Hon Jim Anderton
18 November 2002 Speech Notes

Building on current growth

5:15 pm
Monday, 18 November 2002
Building Industry Federation
Construction Marketing Services at the Victoria Park Market
Auckland CBD

It is always good for the government to be constructively engaged with representative groups from important industry sectors of New Zealand.

It is more pleasant for me as a Government Minister today, than having to explain why the economy is doing badly, a problem that faced Governments in the 80s and 90s.

A strong economy, however, does present its own problems.

One of which is Opposition MPs and some economists predicting how things are going to get worse. It’s a cheap prediction and one that if you say if often and loud enough maybe, in part, self fulfilling. It is also like predicting that it will rain. Even in the Sahara Desert if you say it long enough you’ll be right eventually.

My view is that we can keep New Zealand growing in a positive and sustainable way.

New Zealand can make the target set in February 2002 by this Labour Progressive Government for around four per cent growth each year for ten years.

There may be some minor fluctuations, but with factors such as the growth in wood processing, the boom in overseas students, and more favourable world trade conditions the most likely barrier to our economic development is our own capacity constraints.

I don’t believe the economy is yet at full steam.

Currently much of our growth has been using spare capacity, such as the unemployed and under-utilised capital equipment.

Real growth in productivity can only come as we improve our infrastructure, train more New Zealanders in areas where skills are needed, and work together to develop our economy.

I am pleased to see the increased demand in your industry.

Of course I am pleased that for many of you business is booming.

I am also happy that this means more jobs for apprentices and builders.

However one of the key reasons to welcome this news is that economists pay particular attention to your industry, as an increase in building permits is one of the first indicators of a economic growth.

And building permits are still increasing both for residential and for commecial buildings.

I have visited all regions of New Zealand and the growth and optimism is unlike anything I have seen in the last 40 years.

I think we have before us a huge opportunity.

The regions of New Zealand are all in positive growth mode, most at over four per cent.

There have been over 100,000 new jobs created in the last three years.

Employment is at its highest level for many years.

There is a wall of wood coming on stream which will supply high quality building material.

There are now 3,000 new apprentices than there were three years ago with 3000 to come, and 68,000 people in industry training.

Your industry has been a leader in apprenticeships.

We now face unfilled jobs and unemployment sitting, ironically, side by side while we have had to restructure industry training.

The West Coast recently went to England in search of skilled workers.

Venture Southland has launched a campaign to attract skilled South Africans and was excited to get 170 replies before their recruitment team even left New Zealand.

The manager of Venture Southland didn’t want to go to the UK where there was a migration fair because, he said, “I just didn't want to get lost in the noise of every other region in New Zealand".

In Ashburton there are so many job vacancies that employers are looking overseas for workers. There are also jobs for two hundred freezing worker that can’t be filled – when did that last happen?

There is a mis-match, however, between the skills we do have and the jobs that need doing.

The challenge that your industry, and other industries face is ensuring there is appropriate training to produce the workers you need. This will require working with training providers to create training and encouraging young people to take up the opportunities you can offer.

One of the reasons we need to get moving on training our young people now is that in the next five to ten years 75 million workers are going to leave the OECD workforce.

They will be replaced by only 5 million entrants to the workforce.

In the years following the average age of the workforce will continue to climb.

The maths are compelling. There will be a serious world wide shortage of skilled workers.

People who speak English are likely to have an advantage in OECD countries and New Zealand young people, well educated, hard working and innovative will be highly sought after.

With an ageing population young workers are going to be able to choose where they live, where they work, and probably how much they should be paid.

If we want to keep our economy moving and not lose the best and the brightest of our young talent we need to start creating opportunities now.

This means reviewing how we treat our workers in terms of pay, conditions and training opportunities.

We will also need to compete for immigrants. We will need more skilled and people and we will be competing with other countries for them.

This is one option we have for ensuring your industry has the skilled workers it needs and can keep moving forward.

I am aware that while ‘leaky building syndrome’ or ‘weathertightness’ is a serious issue for those affected, the numbers involved are not great.

And I know that the majority of builders have built excellent homes and commercial premises.

In consultation with the industry the government has developed a disputes resolution process and launched a website and a toll free phone line for homeowners affected by ‘leaky building syndrome.’

We are pursuing four separate streams of work:
- assisting homeowners to obtain redress;
- working with the Building Industry Authority on its responses to the Hunn Report;
- monitoring and assessing the immediate market impacts and reactions in the insurance, building certification, banking and construction industries;
- examining future regulatory changes, including changes to the Building Act and possible registration of builders.

The Labour Progressive Government wants to work with you.

The government is aware of the payment problems endemic in your industry and we are addressing those problems in the Construction Contracts Bill. We have tried to work with the industry to find solutions, and the provisions in the Bill were reached after consultation with the industry, and in particular the Construction Industry Council.

The Bill will be passed very soon, but there will be a transition period of a few months, so the industry has the chance to upskill and educate its members about the changes. I think the Bill will make a big difference.

However as we all know legislation alone will not create a stronger building industry or higher quality training.

This will only occur as you yourselves address the important issues which your industry faces.

In my visits around New Zealand I have been impressed by the new ideas that New Zealanders have and continue to have.

I think that New Zealand’s competitive advantage lies in our innovation.
This is driving our current growth and up and down New Zealand I see examples of just how creative New Zealanders are:
- Hamilton jet boats
- Britten Motorcycles
- Tauranga Motor Mowers
- Blokart
- Angus Tait
- Hi Tech health care development
- Alan McDiarmid – Nobel Prize winning NZ Chemist, small companies with venture ideas.

The challenge for the building industry and all our industries is to apply our good ideas in order to provide better training and better construction techniques.

We need to find ways to ensure our current growth continues for years to come.

The Government is prepared to work with you as a partner to help you develop your industry in a positive way.

As the Minister for Economic, Industry and Regional Development I know that we need all our industries succeeding to continue to develop our economy to it’s full potential.

I look forward to working with you.

ENDS

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