 response and Rick, and Graham, and also Leonie have spoken about that, but CHASZN, with the support of the accord, have worked really hard within industry and government over level four shut down to put in place standards and protocols that enabled the industry to return to work and effectively. And that work that has been done has been acknowledged by the industry, and also other industries. So keeping people who work in the construction industry safe and healthy is one of the bigger challenges facing the industry. And CHASNZ is the peak body of health and safety in the industry, and which was set up through years ago, continues to lead the health and safety wellbeing work stream which is one of the Accord work streams. So CHASNZ is committed to working closely with the Accord industry and government to raise the standards of health, safety, and wellbeing in the industry and to see everybody go home safely every day. So that's the end of my address and I look forward, like the others to answer any questions that anybody might have, thank you.
Thanks very much, Roger, Rick, and Graham. And what we're just going to do now is we've gone out to the industry to ask people a few questions and we're gonna play those videos. And then some of the team will answer those. And again, just encourage everybody on the line. If you wanna send through questions just pop them in the chat box and send them through, And we'll answer them after these videos.
Hi, I'm Josh and I'm a builder. And this is my question. Why is it taking so long for the Accords to acknowledge the problems with mental health in the industry?
Yeah, so listen, I'm happy to answer that question. So the industry has known for a long time that the problem with suicides, and high suicides in our industry exists and that's really why MATES in construction was stood up to lead and provide that support for the industry. And that was in place about the time that the Accord was established. So the Accord have known about the problem since the section of the Accord, and mental health has been one of the key Accord work streams. And I guess if anything, the Accord could have perhaps communicated this a little earlier.
Hi, my name's Brendan Glanfield, I'm approaching mention, how do you make the government understand that the private sector needs funding as well as the public sector?
Thanks, Brendan, and I might have a little bit of a go at that one. And I think it's absolutely critical and it all starts with trying to build trust and understanding, and you know, between the public and the private sector. And because sometimes I just don't think that everybody's quite there in that space. We've got a really complex ecosystem that we're all involved in. And we do need more education, both for the private sector to understand the public sector and some of their challenges and for the public sector to understand ours. But one of the things, you know, again just during COVID, that was really surprising to me. And again, it was difficult to get some response but when there was a lot of support going out to various businesses, particularly small businesses at one stage, the property developers and property owners were actually excluded from that particular suite of support mechanisms. And the only, you know there was some really odd other groups that were excluded. So why where that small group of small business owners singled out and excluded when every other business owner was included? So I think, again, we've got to take some responsibility for this and to look at how we can improve the education and understanding with the public sector. Last year we obviously didn't get a chance to do it this year but at property council we did run courses for the public sector around development and the broader ecosystem again just to help them understand. And this is more the broader decision-makers rather than say, for example the property people in the public sector. So we wanna try and expand that. But I think as, as a broader sector we all need to, to look at that. And how do we improve the understanding, trust in education between the two sectors, because we're all in this together. Thanks.
Hi, my name's Linda and I work with some construction companies. One of the questions I've got is what is the Accord doing to make sure that the government doesn't always accept the lowest tender?
Thank you Linda for that question. It's very relevant. And this was probably one of the first questions we addressed as an Accord. And we're seeing change of government behaviour particularly already, as I mentioned in my introduction and the fact that the race to the bottom has gotta be discontinued. We've gotta break the cycle of excepting the lowest price. And that's why I mentioned particularly we've seen education reduce the weighting of price, and the selection processes from, I think it was 40% to 30%. And so they're really focusing now on non-price attributes with the price becoming less weighting. We're seeing that change starting to transpire into other ministries as well. And ultimately we believe that will start to move forward into the private sector and Leonie will be, I have no doubt, passing on the same message to the private sector, clients, and property council. However, I have to say this. The construction industry and the contractors themselves have gotta take some responsibility. I'm certainly aware post-COVID that a number of contractors have been cutting margins, and I'm aware of projects being large, one large complex project's being one, are what I believe are unsustainable margins. Now the industry can change but we've all gotta take some responsibility in that area. So I think government's leading the way, I applaud what's happening in government, but the private sector's gotta follow and contractors have gotta take responsibility for themselves. Thank you.
Hi, my name is Nella, I'm a scaffolder and this is my question. What is the Accord doing to encourage diversity in our sector?
