Government wants economy growth to expand building pipeline

Tuesday, 17 June 2025

The Government is working to get the economy's juices flowing to open up a bigger pipeline of work for the building industry, Finance Minister Nicola Willis says.

It has been a hard couple of years for the construction sector, and many building companies have struggled to deal with the economic climate and financial pressures.

At a Master Builders post-Budget breakfast in Auckland on Friday, Willis acknowledged the tough times the sector has faced, and said the Government was working to open up more opportunities and a bigger pipeline of work.

She said all the economic data she had seen indicated the economy was moving in the right direction, but the Government was trying to hurry up the recovery.

One of the actions it had taken to incentivise business activity was increased investment in infrastructure, along with the investment boost announced in the Budget, she said.

“The investment boost aims to create a bit of confidence and give businesses a nudge to start projects they would not otherwise have started.”

The boost allows businesses to deduct 20% of the cost of a new asset on top of depreciation. It also applies to industrial and commercial buildings and any improvements to depreciable properties, Willis noted.

“It has been made clear to us by the industry that the lack of depreciation has made it hard for commercial development projects to stack up.

“I’m confident this will help projects stack up and we will see more development in the commercial space.

“The more people who make use of this policy the better. This Government wants people to invest in projects and we want to support the sector with that.”

But the Government was also aware that it was a huge buyer for building industry services, and had the ability to stimulate lots of activity, she said.

“We have to be careful about the way we select capital investment, but we don’t want to wait for the Budget each year to tell you what we need. We want to tell you what the pipeline is so that you can build to it.”

She pointed to Budget allocations of $1 billion for health infrastructure, $50 million for mental health facilities, $946m for school builds and maintenance, $604.6m for railways, and $440m for social and affordable housing as examples of investment in infrastructure which would increase building activity.

“Successful countries invest in and deliver good infrastructure, and that’s why it is a focus for us,” she said.

“But we know you need us to commit to projects as we go forward. Sector representatives often ask us about the pipeline, the future and the on-off situation with changes of government.

“We have a commitment to infrastructure, and we will be publishing a 10-year infrastructure plan later this year. It will give a clearer blueprint for agencies planning to build so people have a clearer way forward.”

The fast track consenting process was also gaining real legs, and the Government would be in a position to confirm the first fast track project later this year, Willis said.

“We are pleased that so many people have put housing and building construction projects through this framework. This will also help to boost development activity.”

Building and Construction Minister Chris Penk also spoke at the event, which aimed to be a forum for government and industry to come together to shape practical, long-term solutions on the big issues.

Penk said the construction sector played a huge role in the economy, providing jobs and opportunities, and creating the spaces that people live, work and play in.

He had a mandate to reduce red tape and get rid of the obstacles to building more quickly, but he had been listening to the industry, he said.

“There needs to be sensible regulatory enabling of some types of builds and activity in the sector, but a careful level of oversight needs to be maintained for bespoke builds and certain typography.

“So it’s all about what ways can we better enable the market, the consent system and the people doing the work, without adding additional costs and regulations just for the sake of it.”

That had led to a suite of policy proposals around self-certification for responsible builders who met the required criteria, and reform of the consent system, including wider use of remote consenting, he said.

“We do need to further consider liability settings, get better consumer protection, and crack down on the cowboys more, and we are doing work in that space.

“But if we can join the dots we will have a system that enables faster building processes, and allow building companies to get on with it and do the work we need to do.”

Neither minister made any big announcements, but each referred to announcements of new systems or rules relevant to the sector that were coming up later this year.

Willis talked about the 10-year infrastructure plan and changes to procurement rules, while Penk promised a decision around a revised earthquake strengthening framework and more detail on self-certification and liability.

Master Builders chief executive Ankit Sharma said the sector understood the Government’s fiscal constraints, and also saw its commitment to critical investment.

He welcomed the $6.8b in new capital funding for essential infrastructure in the Budget, along with the 20% asset deduction for businesses, he said.

“We encourage the Government to build on this ‒ with more ambition, more delivery, and continued momentum. My call to action is we need to keep going, keep building, and keep delivering.”

To that end, the sector needed certainty and a visible pipeline, modern and efficient regulation, a workforce aligned to real demand, and procurement practices that reward long-term value, not just the lowest cost, he said.