October 2021 - January 2022
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EQUIPMENT
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October 2021 - January 2022
Is your fuel bugged? Diesel is an organic compound, and like a slice of bread, it can go mouldy, which can pose some serious safety risks, says David Armitage from Conidia Bioscience
MANAGEMENT
M
ould, a form of fungus, yeasts and bacteria can grow in fuel over time. Termed ‘microbiological contamination’, this threat is greater now as the global pandemic has created a reduction in fuel turnover. As fuel is stored and backed up in the supply chain for longer, road haulage and commercial forecourt operations need to take extra care to keep this contamination in check. While consuming mouldy bread may not be an appealing option, it will not actually do you any harm. Microbiological contamination in fuel supplies, on the other hand, has much more serious consequences on fuel systems and storage tanks. As microbes multiply in the fuel, they can form a biomass layer consisting of billions of organisms. This biomass can block filters, increase injector wear, and even corrode tanks with the organic acid it produces. Worst of all, microbiological contamination can be passed along the fuel supply chain, whether from pipeline to storage tank or fuelling truck to retail forecourt. This means that even if a depot is experiencing high fuel turnover, delivering food, Amazon boxes or other supplies, the overall slump in global 4
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fuel consumption across all modes of transport means contamination from the fuel supply chain could still be an issue. Rachel Harrison at Fueltek Ltd says the ‘diesel bug’ is something that anyone storing fuel in bulk is generally aware of, but maybe not of the increasing risks it poses. What does this mean for managers? No one wants to add unnecessary activity or cost to operations, but managers need a smart way to make smart decisions to help prevent the potential of significant remedial costs due to damage caused by microbiological contamination. But why does microbiological contamination occur? Fuel inherently contains water in some form as soon
making it impossible to keep it completely out of the supply chain. Many companies will have sophisticated wet stock management with water sensory equipment, but even the smallest amount of water (far from the levels these mechanisms can detect) can do damage. Couple the presence of even a small amount of water with the use of more
While there is no regulation to test fuel supplies at garage forecourts or refuelling hubs, the risks contamination poses, especially at a time when overall throughput in the supply chain is lower, are significant as it leaves the sterile environment of the refinery. Water can be picked up at any point in the supply chain; in pipelines, storage tanks and fuelling trucks. It can also naturally enter storage tanks due to condensation,
sustainable and environmentally friendly fuels, which has led to a reduction in sulphur and addition of biofuels, and the microbiological problem gets worse. While steps can be taken,
such as cleaning fuel tanks or dosing them with biocides if the tank is not contaminated, this adds a significant cost to operations. A regular, on-site testing regime using lateral flow devices, however, offers a quick, easy, and low-cost way to ascertain whether action needs to be taken. Immunoassay antibody test kits are a proven technology to give accurate levels of microorganism activity in a fuel source. Testing can be carried out on site without the need for in-depth training or investment in sophisticated test readers or other high-tech equipment. The kits require no special handling, storage or disposal and are safe and easy to use, providing quick results without the need to send samples away for testing. The very nature of how the test works means that there is minimal risk of cross-contamination (unlike if sam-
MANAGEMENT
October 2021 - January 2022
ples are sent away to a lab), results are accurate and completely reliable, and site managers can take control in ensuring they will not be caught out by undetected contamination. Compared with other testing methods or technology to prevent a build-up of microbes, antibody test kits are one of the lowest cost options. With no initial capital investment required, the cost of a kit provides an almost immediate return on investment if it prevents just one unnecessary storage tank clean or biocide dosing or averts an incident where an engine is damaged by the microbiological contamination. Antibody fuel test kits have been used for many years in the aviation industry, where fuel testing has long been a standard procedure, and other bulk users of diesel fuels, such as marine and power generation have followed suit.
Most people are aware of the technology, which is widely used in the medical industry, as it is the principal test for the COVID-19 infection. While there is no regulation or mandate to test fuel supplies at garage forecourts or at road haulage refuelling hubs, the risks contamination poses, especially at a time when overall throughput in the supply chain is lower, are significant. A good testing regime Microbiological contamination can occur at any stage in the fuel supply chain. In any testing process, some important procedures should be followed: Sampling points should be wiped clean with at least 70% alcohol solution or wipe; sampling equipment should be cleaned after each sample is taken, and, ideally, a new sampling container should be used for each sample.
If a site begins to use antibody test kits to periodically test fuel supplies, the frequency of this testing can be adjusted as historical results are catalogued. For companies that employ fuel maintenance contractors, fuel testing is not assured and the number of cases in the road transport sector of equipment being damaged because of contaminated fuel is increasing. Fueltek’s Rachel Harrison says a regime of good fuel husbandry and management should be in place, and antibody test kits are a useful, inexpensive tool to support this. If left unchecked, microbiological contamination can have serious impact on machinery and drivers. Indeed, the damage it can cause to diesel engines, fuel tanks, pumps and other machinery should not be underestimated. The contamination can be transferred to most middle
distillate fuels and will grow if left undetected. Water is the fuel’s worst enemy, and it is good practice to periodically remove as much water as possible from supplies, but testing is the only way to be sure that contamination is not being left unchecked and machinery is not being damaged. This testing can be carried out by a single person and does not need to be an onerous or expensive task. Antibody test kits offer a simple, quick, cost-effective way of checking fuel supplies on site without the need for specialised skills or procedures. For facility or fleet managers, these kits could lower maintenance costs and reduce risks to day-to-day operations. For all drivers, the cost of avoiding catastrophic engine failure on our highways certainly goes way beyond the cost of a lateral flow test kit. safetynews.co.nz
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October 2021 - January 2022
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October 2021 - January 2022 3 4 8 10 12 13 15 16 18 19 20 22 24 26 28 29 30 33 38
No better investment than chemical safety training Has your fuel gone off? Bastion NZ launch Industrial glove range Toxic fumigant banned Remote working putting organisations at risk Critical infrastructure vulnerable to hackers Industry leader in soft fall protection on construction sites Unlearning misguided muscle training Radio technology keeps workers safe and compliant Safety app a crucial element in building site safety Priming your business for post-lockdown recovery Six strategies to manage cash flow during Covid Surviving as a modern business Chemical safety relies on meaningful cooperation Homebrew 1080 poison hospitalises worker Is standardised training the way forward? The SME business dilemma AC Filter - an engineered solution protecting worker health Latest lockdown puts ongoing strain on construction
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Multi-purpose, safer, faster telehandlers increase productivity
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Australian construction industry cries out for reform In search of the perfect surface contractor invents new earth compactor Transmission Gully - what went wrong? The New Zealand Upgrade Programme cost blowout The fight for common sense and a reasoned debate Immigration policies hindering construction sector Site Safe Awards finalists announced Facilities management with personal service 3D-printed housing Capital markets investment outlook Where is housing most affordable in New Zealand? Tax changes threaten rental market New Zealand's housing crisis a breach of human rights China builds apartment block in a day Kiwi innovation leading the way in concrete slab insulation Kiwi Property kick starts build-to-rent in New Zealand What is build-to-rent? Does it have a future? What's holding it back? Wrong name, right product why build-to-rent is struggling
44 46 50 54 56 61 62 64 68 72 74 76 80 81 82 84 90
Published by Media Solutions Ltd PO Box 503, Whangaparaoa Auckland 0943 09 428 7456 Original material published online and in this magazine is copyright,
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Daily news updates online infrastructurenews.co.nz propertyandbuild.com safetynews.co.nz 7 safetynews.co.nz
October 2021 - January 2022
Bastion NZ launch Industrial glove range
Sponsored Article
The right hand protection is critical to keep worker’s hands safe from hazardous conditions that can cause injuries in the workplace. That’s why Bastion NZ have introduced their range of Industrial Gloves into New Zealand
PPE
B
astion Industrial Gloves have been a popular choice for Australian industrial professionals since they were launched down under over three years ago. The full range is designed to protect worker’s hands in a wide array of industries and applications including: - Chemical Resistant Gloves - General Handling Gloves - Cut Resistant Gloves - Cow Grain Leather Gloves - Thermal Safety Gloves Why do Bastion gloves offer superior protection? Simply because the entire industrial glove range is designed with quality materials that comply with the EN388 work safety testing standards. So that means that they’re suitably fit for the task at hand and offer
superior protection from hazardous chemicals, cuts, abrasions, burns and much more. Not only do safety gloves offer protection against hazards, they must also allow the wearer to function competently while they’re working. Each glove is robustly designed to withstand a high amount of wear and tear and for a more comfortable fit (including high breathability). The more comfortable and wearable the gloves are, the more willing employees are to wear them, significantly reducing the risk of injuries in the workplace. The range provides some great efficiencies and cost savings for businesses – as they are competitively priced and reusable and on top of that, most of the gloves in the range are also washable.
We promise ‘first class service’ Bastion has a strong supply chain, with strategically located suppliers, so customers can be confident
that there will be strong stocks on hand when they need it. With a team of product specialists who have a wealth of industry and product knowledge, Bastion strive to provide first class service through product guidance, technical advice and solutions to help customers grow their business. Bastion gloves are imported by Unipak – New Zealand’s leading supplier, importer and wholesaler of personal barrier protection and food packaging products. Unipak distribute their products through a nationwide network of industry-specific resellers. www.bastionpacific.co.nz
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safetynews.co.nz
October 2021 - January 2022
INDUSTRIAL GLOVES
PPE
Superior hand protection, trusted by industrial professionals.
For product information, contact 0800 864 725 or visit bastionpacific.co.nz safetynews.co.nz
9
October 2021 - January 2022
Toxic fumigant to be phased out
CHEMICALS
The EPA is calling for a total ban on the ozone-depleting gas, methyl bromide, which is used increasingly in New Zealand to kill pests from trade cargo
M
ethyl bromide is a toxic and ozone-depleting substance, which India and China require to be used on logs they receive from New Zealand. It is a biosecurity tool, used internationally to kill pests. A total ban on methyl bromide fumigation aboard ships is part of a comprehensive suite of new rules imposed by a Decision-making Committee of the Environmental Protection Authority (EPA). “The EPA’s role in regulating hazardous substances involves carefully balancing environmental, health, economic, and cultural factors,” says Dr Chris Hill, General Manager of the EPA’s Hazardous Substances group. “The decision sets a roadmap to full recapture of methyl bromide. It provides a clear and structured pathway for industry to reduce the amount of methyl bromide emitted. The decision recognises the benefits 10 safetynews.co.nz
associated with methyl bromide use, while also protecting human health and the environment. “Ship hold fumigation will be banned from 1 January 2023. This rule change is significant as the amount of methyl bromide used is much higher than elsewhere, and it is not currently possible to recapture methyl bromide during ship hold fumigation. Therefore, in this setting, the risks to human health and the environment outweigh the benefits.” Stepped increases will apply to the recapture of methyl bromide from containers and covered log stacks, starting from 1 January 2022. This phased approach will be more achievable than a single target, allowing the EPA to ensure that requirements are being met by industry at each stage. The decision also introduces stricter accountability and reporting measures.
“Operators using methyl bromide will be required to provide annual reports to the EPA about their activities in greater detail than before, to ensure actions are being taken to reduce methyl bromide emissions. This information is additional to the existing requirements administered by WorkSafe NZ,” says Hill. There will also be larger buffer zones to prevent people from being in the vicinity while the gas is being used. As well, local councils and affected parties, including neighbouring marae and other community facilities, must be notified in advance of fumigation happening. Revoking the approval for methyl bromide (in other words banning it outright) was not in the scope of this reassessment, but the decision released today sets far more stringent controls on its use. “While methyl bromide use is being phased out
globally, in New Zealand its use increased by 66 percent between 2010 and 2019. We are currently out of step with most other countries which are turning away from this ozone-depleting substance. “However, the combined controls imposed by this decision will result in methyl bromide emissions being reduced significantly over the next five years. The aim is also to disincentivise the use of this fumigant. “While the EPA would like to see methyl bromide use phased out as soon as possible, we acknowledge that this is the only biosecurity treatment that some key overseas markets are prepared to accept,” says Dr Hill. The Decision-making Committee is encouraging continued negotiations with international trade partners to reduce and where possible eliminate the use of methyl bromide, and explore acceptance of alternatives. The committee strongly supports a strategic approach to the reduction of methyl bromide use and acknowledges that recapture is just one of the tools needed to ensure reduction and ultimate elimination of methyl bromide emissions. The EPA, WorkSafe and local authorities all have responsibilities for compliance, monitoring and enforcement activities relating to methyl bromide. The Hazardous Substances and New Organisms Act requires the EPA to publicly notify its decision no later than 30 working days after the conclusion of the hearing. For this reassessment, the deadline was Wednesday 18 August. Read more detail on the decision
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October 2021 - January 2022
Remote working putting organisations at risk of ransomware The Government is urging Kiwi organisations to tighten up the way they enable remote working for staff to avoid the growing risk of cyber attacks
SECURITY
G
overnment cyber security agency, CERT NZ says the majority of ransomware attacks occur through poorly configured remote access systems, which businesses use to allow staff to access systems from outside the office. While there are a range of these in use, one of the most commonly used is Remote Desktop Protocol (RDP), with over 2,500 identified in New Zealand. RDP has a number of weaknesses, which means when it is used over the internet it can be exploited by attackers, and is a leading contributor to the ransomware incidents that CERT NZ receives. “It’s essential that organisations urgently review their remote access systems, and make sure these systems are as secure as they can be. You may need to talk to your IT team or service provider about how to do this,” says Michael Shearer, Principal Advisor – Threats and Vulnerabilities at CERT NZ. CERT NZ is partnering with internet service providers to contact organisations that use internet-exposed RDP to provide advice on how they can make remote working more secure. “Regardless of what technology organisations use to enable remote working, it’s important to keep your sys12 safetynews.co.nz
tem up to date and enable two-factor authentication for logins.” As RDP is often exploited by attackers to gain access to an organisation’s network, CERT NZ recommends organisations consider other options to enable remote working, such as a virtual private network (VPN). Good VPN solutions support two-factor authentication, which adds an extra layer of security, and are designed to be used over the internet. More broadly, CERT NZ is concerned about the growing impact ransomware attacks are having. “Recent events have brought to light the devastating effects a ransomware attack can have on an
organisation. There’s been an increasing trend of these types of attacks globally over the past 18 months, and they’re only going to continue.” CERT NZ has seen an increase in ransomware reports in the second quarter of 2021 (April to June), compared to the first quarter of the year. Reaching a total of 30 reports, this is the high-
est number of ransomware reports made to CERT NZ within one quarter. “These figures do not paint a complete picture of the extent of ransom attacks in New Zealand. These numbers only reflect what has been reported to us, however conversations with our industry partners indicate there are a lot more attacks happening.”
If your organisation has been affected by a ransomware attack, report it: cert.govt.nz/report or 0800 CERT NZ For more information about securing an internetexposed RDP, refer to the CERT NZ website: cert.govt.nz/business/guides/securing-your-internetexposed-rdp-server linkedin.com/company/certnz
Major wake-up call needed after increased cyber threat Waves of cyber attacks have hit our banks, MetService and even the postal service – but critical services such as energy and water supply could be next, warns Vectra APJ Director of Security Engineering, Chris Fisher
C
yber-attacks in New Zealand have increasingly grown in sophistication and prevalence, in part due to increased digitalisation but also wider geopolitical changes and disruptions caused by the ongoing Covid-19 pandemic. According to Deloitte, critical infrastructure operators in Asia Pacific are increasingly being targeted by cyber espionage and sophisticated attacks with the potential for severe disruption to essential services such as energy and water supply. Rapid digital transfor-
mation and convergence of disruptive technologies has led to a much wider attack surface, testing the resilience of the region’s infrastructure. The recent Tokyo Olympics 2020 for instance was beset by a data breach that compromised personal credentials such as usernames and passwords to access affiliated websites aimed at volunteers and ticket holders. New findings in a recent Vectra PaaS & IaaS Security Survey Report have underlined how the cloud has changed everything we know about security; 100%
of the companies surveyed have experienced a security incident but continue to expand their cloud service footprint, deploying new AWS services weekly. The expansion of cloud services has naturally led to increased complexity and risk and the report uncovered some startling blind spots. These include 30% of organisations surveyed have no formal sign-off before pushing to production and 40% of respondents say they do not have a DevSecOps workflow – that is the automated integration of security.
Ransomware attacks on critical infrastructure spike in last year But it’s not just enterprise security that needs further scrutiny. When the Waikato District Health Board (WDHB) experienced a cyber attack earlier this year, hospitals and services were severely disrupted. Described as the country’s largest cyber-attack to date, the attack crippled the WDHB’s 680 computer services, and led to critically ill patients needing to be transferred to other hospitals for care, surgeries delayed and patient data to be shared on the dark web. safetynews.co.nz 13
SECURITY
October 2021 - January 2022
October 2021 - January 2022
SECURITY
New Zealand’s Computer Emergency Response Team (CERT) found that cyber incidents caused a financial loss of $16.9 million in 2020, with 7809 incident reports in total. This number continues to increase year after year. Recognising the risks and finding a solution The speed and agility that comes with the rapid deployment of cloud within organisations has enabled faster delivery of applications and numerous other benefits. However, these advantages need to be balanced against security risks that arise from cloud deployments, which can often be complex. Vectra’s PaaS & IaaS Security Survey Report reveals that risk exponentially increases as more people are granted access to a cloud environment. Although companies surveyed are investing heavily in security operations, the challenges of securing the cloud are expected to continue for the foreseeable future due to sheer size, scale, and continuous change. While the vectors of all these incidents have remained the same, the speed at which the attackers can now pivot through an organisation’s network and the coverage they are able to achieve as a result has greatly increased. This highlights that current prevention tools are no longer enough to mitigate risk. What we are seeing now is that increasing cyber security threats when combined with a rapidly evolving cloud environment is creating a perfect storm that is highlighting significant skills gaps. Constantly evolving critical national infrastructure threats means a round14 safetynews.co.nz
the-clock effort and highly specialised skills to bolster enterprise cybersecurity. Typically, most organisations have lean IT teams and lack the cybersecurity expertise required to preempt and mitigate sophisticated threats, placing enormous strain on what is potentially an already limited resource. Securing the cloud with confidence is nearly impossible due to its ever-changing nature. To address this, companies need to limit the number of attack vectors malicious actors are able to take. This means creating formal sign-off processes, creating DevSecOps workflows and limiting the number of people that have access to their entire infrastructure as much as possible. Ultimately, companies need to provide security holistically, across regions and automate as many activities as possible to enhance their effectiveness. Securing critical national infrastructure with effective incident response Critical national infrastructure (CNI) organisations must be ready and able to defend against a wide range of threats that attempt to steal from, disrupt, damage, or deny their operations. When it comes to assets
and infrastructure that are essential for the functioning of a society or economy, it’s no longer enough to just invest in the tools but it matters to build knowledge and establish stringent governance frameworks. Attackers are increasingly targeting Operational Technology and Industrial Control Systems in ransomware attacks. That’s where vendors with true cybersecurity expertise drive value, helping organisations not only to draw upon expertise and intelligent, AI-driven detection tools but to also gain deep visibility into security and compliance gaps. Slowing down the attackers is only part of the challenge. CNI organisations should have the right capabilities that would also speed up defences across all network stacks (be that IaaS, SaaS, PaaS, or Datacentre). The only way to achieve this is via prioritisation of incidents leveraging AI and automation. This will bolster the limited capacity of the security operations centre giving it the best chance to drive down metrics such as mean time to remediation, therefore reducing the impacts of attackers and reducing the risk of a widespread breach. To better improve CNI cyber defences, there are the top three best practice tips: - Reduce the risk of cloud
services being exploited using an AI-driven threat detection and response solution. - Monitor access of the deployment and the configuration of it. - Review and remove admin-level roles that are no longer used and/or needed. We can expect to see threats to CNI over the next few years across a number of scenarios – for instance, healthcare systems remain vulnerable particularly as the global fight against COVID-19 continues and continued demand for remote working will increase attack surfaces. Each CNI site or situation is unique and visibility and agility are the building blocks of effective incident response. CNI security teams must adopt an assumed-compromised mindset and focus on early automated detections with context to make fast and informed decisions.
