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PwC Report Shows Construction Sector Major Contributor To NZ


PwC Report Shows Construction Sector Major Contributor To NZ Economy

PwC Report, ‘Valuing the role of construction in the New Zealand economy’ shows construction similar to value of the wine industry at 8% GDP

Auckland, 19 October 2016 – The PwC report released today called  ‘Valuing Construction in the NZ Economy’,  sees construction  leap into the fifth largest sector by employment (178,000 FTEs) and contribute 8% of the country’s GDP  - establishing its place as a major generator of NZ economic growth.

The report, commissioned by the Construction Strategy Group (CSG) and the NZ Construction Industry Council (NZCIC), highlights the extent to which the construction sector is a driving force in the New Zealand economy and where both future opportunities and challenges lie.  Crucially the PwC report makes a series of key recommendations (for Government, Industry and consumers) covering changes that would improve the productivity and performance of the industry in order to better sustain its long term growth.

The Chairman of CSG Geoff Hunt says the backdrop of the construction sector’s contribution to New Zealand’s GDP include the regional differences, overall performance of the sector, growth trends and provides deep insights into what we need to do to address structural barriers to future growth.
“Think of the construction sector’s 8% GDP contribution to the New Zealand economy as the same as the whole of the Waikato region - the construction industry is already of the same value as the New Zealand wine industry. This is huge and the construction sector is continuing to expand.  This demand ranges from infrastructure projects through to hundreds of thousands of residential houses for Auckland and means the construction industry will continue to support significant job growth and revenue creation,” says Hunt.

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Hunt adds that one out of every five jobs (26,000 new jobs) for the 2012 – 2015 period came through the construction industry and many of these are people with post-school qualifications.

“Clearly construction is central as a long term contributor to the economic health of the domestic economy. Job creation, and especially higher-skilled workers, will also encourage new investment to flow and the extra scale the construction sector needs to achieve maximum productivity and consistently high quality performance.”

The Chair of the NZ Construction Industry Council, David Kelly says that one of the big differences between the current report and the previous document from 5 years ago is that the construction industry is creating more skilled jobs which also includes far more women in the industry.

“One of the highlights was the 45% increase (or almost 5,000 jobs) in the number of women in construction roles. Projections also suggest we will need an extra 49,000 construction jobs by 2021 to meet demand from things like the Christchurch rebuild, earthquake strengthening, pipeline of infrastructure projects, and significant residential demand in Auckland which all adds up to sustained growth.”

Hunt says that the PwC Report also points out the way to reduce the likelihood of the ‘boom and bust’ pattern of recent decades and allow the construction industry to proceed with a confidence born of certainty in regulatory settings that ongoing market growth will take place.

“The current building industry boom is likely to continue given the Proposed Auckland Unitary Plan provides for the additional 422,000 dwellings over the next 30 years. We expect that the value of construction work will peak in 2017 at $37.2 billion with almost half of the growth coming from the residential housing in Auckland,” says Hunt.

Hunt also adds that there will challenges to deliver sustained growth and productivity for the construction industry without the previous record of debilitating peaks and troughs in demand.   These include:
·         A predominance of small firms in the construction sector and a lack of specialisation which can limit productivity.
·         A gearing of the industry, its supply chain, and manufacturing base in residential building toward bespoke rather than mass-customisation.
·         A need to get more students to take construction related higher education courses and applying for jobs in the sector.
·         Better and more streamlined approaches to procurement, improved quality assurance, contracting and project management, for example reducing the fragmentation of contracts that limits innovation and value for consumers.
·         Reducing the trend to push risk onto suppliers using bespoke contracts.
·         A lack of large scale residential development opportunities that limits the speed at which additional housing can be constructed in Auckland and hampers growth of lower cost customisation trends.


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