I was sent this really well written and argued paper recently. I particularly liked the authors arguing which projects would kick-start the economy best:
If the intention of Government is to restart the economy, focussing only in horizontal construction would be a missed opportunity. Post-pandemic planning for construction should be focussed on maximising employment across the country. In terms of labour utilisation, residential and vertical construction use vastly more tradies and subcontractors to deliver their outcomes compared to horizontal construction. Typically, up to 50 per cent of all expenditures on a vertical or residential project is in the form of direct labour. Materials and other services have further labour costs associated.
Money going into the hands of tradespeople starts immediately at commencement of projects rather than filtering through later. By contrast horizontal construction has typical labour values of 25 per cent to 30 per cent. Stimulus investment in vertical or residential construction can potentially have twice the employment bang per stimulus buck. We need to think beyond “shovel ready” towards “workforce ready”.
Maintenance backlogs (they were referring to DHB’s) could be unleashed immediately when buttons were pressed. Tradies and SMEs would respond without delay. Better yet, most work won’t be tied up with RMA and consenting. “Shovel ready” infrastructure projects are undoubtably central to post pandemic planning. However they should be seen as part of a wider tapestry of options. Keeping tradies busy now on backlog maintenance of public sector assets would provide a resilient resource that could be transferred to the private sector after recovery.
We are in the jaws of a systemic crisis. We need to build our way out through targeted investment. Silver bullet infrastructure spends need to be tempered. We need to retain key skills, maximise employment outcomes and enhance resilience in critical assets. Starkly put – Government should decide whether its policy is to maintain construction employment or construction machines.