Chris Fisher is the Head of Security Engineering for Vectra.ai in the Asia Pacific and Japan Markets
October 2021 - January 2022
Industry leader in soft fall protection on construction sites
Sponsored Article
W
ith the enactment of the Health and Safety at Work Act (2015) it became apparent that there was a need to assure customers that they comply the requirements of the Act in safety measures for fall arrest. “We needed to have our system independently analysed, engineered and ultimately certified. This meant that not only did the individual components of the safety net fall arrest sys-
tem have to be tested, the performance of the safety fall arrest system as a whole also needed to be studied,” says General Manager Craig Daly. A team at the School of Engineering and Technology at Massey University tested a variety of drop heights and weights, different bracket centres, various net sizes and points where the load strikes the net. “It even tested nets of different ages and repaired
nets, with the results being collated and analysed to effectively confirm that our safety fall arrest system works,” says Daly. “This enables PCBU’s to discharge their responsibilities in regard to the requirements of the in the use of a system that is without risk to the health and safety of it’s workforce.” When the nets have been installed and inspected by a Safety Nets NZ team and a handover certificate
completed by our certified rigger, the client can then commence works above the safe area of the net. “All of our safety documentation has been produced in such a format as to ensure that it complements the overall site safety policy and manual that the Principal Contractor is required to establish on all projects,” says Daly. Click here to read inspection guidelines
Safety industry pioneer Safety Nets NZ has developed national standards in association with WorkSafe NZ, ensuring risk from falls is minimised for your construction workforce. • New Zealand owned and operated • Nationwide network of local installers • Dedicated to building site safety North Island 0800 NETSNZ (638 769) South Island 0800 NETS4U (638 748)
www.safetynetsnz.co.nz
safetynews.co.nz 15
ACCESS
Massey University rigorously tested all elements of the Safety Nets NZ system
October 2021 - January 2022
The great unlearning Safety News and AsiaPacific Infrastucture publisher Mike Bishara accepts an invitation from Optimum Training to join a four-hour safety training session
TRAINING
I
harboured a fervent hope that 25 years of development and refinement of Wayne Milicich’s injury prevention model might contain a few surprises. The prospect of four hours in what I suspected could be a moralising lecture about how to lift a box was not enthralling. I could see, as we shuffled into the training centre, that the rest of the class felt the same, with a range of resigned, bored and cynical faces. We were wrong. Boy, were we wrong. Participants soon learned “it was all about them” and their individual quality of life. And how 30 seconds after the training would break the harmful muscle memory that had taken over the way we did things. “The programme is about unlearning what we learned between the ages of about eight to 13 years old and restoring all the movement patterns that we learned naturally during the first five to eight years of our life,” says Milicich. For example, children all demonstrate best balance, unlike most adults. About 80 percent of the adult population “half breathe” from the apical area of the lungs as opposed to the diaphragm and lower lobes of the lungs, according to Milicich. “Children all naturally breathe from their belly, diaphragm, unless they are stressed.” The most hardened cynics in our group quickly became engaged in the programme through a series of 16 safetynews.co.nz
Click here for more information
Optimum Training manager Dwane Stewart with an eager team of learners practical truths, illustrated by a range of interactions, sometimes with a workmate. We emerged half a working day later wondering who to sue for the preventable harm I have inflicted by following instructions. Life quality did not require lifetime dedication, just a reordering of basic instincts and tossing out a few myths. For our group, the quality of life had become anchored forever around balance and the 70/30 weight split between heels and toes. We were converts to breathing out like weightlifters, sticking out our butts and letting tummies and abdominals do their thing - we discarded posture misinformation and stress and replaced it with comfort, a safe and secure back and no pain. Optimum’s programme is of suggested solutions, not imperatives. “When we do this training, it is to benefit the individual. The company
clips the ticket and gets a benefit only when the individual benefits.” “You cannot stand on a platform and tell people they are wrong. When a person’s belief is challenged, they will do anything to defend that truth as it is what they believe and know and have lived by. The only way to expose the false belief is to lead someone to find the truth for themselves. In most cases following instilled poor habits is akin to
tapping yourself lightly on the head with a hammer for years. Do it enough times and you will end up permanently damaged. You cannot separate work safety and whanau safety – they are two sides of the same coin, according to Milicich. Health and safety at home and work are just a component of our life quality. Not something that is separated out with its own rules to be applied at specific times and locations. To a person, we emerged
70/30 balance is at the core of a quality of life
ready to retrain our misguided muscle memory with the 30-secondsa-day-worth of drills to reprogramme our muscle memory that had taken us just four hours to master. “The training empowers people to work out the truth for themselves and trust themselves. You are the only person who can determine what works best for you. Trust yourself to make a good call,” says Milicich. With no pen, paper or tables in the room, this programme is “pure adult facilitation of kinesthetic learning followed by cognitive understanding. It is simple to restore what was once in the muscle memory when we were five to eight years old. The original neural pathways just open up again,” he says. We learned and now retain what we learned. “Stress is recognized as a major cause of MSD and auto-immune disease. We help people understand how their body manifests stress and equip them with the understanding and tools to manage themselves during stressful times,” says Milicich. Optimum’s facilitation process has four specific steps. When applied correctly to the session, most often the learner has no idea of what
has happened, but they do recognise that their life has changed for the better. Our session began with participation exercises which showed the overriding importance of balance. The 70/30 rationale was enough to consign to the bin, along with a flurry of other medical myths, the long-held and totally wrong “bend your knees and keep your back straight” doctrine. It soon became apparent why Optimum’s quality of life programme is used by many of the country’s most astute corporations in an age where time “off the floor” is critical to the bottom line and many companies look only to tick the boxes of compliance. The benefits are equally cost effective, available and absorbed by SMEs. My class had only nine other participants so having a cast of thousands is not essential – or even recommended. “Move Smart Think Smart is about addressing the underlying causes of muscle and joint pain that occur as we interact with inert objects both at work and at home. Home injuries affect the workplace. Workplace injuries affect the home and family,” says Milicich. “Either way the quality
of life of a person is compromised. The traditional medical model calls the problem ‘nonspecific back pain and occupational overuse’. In fact, the pain is about inadvertent personal misuse of the body -- it is very specific.” The bio-medical model reckons back pain is normal. “No, it is not normal,” says Milicich. “It is common, and the medical model is unwittingly part of the problem. “Good posture” is nothing more than an old wives’ tale based on the military model of control and it is still believed today. A teacher tells children to sit up straight as a means of controlling the class. It is now portrayed as good posture. “The medical field is littered with information and advice that was eventually proven wrong and retracted. Some of our western cultural beliefs are based in nothing more than decades or centuries old beliefs and mores. The sad thing is that more than 80 percent of MSD's are inadvertently and unwittingly self-inflicted. People hurt themselves as they interact with inert objects, and they don't even realise it, says Milicich. “The only way a box can hurt someone is if it is flying
through the air and strikes them. Or if it is moving on a conveyor and they put their hand where they should not. A spade and the ground are both inert. To suffer pain while digging a hole is the person hurting themselves as they interact with the spade and ground. The pain is a direct result of poor skills and technique of movement -- self-inflicted pain. Most people blame something or someone for this self-inflicted injury. At that point, only the symptom can be addressed with drugs and therapy. The problem returns as they repeat their old thinking and poor technique once the symptom has eased. “No one deliberately hurts themselves. Given the opportunity, everyone makes the right choice,” says Milicich. To a person, everyone was engaged for the full duration of training, always relevant, interesting, practical and beneficial to each person. We felt equipped and empowered to take back responsibility for ourselves. I personally still muse over and apply the learnings. My years of knee pain has gone.
30-second daily drills to re-programme muscle memory
Wayne Milicich 07 8583040 027 291 1829 www.otl.nz Representatives NZ wide safetynews.co.nz 17
TRAINING
October 2021 - January 2022
October 2021 - January 2022
MANAGEMENT
I
nitially deployed to replace an outdated analogue radio network, the system delivers many additional benefits for forestry company, City Forests. Among those benefits are contact-free communication and social distancing in the field, replacing the need for drivers to exchange paper job dockets with a digital docketing system. The new solution incorporates digital two-way radio repeaters across four sites with radio dispatch software providing valuable data and safety features, helping to locate workers wherever they are in the forest. The system also provides a touch-free method for workers to exchange other essential job details including truck numbers, log quantities and crew ID numbers. All of these solutions are integrated and connected to a digital network radio core. Maintaining Safety and Connection Across a Vast Environment City Forests manages more than 23,730 hectares of forest in the Otago region, growing more than seven million trees while maintaining high standards and certifications for sustainability. Ensuring safety and security for workers and recreational forest users throughout such an expansive area requires instant, dependable and secure communication. Forest Production Manager for City Forests, Guy Bonner, says his organisation has experienced many benefits by migrating to an advanced digital communication system. “Upgrading our network to digital not only enabled clearer voice communica18 safetynews.co.nz
New radio technology keeps workers safe and compliant Otago forestry workers are using new radio technology to manage 23,730 hectares of forest more safely, even enabling them to perform under Covid-19 restrictions
tion, but provided us with other useful features like text messaging and GPS capability,” Bonner says. “Moving to a digital platform also gives us the option to plug in further capabilities to improve safety in the future.” Motorola Solutions Channel General Manager for Australia and New Zealand,
Rhys Clare, says the evolution of digital radio technology is helping enterprises to increase collaboration and performance across their entire operations. “Enterprises have always depended on radio systems for clear and reliable voice communication, but now they are getting many more safety and productivity
enhancing features,” Clare says. “Digital radio solutions are also extremely flexible, enabling organisations to adapt to rapidly changing situations. Even throughout a global pandemic, these solutions are helping organisations keep their operations running and their people safe.”
There are a lot of moving parts to a company’s health and safety programme but an app can bring them all under the same platform
I
n an environment of stringent regulation, it is essential for businesses to have a cost-effective platform to ensure health and safety compliance for everyone who enters potentially dangerous building sites. SiteConnect gives employees an easy, convenient way to stay engaged. They can access reporting features on the go, logging data as they work, saving time by avoiding double entry or tedious engagement with outmoded or separate sources and systems. A business’s entire program, from incident reporting to compliance to training to audits and inspections, can exist within a single, seamlessly configured ecosystem. “Businesses can protect their people using SiteConnect as their one-stopshop” says Edward Baddeley, BDM with SiteSoft. “It is dynamic and malleable enough to be integrated into, and to enhance, businesses at all levels. We also partner with H&S Consultants who use it with
their clients. “For medium-sized businesses SiteConnect makes health and safety compliance simple by creating greater engagement among everyone at all levels,” says Baddeley. “Bigger enterprises, with personnel on several sites at once, can be confident knowing they have a unified health and safety platform that can be utilised efficiently.” Emerging and evolving technology Health and safety technology is evolving rapidly, and many contractors and sub-contractors who still rely on inefficient record keeping are beginning to acknowledge that such methods are obsolete. “Mobility, too, is a factor. Safety managers can’t be tucked behind their desks all day,” says Baddeley. “They need to be actively present in work areas, with a mobile app, finding and eliminating potential hazards, conducting audits, assessing risks, and undertaking other tasks to keep
employees safe on the job.” The different functionality offered by the app creates an ecosystem of compliance, connecting all roles and responsibilities, maximising efficiency. The SiteConnect app enables seamless functionality across an entire health and safety ecosystem. It covers compliance from site sign in, contractor management, site communication and site inductions to the swift reporting of incidents and hazards. Ensuring safety legislation compliance Every work site carries inherent risks to those attending for work and visits. Thousands of work-related accidents are reported to the Health and Safety Authority each year. These cases are largely due to failures and deficiencies in the occupational safety and health management in organisations. Injuries and deaths remain all too common occurrences. To confront this reality, WorkSafe NZ has introduced a rigorous scheme of legislative measures, placing responsibility for managing work sites squarely on PCBU -- executives, and even workers and sub-contractors, with an expectation they be more proactive and vigilant than ever in order to save
lives and prevent injuries at worksites. Companies, their boards and management teams, workers and sub-contractors all face harsh penalties depending on the severity of the offence, with failure to comply leading, in some instances, to prison time and multi-million-dollar fines. In this environment of stringent compliance standards and responsibility at every level, a mobile health and safety app like SiteConnect is a crucial element in business operations. SiteConnect offers multiple layers of protection: reducing the likelihood of injuries to those on site, preventing inefficiency, and fortifying a business against severe penalties that might ensue as a result of a muddled, neglected or outmoded health and safety protocols.
Ed Baddeley is Business Development Manager for SiteSoft www.sitesoft.com 0800 748 763 safetynews.co.nz 19
MANAGEMENT
Safety app a crucial element in building site safety
October 2021 2022 - January Sponsored Article
October 2021 - January 2022
Priming your business for post-lockdown recovery MANAGEMENT
With many small businesses scaled back or closed entirely due to Covid restrictions, Prospa asked savvy business owners for some first-hand tips on how they’re using this time to position their business for the future
D
o things you’ve never had the time for… until now For Laura Heynike of Pocketspace Interiors, the lockdown and product supply interruptions could have been debilitating, particularly when the loss of income turned out to be more than double what she had expected. However, it was a new service she had on the backburner, with no free time to develop, that she saw as her “lifeline”. “So I sat down and spent an entire week at my desk and built Clkspace.” The platform allows clients to undertake smaller design projects remotely, in turn enabling Heynike to expand globally. While initially intended as an additional income stream, the project has allowed the interior designer to establish it as a sales funnel for her existing business too. “I was really happy with the outcome – building an entire company in a week!” Meanwhile, Heynike has used the downtime to expand her marketing and implement contingency plans to keep Pocketspace Interiors trading too. “Use this time to position yourself as an expert in what you do, and the perfect platform for that is social media. While a lot of companies have shut down their advertising spend, I’ve actually increased mine!” Find new ways of serving clients Professional speaker and MC Greg Ward saw the conference and events industry effectively having to shut down overnight. While most bookings were cancelled or postponed indefinitely after the nationwide lockdown was put in
20 safetynews.co.nz
MANAGEMENT
October 2021 - January 2022
place, Ward set about convincing one client to hold a virtual conference instead. “We looked at how we could take a four-day conference and repackage it,” he explains. With a mix of borrowed and older equipment pulled from storage, Ward and the client successfully evolved the event into an entirely digital format. “In just two weeks, they had gone from it being a four-day face-to-face event to a full four-day online event, still retaining all of their sponsors, almost all of their exhibitors and they even picked up a new exhibitor as a result of going virtual,” he says. “Over 500 delegates from all over the world joined us online.” In turn, Ward’s work on this project has since led to new opportunities coming through, as more businesses overcome their panic and realise that life must go on.
“Ultimately, this industry is about connecting people with people, and the only thing we can’t do is meet face-to-face right now.” He urges others to “do what I did”. “How could I still do what I know my client still needs to do? With the skills and abilities I’ve got, how could I make that happen? The key factor was curiosity,” Ward says. “If you’re fearful, then you aren’t in a position of thinking logically… When you’re thinking about someone else, you’re not thinking about yourself to a great extent, and it opens up a huge playing field.” Diversify your offering For Alex and Catherine Watson of Little Bone Broth, the lockdown has given them a chance re-evaluate their operations and explore new product options. The husband-and-wife team were forced to close their two other food-ser-
vices businesses due to the lockdown and have focused their efforts on expanding the range of products they make for Little Bone Broth. Among the shake-up of their operations has been the addition of an organic line, an expanded product offering and reverting back to their early days of making home deliveries (now contactless), which they are doing themselves. The latter has been promoted on new platform delivereat, essentially a directory of independent local food makers. While this diversification is expected to pay longer-term dividends, the Watsons have tapped into rent relief and government support to help cover the immediate hit to their overall cash flow, in order to continue paying themselves and their employees. “If you think you can just go back to business as usual, I think you’re being a little bit naive,” Alex Watson
suggests. “Spending is going to change, the way people are buying things [will change], so you’ve got to adapt,” Catherine Watson adds. “You’ve got to try and make the best of it, because if you don’t, there may not be a business at the end.” Progress is key Regardless of how you choose to prime your business for recovery during the current lockdown, business coach Russell Freeman says one thing is crucial. “The biggest issue is keeping positive and focused,” he says. “The most motivating factor in business ownership is ‘progress’. Currently, that’s hard to quantify. "However, with a focus on re-building and knowing this situation will gradually improve, progress will be found in those business owners who are resourceful and determined to succeed.” safetynews.co.nz 21
October 2021 - January 2022
Six strategies to manage cash flow during Covid Lockdowns and alert level restrictions have put the squeeze on many small businesses – Prospa offers some advice that could help
MANAGEMENT
Apply for any government aid you’re eligible for The New Zealand Government has a multi-billion-dollar stimulus package that includes measures to help businesses, employers, the self-employed, registered charities and incorporated societies overcome the immediate cash flow impacts relating to COVID-19. Among them are: Wage subsidies. Leave and self-isolation support. Tax changes. The wage subsidy is available to eligible New Zealand employers regardless of size, as well as to contractors, sole traders, the self-employed, registered charities and incorporated societies. The subsidy amounts to $585.80 for each person working 20 hours or more each week and $350 for those working less than this. Employers and the self-employed are eligible for the subsidy to cover
themselves and their employees, if the business has experienced a decline of 30% or more in actual or predicted revenue. The same payments per person have also been made available to cover anyone who is unable to work because they are sick with, or forced to self-isolate because of, COVID-19.
In this instance, the isolation payment covers a period of 14 days. For full eligibility information and other details, please refer to the government website. Employers seeking more information on can also call the government helpline on 0800 40 80 40.
Get in touch with the IRD to discuss relief options The Inland Revenue Department has urged any small businesses experiencing cash flow disruptions as a result of COVID-19 to get in touch and discuss assistance options.
ship and know that they simply won’t be able to pay the full amount.
Businesses can apply to set up an instalment arrangement for taxes owed directly through the myIR portal.
Extensions on the filing date for income tax returns. Waiving of late filing penalties for GST and PAYE returns (although the due dates for the returns can’t be extended). Contractors may be entitled to a certificate of exemption for schedu-
There is also scope to apply for a write-off of tax debts where businesses are suffering serious hard22 safetynews.co.nz
Other potential tax relief options include:
lar payments. Early refunds if provisional tax has been overpaid. And be sure to make use of the various existing tax deductions available to small businesses, including these deductions you may not already know about. Businesses can contact Inland Revenue’s Adverse Events Line on 0800 473 566 to discuss assistance options.
October 2021 - January 2022
Reconsider your staff structure
Government support packages, particularly the government’s wage subsidy, are available to help support businesses keeping staff on. However, it is worth keeping in mind that there are a number of other options available to employers short of termination, such as: - Asking staff to work from home, if it is safe and appropriate to do so. - Encouraging staff to use their annual leave. - Asking staff to take unpaid leave. - Discussing temporary salary or wage reductions with staff. - Negotiating job-sharing arrange-
ments to move full-time staff to part-time. - Temporarily standing down staff with a view to rehiring them as business improves. “We recommend that employers proactively consider these issues and what their response might be, bearing in mind that the situation is likely to evolve over time,” explains law firm Buddle Findlay. “As always, preparation and open communication are key. Aside from health and safety considerations, employers would be prudent to recall the overarching obligation of good faith, which applies to all employment relationships, when making decisions on how to deal with individual circumstances.
Follow up any unpaid invoices These are difficult times, it’s important to work with your customers and be flexible with unpaid invoices. If your customer can’t pay the full amount due, try to get a partial payment or create an instalment plan. You can start chasing late payments with a friendly email, followed by a phone call. If that’s not getting you anywhere, try asking to talk to the person who actually makes the payment and getting a promise to pay by a particular date. Many energy companies also offer extensions to payment terms for unpaid energy for commercial customers too – contact yours to find out if you qualify.
“Employers are encouraged to discuss and agree a format for dealing with individual risks in a way that is suitable to both parties, whilst ensuring wider compliance with duties under the HSWA [Health and Safety Work Act]. We recommend such agreements are clear and in writing, to avoid any doubt.” Employment New Zealand has reminded employers that they must act “fairly and reasonably” when making changes to their job. The regulator has a dedicated website on changing an employee’s working arrangements due to COVID-19, as well as a step-by-step guide for the workplace change process.
Seek relief on rent payments It can be possible to negotiate with your landlord over commercial rents, with some tenants already securing amended terms. “Some landlords are working constructively with retailers and offering rental holidays or reduced rents to help navigate through the crisis, and Retail NZ applauds those who are doing their best to help,” the retail body’s chief executive, Greg Harford, says.
Review and reduce any unnecessary overheads Rent and staff costs may be among the biggest overheads for many businesses but far from the only ones. Now is a prime time to review some of the regular expenses your business incurs and separate out the must-haves from the nice-to haves. One place to start is with any online software or subscription services you are signed up to that aren’t essential in this period. Cancelling them can reduce your outgoings and keep your cash flow healthier. Other ideas are to jump online and do price comparisons on your major bills and shop for a better deal. You could start with your internet and phone provider, and then move onto your insurance and energy bills. safetynews.co.nz 23
MANAGEMENT
For many business owners, the thought of having to let staff go during a downturn is a major source of stress.
October 2021 - January 2022
MANAGEMENT
How to survive as a modern-day business Paper-based systems and analogue machines are still common within the industrial sectors, but writing on a piece of paper just isn’t adequate in today’s environment, says SYSPRO Chief Product Officer, Paulo De Matos
W
ith the need for continued innovation and tighter controls, businesses are now realising the urgency to replace legacy and manual systems with technologies that will improve visibility of critical data and reduce business risks. The ability to increase productivity, reduce waste, lower production costs, enable greater quality control and improve the management of schedules and production rates without having to manage multiple systems from various vendors also remains a modern day necessity. SYSPRO’s global research into the inflection point for the factory of the future shows the dire consequences of reliance on old manual systems, where only 38% of businesses felt that their business systems were adequate to cope with the disruption caused by the pandemic. But before investing in a digital solution, manufacturers need to understand what industry requirements exist, how visibility enables 24 safetynews.co.nz
control and how to mitigate overall risk. Industry requirements Reliance on manual systems can be a hinderance for industries that are governed by regulatory control – there is too great a possibility for human error. The food and beverage industry is similar to the other compliant regulated sectors, such as the medical devices industry, in that it requires extensive record keeping as a measure of control. Packaging for the food and beverage industry requires retention samples of all raw materials beyond the shelf life of the products. Tinned food manufacturers, for example, need to coat the inside of the can with a specific lacquer to protect the tin plate from the food product or ingredients. At the same time, a sealant needs to be applied over any welds to protect the product attacking the compromised area, and the can corroding from the inside out. With those measures in
place, a tin may have a significantly extended shelf life. Samples of the internal lacquer and sealant will need to be kept by the supplier for a specified number of years. Taking control of the shop floor through complete visibility During manufacture, frontline managers need complete visibility and control of the shop floor to prevent problems such as overruns, bottlenecks, downtime, poor employee or machine performance and excessive scrap. To achieve this, modern software needs to be combined with a digital strategy that ensures that the critical information is available digitally. Now, many manufacturers are automating the simple jobs and relying on people to manage the remaining processes. This often places a heavy demand on human resources. As an alternative, a sophisticated system like Manufacturing Operations Management (MOM), integrated within an ERP
solution, can be implemented to support the complete manufacturing lifecycle, without the risk of human error. A MOM solution enables manufacturers to automatically connect with machines to collect critical data without manual inputs. MOM helps manufacturers in three ways: 1) Measure performance of overall equipment effectiveness (OEE). This refers to how well machines run and the measurement is based on a combination of uptime, speed and quality. The MOM should not track every single machine but should ideally just track the bottlenecks or older machines. 2) Measure overall labour performance (OLE). Often a lot of time and productivity is lost through human error. 3) Measure total effective equipment performance (TEEP) or the amount of downtime. By measuring these three elements in unison, manufacturers can identify specific challenges and optimise operational effi-
October 2021 - January 2022
The six big losses in manufacturing 1) Equipment Failure Defects and failures in equipment results in downtime, financial losses, variances in inventory and a lack of quality control. This scenario can play out for several reasons. It could be a result of unplanned downtime, no available operators and even a lack of raw materials. 2) Setup and adjustments As the name suggests this refers to when equipment is scheduled for production but is not running due to a changeover or other equipment adjustments.