Thanks for that question, Nella. Look, the diversity is very important to the Accord and that's part of the Developing People Work Stream, which is led by Bill Newson of E tu Union and myself. We're looking at improving diversity. We need to do it to bring more people into the sector, to overcome those long-term skill shortages, and it's also really important that we improve equity and outcomes for different people that are working with, different groups of people, that are working within the sector as well. So we've started off by doing a stock take of what's already happening out in the sector as far as diversity initiatives. And what we're doing is we're trying to work to start with by supporting and promoting existing initiatives such as the Diversity Accord, which has been set up with Engineering New Zealand, Institute of Architects and some others. Diversity works, which is a broad-based organisation that's sole purpose is to improve diversity and supporting organisations like NAWIC, The National Association of Women in Construction. So it's really important to promote diversity, not just across gender, but also to make sure that we're looking at diversity across ethnic grounds and also people with disabilities, or different thought processes, and what have you. We are really looking forward to the work of ConCOVE. ConCOVE has got a work stream that's all about diversity, how to get more people into the industry, how to get better retention in the industry, and better outcomes for people, especially groups that currently tend to go through and not work their way up through to upper management and ownership. So that's a research project that we'll also be looking at actionable outcomes that will feed into our vocational education system and be taken up by the new WDC's the Te Pukenga and the Regional Skills Leadership Groups. We recently ran a webinar on on our diversity work stream, which was well-supported, And this week it's gonna carry on into the rest of the life span of the Accord, thanks.
Hi, my name's Craig, and I'm a painter. This is my question. How do you think Resource Management Act can be improved to streamline production?
Thanks very much for that one. And I'm gonna hand that question over to you, Rick, as a starting point.
I'm a bit hard of hearing but I think the question was, Leonie, is how are we going to improve productivity or production? Is that correct?
Yes, how the Resource Management Act can be improved to streamline construction?
Oh, sorry, okay. The Resource Management Act. Well I think we all agree that the Resource Management Act is a very important piece of legislation for the protection of our environment, but we all recognise also that it has to be streamlined to slow down the process of consenting, resource consenting for the point of view of cost and planning. Because at this stage, we're all aware of horror stories of numerous projects which have been held up or even got to the point where they'd be shelled because of issues around resource consent. We also need to overcome the types of issues associated with challenges to applications resource consent which were purely extortionary, And there was really no merit in the actual app, the complaint or the challenge to the application. And, but it's really just there as a money making exercise for the individuals themselves. So that's something the government's gotta work for. The government has committed to that. We're already starting to see some work being done in that area, so I think we all accept that there's work gotta be done. And that the challenge there is still to come out with legislation that works both for the environment and is something that is going to be streamlined enough and efficient and effective enough for the industry. A lot of work to be done there yet.
And I agree with you, Rick. And one of the things, you know, we've done a lot of work in the space around the Resource Management Act. And one of the challenges that I see is there's been a huge amount with the review of the Resource Management Act. And I know legislation is being drafted now. the critical point when it comes out for public consultation is that we need to make sure that what's being drafted actually will work in practise. I think sometimes there's a real disconnect between the people who draught legislation and actually our industry who have to put it into practise and what I've been advocating quite extensively within government around the space is actually make sure that we do more than just write legislation. But the whole thinking process towards how it's going to be put into practise is actually thought through before the act is passed because we do have this real danger that whilst the objective is to reduce cost, and speed up development, and protect the environment, and all these great outcomes, we actually face a real risk that it might slow down development and end up costing more. And that's what we don't want. And that's where we need to see things coming through.
So we're starting to get a few questions from everybody on the line. So thank you very much. So I think I'll kick off with a few of these questions that are coming in and I might start with you Graham. And the first question coming in is, you touched on it a little bit in your answer before, but it was how do you see the Accord working with the new ConCOVE?
So the ConCOVE has largely embraced the principles and the objectives of the Accord and its work projects. The two aren't tied directly together, the ConCOVE, it's a five-year project mainly a research project. But the thing about the ConCOVE is it's all very well to develop ideas, they've gotta be trialled. And so the Accord gives us that conjured out to industry where we can actually trial new initiatives, see if they work, measure the bits that work well, look at the bits that don't, you know, obviously work on multiplying the good bits and reducing the bad so that at the end of that five-year period we've actually got something meaningful to hand over. Now that the work of ConCOVE should be picked up by the new WDC, Workforce Development Council and the way that they put together qualifications. Te Pukenga, the Institute of Skills and Technology and their delivery, and it will also feed into work of the Regional Skills Leadership Groups which are there to direct the Tertiary Education Commission into their spending and vocational education.
Hmm, thanks, Graham. And I might just, while you're talking about ConCOVE cause there's another question aligned to it so we might answer that while we're here, which was how will the Accord help to ensure that the new ConCOVE has suitably qualified staff with New Zealand Industry experience? And then in brackets, they mentioned this is a real issue across the education sector currently.
