NZ government seeks to save money on building materials as annual spending set to double

Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.

Launch Radio player

New Zealand's government is looking for ways to save money on building materials as its annual spend is predicted to more than double for the next five to eight years, driven by the Canterbury rebuild and leaky building remediation.

Government agencies are forecast to increase their annual spending on building supplies to $3.3 billion from a previous base of $1.5 billion a year, the Ministry of Business, Innovation and Employment said in a discussion document. Canterbury is expected to account for 54 percent.

As part of a procurement reform programme started in 2009, the government is trying to save money, improve productivity and boost competition by establishing 'all of government' contracts with suppliers. The government, which traditionally accounts for about 27 percent of the construction market, wants to expand the procurement programme to cover building materials as its spending ramps up.

"Since 2007, there has been an upward price trend on a variety of building materials despite reduced demand associated with the global financial crisis," the ministry said. "Our current forecasts indicate that increases in prices arising from renewed international demand, exchange rate movement, a reduction in raw material availability and rising transport costs will maintain or increase this trend.

"Given both the scale and potential increases in agency spend, government is keen to ensure that it takes a more collaborative, coordinated and strategic approach as to how it procures and pays for building materials," the ministry said.

The ministry is seeking input on the discussion document from manufacturers and distributors of building materials, tradespeople and construction companies, and professional organisations or construction professionals involved in the specification of building materials.

Responses must be returned by Nov. 8 and the ministry plans to publish a summary detailing its findings by Nov. 29.

(BusinessDesk)


This article is tagged with the following keywords. Find out more about MyNBR Tags

Post Comment

3 Comments & Questions

Commenter icon key: Subscriber Verified

What about regulating the construction cartel, to a level of gross margin that would otherwise be acceptable if there was competition.

The biggest thing that is slowing this countrys economy down is the profit gauging by companies who products have no substitute. Whats worse, these companies are mainly overseas owned.

I thought the government was employed to work for its citizens. Think again. Free market my ass. It doesnt exist.

Reply
Share
  • 0
  • 0

Yeah, 'cos things are so much better under Government regulation. Works well for all those Socialist countries, eh !

Reply
Share
  • 0
  • 0

It would do well to look at the durability of the products / materials not just price. The leaky building debacle was the result of seeking to build homes faster. The process of impregnating timber with chemicals to help resist water and the subsequent time to dry the timber led to huge pressure to change the rules on boric treatment. The rest is history. The use of pvc without ultraviolet light protection suitable to NZs hash UV incidence is another area where imported products will fail. Home builders who source all materials and appliances from Malaysia and other Asian markets via Merchants have little regard for the home owner once the property is sold, cheap and shoddy dwellings that will not last and will cost more in the end.

Government should do Total Cost of Ownership models and ensure Builders / Project developers take insurance to cover failures. We get better service (and product) from the Motor Industry but they supply cars worth a fraction of a house, and when they fail the industry has to get in and repair the fault, and where bad enough go back and repair all previously sold items with the faulty part.

Reply
Share
  • 0
  • 0

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7493 0.0007 0.09%
AUD 0.9604 -0.0014 -0.15%
EUR 0.6799 0.0011 0.16%
GBP 0.4915 0.0004 0.08%
HKD 5.8128 0.0050 0.09%
JPY 89.9380 0.0330 0.04%

Commods

Commodity Price Change Time
Gold Index 1198.1 -2.780 2015-03-05T00:
Oil Brent 61.0 -0.250 2015-03-05T00:
Oil Nymex 52.5 1.050 2015-03-05T00:
Silver Index 16.1 0.000 2015-03-05T00:

Indices

Symbol Open High Last %
NZX 50 5856.8 5903.6 5856.8 0.78%
NASDAQ 4979.9 4993.5 4967.1 0.32%
DAX 11427.6 11532.8 11390.4 1.00%
DJI 18096.9 18160.3 18096.9 0.21%
FTSE 6919.2 6968.6 6919.2 0.61%
HKSE 24235.8 24294.4 24193.0 -0.01%
NI225 18814.8 18979.6 18751.8 1.09%