4) Reduced speed This is when your equipment operates at a slower time than the ideal cycle time. ciencies through the better workflow of core manufacturing activities and secure a reduction in the ‘Six Big Losses’ in manufacturing. Thanks to legacy systems, manufacturers had no clear visibility into the manufacturing process and could not always tell where issues had arisen, or where the bottleneck was occurring. Now with MOM, manufacturers have a single source of data and in turn, full visibility of production. While MOM may seem like the obvious next step for manufacturers to optimise operations, many have been reluctant to move away from their traditional legacy systems. The reality is that the industry has reached an inflection point, where digital transformation and the need to fast track to a smarter factory is vital to remain competitive in the coming months. Manufacturers should ideally consider a MOM solution that adheres to world-class manufacturing standards and is importantly fully integrated into their ERP, to leverage a single
platform to monitor and improve factory performance. This will transform how an organisation manages people, equipment and processes to drive better business performance and strategic outcomes.
5) Process defects This refers to the need to account for defective parts produced during stable (steady state) production. 6) Reduced yield This refers to the defective parts produced from start up until stable (steady-state) production is reached.
safetynews.co.nz 25
MANAGEMENT
3) Idling and minor stops This refers to when the equipment stops for a short period of time.
April - May 2021
Chemical safety relies on ERAC ELBISN OPSER GOT A meaningful cooperation A TOG RESPONSIBLE CARE
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CHEMICALLACIMEHC SAFETY Y T E F A S QUESTION NOITSEUQ
Expanding government-industry partnerships to help business operators should be a no brainer. Inviting enquirers to read the regulations falls well short of educational expectations
EQUIPMENT
Today, chemical suppliers and their customers continue to adjust to the Covid operational environment.
Responsible Care is a global voluntary chemical industry initiative developed autonomously by the chemical industry for the chemical industry.
and cost-effective Certified Handler standard training, complete with a certificate.
Responsible Care NZ site compliance They struggle with supply Chemical suppliers continue to help assessments are non-threatening, chain delays, the loss of excustomers achieve workplace chemical effectively capturing and assessing perienced staff, frustration safety aspirations through product chemical safety performance in a variety with unanswered queries stewardship initiatives. of workplaces. to risk-averse authorities, We provide accurateTocompliance advice inflexible and prescriptive help solve the in-house chemical +64 4 499 4311 regulations, rising comcompliance dilemma in NeweZealand, to enable the safe management and civda ecnainfo@responsiblecarenz.com ilpmoc etarucca edivorp eW pliance costs, diminishing Responsible Care NZ delivers specialist www.responsiblecarenz.com dna tnemeganam efas eht elbane ot handling of hazardous substances and resources and increasing public chemical safety exdangerous goods in your workplace. dna secnatsbus suodrazah fo gnildnah pectations. Downgrading the flawed work practices and workCare NZ .ecalpkrow ruoy niextols sResponsible dooless g sregulation uo regninad but effective HSNO Cerplaces, by responding to While 130,000 businesses tified Handler requireworkers’ suggestions about favour of enabling business are reportedly captured by ment has inadvertently improvements. operators to be increasthe Hazardous Substances undermined an invaluable ingly self-sufficient, using TAILORED TO THE and Major Hazard capability. Conscientious business cost-effective products and CHEMICALS YOU Facili-USER FRIENDLY ACTUALLY HANDLE EHT OT DEROLIAT COMPLIANCE TOOLS ties regulations, the official operators can add valservices such UOas Y SLsite ACIMEcomHC YLDNEIRF RESU E LDNAH YLLAUand TCA S L O O T E C N A I L P M O C mantra of “600-900 persons The action deprived busiue by sourcing accurate, pliance assessments seriously harmed each year nesses, particularly SMEs, cost-effective workplace specialist training. by unwanted exposure to of an immediate and recchemical safety advice and INDUSTRY chemicals in their work-MEETS NATIONAL ognisable source of workcompliance tools from their The focus is keeping CERTIFIED ENVIRONMENTAL LANOITA N STEEM safe around YRTSUDthe NI RECOGNITION place” presumably appliesSTANDARDS place chemical safety and suppliers, industry partners people LATNEMNORIVNE DEIFITREC DNATS OITINGOCER to all of the country’s compliance advice -- a safe and Responsible Care NZ. SDRAchemicals weNencounter 530,000 workplaces. chemical handling capabilievery day by adding value ty and emergency response A proven strategy is to businesses. Increasing community knowledge – critical when a government agencies concerns about vulnerabilchemical incident occurs. collaborating with proacity to unwanted chemical tive industry associations exposure and damage to PCBUs and SMEs must to best achieve workplace our fragile environment now devise their own solusafety aspirations. The places additional pressure tions to ensure employees problem is that SMEs rarely on both suppliers and users are competent to safely join associations. of the chemicals. handle the chemicals with which they work. However, they all obtain We all need to sustain and their chemical requirements improve quality of life Chemical industry leadfrom suppliers and can BE our COMPETENT, STAY COMPLIANT Tbenefit NAIfrom LPM OC Y ATS ,TNETEPMOC EB and these products must be ers are moving away from product stewBarry Dyer safely managed throughout relying on lagging indicaardship advice and cost-efChief Executive their life cycle. tors of safety performance fective industry compliance Responsible Care NZ in favour of identifying safer initiatives.
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October 2021 - January 2022
Pest control company’s ‘home brew’ 1080 leaves worker hospitalised A pest bait manufacturing organisation has been fined $275,000 over an incident in which a worker was poisoned in May 2019 and nearly lost his life
HAZARDOUS SUBSTANCES
P
est Control Research Limited Partnership (PCR) manufactures pest control products including baits containing sodium fluoroacetate (more commonly known as 1080) as the toxic active ingredient. In 2018-2019 PCR was experiencing issues with the ongoing supply of sodium fluoroacetate and set up an internal project codenamed the “Home Brew Project” / “Project X” to manufacture its own supply of the highly toxic substance. “Health and safety requirements were not met from the very start of this project and cumulatively design, fabrication and process errors ultimately resulted in workers being exposed to highly toxic vapour from a failure in the manufacturing process and in PCR’s overall safety management systems,” says Dr Catherine Gardner, Head of Specialist Interventions. “One worker spent four weeks in hospital being treated for fluoroacetate poisoning and a further two months recuperating out of hospital. His urine fluoroacetate reading was more than 500 times higher than WorkSafe’s Biological Exposure Index limit and he was extremely lucky to survive.” The incident occurred during the first trial produc28 safetynews.co.nz
tion of sodium fluoroacetate when an unexpected chemical reaction resulted in a loss of containment. The work was being undertaken inside a purpose built self-contained chemical processing container inside an empty industrial unit in Bromley, Christchurch. WorkSafe’s investigation into the incident uncovered a series of failings: There was no structured hazard and operability study prior to commissioning the operation; PCR did not obtain a peer review of the proposed chemical process, plant, and equipment from a competent person; PCR failed to ensure that there were safe ventilation arrangements for the chemical processing container (including for when it was operating under negative pressure), PCR failed to ensure that
a commercial proprietary pressure relief valve was used on the processing container’s reactor; PCR failed to develop, document, implement, and communicate a safe system of work for the operation of the process including detailed operating procedures, automatic data logging, appropriate personal protective equipment, and an emergency response plan. PCR failed to test its chemical process and processing container by ensuring that a trial run was completed with a more benign raw material PCR failed to take any steps to obtain a Hazardous Substances Location Compliance Certificate and did not meet fundamental safety requirements to obtain a compliance certificate (including failing to notify WorkSafe, failing to display any signage on the outside of the Bromley building and
inadequate signage on the process container itself, failing to prepare an emergency response plan and a site plan). They had also failed to ensure that a safety data sheet was readily accessible at the site for emergency service workers. “PCR is experienced in handling and manufacturing hazardous substances but in this case, it would seem that their enthusiasm to create their own active ingredient has over-ridden the legal obligation to ensure their workers were protected. It was an operation they knew was dangerous and could have potentially fatal consequences” says Gardner. PCR was fined $275,000. Reparation of $8,177 was ordered (in addition to what the Defendant had already paid voluntarily to the victim). Costs of $96,603.94 were awarded to WorkSafe.
October 2021 - January 2022
Is standardised training the way forward?
Southbase Construction introduced a forward-thinking professional development programme in 2017 to support consistency across teams and career progression eCampus NZ, who support the online learning for several Te Pūkenga subsidiaries, has worked with the company to help them design and award digital badges to recognise their team’s achievements. A digital badge is a visual, online image of a skill or competency earned. These online certifications can be stored in an online profile, allowing learners to instantly share their achievements with employers, colleagues, whānau, friends and professional networks. The launch of the digital badging has attracted interest from health and safety regulators in New Zealand, who have connected with Southbase Construction on LinkedIn to learn more about their innovative approach to upskilling their workforce. Members of the Southbase Construction team who have been awarded a digital badge have enjoyed sharing their achievements online.
TRAINING
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he programme gives employees access to 60 micro-learning courses, each designed to help them upskill in a specific area. The courses are bite-sized education opportunities, designed to cut through the jargon and focus on specific industry and workplace skills. Recently promoted Project Manager, Tom Quin, who joined the team in 2014, has completed 31 micro-learning modules, or ‘competencies’, since 2017. He credits the consistency across teams at Southbase Construction to their commitment to professional development. “I could go and work on a job in Auckland, Queenstown, or Christchurch and pick up where the last project manager has left off,” says Quin. “Everything is done the same, so we’re all on the same page, heading in the same direction, working towards the same goal.” Since introducing their highly structured approach to professional development, Southbase Construction has supported, tracked, and celebrated the achievements of hundreds of employees. “Our employees are learning and bettering themselves, and we’re able to deliver consistency and a high-quality service to our clients,” says Southbase Construction’s People and Compliance Manager, Carena Parish.
“The badges prove that we know about health and safety in the construction industry,” says Quin. Southbase Construction has now rolled out thirteen digital badges to reward employees for upskilling in a range of areas, from Health and Safety to IT. Daniel Foster, who was recently promoted from Site Engineer to Project Manager, believes that his career progression at Southbase
Construction is directly linked to the professional development opportunities they offer. “One of the keys to keeping your employees is giving them a professional growth path," he says. "At Southbase, there’s a huge emphasis on helping us to understand what the next stage of our career may look like, and they’re very proactive at enabling us to get there."
safetynews.co.nz 29
October 2021 - January 2022
The SME business dilemma
MANAGEMENT
How to survive increasing pressure to integrate more social responsibility, compliance and quality into my business at a lower cost
30 safetynews.co.nz
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wning and running a business in the world today is becoming increasingly challenging. Buyers are wanting more for less, at the same or higher quality. End customers are looking closely at the sustainable nature of business practices. And then there is the regulator is keeping an eye on safe and healthy work practices being undertaken. This is creating a significant conundrum for
a significant employer of New Zealanders – Small to Medium Sized Businesses (SME). The dilemma of trying to juggle the demands of external stakeholders is compounded by most SME’s predominantly focused on securing and fulfilling orders. The quality of the outputs in this type of environment is important and it is the foundation upon which repeat business usually occurs. I say usually because, increasingly, price and ability to deliver at breakneck speed has become more important than some of the more “fluffy” associated aspects of delivering a product or service. Overall, the combination of, or one of, shoddy workmanship, poor environmental practice and putting workers well at risk can severely impact an organisations perception and brand value. Thus the conundrum. Most business owners understand the need to incorporate good practices in these areas into their businesses. But finding the
time and the money to do it is not easy. This leads to the obvious question – how can SME business owners build these elements into their businesses in a manner that is going to increase value across the board. When trying to crack this chestnut it is better to step back and look at the problem from a holistic perspective. A business is made up of a significant amount of cause and effect. For every action there is an equal and opposite reaction. Actions when carried out in a well thought-through way usually end up with a good outcomes. Actions undertaken in a hasty or un-thought-through manner can lead to any number of poor outcomes. So what is to stop SME’s from starting to look at the way they work and build el-
ements of quality, environmental and worker well-being into the way process steps are undertaken? To be brutally honest. Not a lot. We are seeing increasing numbers of SME in New Zealand realising the value of delivering outcomes in a more measured and pre-determined manner. A good example recounted by one of Telarc’s clients, highlighted their business dilemma, the approach they undertook to remedy it and the results of taking the steps they did. Below are the high-level events that were the key elements of the story. Current state – about five years ago - A family business that had been passed through to the 3rd generation - The previous generations had long standing relation-
ships with a number of the then-clients - 20 percent of the historical revenue base required 80 percent of managements time to resolve price, delivery and invoicing related issues - The revenue from the 20 percent in the item above was being made at an overall loss to the business - The same 20 percent was absorbing time that would have preferably been spent on improving worker competency and improved company performance - The same 20 percent was limiting the ability of the business to grow new opportunities and to improve existing profitable client opportunities The decision – about three years ago - The clients who made up the 20 percent of revenue above were advised that
the business was unable to support the requirements going forward - Priority One was to lift operational performance through the establishing of working methods that empowered workers and supported a continuous improvement mind-set - Priority Two (once Priority One was ingrained in the business) was to then grow existing and new (profitable) business opportunities - The approach deemed most suitable to deliver Priority One was to immerse the business in the ISO framework of Plan “Do, Check, Act” - And the standard chosen as the mechanism to deliver the change was the internationally recognised Health & Safety standard ISO45001 - Going down the ISO45001 path required
NZs Preferred Nationwide Certifier of ISO standards Want to manage and reduce risk, increase productivity and profitability? Telarc has the right standard for you to achieve this. ISO 9001 - Quality, ISO 14001 - Environmental, ISO 45001 - Health & Safety, ISO 55001 - Asset management - ISO 27001 - IT security
Contact us to find out how standards will improve your business
0800 004 004 info@telarc.org www.telarc.co.nz safetynews.co.nz 31
MANAGEMENT
October 2021 - January 2022
October 2021 - January 2022
MANAGEMENT
investment in a consultant to work with the business to design and implement the agreed management system - Committing to ISO45001 also required an annual audit from an accredited Certification body to assess performance and to identify improvement opportunities. The outcome today - The organisational culture has made a significant jump shift with workers now self-monitoring performance and looking at methods to continuously improve performance - The business has grown by 30 percent......recovering the 20 percent given up but doing it profitably - The business continues to be audited annually to allow a fresh set of eyes to look for areas where opportunities to improve can be identified - The business is now looking at extending its scope of certification to include Environmental and Quality. The managing director could not speak highly enough of how the utilisation of the ISO framework, and the focus on Health & Safety had been a game changer. The combined impact of management commitment, worker engagement, collaborative design, deployment and monitoring of process activity along with an annual impartial audit has changed their business for the better. Increasingly, this is the type of feedback we are receiving. Our intention at Telarc is always to help all of our clients improve their business through certification. But when you hear such a great story as the one 32 safetynews.co.nz
Risk comes in many forms and certification helps over a variety of levels
Telarc is a Jas-anz Accredited Certification Body which provides qualified, competent, New Zealand auditors, who are industry coded to provide relevant and impartial intervention for a large range of New Zealand business regardless of the business size. The body is able to provide New Zealand business with an individual or a team of auditors capable of assessing one or multiple standards across one or multiple sites. While the key priority of any commercial relationship is to deliver a product or a service, there is an increasing need from businesses to have confidence that their tendering parties and suppliers are managing their business in a manner that won’t negatively impact the supply relationship. There are increasing demands from buyers for their suppliers to provide confidence that they are operating their business in a manner that is delivering good quality and environmentally aware
above it makes you realise that mountains can be moved if all parties are willing to co-operate and to leverage an internationally proven management framework combined with external audits.
products (ISO 9001 and ISO 14001) while managing workers in a way that protects worker well-being and safety (ISO 45001). There is more demand across other areas such as ethical work practices, Asset Management (ISO 55001) and IT Management (ISO 27001). Accredited Certification looks for gaps, risks and improvements in the way that work is actually done versus the way it is planned and communicated. This provides visibility of where work practice and or documentation anomalies lie in all levels of the business. This then leads to improvement activity so Certification can be granted. The second growing area that is driving minimisation of risk through Certification is through board and senior leader directives. Over the last decade, legislation and regulations have looked to push culpability for sub-optimal work practices towards senior leaders and boards.
Philip Cryer is Chief Executive of Telarc, a Crown Entity Subsidiary with a vision is to continue to excel as New Zealand's leading provider of systems assurance and training services. www.telarc.org | 0800 004 004
October 2021 - January 2022
Sponsored Article
AC Filter - an engineered solution protecting worker health
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he AC Filter cabin overpressure and filtration story began more than 30 years ago in The Netherlands and it has proven its durability and value. Fillflex manufactures, supplies and maintains AC Filter systems for any cab, on equipment of any type and size. “Our technology has often been copied, but there is only one genuine ACFilter product range,” says Fillflex
New Zealand managing director Bill Hackshaw. “The system optimises your equipment’s in-cab operating environment to protect both the health of the operator, and the existing heating, cooling and electronic systems in place. AC Filter complies with standards CROW132 and NEN4444.” Filters are certified, and available for all applications, including asbestos, respirable crystalline silica,
pollen, spores, hydrocarbon aerosols and gases that are harmful to humans. Parts and filters are of the highest quality, carrying the European CE Quality Mark. The system has a standard AOC (Advanced Overpressure Control) unit fitted in cab, with an optional PPM (Particles Per Million) readout function for hydrocarbons. The system is designed to maintain a pre-set value of 120pa in the cabin.
The system operates automatically when the vehicle is started to check for the status of the filters in the unit and the quality of the air pressure. If the pressure drops below 100pa the display will blink and an acoustic alarm will sound. www.acfilter.eu View the case study here
Cabin Overpressure & Filtration
Protect your workers from harm, and your business from risk. Contact New Zealand’s market leader, for more information on purchase or lease of AC Filter
Contact: Bill Hackshaw 021 232 0088 billh@brolube.co.nz safetynews.co.nz 33
HEALTH AND SAFETY
Control the risk to your machine operators and truck drivers from fine dust, hydrocarbons and other harmful airborne contaminants
Yearbook 2021
FETS (Fire and Emergency Training Solutions Ltd) is your workplace safety partner. We are in business solely to help you keep your team safe from harm through education and training. We are flexible and can adapt quickly to your requirements. We focus on three main areas:
WORKPLACE FIRST AID
Be proactive
Avoiding accidents in the workplace and at home by educating your team in safe practices for: • Confined Space Entry
• Working at Height
• Permit to Work
• Lock Out, Tag Out
• Fire Extinguisher
• Fire / Floor Warden
• First Aid
• Hearing Conservation
• Spill Kit
• Breathing Apparatus
• Elevated Work Platform
• Emergency Response Team
Completed to unit standards or tailored to meet your needs
Be prepared
Both as a business or a team member in the workplace: • Preparedness training for your emergencies • Risk Assessment • Training material tailored to your organisation • Nationwide delivery of training • Consultancy for emergency response / evacuation plans
Take action
When the unthinkable does arise: • Consultancy in the area of rescue planning • Application of bespoke emergency plans • Emergency response training – tailored to your organisations needs 34
safetynews.co.nz
infrastructurenews.co.nz propertyandbuild.com
Contact us Ph: 04 939 2669 www.fets.co.nz
October 2021 - January 2022
E M I T R E OV T E G D U B R E OV WHAT'S HOLDING BACK OUR INFRASTRUCTURE PROJECTS?
