NZ Chinese Building Industry Association president Frank Xu has called for the Government to apply part of its surplus to funding construction work when the construction peak has passed, forecast for 2021.
Mr Xu said the Government needed to do more to plan for a slowing environment: “Everyone in the construction sector expects a downturn in the next 2 years, once the peak passes in 2021. Government plays a very important role in stimulating the economy. By acting smart within the cycle, the Government can plan to invest in housing & infrastructure over the years when the industry is set to be quieter.
“We have all seen recent announcements from the Government celebrating the large budget surplus. By applying some of this surplus in a downturn, they will be able to buy more for their money and provide the construction sector with greater project certainty, which is the key to maintaining workforce, skills & training. Certainty of pipeline is everything, as the industry finds it extremely difficult to invest in staff, technology & equipment without it.”
Mr Xu said Australia’s Reserve Bank provided a tax deduction of at least 30% on investment in plant, equipment & machinery in the construction industry in the last downturn after the global financial crisis: “When the time is right, the Government here could consider this course of action, for example. It’s one thing that the Government could do to keep investment stimulus going in the sector to smooth activity during downturns.
“Another thing they could do is set up an indicator or index to understand when the Government should intervene with stimulus; creating a band, much like exists for the Reserve Bank of NZ to raise or lower interest rates. This could be a performance criterion for Government – when to cool, or invest more, in the construction sector.”
The annual National Construction Pipeline Report, produced in August by building sector research association BRANZ & Pacifecon NZ Ltd for the Ministry of Business, Innovation & Employment (MBIE), forecast a peak in total construction value of $43.5 billion in 2021, and residential activity to level out next year at $26 billion.
The NZ Chinese Building Industry Association (represents a wide range of businesses & professionals in the building industry in New Zealand as well as local businesses & professionals that have close working relationships with the Chinese building industry.
Mr Xu is deputy general manager & executive project manager of Chinese-owned development company Shundi Customs Ltd, which is developing the 187m, 52-level Seascape apartment tower on Customs St in downtown Auckland.
Attribution: Association release.