Construction industry leaders plead for acceleration of infrastructure projects

(file image) Photo: RNZ / Cole Eastham-Farrelly

The construction industry is pleading with the government to speed up its infrastructure plans, warning a major work slowdown is pushing businesses to breaking point.

Four large associations from across the sector wrote to Infrastructure Minister Chris Bishop in April, calling for him to accelerate work, particularly in the water and transport sectors.

"We are witnessing a significant slowdown in work, particularly evident in the water sector, but also

permeating across other areas including transport and housing, with project cancellations and

deferments.

"Among others, local authorities are conveying to us their challenging financial predicaments, citing either a lack of funds or a need to await direction or decisions from central government before proceeding with planned works."

Labour leader Chris Hipkins revealed the letter in Parliament to which the prime minister said a big pipeline of infrastructure projects was coming.

The letter was signed by the chief executives of Infrastructure NZ, Master Builders Association, Civil Contractors NZ and ACE NZ.

The associations said the resulting uncertainty had forced some businesses to the brink of collapse.

"Many, including our small to medium businesses, have reached a breaking point and are being forced to make tough decisions such as cost-cutting measures and downsizing in the absence of immediate investments."

With 10 percent of New Zealand's workforce employed in the infrastructure sector, uncertainty could mean losing skilled people to overseas opportunities, they said.

"If we lose people, it will be very hard and expensive to attract them back when we need them for delivery."

They said multiple surveys they had undertaken showed constraints as a result of contracts being cancelled, paused or deferred, attrition overseas, and failing business confidence.

"Our collective view is that some immediate signals from the government into some kind of stimulus renewals package would help address the current challenges the sector is facing, and

better position us to deliver to the government's future infrastructure plans when these are ready to flow to market."

Many businesses were caught in a gap between the intention to start work on projects and the actual starting point, they said.

The leaders of the associations called for sustained infrastructure investment.

"Infrastructure has a knock-on effect to the broader construction and housing industry. If we do not have adequate infrastructure, then we are constrained in our ability to build houses and there is also an impact on commercial growth also."