October 2021 - January 2022
Built for New Zealand conditions
EXCAVATION
Through John Deere Customer Advocate Groups (CAGs), engineers and developers engage closely with customers, and respond to their feedback, at key points in the design of John Deere machines so that features and specifications deliver exactly what is needed
36 infrastructurenews.co.nz
J
Sponsored Article
ohn Deere introduced its Series-II Excavator offering to the Australian market over 12 months ago and customers enjoy the power and performance, says Kel Davison, Director for Marketing and Sales, Construction and Forestry Equipment. The lineup included eight models ready to perform in Australian and New Zealand conditions and to deliver the quality and performance John Deere customers expect. Through John Deere Customer Advocate Groups (CAGs), engineers and developers engage closely with customers, and respond to their feedback, at key points in the design of John Deere machines so that features and specifications deliver exactly what is needed. Customers also help evaluate John Deere designs by putting equipment through their paces in a series of in-dirt evaluations. By understanding real-world application, our engineers have the information and insights they need to create a differential edge on John Deere products, and this critical input is the driver behind every comfort, function, and performance feature we produce. John Deere Senior Vice President Engineering, Manufacturing and Supply Management for the John Deere Construction and Forestry Division, Brian Rauch, says this customer-focused design approach is prioritised and implemented globally, across all products. “We study customers in our intended markets, apply their feedback to our designs, and define extensive product verification duty cycles based on the requirements they share
with us. All Deere engineers, regardless of product responsibility or location of design centre, utilise the same approach, collaborating extensively to ensure we are delivering products worthy of the Deere name.” Rauch says. Enhanced comfort and convenience The spacious cab was designed with convenience in mind. We made sure there was plenty of storage and controls were easy to use and well placed. Ensuring that operators can be comfortable and productive all day long. The Sealed Switch Module (SSM) is very intuitive, conveniently placed, is water and dust proof and eliminates unsealed connections and moving parts associated with traditional rocker switches. The 7-inch touch screen monitor is easy to navigate, providing quick access to machine features and functions that is easier than some systems. Multiple machine readings and Diagnostic Trouble Codes (DTC’s) are available for the operator to read via the touch screen. Easy daily servicing is another thing we are hearing from our customers. The ability to do most tasks from the ground without tools is a time saver for our customers. Grouped service points, single position swing greasing, 4,000-hour hydraulic oil and filter and 500-hour engine oil and filter changes, as well as the oil-sealed and lubricated undercarriage, ensure daily servicing is simple and efficient. More uptime John Deere excavators are built tough to deliver more uptime by harnessing the power of heavy-duty booms and arms, a robust electri-
cal system and optimised hydraulic routing. A sealed and lubricated undercarriage and heavy-duty welded X-frame provide a solid, stable platform, while the sloped track frame resists material build-up to decrease cleaning time. Full-length track guides and double-grouser track shoes are optional for rocky terrain and a heavy-duty cooling system keeps the engine and hydraulic system running efficiently, even in tough environments. More muscle Big tasks demand serious equipment. Combining substantial power with smooth, low-effort control, John Deere excavators provide the exceptional performance and fast work cycles needed to tackle large jobs quickly. Four power modes and three work modes deliver the right power and response for maximum productivity and strong digging force. With a strong focus on getting the job done, these excavators prioritise quality, productivity and operator comfort while incorporating strategic features such as premium hydraulic performance, highly durable and thick boom, arm and buckets to withstand tougher digging conditions, and Auto Pressure Boost to anticipate and deliver power when it’s needed. Tough components The highly dependable John Deere PowerTech™ Plus engine with variable-geometry turbocharger (VGT) delivers outstanding fuel efficiency, to move more material on less fuel. Full integration with Deere’s Intelligent Hydraulic (JDIHC) system combines impressive performance with smooth, low-effort control.
Generous flow, arm force, and swing torque help keep things moving, while the 90/180-deg function (available on the E300’s) increases the boom-up speed for faster truck loading. Design control We design the majority of our components, which means we don’t need to compromise the overall design. This deep vertical integration of products provides a further competitive edge to customers. JDLinkTM Telematics system enables dealers to respond to customer needs and diagnose, and even correct many issues, without leaving the dealership. This also means software updates can be made quickly and simply, by pushing downloads over the air to equipment. Quality is everything John Deere Construction and Forestry Equipment has a reputation across the world for outstanding quality, reliability, durability and performance, and our Series-II excavators are no exception. These excavators are built in a purpose-built factory in Tianjin, China to our exacting Deere engineering standards and will help drive production and profitability for local operators through fast cycle times, more muscle, more daily uptime and tough components. “We use state-of-the-art, high-precision machinery and techniques across our facilities, and the same parts and components can be produced to identical standards at any of our
worldwide manufacturing facilities,” Rauch says. “This is accomplished by using the John Deere Production System at all of our factories. No matter the location, employees follow the same procedures, and use the same tooling, assembly processes and quality assurance checks.” Once a build is complete, quality inspections continue, with new products put through a series of thorough trials to ensure quality and performance at dedicated factory test facilities. Equipment is subjected to several thermal cycles, raising and lowering operating temperatures. This is why John Deere machines will often have two to three hours on the clock at time of delivery – so customers can be assured the equipment has been thoroughly tested. For additional quality auditing, a UV sensitive dye is added to the factory fluids, the equipment is run through a thermal cycle then thoroughly inspected under a black light to detect even the smallest of leaks. “The purpose of everything we do is to ensure that we're building products that continue to deliver on the promise our company founder made – ‘I will never put my name on a product that does not have in it the best that is in me’,” says Rauch. The Series-II excavators are in stock. Call your John Deere dealer to experience the outstanding quality, reliability, durability and performance.
For the North Island contact AGrowQuip on 0800 433 373 For the South Island contact Drummond & Etheridge on 0800 432 633 infrastructurenews.co.nz 37
EXCAVATION
October 2021 - January 2022
CONSTRUCTION
October 2021 - January 2022
Latest lockdown puts ongoing strain on construction Dan Pollard, founder of trades software company Fergus, gives a breakdown of the current challenges facing the industry, and considerations to help get through the months ahead
L
ockdowns and tight restrictions coupled with border closures and broken supply chains had a noticeable impact on the construction industry. Fergus data reveals that, while there is a demand for work, the number of jobs created under Level 3 was still 30% less than before lockdowns began on 17 August. Under Level 2 it is still 10% less. In Auckland, the extended lockdown and continued restrictions have caused an even bigger strain – with average jobs created per company at 57% less than the rest of New Zealand in the week between 6 and 12 September alone. Auckland’s lockdowns will 38 infrastructurenews.co.nz
continue to impact much of the North Island too, adding a layer of complexity for anyone attempting to travel through. The challenges: work backlogs and broken supply chains The halt on construction work has naturally caused more of a backlog of work than usual in the lead up to Christmas, making it even more difficult to cater to every customer. The perpetual skills shortage in New Zealand has been exacerbated without access to international workers, making it difficult to capitalise on work when it does come in, including the raft of shovel-ready
public infrastructure projects and affordable housing targets. Construction workers must now be much more selective about the work they take on, and prioritise high-value work from customers that will be able to pay on time. Another challenge, and perhaps the most concerning impact on the construction industry is how it has exposed the fragility of our global supply chains. New Zealand has been left off the global supply chain of many construction material suppliers. Global shipping and building supply companies aren’t willing to supply New Zealand, with supplies only
going as far as Australia. This can significantly raise the prices of importing much-needed materials, with one Kiwi company spending up to $65,000 a week in shipping costs alone. Material shortages and the price fluctuations it causes make it very difficult to manage a job in a timely and affordable manner, and almost completely remove fixed-price contracts from the table. There’s not a whole lot that a small business can do to combat the impact of a global pandemic, but there are a few tips that will help you keep your head above water during difficult times like now.
October 2021 - January 2022
The return to work under Alert Level 3 saw thousands of construction businesses breathe a sigh of relief, made possible by assurance to the government that the industry was able to do so safely by following the Covid-19 construction protocols. The first lockdown last year saw vertical and commercial businesses in the construction industry combine to form a steering group, with Site Safe playing a key role, to develop the Covid-19 construction protocols. This set of documents lays out the processes that construction businesses must adhere to under the different Alert Levels. It’s not a pure science, however. The considerations: organise your finances, communicate and support your team Firstly, ensure your finances are in order. Making sure you have a strong grasp of your financial position is the first step to navigating uncertain times. It’s vital that you know your hourly rate in order to remain solvent and to pay your staff appropriately. You also need to know what your overheads are so when you are pricing work for a customer, you will end up with a healthy profit margin. If you don’t know how to work it out yourself, ask your accountant or financial advisor, or lean on the bevvy of resources and tools out there to automate functions like invoicing and payroll. That being said, it’s vital to have the money conversation with your customers right off the bat. Start pricing your work immediately and require your customers to pay a deposit upfront. Be sure to set a clear payment schedule and timeline for invoices. You should also have your terms of trade signed and
Brett Murray, Site Safe Chief Executive, says that the protocols are changing in tune with the nature of working in Covid-19. Pete Lockhart, Naylor Love Construction General Manager, says the key to the protocols’ success is a combination of health and safety expertise from the industry along with Site Safe’s practical knowledge of the industry, particularly education, helping to create a document that is easy to understand and apply. “It has been fantastic to see the cooperation from all parts of our industry. All those involved have worked to ensure the document works for everyone and we’re proud
register a PPSR (Personal Property Securities Register) against the property. If the customer won’t pay a deposit or sign off on your terms, you know they aren’t a customer you want to work with. Secondly, communicate. Your customers have also been feeling the strain of the pandemic, and may not necessarily know what work is and isn’t allowed under lockdown rules. When talking to customers, make sure to be transparent on the status of their job and what is and isn’t possible under current restrictions. You also need to reassure your customers that you will take the necessary safety precautions if you’re working on their premises, as they may not know what they are. Pay close attention to how customers want to communicate with you, as it may have changed during the pandemic. While lockdowns are still in place, it’s best to talk to customers remotely rather than face-to-face whenever possible. One silver lining of the pandemic is that contrac-
to be part of the discussion and its creation. Having people on the front lines involved means the results are more practical and can be more easily implemented on-site. “Under the higher Alert Levels, working on-site is quite different to what we’d normally see, but the extra effort is more than worth it when you consider the alternatives available. “At the end of the day, keeping our workers safe as well as others they interact with under these conditions is paramount. We can use the protocols to do this, while maintaining the ability of businesses in construction to stay working.”
tors can be more selective about the jobs they take on and who they work with. Now is a perfect time to reassess your customer base and focus on the type of business you want to build. Reliable customers will translate into a more engaged workforce and therefore less staff turnover. And finally, support your team. If you run your own business, chances are your staff will be just as lost as you are when the business world is so volatile. Communicate your strategy for the pandemic to staff, explain why it’s the best course of action and how you can work together to make it happen. Employees and co-workers are likely struggling with the mental weight of
lockdowns too. Schedule regular check-ins with staff and make sure not just to talk about work, put measures in place to support the well-being and mental health of those around you. The light at the end of the lockdown tunnel is drawing closer, but it’s likely we’ll still feel the impact of these lockdowns for years to come. If you’re struggling to cope with the strain of lockdowns, know that there are resources available so you don’t need to bear the weight by yourself. Getting a handle on your financial position and supporting your co-workers and customers will go a long way in helping the construction industry return to normalcy. Dan Pollard launched Fergus in 2014. Having done the hard yards as a plumber for over 20 years, Dan was determined to come up with an easier way to manage the end-to-end operations of his trades business. fergus.com
infrastructurenews.co.nz 39
CONSTRUCTION
Protocols key to keep construction working during pandemic
October 2021 - January 2022
Multi-purpose, safer, faster telehandlers increase productivity
Sponsored Article
The introduction of game changing 360-degree rotating telehandlers looks set to disrupt the infrastructure, civil and construction industries
MACHINERY
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The world’s highest rotating telehandler – RTH6.51 (six-ton lift) with an impressive 51-metre reach 40 infrastructurenews.co.nz
he days of needing on site a mobile crane, a boom lift or other types of elevated work platforms, a forklift and an excavator are numbered - one machine can do it all. Rotating telehandlers may look a lot like their conventional cousins, but they are very different. Their arrival on New Zealand work sites has completely changed the way project management is planned and the way onsite work is completed in a safer and faster manner. They load material, pick it up, drive to where it’s needed and then unload. The rotating telehandler can then pick the load, rotate and place the materials where needed. The concept originated in Europe, where the majority of urban construction sites are very compact and do not allow room for traditional telehandlers. “Rotating telehandlers have taken North America by storm and over the past 18 months have been attracting a lot of attention in New Zealand,” says APS general manager Darren Boon, agents for Magni, one of the most technologically advanced brands of rotating telehandlers in the world. “As technology has improved so has the reach and lifting capacity of these type of machines. On a
Sponsored Article
Magni recognised early that the biggest trend in the industry is to lift safer, higher and heavier multi-level construction site, a machine with a five-tonne lift and 26-metre reach would usually have been the standard,” says Boon. “Now machines are available for bigger projects with heavy lift capability up to 13 tonnes and machines with a reach of 51 metres.” APS have supplied a number of machines across
New Zealand including a rotating machine to Ports of Auckland and New Zealand’s largest telehandler, a massive Magni HTH24.11 (24-tonne lift) machine to Ghella Abergeldie Joint Venture which is working on the Watercare Main Central Interceptor tunnel project in Auckland. ‘This kind of versality and safety is exactly what I have
APS Equipment and Magni a winning combination Italian designed and manufactured Magni telehandlers have won three LLEAP (Lifting Equipment and Aerial Platforms) awards in a row. Magni produces some of the world’s biggest telehandlers – HTH50.14 (50-ton lift) and highest rotating telehandler – RTH6.51 (six-ton lift) with an impressive 51-metre reach. As well as being the New Zealand distributor for Magni telehandlers, APS Equipment has a fleet of 20 hire telehandlers from 2.5-ton lift to 12-ton lift and eight to 20 metre reach. These machines are available for short- or long-term hire throughout the country.
been looking for’ is a rejoinder that Boon is getting on a regular basis. “Magni recognised early that the biggest trend in the industry is the desire by end users to lift safer, higher and heavier and, as a result, Magni has become the industry leader in all of these categories,” he says. Magni rotating telehandlers are one of the safest machines to operate on the worksite. Self-levelling stabiliser legs combined with attachment recognition and on-board diagnostics show the position of the load in real time. “The machines are backed by factory trained mechanics, remote diagnostic
technology and a nationwide service network,” says Boon. “Rotating telehandlers act like cranes in that they have a cab that continuously spins 360°, enabling the unique pick-and-place capability that is the hallmark of this class of equipment. “Without a need to drive the materials, a rotating telehandler reduces load transport times and increases productivity,” he says. Rotating telehandlers are also a solution for compact jobsites, where their greater lift heights and reach can place many of the jobsite materials without the need to reposition the machine.
Article sponsored by APS Equipment www.apsequipment.co.nz Darren Boon +64 9 437 9036 darren@apsequipment.co.nz
infrastructurenews.co.nz 41
MACHINERY
October 2021 - January 2022
October 2021 - January 2022
CONSTRUCTION
Australian I construction industry cries out for reform Industry experts say Infrastructure reform is “desperately” needed to rollout Australia’s massive $110-billion infrastructure program, The Urban Developer reports
42 infrastructurenews.co.nz
nfrastructure Australia has released its 648page infrastructure plan for 2021, responding directly to the 180 infrastructure “challenges and opportunities” identified in its 2019 Australian Infrastructure Audit. The plan, which highlights nine focus areas to “support infrastructure”—following bushfires, drought, cyber-attacks and the Covid-19 pandemic—zeros in on delivering infrastructure for the lowest cost. Infrastructure Australia chief executive Romilly Madew says Australia’s approach to infrastructure, at a time of record investment, now needs to consider value for money and whether
or not projects deliver optimum public value. “The challenge of progressing the reforms outlined in the plan is a shared one—that is why we stand ready to partner with the commonwealth, states and territories, local government and industry to support the implementation of reform,” Madew says. The federal budget tipped an additional $10 billion into the government’s $100 billion, 10-year infrastructure program, in a bid to drum up job creation following a turbulent 2020. Only a few years ago, the federal government’s “headline” infrastructure promise was around the $50-billion mark. The pandemic has since increased pressure on supply chains, material costs and construction companies as more money is pumped into new projects across all sectors to stimulate the economy. “The ability to successfully deliver this ambitious infrastructure pipeline is constrained by current processes,” Madew says. “These include an over-emphasis on a project-to-project and contract-by-contract mentality, inappropriate apportionment of risk, and a sporadic uptake of best practice. “If these processes and practices continue, less infrastructure will be built for the same money, and the infrastructure will not be as functional in the long-term.” Slattery managing director Sarah Slatterytold The Urban Developer that the national property and construction advisory firm welcomed the strategy and and that it was strategic and necessary to “build confidence” in the market and provide much needed flow on effects.
“The goal is to stimulate but not overheat,” she says. “Opening borders for skilled workers is key to striking the right balance.” Australian Constructors Association chief executive Jon Davies says the pandemic had supercharged the construction industry and had presented a “once in a generation” opportunity for reform. “All levels of government are relying on the construction industry to lead the economy forward on the basis that every dollar spent on infrastructure has a $3 kick on to the wider economy—but our industry is broken,” Davies says. “Construction accounts for almost 25 per cent of all insolvencies in Australia, only 12 per cent of the workforce are women and construction workers are six times more likely to die from suicide than a workplace incident. “As the direct procurer of major projects and as a significant source of funding for jurisdictionally led projects, the federal government is best placed to coordinate and incentivise reform—and it needs to do
this now. “We cannot afford to wait 5, 10 or 15 years, the record spending is happening now, companies are going out of business now, people are leaving our industry now.” Davies says the peak body was now fearful that the plan could fall short given the “lack of progress” made since the 2016 Australian Infrastructure Plan and says he was worried that many will never happen. “[There has been] a similar lack of progress in improving productivity and implementing mar-
30 years trails that of other significant industries by 25 per cent. “If we could just halve the gap in productivity growth, we could be constructing an extra $15 billion of infrastructure every year for the same level of expenditure and employ an extra 15,000 people.” The plan, which will now go before the federal government, involved more than 5000 stakeholders across industry, government and academia. Recommendations include integrating transport net-
"The pandemic has increased pressure on supply chains, material costs and construction companies as more money is pumped into new projects" ket-based reform will be a huge missed opportunity,” Davies says. “Carrying with it a 5-10 year timeframe for implementation, one of the key recommendations identified in the plan is to improve industry productivity and value for money. “Productivity growth of construction over the last
works, enabling an affordable transition to net-zero energy, water safety and security, equity of access to digital communications, social infrastructure, and accelerating Australia’s transition to a circular economy. The plan also addresses the infrastructure challenges posed by the pandemic,
including a 20 per cent increase in household waste, and increased numbers of residents and businesses experiencing difficulties in meeting energy costs. The importance of “transformative technology” and digitisation in order to empower those across the construction lifecycle to be more proactive in “harnessing data” was also key. Deloitte infrastructure and capital projects lead Paul Mountney says infrastructure assets provided rich environments for data mining and which were currently not being leveraged. “We know that the anticipated spend on Australian infrastructure in the next decade or so is over $760-billion dollars,” Mountney says. “The biggest opportunity for making long-lasting improvements lie in digital capital project delivery … we need to push the envelope and make the best use of those investment dollars.” Another key point the report makes is that the cost of natural disasters will rise from $18 billion a year to potentially as high as $39 billion a year. infrastructurenews.co.nz 43
CONSTRUCTION
October 2021 - January 2022
October 2021 - January 2022
ENVIRONMENT
A
ccording to Tony his new machine, developed entirely in New Zealand, has far less drag substantially reducing the tearing of the fill, with a fuel saving of up to 50 percent, and less environmental impact compared to commercially available compactors. Field trials have been so successful that he intends taking the machine to market by the end of 2021. It's a big step up for the CEO of family-owned Cameron Civil, a 44-machine strong company which Tony started with his wife Lynley, in 2002. Tony and Lynley bought the business from long-time Auckland contractor Allan Cameron, who remains a mentor and supplier of machinery to the company. Their daughter Katie made news in Auckland two years ago when she bought her own Komatsu D65 bulldozer and became, at 19, one of the first female earth moving contractors in New Zealand. Tony almost simultaneously bought a Komatsu D61PXi-23 dozer fitted with a fully factory integrated intelligent machine control [iMC] system to use initially, on a major project for the RNZAF's Whenuapi airbase, in West Auckland. According to Tony, the OEM iMC system enabled the bulldozer to achieve grader-quality trimming tolerances of 25mm, better than half that of aftermarket GPS solutions he had been using. The iMC system incorporates stroke sensing hydraulic cylinders with load sensing hydraulics which automatically adjust to enable transition from rough dozing to high-precision finish grading. "In many cases, we've 44 infrastructurenews.co.nz
In search of the perfect surface
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been able to eliminate the grader phase of a final finish operation because the D61 has delivered the required quality," he said. As part of his pursuit of the perfect surface, Tony had been an early adopter of aftermarket trimming systems, achieving between 50mm and 70mm tolerance, enough to enable a grader's final finishing pass to be relatively simple. On each job, he established a flat Plane surfaceon which the cutting and trimming coordinates of his machines were checked daily to ensure they were optimised. It is a technique similar to setting-up successful racing cars to ensure all
corners of the vehicle are evenly balanced. "With the D61, we have a Komatsu technician come on-site to fine-tune the electronics specifically to requirements of the job, to ensure its providing the maximum result," he said. The Whenuapi airbase required ground preparation to a depth of 1.1 metres to construct 15,000 square metres of hard stand and taxiways. Cameron Civil achieved the complex task first time, and ahead of schedule. Cameron Civil is now trialing Komatsu's PC210LCi-10 excavator with Intelligent Machine Control, with the view to expanding its range of OEM-fitted precision
aids. "The iMC system on both the Komatsu dozer and excavator are semi-autonomous and don't require special operator skills to run it," Tony said. "We employ skilled operators for their general proficiency because our jobs will always benefit from having people with years of experience who know best how to employ the tools we use." Tony makes a point of spending time on his machines himself. "It's important to know what we're doing and hands on experience brings with it, a respect from the operators that you wouldn't otherwise necessarily get," he says.
ENVIRONMENT
October 2021 - January 2022
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infrastructurenews.co.nz 45
October 2021 - January 2022
Transmission Gully what went wrong?
TRANSPORT
With an initial opening date of April 2020 at an estimated cost of $850m, the now $1.25b project is still unfinished with no clear opening date in sight, the Dominion Post's Josh MacManus and Sophie Cornish report
After more than a billion dollars and a century of waiting, drivers should now be saving a precious 11 minutes on trips to or from Wellington. Instead, communities have again been left in the lurch. The coastal highway continues to back up with traffic, creating crash risks and resilience issues for the capital 46 infrastructurenews.co.nz
and surrounding regions. The opening day has been delayed indefinitely, with no clear indication of when a new date might be announced. It is the fifth time the deadline has been pushed back. Delays, cost blowouts, and construction issues have dominated headlines about the project for decades.
October 2021 - January 2022
T
he opening date for Wellington’s Transmission Gully has been delayed due to Covid-19, with a new date yet to be confirmed. Waka Kotahi NZTA says
it is working with the Transmission Gully Public Private Partnership contractor, Wellington Gateway Partnership (WGP), and its subcontractor, CPB HEB Joint Venture, to confirm a
new opening date for the motorway. Costs for the project blew out from $850 million to $1.25 billion after missing the initially planned opening date of April 2020.