Look, yeah, it's an interesting question when it comes to, so. So far ConCOVE has stood up most of the board, and I can tell you without listing all the individuals that we've got experience across vertical, residential, civil, I'm there representing specialist trades. We've got people from ITO backgrounds, from Polytech backgrounds, and from private training backgrounds. The board will obviously pick a Chief Executive or Director I should say, of the ConCOVE but a board doesn't get down to operational levels but the board will be monitoring the outputs of ConCOVE and the direction it's travelling. So like I said before ConCOVE is largely a research project, so we won't be employing carpenters, or painters, or whatever to research into the problems of the industry. But what we will be doing is as a board is ensuring that the engagement with industry for that research is meaningful and that we are getting out to the broader sector, including SMEs especially SMEs, they're that real hard to get to part that makes up most of the industry.
Okay, thanks Graham, much appreciated. Rick, I might put this one to you first and then open it up if anyone else wanted to make a comment. But the question is, what do you see as the biggest challenge for the Accord?
Undoubtedly, in my mind, the diversity and broad scope of all the stakeholders in the construction industry. And one of the other questions relates to the small end of town, small contractors, which Graham represents generally through the Accord. But it's bringing all those pieces of the industry together, look even at government and you look at the multiple facets within the government organisations. You've got education, you've got health, you've got defence you've got all these types of business, Ministry of Social Development, ACC, et cetera, et cetera. And it's getting the same communication, same habits, same ways of doing things throughout all these government departments private contracting organisations, private land owning and property investment companies, such as you're own, Leonie, and getting the same message, same behaviours, and same culture, and understanding of construction industry across the broader industry. That is the single biggest challenge. We will only get there with tenacity by sticking with it by supporting the Accord, and that was the point I was trying to make in my introductory section. This is not gonna happen overnight. It can't possibly happen overnight with such a broad diverse sector with so many stakeholders. We've gotta get support. We've gotta get everyone aligned and just grind away, a lot of commit, tenacity, and a lot of hard work.
Good answer, Graham.
Look, I totally agree with what Rick said. You know, we can, Rick and I can be adversaries quite often but at the end of the day, we end up with agreeing on principle on just about everything. I think, I think the number one thing we face, and it's kind of a societal problem with our total focus is on getting the best deal we can on the initial upfront cost of an asset, whether it be an extension on our house a new house, a new building, or a new motorway. And as a country we've been paying for this for years because we've got assets that aren't lasting anything like the time they should be. And we've got a construction sector that's been far from resilient and, you know leading up to the start of the Accord, we were seeing major construction businesses falling over at a time when we've had the most prolonged period of growth in history, not just living history. So it's changing--
No that's fine, I think there was a slight technical hitch there. And Roger, I'm just checking whether you're still there 'cause I was going to direct this question to you. He seems to be off the screen just for the moment. So it might be just down to the three of us guys. And so I'll put this one back to you, Rick. What, what's the biggest lesson you have learnt since you've been on the Accord?
That's a good question. I think I've learnt to listen to other people's side of the story. I'm a pretty probably opinionated person. There's a lot of people that'd appreciate. Listening to the other side of the story and trying to ensure that the other person's views are incorporated into the, whatever the solution might be.
Hmm, one of the things that I've often talked about when I've played in the space for many years around trying to bring people together to work together is I ask people if they remember that book, "Men are from Mars and Women are from Venus." And most people remember that. And 'cause I think there should be a new book, you know particularly when you talk about the public and the private sector, which is just a bigger story for bringing all of us together. And I think we should be a book, which is, you know, the public sector are from Mars and the private sector are from Venus. And the thing is that, you know, regardless of which perspective you come from, at the end of the day we all need to get married. And it doesn't mean that we have to agree on everything but often a marriage works because of strong underlying values and being able to understand each other's perspectives. So that's sometimes the analogy that I use in just trying to you know, get that wider thinking that we are all in this together. Graham, I might give this one to you first which is, what is the Accord doing to ensure that women see construction as a viable career option?
Look, at the risk of sounding like I'm dodging the question, we need to make construction a viable career option for everybody. And going back to the things that both Rick and I have talked about before, we need to have sustainable businesses, we need to have good wages. You know, we need to see good career paths. On top of that we do need to embrace diversity. So we need to, we need to break down their culture that's, you know... Look, a lot of construction you do have to be quite a tough person to work in it, let's face it. But we can be inclusive. And there's absolutely no reason why we can't have women or any other sectors of society working in construction. And I think it's a little bit like the mental health. We need to look at ourselves. We need to look at the gaps and just embrace a bit more inclusivity across the sector.
And I think for me, right, you go right, Rick.
I can probably help Graham a little bit of matter. And one of the initiatives we had came under business performances, which was initially initiated by the Vertical Construction Leaders Group and Master Builders is now being taken up by Graham's own organisation, specialist trades and being looked at also by civil contractors and the consultancy organisations. And that is, what does good look like? What does a good contracting organisation look like? And one of the aspects of that has to be diversity. And so it's gonna take a while as an industry, we're probably one of the last bastions of chauvinism in New Zealand in a lot of ways, and women aren't well-represented in the construction industry, particularly in the trades. But it's that understanding what a good construction company or a good company looks like, a good corporate citizen looks like and diversity, ethnic, and gender has gotta be a huge part of that.