“WGP and CPB HEB have advised Waka Kotahi that the recent Covid-19 lockdown, alert level 3 restrictions, and supply chain constraints as a result of the extended lockdown in
A timeline
1924 A 110,000 volt transmission line is laid between Wellington and Mangahao Power Station in Shannon, giving the gully its name. 1995 The Wellington Automobile Association suggests Transmission Gully should be built as a toll road. Transit New Zealand estimates construction costs at $160m. 1999 In an updated estimate, Transit New Zealand puts construction costs at $245m. 2009 Transport Minister Stephen Joyce announces Transmission Gully as part of the roads of national significance strategy. 2012 Transport Minister Gerry Brownlee tells the NZTA to consider a public-private partnership. This was largely due to the Christchurch earthquake, which put funding pressure on the Government’s balance sheet. By now, the cost estimate was $850m. July 2014 NZTA signs a PPP contract with Wellington Gateway Partnership (WGP) to design, construct, finance, and then operate and maintain the new motorway for 25 years. WGP hired a series of contractors to complete each part of the project. CPB HEB is hired as the road builder.
October 2015 Works begin on-site with a massive earthmoving operation, which will eventually dig up enough dirt to fill the Sky Stadium 2.7 times. November 2016 The Kaikōura earthquake hits, followed by a season of torrential rain. CPB HEB warns the opening date of April 2020 could be pushed as late as August 2020. June 2019 Waka Kotahi agrees to a one-month extension due to delays from the earthquake, moving opening day from April 2020 to May 2020. September 2019 The opening date is pushed back again, from May 2020 to November 2020. NZTA admits there have been more issues than it previously let on – storms had caused slips on some cut slopes and damaged a stream diversion project. In some areas the damage was so severe they needed to redesign the slopes entirely. February 2020 Costs officially blow out to more than $1b after Waka Kotahi agrees to pay another $191m to Wellington Gateway Partnership due to the delays. A press release quietly abandons the November 2020 date, instead noting the builder is “working very hard to complete the motorway by Christmas”.
August 2020 After months of negotiations, Waka Kotahi agrees to pay WGP an extra $208 million. It brings the total cost to $1.25b – $400m more than originally agreed. The opening date is moved to September 27, 2021. As part of the deal, builder CPB HEB will face a penalty of $7.5m and $250,000 per day it opens late. November 2020 Media are invited on a drive-through of the road. All major bridges are completed, but much of the road is still an unsurfaced, bumpy ride. Sergio Mejia, chief executive of Wellington Gateway Partnership, says the only thing that could delay the project again would be an earthquake or an unprecedented flood. What he didn't see coming, however, was another Level 4 lockdown. July 2021 Paving is reported as 94 per cent complete. Waka Kotahi puts out a cryptic press release reminding WGP of the consequences if the road doesn’t open on time – but there is no official word that the opening day is at risk. August 14, 2021 Greater Wellington Regional Council chair Daran Ponter warns that dozens of outstanding resource consents could put opening day at risk.
March 2020 New Zealand enters a level 4 lockdown. All construction on the road stops.
August 18, 2021 New Zealand enters a Covid-19 level 4 lockdown. Workers are given essential permits to access Transmission Gully for security, safety and environmental protection.
April 29, 2020 Work is able to restart, albeit without 80 staff, who are stuck overseas. The lockdown costs valuable time during peak paving season.
September 18, 2021 Waka Kotahi confirms Transmission Gully will not open by its September 27 deadline. No new opening date has been announced. infrastructurenews.co.nz 47
TRANSPORT
1919 The Evening Post reports on a proposal by Otaki MP William Field for an inland motorway from Paekākāriki to Paremata – the earliest known record of a proposal roughly resembling the road today.
TRANSPORT
October 2021 - January 2022
Auckland have impacted on their ability to meet the contractually agreed opening date of 27 September 2021,” Waka Kotahi general manager of transport services Brett Gliddon says. It has faced hurdle after
hurdle since construction began in 2015, with re-laid section, Covid-19, environmental breaches, and corporate conflicts all plaguing the project. Work has resumed on the project under the appro-
priate health and safety protocols since the move to alert level 3, then alert level 2, in Wellington. However, these new delays, on top of the risk that already existed around achieving the contractually
agreed opening date, mean it is clear that the motorway will not be ready to open on September 27. The partners are working together to understand the full impacts of the lockdown and restrictions on the
Interim review reveals weaknesses in PPP procurement process Transmission Gully has long been a dog of a project, says Greater Auckland’s Matt Lowrie. “From it’s poor initial business case, to it being made a Public Private Partnership (PPP) that would see taxpayers forking out over $3 billion over the coming decades and then having cost blow out after cost blowout and a range of other issues,” he says. “In August last year, then Ministers of Transport (Phil Twyford) and Infrastructure (Shane Jones) announced an urgent review of the project. That review was released and it’s damning for both the previous government and Waka Kotahi.” The review recommends updating aspects of the national Public Private Partnership (PPP) Guidance and that Waka Kotahi implement changes related primarily to the management of future PPP projects. A PPP is a long term contract between a client and a private sector consortium to design, build, finance and maintain an asset, with the client retaining full ownership of the asset, explains former Infrastructure New Zealand Policy Director, 48 infrastructurenews.co.nz
Hamish Glenn. “Bundling all these activities in one package for an asset lasting 30 years is extremely complex, so PPPs tend to be used for large projects where the benefits can be shown to outweigh the costs. Seven PPPs have been signed in New Zealand. Each of the five operational contracts was delivered on budget for the Crown. “The Government launched this review following concerns that the PPP model used to procure Transmission Gully had not performed as intended,” Glenn says. “It’s important to note that Transmission Gully successfully passed all the value for money tests designed to protect the taxpayer from project time and cost overruns, or assets which do not meet essential community needs. “But what the interim review shows is that there were several issues in the process, including that original cost estimates for the project were too low, encouraging bidders to seek out ways to reduce costs which did not necessarily provide best value, and that PPP project
governance can be strengthened. “It is important that these recommendations are quickly implemented to maintain confidence across the general public and industry that the model provides a viable infrastructure procurement option. “New Zealand has a very large nation-building investment programme ahead. Use of private capital to manage public cashflows, inject innovation, attract international expertise and better allocate risk is critical to successful delivery. “PPP is one such way to leverage private investment to achieve public outcomes. The review recommendations ensure that PPPs continue to provide decision makers with a genuine option to deliver major infrastructure,” Glenn says. Chief Executive of the New Zealand Infrastructure Commission, Ross Copland says they will implement the recommendations directed by the Minister for Infrastructure. “The lessons learned from the Transmission Gully Interim Review will be valuable for future PPP projects and other major project procurement,” says Copland.
October 2021 - January 2022 security, safety and environmental protection. Minister of Transport Michael Wood had expected the Covid-19 lockdown would affect the project’s completion date. It was also revealed there are several ‘’black spots’’ on Transmission Gully with no radio or mobile coverage which could pose a risk for emergency services. CPB Contractors is seeking $75 million in losses and damages it claims were caused by errors in engineering design, claiming the errors led it to incorrectly forecast the project cost and profits, resulting in losses and damages of $75.2m.
“It was noted in the review that Waka Kotahi had already proactively captured lessons learnt from Transmission Gully and applied those lessons to the Puhoi to Warkworth PPP project. “The Major Projects and PPP Guidance, which we are currently updating as a result of the review, will allow us to give better advice on when the PPP model should be applied and provide tools on how to set up major projects for success.” The review recommends that improvements be made in PPP procurement, including the setting of the price through the Affordability Threshold, the management of consenting risk, and the project governance structure. “By international standards, Transmission Gully was always going to be a large and complex road project to both plan and deliver successfully,” says the review team. “While we found there were good aspects of how the project had been managed at the planning stage, several aspects of PPP management during that stage could have been done better and addressing
Transmission Gully will become part of State Highway 1
those identified issues earlier may have minimised or avoided some of the delivery issues that have been reported.” Lowrie says it’s not surprising errors were made, given the PPP model was hurriedly pushed through for ideological reasons by then Transport Minister Stephen Joyce. The report notes Waka Kotahi had just one month to convert a nonPPP project, with an existing consented scheme design into a design that could be compared against a PPP option. This meant they had to use a design that was less developed than what they would normally include in a procurement process. “I recall speaking to a Waka Kotahi procurement manager at a conference at around the time this was all being set up,” says Lowrie. “He told me that essentially all of the ‘innovation’ benefits PPPs are said to deliver can just as easily be achieved through an alliance model, like those used on projects such as Waterview and the City Rail Link. “Ultimately the only thing PPPs seem to deliver is a more expensive way of delivering infrastructure and
TRANSPORT
project, and confirm a new opening date. “We know that people are keen to see the road open as soon as possible, and everyone is working as fast as they can to get the road open to the public.” As well as finishing works, there are other critical requirements which also need to be met by WGP and CPB HEB before the motorway can legally be opened for public use, including safety and asset quality assurance work, and compliance with environmental consent conditions. During level 4 lockdown, workers on the project were given essential work permits to protect the state highway during alert level 4 lockdown and ensure
great returns for the financial institutions lending the money to pay for it. “It’s scary to think that despite all of the known issues with PPP’s, the current government were extremely close to pushing ahead with another one with the Light Rail in Auckland. “One thing that really concerns me about this whole saga is that many of those involved in creating these issues, and cost blowouts on other projects, are still in the organisation and in many cases now in even more senior positions. “Worse still, the organisational structure means there is a ‘fox guarding the henhouse’ situation as those tasked with reviewing and approving funding for projects actually report to the people who create and design the projects. “So while local government projects get put through the wringer, Waka Kotahi projects often get rubber stamped, both to keep colleagues happy but also so as not to annoy the boss. “I do wonder if we need to go back to having transport funding decisions made by an independent agency,” concludes Lowrie. infrastructurenews.co.nz 49
October 2021 - January 2022
The New Zealand A Upgrade blowout
TRANSPORT
Projects in the New Zealand Upgrade Programme announced last year have now been scaled back or axed entirely, Greater Auckland's Matt Lowrie investigates
t the start of last year the government announced the NZ Upgrade Programme, a massive infrastructure programme which included $6.8 billion in transport projects around the country with around half of that being in Auckland. The package contained some really good and much needed projects, such as the Northern Pathway, the third main between Otahuhu and Wiri, electrification from Papakura to Pukekohe along with new train stations along that section. But the vast majority of the package, over $5 billion (75%) was for massive road upgrades, including to continue the National Party's Roads of National Significance. It was bizarre and many of the projects completely contradicted the Government Policy Statement (GPS) which is meant to guide transport priorities across the country. There have been rumours circling for some time about
Biggest blowouts Otaki to North of Levin $817m to $1,500m (+$683m) It’s really hard to see how the government can justify continuing to fund this project. While traffic volumes have been increasing at the telemetry site at Ohau south of Levin and the current Annual Average Daily Traffic (AADT) is about 18,000, the business case suggested that by 2041 it is only expected to reach around 22,600. This is important as in the business case for the proposed Warkworth to Wellsford expressway, Waka Kotahi suggested the trigger for four-laning is when “Forecast traffic volumes are predicted to exceed 25,000 AADT“. I wonder what could have been achieved by instead putting that 50 infrastructurenews.co.nz
money into some safety upgrades, better connections between SH1 and SH57 to create a proper bypass of Levin and the rest into track upgrades and/or extension of electrification combined with improved rail services? Penlink $411m to $830m (+$419m) Penlink is a planned 7km toll road in Auckland between SH1 near Dairy Flat through to the Whangaparaoa Peninsula. It has been pushed for by locals for decades. The $411m when announced last year was already up significantly on the $280m previously estimated by Auckland Transport. One of the main problems with Penlink has been
there are just not that many people on the peninsula to use it. That and they’ll still face the same motorway bottleneck on SH1 – though I wonder if some of the extra cost could be widening SH1 too. Auckland Transport have long term (unfunded) plans to extend the NX2 to Whangaparaoa via Penlink. Perhaps that needs to be combined with more general upzoning of the peninsula to help justify the cost. The cost should hopefully put to bed the push for the road to be four lanes and not tolled – the toll will help in managing demand but even in 2046 only around 16,800 vehicles a day are expected to use it, so toll revenue would barely cover the interest on that construction cost.
TRANSPORT
October 2021 - January 2022
big cost blowouts for some of these projects and the government themselves have said they’ve been going through ‘baselining’ process to review the costs. Earlier this year they
announced the outcome of that. It’s significant, with the overall programme almost doubling in cost if they were to continue all projects originally announced. The government say
Takitimu North Link Stage 1 $478m to $655m (+$177m) Stage 1 is formerly known as the Tauranga North Link and would see a new 6.8km, 4-lane road build from the current toll road (Takitimu Dr) to
they’re investing an additional $1.9 billion into the programme which will mean 26 out of the 32 original projects will continue to go ahead unchanged while the remaining projects have
about Te Puna. One small positive of the project is, as Waka Kotahi say: “One lane in each direction will be used to prioritise public transport, vehicles carrying multiple passengers and/or freight“.
been changed – mainly for the better. Cost Increases One of the first things that stood out to me looking at the revised project costs
Melling Interchange $258m to $420m (+$162m) This is the next in the progressive removal of at grade intersections along SH2 through the Hutt Valley and also includes flood protection works for the Hutt River and shifting the train station. The project had a business case completed in September 2019 so again it’s hard to understand how the costs could have escalated so substantially. Canterbury Package $159m to $300m (+$141m) As the name implies, this isn’t a single project but a bunch of projects throughout Canterbury.
infrastructurenews.co.nz 51
October 2021 - January 2022 was where they had increased. The various rail projects in Auckland and Welling-
Transport Minister Michael Wood
ton along with a group of 13 smaller road projects throughout the regions all saw no to small increases in costs. Meanwhile the bigger roading projects saw in some cases massive budget blowouts, in some cases more than doubling. The fact that costs nearly doubled in just a year highlights there are serious issues in agencies like Waka Kotahi who provided the original estimates.
Yes, some cost escalation as projects go through more detailed design processes are understandable but projects doubling (or more) in such a short space of time suggests there are much bigger issues at play. These are also the same people responsible for other highway blowouts. It seems to happen so regularly and with no consequences that it’s hard to tell if it’s incompetence or deliberate – after all it’s much harder for a
politician to stop or delay a project that has been announced or is underway. Project changes One of the things that is notable from the changes is it’s clear the government are taking climate change more seriously. This is most notable in their comments surrounding Mill Road. Transport Minister Michael Wood says in light of the increased costs and climate commitments, it was im-
TRANSPORT
Changed for the better? Whangarei to Marsden In Northland the planned expressway between Whangarei and Marsden is likely to have seen similar cost escalation to the other projects. As such it has been replaced with safety upgrades to the road and funding for the 19km rail spur to the port at Marsden Point which Kiwirail say is the first significant new rail line since the 1950s. There’s also funding to upgrade the line between Whangarei and Otira to handle heavier trains. Kiwirail also say that when the port moved from Whangarei to Marsden Point rail freight movements in the region dropped from about 1 million tonnes a year to about 100,000 tonnes but a Ministry of Transport business case found these improvements could see that rise to about 2.2 million tonnes.
Mill Road/South Auckland Mill Rd is the most high-profile change and comes after the costs blew out from $1.354 million to about $3.5 billion – likely combined with pressure from advocates over its environmental impact. That environmental impact was even called out by Transport Minister Michael Wood. Mill Road will become a smaller scale project, with a focus on addressing safety issues. It is expected to involve an upgrade of two lanes instead of four between Flat Bush and Alfriston tying in the existing urban Redoubt Road dynamic lanes. There will also be targeted safety improvements between Alfriston and Papakura. Some suggest that a big factor behind the cost escalation for Mill Rd
is Auckland’s runaway land prices. It was always bizarre that we’d build both Mill Rd and an upgrade of the parallel SH1 at the same time. As part of the announcement, Stage 2 of the motorway widening from Drury to where Mill Rd would have joined in south of Quarry Rd (including a new interchange for Mill Rd) has been deferred. The overall package of works in South Auckland remains about the same total value but they say the savings “will allow investment in transport upgrades to release housing and local centres in Drury in a way that supports the Government’s decarbonisation goals“. Finally in South Auckland, the initial NZUP announcement included $247 million for two new of the three planned new trains stations between Papakura and Drury. They’re now going to build all three. Takitimu North Link Stage 2 Takitimu North Link Stage 1 is still going ahead, albeit with an increased cost. Stage 2 was a further 7km to Omokoroa and presumably experienced similar cost escalation to the other projects. Stage 2 has now been deferred with funding just for route protection. They also say it will now be required to be funded from the normal National Land Transport Programme and that it’s unlikely to occur within the next 10 years.
52 infrastructurenews.co.nz
October 2021 - January 2022
Northern Pathway canned
Earlier this year, the Government announced plans for a much needed second harbour crossing for Auckland. The issue that many New Zealanders had with the project was that it would be a bridge for cyclists and pedestrians only, doing nothing to alleviate Auckland's growing congestion. The Government has now decided not to go ahead with the project, saying it did not get the public support needed. “The Government has both listened and acted, meaning that the Northern Pathway standalone bridge will not be going ahead,” Transport Minister Michael Wood says. He says work will now continue on a public transport-led additional harbour crossing. "We allocated $60 million in the Auckland Transport Alignment Project (ATAP) earlier this year for planning work and property acquisition to occur. “The cancellation of the standalone bridge means we can support a range of other projects consistent with our plan for a transport system that both reduces emissions and supports new housing,” Wood says. Funding will be allocated across four main categories: - Continued work to improve pedestrian and cycle access across the Waitemata - Delivering high priority transport projects in Auckland - Accelerating the rollout of the Auckland strategic cycling network - Delivering a range of high quality regional transport projects “Auckland will continue to see significant investment to support the eco-
nomic recovery and get the city moving – which is why it’s our intention to use part of this funding to bring the Eastern Busway forward,” Wood says. “East Auckland can’t afford to wait longer for better public transport. This project will achieve similar objectives to the bridge of reducing emissions and congestion. “Another project we want to bring forward to give East Aucklanders more choices is a 1.9km link between Glen Innes and Panmure to connect the new Eastern Busway cycleway with the Glen Innes to Tamaki cycleway. "Additional work will occur in the coming months to identify other key links in the Auckland strategic cycling network that can be delivered. “We will also continue to recognise the importance of better pedestrian and cycling access across the Waitemata. “The Seapath cycleway project will continue, with some re-design at the harbour bridge end. "We will run a short process to investigate lower cost options to create a connection for walking and cycling across the Waitematā before the additional harbour crossing is built. “I know there will be calls from some to permanently allocate a lane on the existing bridge for walking and cycling but decisions about access to the state highway network formally sit with the Waka Kotahi Board. "I have formally written to them to express my support for a temporary trial that could occur over the quiet summer holiday months, subject to safety considerations being met," Wood says.
infrastructurenews.co.nz 53
TRANSPORT
portant to take another look at the programme. “Recognising the need to decarbonise our transport system, we’re rebalancing the package to increase investment in rail, public transport and walking and cycling. “If we had proceeded with Mill Road as originally scoped, it would have cost up to $3.5 billion and at peak produced six tonnes of CO2 emissions a day. "Instead, we’ve focused on delivering important safety improvements to Mill Road, upgrades to SH1 and rail, and new rail stations connected to public transport, walking and cycling infrastructure. "This rebalanced package helps manage debt, reduces emissions and supports housing growth. “The Marsden Point rail spur will be a strategic investment in Northland’s future prosperity, getting heavy trucks off the road to make the highway safer, and reduce emissions. "We know safety on SH1 is a concern for locals, so there will be targeted safety upgrades, including median barriers, along the route. “Meeting our commitment to decarbonising transport means that we have to start doing things differently. "This re-balanced NZUP package shows our intent, and to guide future investment I intend to amend the Government Policy Statement on land transport to provide Waka Kotahi with the clarity it needs to make investments consistent with our country’s decarbonisation goals,” Wood concludes. This is great to see and hopefully we’ll see a lot more of it, maybe even through some of the projects above where the costs increased.
October 2021 - January 2022
WASTE MANAGEMENT
The fight T for common sense and a reasoned debate Pressure continues to grow for the introduction of thermal recycling to process unrecyclable waste
he issue refuses to die despite efforts by government agencies to discredit the notion ahead of policy directions due next year. Early indications suggest the government line is likely to follow the EU Green Deal which holds that “incineration causes lock-in effects and hinders both material recycling and waste production”. The EU refuses to fund such projects. Critics claim that the result of discouraging incineration for material which cannot be recycled has the opposite effect and “locks in landfills”, especially in poorer countries where
there is no money available for waste to energy programmes. “New Zealand is in the middle of a landfill waste crisis, as was seen with the 2019 Fox River landfill environmental disaster,” says South Island Resource Recovery Limited (SIRRL) director Paul Taylor. “Waste disposed at municipal landfills grew by 48 percent between 2009 and 2019.” SIRRL is a joint venture bringing together New Zealand expertise with Spanish and Chinese waste technology. Dubbed Project Kea, the joint venture is looking at
An artist's impression of a proposed waste-to-energy plant in Waimate, South Island
54 infrastructurenews.co.nz
possible sites to build an Energy-from-Waste plant near Waimate in South Canterbury. Similar plans in the Waikato in a kiwi partnership with Danish expert Ramboll , which has built a facility in the heart of Copenhagen, has apparently languished. It initially attracted support from the Waikato Economic Development agency Te Waka. In the South Island, SIRRL has begun Investigations into the viability of building a plant that will safely convert 350,000 tonnes of waste a year (that would otherwise be dumped into South Island landfills), into renewable electricity. “All emissions from the processing of the waste will meet strict air quality and noise standards set by central government and the regional council. “Waste materials delivered to the plant for disposal will be contained within a negative pressure bunker storage environment which eliminates any possibility of any odour from the plant. Taylor says that Energy-from-Waste plants are popular throughout the northern hemisphere, especially Europe, because they are providing an environmentally clean solution to a residual waste disposal problem at the same time as generating renewable energy. These plants are able to be located close to urban areas with no environmental, odour or noise issues. All waste that goes to them needs to first have anything recyclable removed. “We are very clear that recycling is the priority and desire only waste that is otherwise destined for landfill, after any options for reuse”, he says. “There will be no visible
WASTE MANAGEMENT
October 2021 - January 2022
air discharges emitted from the plant into the atmosphere other than non-toxic condensing water vapour. Steam produced within the plant is converted into electricity and delivered to local industries as well as to the national grid. “Many of the South Island’s landfills are older, overpacked and failing. An increase in population and more extreme weather events will put further pressure on landfills. “Landfill gas from waste contains high concentrations of methane, and if not first captured, has about 30 times higher global warming impact compared to carbon dioxide. “The proposed plant can run alongside New Zealand’s essential waste minimisation and recycling efforts and, at the same
Climate change plusses Project Kea says the advantages of Energy-fromWaste plants can include a number of additional areas to help mitigate Climate Change: - Carbon dioxide transfer for use in horticulture, greenhouses etc - Assisting in the production of hydrogen by having available energy to enable an electrolysis plant to be operated - Reducing the use of coal fired boilers in industry - Enabling water recycling technology ensuring minimum impact upon the environment - Plasma treatments to capture toxic fly ash and aid in the reduction of toxins from other industries - After the bottom ash has been filtered and metal extracted for recycling, the plasma-treated fly and bottom ash can be used for road aggregate or concrete block manufacture time, produce renewable energy to benefit the local economy”, he says Resource consents will be required from both Environ-
ment Canterbury and the Waimate District Council. www.projectkea.co.nz infrastructurenews.co.nz 55
CONSTRUCTION
October 2021 - January 2022
Strict immigration policies detrimental to construction sector New Zealand’s construction industry is riding a massive rebound in business confidence, but this may be undermined by skill shortages, with 90% of construction firms struggling to recruit, finds Civil Contractors New Zealand
F
indings from the 2021 Construction Industry Survey, a partnership between Teletrac Navman and Civil Contractors New Zealand (CCNZ), validate growing sector confidence, with 50 percent of those polled optimistic the New Zealand construction industry is on the upward trajectory and over half predicting turnover and staff growth in the next 12 months. A significant difference in this year’s survey results is a rise in the requirement 56 infrastructurenews.co.nz
for skilled staff to unprecedented levels, with growing workloads and closed borders. A new survey of CCNZ and other key industry body members has found nine out of ten construction firms are having difficulty recruiting in New Zealand. The 135 organisations that responded to the survey collectively reported 3,229 vacancies across a wide range of jobs and experience levels, varying from professional services to trade roles. The survey found that
while many firms usually recruit from overseas, most are currently not doing so because of concerns about New Zealand’s border exception processes and criteria. CCNZ Chief Executive Peter Silcock says the findings showed that many in the industry felt that Immigration NZ’s border exception criteria were too narrow, and in some cases at odds with the Government’s intention to allocate MIQ places for the construction sector. A report on the survey
findings has been sent to Government, along with a request to meet key ministers to discuss the issues raised. The main recommendations include: - aligning Immigration NZ’s border exception criteria for “long-term critical workers” for the infrastructure sector with the MIQ group allocation criteria, - lowering the salary threshold for workers whose skills are in short supply, - adding construction sec-
October 2021 - January 2022
Tens of thousands of New Zealanders are locked out of the country and many companies are relocating staff offshore because of a logjammed MIQ system, Make Lemonade reports. But Auckland tech company Jupl has developed a self-isolation solution. Jupl co-founder Sir Ray Avery says they have developed a system so Kiwis are not locked out of the country which will help ease MIQ issues. His company has come up with a plan to safely open up New Zealand to the world, using a home based self-isolation system. “New Zealand is blessed with some outstanding healthcare tech companies and we can provide an end to end, best of breed, home quarantine service to safely open up our border,” Avery says. Jupl has launched a self-isolation solution which can ensure all arrivals into New Zealand can safely home-quarantine at a much lower cost than the government-run MIQ facilities. The company says it is a world leader in medical grade personal monitoring systems which comply with all necessary privacy regulations. The plan is for all self-isolation arrival passengers to be fitted with a Jupl non-removable wrist strap at the airport. The wrist strap is paired to a dedicated pre-programed Jupl mobile phone so passenger movements tor professions and occupations to the list of approved classes of workers, alongside dairy farm managers and shearers etc, - improving levels of support from Immigration NZ for the sector, including help with applications for MIQ places and border exceptions (e.g. nominated key sector contacts and application templates). Silcock says access to a skilled workforce and pipe-
may be tracked and traced 24/7 via the Jupl cloud based monitoring service. “If the person removes their wristband or leaves their designated home quarantine area then an alarm is automatically sent to managed isolation staff," Avery says. “Multiple wristbands can be paired to the Jupl mobile phone in the event that a returning family wants to home isolate in their own bubble. “Jupl will partner with established travel companies making sure that from booking, boarding, processing through immigration and travel to their home, they will meet all Jupl self-isolation protocols. This includes pre-departure documentation including a valid covid vaccination certificate and a negative covid test, no more than 48 hours old and transport from the airport using protocol-approved and trained drivers wearing medical grade personal protective equipment.
line of talent was essential if the current and proposed infrastructure investment across New Zealand is to be delivered. The survey findings could play an important role in highlighting the need for change to our current immigration settings. What the future holds Industry is confident about future work but still needs clarity from local and cen-
Jupl chief executive Alan Brannigan says when the arriving passenger picks up their home-isolation kit it is already pre-programmed. “These details include covid support information, self-isolation address, family and next of kin details, quick dial personal numbers and direct dial emergency numbers. “All they have to do is switch it on and they are entered into the Jupl self-Isolation system. “Initial home covid testing and ten day covid release testing may be conducted by private healthcare providers who can also provide remote healthcare checks and contactless delivery of any medicines that the returnee may require during their isolation.” Avery says the Jupl system is an opportunity to rapidly implement covid home quarantine services managed by professional independent travel and healthcare providers in technical collaboration with existing MIQ management teams.
tral government on when work will come to market. As New Zealand normalises post-pandemic, issues such as fluctuating costs, sustainability and environmental impact have returned to the spotlight, and will influence client procurement decisions that sets how the country’s infrastructure is built in years to come. “It’s encouraging to see the groundswell of optimism in New Zealand’s civil
construction industry, which indicates the country is back to business-as-usual post-COVID,” says Silcock. “The future of construction in New Zealand certainly lies in keeping the people within this sector confident, so civil contractors can continue to invest in the right people, capability, and equipment for the work ahead.” The good news is infrastructure activity is forecast infrastructurenews.co.nz 57
CONSTRUCTION
Unlocking MIQ gridlock
CONSTRUCTION
October 2021 - January 2022 to increase to NZ$10.1b in 2025. Already, transport, water and subdivision projects dominated new infrastructure activity in 2020, contributing 85 percent of projects and 88 percent of total value. Three Waters assets are projected to require between $120b and $180b investment over the next three decades, which supports the survey results where participants identified Three Waters projects and maintenance efforts with the most significant number of opportunities for increasing capability. This is followed closely by roading (24 percent), public transport (17 percent) and public infrastructure (16 percent). As New Zealand eases out of Covid-19 restrictions, the construction industry has a renewed focus on both the issues and challenges. This may impact the potential growth they expect from the pipeline of work they have before them and on benefits they may achieve
58 infrastructurenews.co.nz
using emerging technologies. “The industry has said, loudly and clearly, that they want local and central government to provide a clearer pipeline for upcoming work,” says Jim French,
Construction Industry Specialist, Teletrac Navman. “However, the lack of clarity impacts their planning for manpower and resources in these uncertain times. Covid-19 still affects the industry, as border closures
dampen hiring outside talent and delay the supply of building and construction materials. Renewed buoyancy on the other hand is putting the spotlight back into sustainability and environmental issues.”
October 2021 - January 2022
3D-printed houses Buildtorent takesoff UN's27 policyreforms
SOLVINGOUR HOUSING& RENTALCRISIS
October 2021 - January 2022
TRAINING
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60 propertyandbuild.com
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October 2021 - January 2022
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S
ite Safe’s annual Construction Health, Safety and Wellbeing Awards were created to promote health, safety and wellbeing in construction by recognising those companies that make a real difference. To continue to push health and safety as a top priority for business, the aim of the awards is to acknowledge people, sites and businesses that are demonstrating excellence in the areas of leadership, innovation, and contribution in New Zealand’s construction sector. Brett Murray, Site Safe Chief Executive, says that to recognise initiatives that come from the wider workforce helps the organic buy-in to health and safety. “The entries this year have shown that people are taking this seriously and want to be recognised for the great work they are doing in the health and safety space. “Building support for health and safety initiatives from the ground up is key to achieving the culture shift we are undertaking as an industry towards a culture
that values health and safety as a top priority”. This year the judges were particularly impressed with the calibre and maturity of all entries received. Award winners will be announced at Site Safe’s annual Evening of Celebration, an industry-wide celebration of health and safety excellence, along with Site Safe scholarship recipients and graduates from their Health and Safety in Construction programme.
Award categories and finalists Safety Innovation Award Small to Medium Business (up to 50 employees) Goom Landscapes Ltd Major Consulting Group Ltd Judges special mention Safety 1st Removals Ltd Safety Innovation Award Large Business (over 50 employees) Piritahi Capital Journeys Fletcher Construction Safety Leadership Award (Small, medium or large business) Hawkins TopMark Electrical Brian Perry Civil Safety Contribution Award (Individual or small team) Rabo Construct Limited The Roofing Specialist Limited Pipeline & Civil Ltd The Kalmar Mental Health and Wellbeing Award (Company, organisation, team or individual) Dunlop Builders Accent Construction Interiors Ltd PFS Tiling Limited For further information about specific initiatives and entries, visit: www.sitesafe.org.nz/news--events/news/ award-finalists-announced
propertyandbuild.com 61
TRAINING
Site Safe Awards finalists announced
October 2021 - January 2022
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Hard work gets results
The success of Rapid Facility Services is driven by a team that combines experience, commitment and a professional skillset that covers every aspect of facilities management with personal service
FACILITIES MANAGEMENT
T
he team was forged by three friends working in the industry who realised that the key thing stressed building managers, business owners and landlords needed was to make a single call and get a reliable and qualified support team that would cover any aspect of facilities management. The Rapid trio set down a business philosophy that “we will do what others can’t or won’t do “ and set about assembling a highly trained, efficient and safety-conscious team of professionals who get the job done right, the first time. Today that service stretches from food manufacturers’ audit cleaning, all aspects of industrial cleaning, painting, building and floor safety management to anti-microbial and moss
62 propertyandbuild.com
Having worked in the industry for many years, three friends, Paul Schoch, Robyn Schoch and Andrew Chan realised that by combining their skills, they could create a company unlike any other and mould treatments to prevent surface damage to roofs, ceilings, walls, floors and specialised equipment.
Team members Darren, Brandon and Akeli
FACILITIES MANAGEMENT
October 2021 - January 2022
propertyandbuild.com 63
October 2021 - January 2022
HOUSING
The cutting edge of 3D printing of homes
Printing our way out of the housing crisis 3D printing a range of housing from emergency to luxury residential and high-rise apartments meets New Zealand building standards and stringent European and US standards, says Property& Build publisher Mike Bishara
D
evelopment is held back here by our own inability to adapt, retrain and deal with the major changes that will be wrought in the construction sector. The situation is aided and abetted by a Resource Management Act that has not been fit for purpose for years. In the US, Europe and China off-site factory construction of walls, trusses and roofs has turned residential new building into largely producing a solid foundation and provision for the storm, waste and drinking water plus hooking up the 64 propertyandbuild.com
electricity. Here that privilege (with a lack of the need for double and triple consenting nightmares) is largely reserved to a few major players with a band of would-be competitors struggling in a maze of bureaucracy to compete. Legislation to create a more even playing field is wending its way tortuously through parliament We are well behind the mark in even getting off site consented manufacturing universally approved while offshore, off site construction has moved forward and is now being increasingly
augmented with onsite 3D printing. The disruption of the construction sector worldwide is happening all around us while we remain passive observers in the midst of our own housing crisis. Rush Digital chief executive Danu Abeysuriya says 3D printed homes could help to solve New Zealand's housing crisis but hundreds of jobs would be lost in the process. Abeysuriya says for example California needs two million new homes to overcome its housing crisis and has introduced progressive
rules around new technology and have developed a standard for 3D homes, which companies have taken into their designs. "There's a reason it's called disruptive technology. The reality is - if we do things the same way that we are doing them right now, we are never going to fill that backlog," Abeysuriya says As well as the speed of the development of 3D houses, they also cost significantly less. CNN reported the three-bedroom, two-bathroom homes to be built in
HOUSING
October 2021 - January 2022
Rancho Mirage California, which come with a deck and a swimming pool, will have a starting price of US$595,000 compared with the average owner-occupied value of US$825,738. Prices are low because the owners don't have to pay for labour to build the homes. US based 3D builder Mighty Buildings told the Guardian up to 80 percent of the construction can be automated, with 95 percent fewer labour hours and 10 times less waste than conventional construction. On terms of emergency or special housing needs 3D printing is clearly the way to go. Another US innovator Icon has so far delivered more than two dozen 3-D-printed homes across the US and Mexico. Coming projects run the gamut from social housing to disaster relief housing to market-rate real estate. A project is also in the works with NASA to develop space-based construction systems that it hopes will eventually serve as habitats on both the moon
Plopping a 3-D printer from an American tech company into the heart of a rural village in Mexico was a big shift
and Mars. When Icon was founded, its biggest hurdle was convincing sceptics, Jason Ballard, Icon’s chief executive told the New York Times. “I had builders and developers explaining to me how it’s not possible to get concrete to do that, even as I walked them up to our 3-D printed house,” he says. “Now our biggest challenge is we’ve just got to make more printers.” An Icon partnership in
Nacajuca, Mexico is building a village for residents living in poverty in shanties with dirt floors, and prone to flooding in the rainy season. Building a home with Icon’s Vulcan II printer looks much like a massive softserve ice cream cone: Layers of lavacrete, the company’s proprietary concrete mix, are poured one after another in long swirls. The printer is controlled by a tablet or smartphone,
requires as few as three workers and can complete a home in less than 24 hours. Up to 500 new homes being built by New Story, a San Francisco non profit organisation focused on providing housing solutions to communities in extreme poverty. They can also be constructed to tolerate natural disasters: Nacajuca sits in a seismic zone. New Story has partnered propertyandbuild.com 65
HOUSING
October 2021 - January 2022 with Échale, a social housing production company in Mexico, and Icon, Échale, which has been operating in Mexico for 24 years, helped New Story select residents for the new homes based on need. It decided to sign the titles of each home not to a whole family but to the woman of the house. “It’s to protect the family,” said Francesco Piazzesi, Échale’s chief executive. “A man will sell a house if they need to. A woman will do whatever she needs to do to save the house for her children and her family.” Échale hires local workers to build their own communities, so plopping a 3-D printer from an American tech company into the heart of a rural village was a shift, the New York Times reported.
“If you came to Nacajuca when the 3-D printer was there, you would see machinery that looked like a RoboCop movie,” Piazzesi says. “It’s creating opportunities for the people because something gets into the community and it lasts.” “We know that being able to build more quickly, without sacrificing quality, is something that we have to make huge leaps on if we’re going to even make a dent on the issue of housing in our lifetime,” says Brett Hagler, New Story’s chief executive. Speed is only one factor in bringing a village to completion — New Story has teamed up with local officials in Tabasco to bring sewage services, electricity and water to the community.
The future and a warning The 3-D printing market grew 21 percent in the US last year last year, and Hubs, a manufacturing platform, projects that it will double in size over the next five years. A manufacturing process that builds objects layer by layer from a digital file, 3-D printing is set for explosive growth. After a pandemic-related boom from printing objects like test swabs, protective gear and respirator parts, the 3-D printing market is forecast to be worth $55.8 billion by 2027, according to Smithers, a technology consulting firm. Single-family homes are a good testing ground for the durability of 3-D printed construction because they are small and offer a repetitive design process without much height, says Henry D’Esposito, who leads construction research at JLL. “It really is a very effective and efficient way to build a small segment of properties, but it’s not something that applies across the broader commercial real estate ecosystem,” D’Esposito says. “We don’t know exactly how these buildings will perform over decades or what the long-term value retention will be for them. So if you’re talking to an investor or lender, that’s a big yellow flag.”
Layers of lavacrete, are poured one after another in long swirls. The printer is controlled by a tablet or smartphone, requires as few as three workers and can complete a home in less than 24 hours
66 propertyandbuild.com
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October 2021 - January 2022
COMMERCIAL PROPERTY
Capital T markets investment outlook Despite the latest Covid-19 outbreak, investor confidence is expected to remain strong, JLL Head of Research Gavin Read says Key investment trends entering 2022 Office Office investor demand remains stable, however there is a divergence in grade and location from both investor and occupier perspective. Industrial Industrial and logistics will remain most sought after asset class, with the majority of developments being pre-leased. Retail Despite strong retail spending, investors remain cautious towards the discretionary retailing and lean towards non-discretional retailing. Alternatives Interest for alternative assets such as medical centres, data centres, aged care, hotels and cold storage are picking up, plus Build to Rent. Tenants Tenant covenant strength is increasingly more important for investors with investments made on caseby-case basis. Reposition There is increasing demand for reposition opportunities for value add strategies in strategic locations. ESG Investors are also increasingly conscious of the importance of ESG in the investment decisions and strategies. 68 propertyandbuild.com
he resilience of the country against Covid and stronger than expected economic recovery has seen an uplift in investor interest for New Zealand's real estate market. While it is uncertain how long the latest Delta-related lockdown will last, investor confidence is expected to remain strong and the existing transaction pipeline continues to progress with minimal impact on investment decisions, particularly for those assets with strong tenant covenant. All sectors (inclusive of traditional and alternatives) have been sought for direct investment across the
country, with powder remaining dry from a tentative approach throughout 2020. Although some sub-sectors struggled, others have thrived, with investors focused on placing capital into trending sectors with long term growth and stability. New Zealand’s long-term outlook remains positive for investors. It is still a favourable destination for capital on the back of the long-term economic and population story remaining positive. In the next 10 years between 2020 -2030, New Zealand population growth is forecasted to be 0.88% per year, while average
October 2021 - January 2022
Industrial market Industrial yields have compressed significantly in the last 10 years. Auckland prime yields for example is now sitting at an all-time low at 4.13%, compressing 475 bps since June 2011. We are expecting yields to remain structurally low supported by strong sector fundamentals, population growth and ongoing investor interest. Well located strategic locations remain the key focus for Investors. In 2020, industrial sector contributed to 46% of total transaction volumes (up from 35% in 2019). Sale and leaseback transactions have increased due to the scarce nature of market opportunities. Record low yields are enticing these conversations with investors, previously
anxious about leaseback terms and occupancy costs restricting the changing workplace nature. With tenants across the country constantly searching for large scale facilities, especially for distribution, e-commerce and storage in particular, large land parcels remain sought after for conversion or development. Cold storage and data centre facilities remain a sought-after asset class under the industrial header. Offshore data centre developers have recently conducted off market site acquisitions in targeted locations to build new facilities. This is coupled with global data centre investors searching for scalable investment opportunities.
propertyandbuild.com 69
COMMERCIAL PROPERTY
GDP growth is expected to 2.57%. The low interest rate environment is expected to change, with the RBNZ signalling the start of the OCR firming cycle in 4Q21 and continuing till the end of 2023, increasing the OCR to 2.00%. This will have the OCR under the lower quartile of 2.25%. Funding costs will be a consideration for investors as they review their strategies and medium to longer-term returns. The main barriers for offshore investors are not having local representation or the ability to transact quickly. The only notable investment into New
October 2021 - January 2022 Zealand during 2021 to date remains the GIC acquisition of the half share of the ANZ Centre in Auckland CBD. This excludes local partners purchasing on behalf of offshore sources. Listed REITS and fund managers that have previously been priced out of
market
and has some est vacancy ally
certain opportunities are now increasingly looking at partnership agreements to efficiently acquire assets. Strides Industre fund with JP Morgan and Centuria’s acquisition of Augusta are two public representations of these partnerships. Sales campaigns are see-
mandates. - Stride acquired the Deloitte Building in Wellington for NZD$288m at a 4.5% initial yield in November 2020. - Precinct Properties' recent acquisition in Wellington of the Bowen House and the Freyberg Building for NZD$92m and NZD$49m respectively. - In Christchurch, Manawa Building and the PwC Centre in Christchurch were sold for NZD$80m and NZD$60m respectively during 2H20. With limited core assets available to purchase, build-to-core strategies are also rising in popularity. Auckland for example is expected to deliver over 140,000 sqm of prime grade accommodation over the next 5 years, notable projects include 1 Mills lane (25,0000 sqm, A-grade) and 3-15 Albert (15,000 sqm, premium grade).