And I think for me, you know I haven't been as long in property as Rick or Roger 'cause I think for me, it's about 30 years, but you know one of the things that I have seen over that time is there has been change, you know. So I can remember starting out as a valuer. There were very, very few female valuers and now nobody blinks an eye. I know that I did my time on a construction site. I've been out there doing that, but that was about 30 years ago as well. So it's something that we all need to work on but it's not, to me, it's not about whether it's gender or ethnicity, or what, it's about the diversity of thought, it's about diversity of perspectives and diversity of skills. And that, you know, we all have a war for talent that and there's lots of opportunities for people. And so we want to make what we all believe to be an exciting area and a great contributor to New Zealand you know, for everybody to see that they have a place it doesn't matter age, background, ethnicity, gender, whatever. And you know, we all have have a bit of a responsibility for that. So, you know, part of my reason for taking the role of property council was I wanna shift the diversity and inclusion in our industry. And that is part of the legacy I want to leave.
Yeah, that's an important point, Leonie. We can't forget how far we came. I joined the industry in 1973. I didn't come across the first woman in the construction industry 'til over 10 years later. It was probably sometimes about the mid eighties I came across a woman who was a professional engineer rather than, not the receptionist, not the tea girl, not somebody working in administration. So we, now in Naylor love, we have 30% of our professional administrative professional and admin staff are female. I can't say that's the same in our trades teams but things are changing.
Yeah, absolutely, so the next question and this is probably more directed to you, Graham, is there a dedicated support platform specifically for subcontractors helping them to manage risk contracts, et cetera?
So I represent small to medium enterprise businesses on the Accord and I'm President of the Specialist Trade Contractors Federation. Look, we, there's not a specific part of the Accord that's looking at contracts for subcontractors but the Accord has been very strong in advocating for improvements to the retention's regime, which I believe if we hadn't have had the COVID crisis this year would have been through by now. What's really interesting, I think is when the Construction Contracts Amendment Bill came in, and I'm just, I think it's about three or four years ago now there was, there was a huge void at the time between main contractors and sub-contractors, and this was a real divisive issue. Now we're on the same page. Good main contractors want to see the changes as much as sub-contractors do, because it's only the rat bags basically, that are mistreating retentions. Now we get criticised for talking about retentions too much but the thing to remember about retentions is construction's the only industry that uses them. And the problem with retentions traditionally has been that a lot of main contracting businesses have been surviving by using the retentions from their supply chain for their working capital. Now, if you're running a good business and you've got margin in your business, and you know your costs, and you're trying to compete on a level playing field, and you're putting that retention money aside, you're at a major disadvantage to a company that's working on no working capital and using everybody else's money. So I think to answer the question in a slightly roundabout way, what's good for one is good for all. We need to be concentrating on value not just bottom price. If the client is looking at value, and capability, and capacity in their contractors, then those contractors need to be looking the same in their subcontractors and supply chain. Ultimately, I would like to see the procurement rules change so that they are driven down through the supply chain not just for the main contractor but down through the sub-contractor as well. So that we see those training requirements where we see the capacity and capability requirements where, let's face it, that's where most of the actual work is done, about 80% of the work is actually performed by those specialists trades. So echoing what Roger said earlier on, as well as, we're our own worst enemies. So I know talking to our members and my friends here in business in my broader network that coming out of lockdown the first thing that happened is a lot of people in the specialist trades drop their prices to make sure that they got any work that was coming up. Now we've gotta, we've gotta be strong in ourselves. We can ask the Accord and we can ask the government to do all sorts, but if we're gonna continue to go out there and work for zero margins we're not gonna see an improvement in the industry. That's something we have to do ourselves.
Thanks Graham, and thanks Roger for getting back on. Now our time's up so I apologise to those who sent in questions that we weren't able to get to but I'm now handing back to Dean to do his closing remarks. And just thanks to you all--
Thank you Minister for your introductory remarks, and of course, to all my colleagues from the Construction Sector Accord Steering Group. And of course thank you to all of those hat have asked questions. This webinar has been recorded and can be watched by visiting the Construction Sector Accord website. There is no doubt, however, we all have a lot of work ahead of us to enact change in our sector. This government has signalled the strong support for the Construction Sector Accord and the work needed to maintain construction momentum and respond to the impacts of COVID-19. As government and agencies continue driving an ambitious construction and infrastructure programme the Accords role in supporting a collaborative, high performing sector will be crucial. So I look forward to bringing you further updates in 2021. So on behalf of the Construction Sector Accord, happy and safe holidays everybody.