20%
15%
10%
5%
Source: JLL Research 70 propertyandbuild.com
Houston
Chicago
Dallas
Atlanta
Denver
Perth
Seattle
San Francisco
Adelaide
Brisbane
Philadelphia
Boston
Melbourne
New York
Sydney
Warsaw
Toronto
Stockholm
Montreal
Auckland
0 London
ed
(especially those in less favourable locations) when compared to prime assets. Investors, both domestic and offshore, are looking to acquire core assets with strong tenant covenants and long term WALTS. With current border restrictions and isolation procedures in place for international investors, an opportunity has presented itself for local capital in 2021. Except for one transaction, all deals above NZD$30 million in 2021 have been by domestic capital. With pipeline difficult to acquire, especially in Auckland, investors are looking to other cities for opportunities. Recent transactions in Wellington and Christchurch have shown a willingness to acquire at low yields for the right assets that match their
25%
Paris
ly as
Office market
30%
Canberra
re ew
strongly during 2H20 as the economy quickly recovered from the initial impacts of Covid, up 115% h-o-h from 1H20 reaching NZD$3.18b. Industrial assets were the most sought after, contributing 46% to the overall 2020 transactions. Since 2017, 2H sales have
Figure Global mature office markets vacancy rate (2Q21)
Christchurch
s New
The way New Zealand has managed COVID to date has lessened the impact to the New Zealand office space, when compared to several offshore markets, and has helped New Zealand have some of the lowest vacancy rates globally as of June 2021. Wellington has the lowest vacancy rate of 5.1%, followed by Christchurch 6.3% and Auckland 10.6%. Vacancy rates are expected to rise more in the secondary assets
Wellington
COMMERCIAL PROPERTY
ave been high in New 2021, although are Re-entry rates have been high in mpacted 3Q21 due to the New Zealand to June 2021, although are expected on the 17 August. At theto be impacted 3Q21 due to the Delta outbreak. his impact is Atexpected the time of writing this impact is expected t term in nature, and to be more short term in nature, and investors will look ok throughthrough this short-term this short-term outbreak as y keep their eyes ontheir theireyes on their medithey keep um to long-term strategies. -term strategies.
ing an increase in off-market structures, especially in sale and leasebacks to protect vendor interests. Agencies are being trusted to execute these processes given the pools of active capital able to invest at low yields. Transactions rebounded
October 2021 - January 2022
Gavin Read is the Head of Research at Jones Lang LaSalle (JLL) New Zealand. JLL is a leading professional services firm that specialises in real estate and investment management.
Retail market While pure retail shopping centres struggled throughout 2020, investors have renewed optimism for this asset class, supported by strong rebound in retail sales post-lockdown, with many shopping centres recording year-on-year growth despite supply chain constraints. This optimism is supported by the year to June 2021 total retail sales in New Zealand increasing 12.6%. At an industry level, vehicles and parts enjoyed the highest growth (+25.5%), followed by electrical (+25.4%) and hardware/building/garden (+23.9%). In comparison, the categories with least growth were supermarket and grocery (+0.5%) followed by accommodation (+1.4%) and fuel (+2.5%). Investors will remain cautious about the sustainability and reliability of income. However, there remains strong demand for and limited supply of defensive retail assets, being neighbourhood/ suburban centres, non-discretionary based centres and long-WALE retail.
While retail sectors such as CBD and secondary suburban yields remain balanced, bulk retail and prime suburban retail yields have shown y-o-y compression of 25bps and 19bps respectively, supported by increase demand. Regional Centre investments are made on a case-by-case basis taking into consideration tenant mix and location. The notable 2021 shopping centre transactions include the sale of Bethlehem Town Centre for NZD$95m and Albany Lifestyle Centre for NZD$87.5m. Recently, a joint venture between Tainui Group Holdings (TGH) and Kiwi Property (NZX:KPG) was announced for the future retail/office development on Centre Place North in Hamilton. Bulk retail has seen strong demand in recent times which aligns to the increased spending on electronics and homewares. These tenants are often destinations in their own right and securing physical footprints in appropriate locations is a key part of their success.
Alternatives market Data Centres As COVID-19 intensified, the role and value of data centres shifted up a gear. Demand continues to grow with the dramatic rises in data consumption, driven by increasing smartphone usage and internet access for cloud computing, remote working which spurs video conferencing and other e-services. A growing driver of Data Centres is data security and also growing requirements for Corporates wanting their client information stored in New Zealand rather than offshore. This has seen an increase in enquiries and transactions in New Zealand over the last 12 months. One notable transaction being Microsoft’s land purchase for NZD$33.5 million in West Auckland to develop its NZD$100 million-plus data centre and its intention to build three data centres around Auckland.
Hotels While the Hotel sector has been one of the hardest hit industries globally and in New Zealand by the pandemic, this has not distracted investors maintaining a long-term view and securing properties that meet their investment strategies. Two recent transactions of note being the off-market purchase of the Heritage Dunedin Leisure Lodge by Distinction Hotel Group and the Grand Mercure Monaco Hotel in Nelson by Arden Group Domestic travel is expected to return quickly as regional lockdown restrictions are lifted (as experienced last year). However, for international travel we would expect a slower return to pre-COVIDlevels once borders are reopened, as New Zealanders will want certainty returning to New Zealand without being impacted by new lockdowns locally or abroad.
Retirement Villages While the 2020 was a challenging year for Retirement Villages overall, the industry has performed remarkedly well compared to some other first world countries in protecting residents and providing safe communities. This resilience has seen the continuation of investment in this sector, not only by existing operators with their development pipelines, but also, we are seeing increasing enquiry from new operators to the market, as they see the continued demand for this asset class in New Zealand. We expect that there will be demand for an estimated 26,000 new units by 2033, with approximately 11,000 units signalled for development meaning a requirement for further 15,000 units to meet the forecast demand which should underpin investor demand. propertyandbuild.com 71
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accounted for 58% - 68% of annual sales with 2H20 being the largest at 68%. Continuing on this trend, we also are expecting a stronger 2H21.
RESIDENTIAL
October 2021 - January 2022
T
he figure is up sharply from the 7.4 times recorded just three months ago and 6.6 times of 12 months ago. The longterm average is for property values to be 5.8 times the average annual household income. Property values in Aotearoa rose 15% during the first six months of 2021, well ahead of the increase in gross average household income which rose 1.0%, illustrating the acute affordability challenges we face, CoreLogic NZ Chief Property Economist Kelvin Davidson says. “Since our last Housing Affordability Report in late February, the New Zealand economy and property market have generally remained very buoyant. “Even though mortgage rates have remained very low, albeit they’re now starting to rise, housing affordability has simply become worse, and that’s from an already stretched position. “Those higher mortgage rates themselves will exacerbate the situation in 72 propertyandbuild.com
Where is housing most affordable? The average property value in New Zealand is a record 7.9 times the average annual household income according to the latest CoreLogic Housing Affordability Report, though there is wide variation across the country the coming months, albeit they should eventually aid affordability by dampening house prices.” However Davidson says it’ll still plausibly take at least five years for housing affordability to adjust back to some kind of normality. Indeed, the Reserve Bank recently estimated that an adjustment phase could take as many as eight years. The report also found it currently takes more than a decade to save a house deposit (10.6 years), beating the previous record high of 9.9 years, which was set in Q1 2021. It takes almost three years longer to save for a house deposit than the long-term average of 7.8
years. On average, households who take out a new home loan spend 38% of their income on their mortgage repayments, compared to tenants, whose rental payments absorb 21% of household income. Despite historically low interest rates, average mortgage payments as a proportion of household income have increased from 32% a year ago. “However, this is not to say that renting is easy either – indeed, that figure of 21% is also above average,” Davidson points out. “It’s also worth noting that the typical income for a renting household may well
be lower than the overall average, which would imply a much higher figure than 21% of their income being spent on accommodation costs. Mortgage repayments are now back to levels not seen since early 2018, when typical fixed mortgage rates were much higher, above 5%. These patterns of declining housing affordability have been seen right across the country, from the main centres down to the smaller rural areas. Of 66 main authorities, 49 currently have a value to income ratio at its highest recorded level, going back to 2004. Looking at the mortgage
from 7.8 a year ago, but still a bit below the previous peak of 9.3 in Q4 2016. Once again, Christchurch has
2021, well above its long term average of 7.8, and in fact a new record high – surpassing the previous peak the lowest reading amongst the main centres (5.7), and is also a bit below the previous peak of 5.9 in Q2 October 2021 of 9.6 which only reached in Q1 this year. At 7.9, Hamilton’s value to income ratio in Q2 2021 was also Value towas income ratio 2007 – but even there, affordability has still declined (a year ago Christchurch’s reading -was only 4.8). January 2022 a record high, along with Wellington (7.6), and Dunedin (8.1). Auckland Hamilton Tauranga Wellington
8 10 Affordability in New Christchurch Value to income Zealand’s main centresratio Tauranga and Auckland Dunedin 6 8 are New Zealand’s least 12 affordable main centres, Auckland 6 4 requiring 49% and 43% of Hamilton 10 household income gross Tauranga 4 respectively, to service an 2 average mortgage with an Wellington 8 More affordable 80% loan to value ratio. 2 Christchurch 0 Despite ultra-low mortMore affordable 2006 2008 2010 2012 2014 2016 2018 2020 Dunedin 6 2004 gage rates in the past three 0 to six months, Hamilton 2006 2008 2010 2012 2014 2016 2018 2020 households 38%required2004 Share ofrequire income for payments 4 of their income to make Share of income payments payments, the highest level and Whangarei, whilerequired New Onfor average, servicing a flattening out, which could 2 just prior to the GFC since Plymouth (29%) is bang on mortgage costs 74% of that see affordability metrics 80% in Q2 2008. its average. income and saving for a dedecline further inAuckland the next More affordable 80% Similarly mortgage holdHowever, Palmerston posit would take 20.4 years. three to six months, partic70% 0 Hamilton ers in Wellington spend North, Napier, Whanganui, Rent costs 30% of the ularly with the added threat 2004 2006 2008 70%2010 2012 2014 2016 2018 2020 Tauranga 36% and Nelson all have mortaverage household income, of continued interest rate 60%of their income on mortgage repayments and gage servicing figures that second only to the Kaipara rises (which will Wellington serve to 60%for payments Share of income required 50% Dunedin households spend are 8-9% points above District at 33%. push up mortgage repayChristchurch 39%. normal – even though mortWestland stands as the ments in the near term 50% 40% Dunedinhelp Christchurch’s figure is gage rates are low. most affordable area in before they eventually comparatively low, albeit On the years to save the country in all regards. affordability by restraining 80% 40% 30% at 28%. rising, a deposit measure, the It has a value-to-income house prices). Auckland 30% across the main 70% figures ratio of just 3.2. Saving for “However, towards the Hamilton 20% Affordability outside New urban areas range from 6.8 a deposit takes an average middle and later stages of Tauranga 60% Zealand’s main centres in20% Invercargill up to 13.2 of 4.3 years and servicing 2022 slower house price 10% Wellington In each of the main urban in Queenstown. However, a mortgage costs 16% growth should allow for More affordable 10% 50% of New Zealand areas (outeach area is above its own of household income, on some improvement in afMore affordable Christchurch 0% side the main centres), the average (i.e. affordability is average. Renting costs only fordability, especially as ris2004 2006 2008 0% 2010 2012 2014 2016 2018 2020 40% to Dunedin value income ratio has worse2004 than normal), espe14% of average household ing incomes in a squeezed 2006 2008 2010 2012 2014 2016 2018 2020 deteriorated in recent years, cially again in Palmerston income. labour market should help 30% 11 in fact for 11 of the 12 and North and Kapiti. South Waikato and the those first home buyers 11 areas, it was at a record Renting is still more Grey District aren’t too trying to cobble together 20% high in Q2 2021. In other affordable in Queenstown far behind in affordability the deposit. words, affordability was than normal (presumably either. “That said, even with 10% the worst it’s beenMore since at reflecting the reduction housing supply expanding, affordable least 2004. in the hospitality workAffordability Outlook a return to ‘normal’ for most 0% Only2004 Queenstown bucked force and reduced rental Davidson says it’s conaffordability measures looks 2006 2008 2010 2012 2014 2016 2018 2020 that trend, but not by much. demand), but much more ceivable that house prices likely to be a long grind.” Kapiti Coast (from 8.7 in Q1 stretched in areas such as have further to rise before 11 2021 to 9.6) and PalmerNelson, Whanganui, and ston North (6.8 to 7.6) saw Napier. However, it’s also particularly large changes important to note that rentin Q2. al affordability has declined Even though property recently across all the main values have soared right urban areas. Kelvin Davidson across the country in the The Thames-Coromandel Senior Research Analyst past year or so, some still District is the least affordCoreLogic 027 355 3813 have mortgage repayments able area in the country, as a % of gross household where houses are worth kelvin.davidson@corelogic.co.nz income that are below past 15.3 times the average corelogic.co.nz norms – e.g. Queenstown household income there. propertyandbuild.com 73
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12 Auckland’s latest value to 9.1, which isratio high by national standards and also up sharply affordability measure, 43income reading Valuewas to income 7.8 a year but still a bit below the previous peak of 9.3 in Q4 2016. Once again, Christchurch has offrom 66 areas areago, currently above average, despite lowthe main centres (5.7), and is also a bit below the previous peak of 5.9 in Q2 the reading amongst 10 lowest 12 interest rates. 2007 – but even there, affordability has still declined (a year ago Christchurch’s reading was only 4.8).
October 2021 - January 2022
Concerns rental T market will worsen following tax changes RENTAL
Interest deductibility changes kick in for landlords on 1 October, the Government has announced, going against Inland Revenue’s advice and ignoring recommendations from property industry leaders
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he Government has confirmed its proposal to limit the availability of deductions for interest expenses incurred by residential property investors from 1 October, phasing them out over the four years. There is an exemption for new purpose-built rentals with deductibility for up to 20 years. Cabinet is also set to consider an even longer period for large build-torent developments. “However, for most Kiwi landlords the rules take effect on Friday,” says Tim Kearins, Owner of Century
October 2021 - January 2022
Rising interest rates won’t deter first home buyers as rent increases continue As long as servicing a mortgage remains comparable or cheaper than paying rent, prospective buyers will not be put off, says Century 21 New Zealand owner Tim Kearins. Interest rates are still incredibly low and will be for some time. It will take a lot more than tweaks to the official cash rate (OCR) to put off those desperate to get into the housing market. The demand pressure on our housing stock is not going anywhere fast, particularly when you consider 165,000 migrants are now eligible for fast-tracked resident visas. While’s it’s positive news, it will nonetheless start unleashing many new home buyers into the domestic market. On top of the ongoing housing shortage, record high rents are motivating first-home buyers to purchase.
says Kearins. Property Council New Zealand has also spoken out against the Government’s move. Chief Executive Leonie Freeman says it shows a lack of ambition from the Government in dealing with the housing and rental crisis. “You cannot tax your way out of the problem. For us to be innovative about solutions the Government has to work with the men and women across the industry who are fighting to increase the options for Kiwis in dire need of better housing.” While she says the exemption for new builds is welcomed, Freeman doesn’t believe it will incentivise even one extra home to be built for a deserving Kiwi family. “Property Council New Zealand has been a passionate advocate for Buildto-Rent in New Zealand as a solution to some of our
A recent UK Cost of Rent Index Study placed New Zealand as the 13th least-affordable country to rent a three-bedroom house in the world. At the same time, New Zealand was 10th on the list of countries spending the highest percent of monthly outgoings on rent. If it costs you $650 a week to rent, but you can buy the same home at $600 a week, people will buy. If Kiwis can raise a deposit, buying the likes of a townhouse gets them on the property ladder which will only help secure their future. As long as the option to secure a fiveyear interest rate at under four or five percent remains, OCR hikes will not deter Kiwis from purchasing property. Over time, house prices always inflate, and that’s much more rewarding than paying a landlord.
housing woes, and today’s announcement sadly does little to advance that cause,” Freeman says. “We are disappointed that the Government hasn’t looked to incentivise a truly game-changing asset class which would see more options for Kiwi renters. “Build-to-Rent is flourishing in other comparable countries like Australia and the United Kingdom. Today’s announcement does nothing to seize this opportunity for better rental accommodation in New Zealand. Ultimately, this means less supply for Kiwi families.” Freeman says Property Council New Zealand is pushing for Build-to-Rent developments to be specifically exempt from the interest deductibility proposal to encourage this dynamic new asset class. “These changes will do nothing to unleash Build-to-
Rent’s potential, side-lining what could have been a potential gamechanger for the local rental market.” Kearins points out that this move comes hard on the heels of the Residential Tenancies Amendment Act which was the biggest overhaul of our tenancy laws in 35 years. “Just when our property managers are screaming out for more properties to rent given the huge demand, it becomes less attractive for ‘mum and dad’ investors to provide the stock. Many are instead heading to the share market or commercial property syndications.” Kearins does give the Government credit for trying to encourage new builds to fill the void, but says the rental availability gap will only widen in the short to medium term. “That’s where the real pain will be for tenants.” propertyandbuild.com 75
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21 New Zealand. He warns that the new rules will put unwanted pressure on residential rents already at record high levels. “Rising rents are not just the property sector’s prediction, but Inland Revenue’s – arguably the one organisation that’s got the most to gain. Its advice to Ministers earlier this month is as clear as daylight: they strongly advised against it.” Kearins points to the ‘Regulatory Impact Statement: Limiting interest deductibility on residential investment property’. Authored by Inland Revenue, and dated 8 September, it advised the Ministers of Finance, Revenue, and Housing against going down the deductibility route at all. After considering four options: ‘Inland Revenue has advised against any of these options to deny or limit interest deductions and prefers the status quo to all options. It considers that additional taxes on rental housing are unlikely to be an effective way of boosting overall housing affordability. “While they will put downward pressure on house prices, they will put upward pressure on rents and may reduce the supply of new housing developments in the longer-term,” Inland Revenue advised. “The benefit of increased housing affordability for first-home buyers is outweighed by negative impacts on rents and housing supply, high compliance and administration costs for an estimated 250,000 taxpayers, and the erosion of the coherence of the tax system.” “Against the advice of their own tax department and experts, the Government soldiered on regardless,”
October 2021 - January 2022
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he housing crisis is a human rights crisis in New Zealand according to the United Nations (UN) Special Rapporteur on adequate housing in a new report officially tabled over night at the UN Human Rights Council in Geneva. Housing speculation, a lack of affordable housing options, limited protection for tenants, substandard housing, the absence of an overarching Te Tiriti and human rights based housing strategy, and a lack of adequate social housing or state subsidised housing are the main causes of the crisis according to the report. During a visit to New Zealand from 10 to 19 February 2020, at the invitation of the Government, the UN Special Rapporteur on adequate housing, Leilani Farha, investigated housing as a human right in New Zealand. She spoke with government officials, residents, researchers and representatives of civil society organisations in visits to Auckland, Christchurch, Kaitaia and Wellington. The findings of her visit were published in a report tabled at the UN Human Rights Council on June 22 in Geneva. Farha wrote that “legal protection of the right to adequate housing remains relatively weak” in New Zealand. Housing has become a “speculative asset” in New Zealand rather than a “home” wrote the Special Rapporteur — calling attention to on-going housing speculation due to low interest rates coupled with an underdeveloped rental housing system with inadequate tenant protections. Chief Human Rights Commissioner Paul Hunt has welcomed the report and encouraged local and 76 propertyandbuild.com
UN declares New Zealand’s housing crisis a breach of human rights A United Nations report suggests New Zealand follow in Canada’s footsteps by adopting a human rights approach to housing policy and makes 27 recommendations for Government to address the crisis central government to seriously consider the 27 recommendations made by the UN Special Rapporteur Leilani Farha. 1) Acknowledge housing as a human right Recognize the right to adequate housing, as set out in international human rights law, as an enforceable right in national
legislation and in the New Zealand Bill of Rights Act. The Canadian model could be an option. This should at minimum include a legal obligation of the State to progressively implement the right to housing and provide suitable and accessible emergency housing to individuals and families at risk or in a situation of homelessness.
A legislated right to housing should render the right justiciable in domestic courts and enable those who have suffered violations access to effective administrative, non-judicial and judicial remedies. 2) Form a human rightsbased housing strategy Develop and implement a comprehensive human
October 2021 - January 2022
3) Make the private sector accountable Ensure that private sector actors are aware of their human rights responsibilities with respect to housing provision, maintenance and finance and that they are included in the monitoring and accountability mechanisms established with respect to the right to housing.
affordable housing has been offered to the affected tenant(s) in close proximity to the place of residence before an eviction order is executed. 5) Support those who are struggling Expand advice and financial support for tenants and homeowners who have fallen into arrears for rent, mortgages or utility costs. Such public spending would significantly reduce the high costs that are currently incurred by placing individuals and families into emergency accommodation and the social and health costs incurred by evictions and homelessness. 6) Allow the Human Rights Commission to resolve disputes Ensure that the New Zealand Human Rights Commission is enabled to provide dispute resolution for all alleged violations of the right to adequate housing, not only those related to allegations of discrimination, without curtailing
the ability of courts to hear matters related to the right to adequate housing. 7) Establish commissioners for indigenous and housing rights Establish forthwith the post of a commissioner for indigenous peoples’ rights in the New Zealand Human Rights Commission, as well as of a commissioner responsible for monitoring the implementation of the right to housing. 8) An international watchdog Ratify the Optional Protocol to the International Covenant on Economic, Social and Cultural Rights, which allows individuals who have exhausted all domestic remedies to submit complaints to the Committee on Economic, Social and Cultural Rights. 9) Stronger tenant protection associations Strengthen the capacity of tenant protection associations so that they are better equipped to provide
legal advice, assist tenants in out-of-court settlements of grievances with property owners and, if necessary, in filing applications before the Tenancy Tribunal. 10) Improve efforts to ensure rentals are up to standard Enhance the capacity of the tenancy compliance and investigations team as an independent service to inspect whether housing meets building, safety, health and accessibility standards, including by providing advice, support and credit for private and public lessors to undertake necessary renovations. Enforce fines for homeowners who fail to undertake required works and adjustments. 11) Improve tenant security Strengthen tenant protections beyond the latest reform of the Residential Tenancies Act by further enhancing security of tenure through the regulation of rent increases and rental
4) Put a stop to evictions that result in homelessness Ensure that national law provides for a complete prohibition of any eviction that may result in homelessness. Evictions from primary residences should only be ordered after all alternatives have been explored with the affected persons and after ensuring that they have access to all social and housing benefits to which they are entitled. If eviction cannot be avoided, proof should be submitted to the district court that alternative propertyandbuild.com 77
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rights-based housing strategy based on the right to adequate housing as reflected in international human rights law, the Treaty of Waitangi, the Convention on the Rights of Persons with Disabilities and the United Nations Declaration on the Rights of Indigenous Peoples and its principles of free, prior and informed consent and self-determination. The strategy should also take into due consideration the guidelines on the right to a decent home being developed by the New Zealand Human Rights Commission. It should also set out how New Zealand will implement the relevant Sustainable Development Goals.
October 2021 - January 2022
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freezes in tight markets, and by fortifying rules around short-term rental platforms to ensure they do not have a deleterious impact on the availability and affordability of long-term rentals. 12) Fill empty homes Adopt regulations that provide incentives for making vacant housing units available to low-income households, and provide to State and community housing providers in regions lacking affordable housing priority for renting a housing unit on the private market to ensure that all people on waiting lists can be housed. 13) Ensure benefits are sufficient Ensure that housing and social benefits are sufficient to actually cover the cost of living for low-income households, and reduce energy poverty to ensure a life in dignity for all. 14) De-incentivise housing as an investment Reduce housing speculation and the financialization of housing by: adopting a capital gains tax as a sustainable revenue
source to support a strong housing system limiting the debt-to-income ratio to regulate mortgage markets introduce a progressive refinancing scheme for primary homes to limit the effects of negative equity that could result from changes to taxation and mortgage lending. 15) Rent-to-buy Expand rent-to-buy schemes and improve access to State-insured mortgages for low-income households and those who experience difficulties in accessing homeownership financing. 16) Alternative housing schemes for those who need it Increase efforts to provide alternative housing schemes for low-income and vulnerable groups. This must also include targeted funding, financing and capacity-building for iwi and Maori housing providers. 17) Support indigenous housing Support, facilitate and provide financial resourcing to iwi, runanga and Mao-
ri housing providers and increase the self-determination of housing solutions by indigenous peoples. 18) Build more houses Significantly increase the public housing stock and enhance the support for community housing providers in order to complement and amplify State efforts to ensure community-based solutions to the housing crisis and ensure that there is competition in the public housing sector in order to promote high quality, well-maintained and responsive homes that go beyond the provision of a roof and four walls. 19) Reduce reliance on emergency accommodation Redirect, in the long-term, expenditure away from programmes that are failing to realize the right to housing, such as the use of motels as emergency shelters or programmes subsidizing housing that fail to deliver a net increase in affordable housing, towards supporting housing providers and developers committed to building and delivering adequate, affordable housing.
20) More inclusive policy In conformity with the right to adequate housing, ensure meaningful participation of all residents, including minorities and marginalized groups, in the development and implementation of all government programmes, policies and legislation related to housing, including with respect to urban development and regeneration. 21) Zoning meets everyone’s needs Adopt regulations requiring or enabling inclusionary zoning nationally and ensure that targets set for affordable units correspond to actual, measured need to ensure thriving communities throughout the country in which nobody is left behind. 22) Adopt accessible design standards Incorporate universal design standards and other obligations contained in the Convention on the Rights of Persons with Disabilities in all housing-related legislation, building standards and policies, to ensure accessibility of housing and the right of persons with disabilities to independent living in the community. 23) Allow modifications to improve accessibility in existing rentals Specify in the Residential Tenancies Act the reasonable modifications and adaptations required by homeowners to ensure that rental housing is rendered accessible to persons with disabilities and persons with age-related impairments. 24) Funding for accessible design Provide to all persons with disabilities, on a non-dis-
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October 2021 - January 2022 criminatory basis, access to funding for housing modification and adaptation based on individual need, not on the basis of their tenure status or other criteria.
26) Better action and support in natural disasters Improve regulations and policies in relation to natural disaster response to ensure that compensation, inspection, repair and reconstruction is undertaken in a timely, coordinated, non-intrusive manner and that mitigation measures minimize displacement, relocation and the break-up of communities and prevent any homelessness as required under international human rights law. 27) Better housing policy systems and data recording Further improve the monitoring and implementation of housing policies by establishing independent accountability and monitoring mechanisms. Regularly publish data, disaggregated by age, population group (Maori, Pacific peoples), gender and sexual orientation, and disability, on: - housing affordability - housing conditions and housing overcrowding - compliance with healthy home standards - homelessness - accessibility of private and public housing for persons with disabilities - security of tenure - rent - mortgage and utilities
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25) Do not punish homelessness Refrain from adopting or implementing laws or bylaws that serve to criminalize homelessness, including living in cars, campervans or tents.
- evictions - duration on the waiting list for accessing public housing - time spent in transitional housing before accessing long-term housing How do we start? The Human Rights Commission is set to release framework guidelines on the right to a decent home to help both duty-bearers (e.g. local and central government) and rights-holders (e.g. individuals, communities, iwi and hapū) advance the right to a decent home grounded on Te Tiriti. “A living-framework for understanding what the right to a decent home means in our distinctive national context, and how it can help individuals, communities, hapū, iwi, housing policy makers and practitioners, is needed in New Zealand,” says Chief Human Rights Commissioner Paul Hunt. “The government has binding human rights and
Te Tiriti obligations to create conditions which permit everyone to enjoy a warm, dry, safe, accessible and affordable home. “Our new guidelines,
grounded on Te Tiriti and international human rights law, will outline what the right to a decent home means in the unique context of Aotearoa.” propertyandbuild.com 79
October 2021 - January 2022
China builds 10-storey tower in a day A modular apartment block has taken shape in just 28 hours in what the Chinese developer claims is a world first, The Urban Developer reports
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hinese company Broad Group released vision of the tower that was lifted into place and bolted together in 28 hours and 45 minutes, in what the company claims is the “shortest construction period” for a building of that scale. Broad Group built the tower in its hometown of Changsha using the bolt-together modular units called the “Living Building” system, which the company manufactures, in addition to air conditioning and heating modules. According to the company’s website the modular units are the same dimensions as a shipping container, so they can be easily shipped, and include wiring and ducting. The Living Building system uses Broad’s “B-Core” steel slabs as the structural element, which the company claims are 10 times lighter and 100 times stronger than conventional alternatives and are a disaster-resilient building system. Each module is 12.19m long, 2.44m wide and 3m high. The modules were stacked with one wall of each unit folding down to become a floor plate and create a column-free space that is 12m long and 4.8m wide. Windows and balconies fold out from the unit to enclose the spaces, a company spokesperson says. theurbandeveloper.com 80 propertyandbuild.com
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Kiwi innovation leading the way in concrete slab insulation
Why do I need to insulate the concrete slab? Slab insulation is important not only to save on energy bills for future owners and tenants, but also to improve comfort. Insulation will reduce heat loss and make the slab easier to heat. It offers a layer of projection against moisture and will provide a thermal mass to regulate temperatures. If embedded floor heating is incorporated in a concrete slab-on-ground, the slab must be insulated so that heat from the slab is delivered up into the space above and not lost to the exterior and ground below.
A new generation of Expanded Polystyrene Board insulation has arrived
LABX200 is specifically designed to deliver high compressive strength and improve insulation under concrete slabs. Developed by trusted Kiwi insulation experts EXPOL, this exciting new innovation has quickly become the product of choice for specifiers and others in the construction industry.
Wayne Watson Technical Manager EXPOL doing a visual check of SLABX200 to ensure it meets EXPOL’s high technical specifications.
What makes SLABX200 different? We chatted to Wayne Watson a Structural EPS and GeoFoam Consultant at EXPOL to see what makes SLABX200 different. Wayne told us that due to its compressive strength rating of 200Kpa there is no comparable product on the market. He states “SLABX200 is specifically designed for insulating concrete slabs. It has a rating of 200kpa at 10 percent compression or 20 ton per square meter.
Its high performance specs are designed to give Engineer’s peace of mind so that they can recommend this product with 100 percent confidence”. The team at EXPOL recognised that there was nothing on the market that offered a cost-effective yet high performance solution to concrete insulation. So they set about to develop a product with New Zealand residential and commercial projects in mind. The durable nature of SLABX200 means that it won’t degrade over time, keeping its integrity for the life of the structure. Due to the lightweight nature of Expanded Polystyrene the product is also easy to handle and install making quick work of slab insulation on site. How does this product compare to Healthy Homes standards? The Healthy Homes insulation standards across New Zealand states than underfloor insulation should have an R-Value of 1.3 or
greater. With several thicknesses available SLABX200 ranges from an R-Value of R 1.5 at 50mm thickness through to an impressive R6.0 at 200mm thickness. Therefore, all thicknesses offer R-Values over and above the standards to ensure healthy and efficient homes. How does this product work in my sustainable building project? The team at EXPOL are committed to the environment. In a true closed loop process 100 percent of manufacturing waste is recycled in their seven recycling plants nationwide. Expanded Polystyrene offers great eco credentials and at the end of a products life it can be turned into other EXPOL products. The high performance of the SLABX product also ensures that your building project is sustainable to heat and cool and therefore leading to less energy consumption over the life of the building.
If you’d like to learn more about the SLABX200 product, the team at EXPOL are happy to have a chat. Visit their website on www.expol.co.nz or give the Technical Manager at call on 0800 86 33 73. propertyandbuild.com 81
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October 2021 - January 2022
October 2021 - January 2022
Build-to-rent finally gaining traction in New Zealand HOUSING
Countries overseas have already adopted build-to-rent as a way to tackle housing issues – New Zealand may finally be catching up as Kiwi Property plans to construct the country’s first large-scale build-to-rent development
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ocated at Sylvia Park, Auckland, the 295-unit apartment complex is set to change what it means to rent in New Zealand. Construction of the $221 million development is scheduled to begin later this year, offering a mix of studio, one, two and three-bedroom apartments that are built for sustainable living. Build-to-rent properties are owned and managed by an institutional landlord – Kiwi Property in this case – and are specifically designed for long term tenancy. The model offers
October 2021 - January 2022 promote a vibrant community. We’re creating a new way of living that’s custom designed for the modern Kiwi lifestyle.” The announcement is just the start for Kiwi Property, with additional developments expected to follow over time. Approximately 1,200 apartments could potentially be built across Sylvia Park in the medium term, transforming the location into a major residential hub. Resource consent is also being sought for a 245-unit build-to-rent tower at Auckland’s LynnMall, with the potential for the site to one day accommodate more than 600 apartments. “This is a pivotal moment in Kiwi Property’s history, as we take a major step forward in the delivery of our mixed-use strategy,” Mackenzie says. “Build-to-rent is set to become a significant part of our portfolio, helping to diversify our asset base and unlock growth. “Today’s announcement signals an important strategic shift for the company and demonstrates our commitment to delivery, for our shareholders, our community and the residents who will soon call Sylvia Park home.”
More build-to-rent developments are expected in the future, including 600-apartments in Auckland's New Lynn
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residents the flexibility and convenience of renting, coupled with the security of tenure usually associated with home ownership. This means that in addition to a raft of facilities and services such as a private gym, co-working spaces, rooftop terrace and on-site maintenance, residents are welcome to have pets, hang pictures, or add their own personal touch to the colour scheme. Kiwi Property chief executive, Clive Mackenzie, says build-to-rent also has the potential to help alleviate New Zealand’s significant housing shortfall. “It’s never been tougher or more expensive for Kiwis to get on the property ladder. The median Auckland price is now around $1.2 million and as a result, it now takes the average first home buyer 14 years to save a house deposit. “Today, more than half of Aucklanders over the age of 15 are living in rental accommodation. Our aim is to make that experience as good as, if not better, than owning your own home. “Kiwi Property’s buildto-rent developments will feature quality amenities, a range of resident services and specially curated events, all designed to
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October 2021 - January 2022
What is build-to-rent and does it have a future here? All the signs indicate an exciting future for this emerging asset class that could be key to helping solve the housing crisis and provide investors with predictable long-term returns in the process, JLL research finds
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A proposed build-torent skyscraper in Parramatta, Sydney
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omentum is certainly building for Build to Rent (BTR) in New Zealand. JLL defines BTR as purpose-built larger scale residential assets owned by a single entity, professionally managed, focused on quality, durability and a highly satisfactory rental experience. The current rental market isn't a great experience with the quality bar set so much lower than it should be. BTR is a positive move away from rental supply being driven by Mum and Dad individual investors which creates a lottery of good and bad landlords and housing – towards a more professional, consistent and high-quality offer that can also provide greater security of tenure. BTR sits within the growing suite of institutional investment opportunities in the Living Sector, providing housing solutions for those who rent at all ages. Government support to help kickstart the sector is essential and the signs are looking more positive. The development of BTR is not always straightforward however. Achieving viability even just on paper can present a challenge, requiring a sound understanding of the drivers, the product and the service offering. There are a number of considerations that add complexity that other
large-scale property developments don’t necessarily need to contend with. These include the inability for foreign investors to access the sector due to the restrictions of the Overseas Investment Act rules, residential use classification and rules (particularly as proposed around interest deductability for taxation purpose), comparably high construction costs, and GST and depreciation. Kiwi Property’s recent announcement that they intend to develop 550 units at their Syliva Park and Lynn Mall shopping centre sites is a very encouraging statement of intent for what the sector could develop. However, we need to also make it attractive to developers who don’t already have substantial mixed use developments to leverage from. With the right Government policy settings, expert advice, a multi-disciplinary team and a clear vision, there are significant opportunities to profit from. Amenity and design crucial to BTR's success The design of BTR is critical in creating product differentiation in the market and providing the customer with an experience superior to that which is currently offered in the private rental market. It is important to understand that BTR design must
October 2021 - January 2022
Overseas success USA Over the last 30 years the US Multifamily Housing asset class has undoubtedly established itself as a key investment sector for many high-profile institutional investors. Alongside more traditional commercial property assets in the office, retail and industrial sectors, US Multifamily housing has become a key staple for many financial institutions’ real estate holdings. Multifamily housing has driven construction of hundreds of thousands of new homes in the last 20 years, shown consistently low vacancy rates and wage-growth linked incomes and investment value growth through reducing capitalisation rates over time and growing investment volumes. Australia It is very encouraging to see both the New South Wales and Victorian State Governments already supporting the BTR sector. The NSW government announced in July 2020 that it will introduce a land tax discount of at least 50% until 2040 on new BTR projects of at least 50 units that commenced construction on or after 1 July 2020. An exemption from foreign investor surcharges will also be provided under the new measures for qualifying schemes. Interest has already increased considerably for NSW investment and development following these announcements. The VIC Government announced in October 2021 that it will also offer a 50 per cent land tax discount from 2022 for
eligible BTR projects together with a full exemption from the Absentee Owner Surcharge for 30 years from a development's practical completion. Other states are also likely to follow in making similar concessions. UK The learnings from political support in the UK are helpful as a case study of what Government endorsement of BTR as a sector can achieve. After a slow start, over the last decade BTR has firmly established itself in the UK as a sought-after investment sector. Supported through government policy in the early 2010s, the sector now provides high-quality rental accommodation for tens of thousands of customers. After initially commissioning the Montague Review in 2012, the UK Government’s subsequent adoption of the Review’s numerous recommendations provided the market with the key impetus and catalyst it needed to become established. What public government support did in the UK was to inspire confidence at a large-scale and institutional investor level that the sector had the potential to succeed in practice. And succeed it has. As at June 2021, there were over 195,000 BTR units in the UK, 62,274 of which are completed, 39,524 under construction, and 93,800 in planning. This represents phenomenal growth in a short time period. If we can replicate the same pace of growth in New Zealand through appropriate legislative policy settings, we could see tens of thousands of new purpose-built dwellings available for rent by 2030. propertyandbuild.com 85
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aspire to be best in class from the perspective of its target segment as, unlike build to sell apartments, the goal is to attract customers and retain high levels of occupancy over the long term. It is difficult to hide from design flaws or sub-standard product and investment performance will be inevitably negatively impacted. Properties that fail to provide desirable living spaces or the promised experience through effective management at the targeted price point will struggle to attract and retain customers and will underperform in what will become a mature and competitive market. A common goal is achieved in the creation of new real estate: purpose-designed facilities that are built to stand the test of time and continue to be perceived as desirable places to live well into the future. The early leaders in the Australian sector have set a high bar in terms of design. Many of these projects include expansive common area amenity such as rooftop terraces, gyms, resident lounges, common dining areas and working spaces. These common areas add value to the customer experience and separate the new wave of build to rent
October 2021 - January 2022 from much of the existing rental product previously available in the market. Some of the leading projects in Australia are shown below, demonstrating best in class design and the sophistication of the sector.
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What industry leaders should be promoting Education must surely be the buzzword for BTR going
forward. Investors and renters alike need to appreciate and understand what BTR could offer to the market to help transform housing. Those focused primarily on investment return often overlook its facets of value that are not purely financial. BTR is valuable because it is practical and predictable, experiential, and societally
desirable as well as financially beneficial and resilient in challenging times. Each of these elements of ‘value’ are important. Practical value BTR has practical value for a wide range of stakeholders. If it is done efficiently, effectively and viably for the longer-term, professionally managed housing provides one feasible answer to help ensure people are housed in quality and long-lasting accommodation. Housing is a fundamental need for each and every member of the population. There is a long-term and arguably chronic shortage of housing, particularly so in an age of comparatively rapid urbanisation and population expansion. A very practical way of overcoming the housing shortage is to focus
on high-density housing because more homes can be built quickly on smaller areas of land. Housing tenure statistics clearly demonstrate that the rental population is growing; and significantly. Servicing this growth is important. An increase in single person households is also adding to rental demand and this group generally require smaller dwellings than couples or families. This is especially true for those who become single later in life as they often don’t wish to share a property with others. This growing market is not typically catered for by traditional New Zealand housing because family houses and larger apartments don’t suit them. Filling this supply gap and the provision of additional new housing appropriate
Eight key investment drivers There are eight key investment drivers from a purely financial perspective that are attracting institutional investment and interest in BTR in both Australia and New Zealand. Each of these are equally important to the overall investment case. Continued appetite for real estate Globally, real estate remains a popular investment class from individual investors up to large-scale institutions. It is perceived as a safe bet (with a residual value many paper assets don’t have) and essential for a diversified portfolio. And as investment funds continue to grow, real estate allocations are increasing too aggregate terms. But the proportion going into real estate globally is also growing, with extremely low (and even negative) bond yields pushing more invest-
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ment ‘up the risk curve’ to higher yielding assets. Growth in alternative property With more exposure to real estate, and substantial un-deployed capital, investors are seeking complimentary real estate assets to traditional opportunities of scale office, industrial or retail investment. This trend is being accentuated at present by structural trends currently making retail property challenging (traditionally a large stable part of major investors’ portfolios), and by cyclical pressures post-COVID in office markets. The Living Sector more broadly, and BTR specifically, has become an obvious avenue of interest. Portfolio diversification Core real estate sectors tend to be highly cyclical, with returns that are highly correlated.
However, BTR provides an opportunity for investors to benefit from lower cyclicality, or even a slight counter-cyclical nature. For large investors, this can potentially reduce overall portfolio volatility and enhancing risk-adjusted returns. An opportunity for scale A challenge for institutional investors is finding scale-able opportunities due to their requirements to deploy significant capital through investments. BTR offers the ability for largescale investment, both in terms of individual asset size and potential overall market size. In addition, BTR offers the opportunity to maximise operational efficiencies due to building scale. In Australia, over 90% of the institutional-grade BTR developments planned comprise over 250 units.
October 2021 - January 2022 for renters is arguably the most important value that BTR offers to society. Although this might not be as important to investors as financial return, investors can take solace in the fact that their financial investment is creating needed social capital and meeting a basic human need at a time of global instability and confusion.
Income hedged against inflation BTR can offer steady and predictable cashflows over the medium to long-term. Given that rental income profiles tend to be closely correlated with the higher of wage growth or inflation, income returns are less cyclical than commercial real estate where performance is more linked to wider economy performance. With residential, there is also less risk to factor into incentive level risks, vacancy (given a wide potential occupier pool and granular asset reducing concentration risk), and obsolescence. Residential rents in Australia and New Zealand have exceeded inflation over the long-term, which cannot be said of commercial rents after accounting for incentives.
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Experiential value If done well, BTR has the potential to provide renters with a level of happiness and contentment that is elusive for many in the current private rented sector. How people feel about the property they live in is important to renters but is all too often overlooked by landlords. As a purpose-built rental option, BTR investors focus more on renter needs and wants than those providing
Needs-based opportunity Residential is a needs-based asset class and with housing shortages, the fundamentals underpinning an investment case for BTR are strong. Recent trends show that residential consistently outperforms commercial from both a rental and long-term price growth perspective which is attributable to a combination of restricted supply and strong demand. Rental growth prospects A combination of population growth and housing affordability putting increasing pressure on housing prices suggests a healthy outlook for the rental market in the medium term. This is despite short term fluctuation as a result of COVID-19 and its associated economic impacts. Steady rental growth, and the potential ability for rents to exceed inflation, is a key attraction for BTR
investors. There is also potential for BTR to drive long-term rental growth through offering a superior product to that available in much of the private rented sector. A defensive asset class Whilst offshore investment appetite is somewhat cyclical, an underlying demand for relative stable risk adjusted returns is a recurring theme. BTR is sought after as its income and inherent low risk profile appeals to long-term institutional capital relative to its core sector counterparts. Recent US research also demonstrates the resilience of rental income streams of US Multifamily housing compared to other asset classes despite COVID-19 during 2020. This is an increasingly important consideration for income prioritising institutions.
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Figure 19 Customer priorities
Affordability •
Flexible lease terms (length, inflation linked)
•
Reasonableness in dealing with deposits and rental increase
•
Predictable rent increase
Quality •
Building design and fit-out specifically tailored for BTR
•
Communal and internal parts of property maintained
•
Regular maintenance and consistent levels of high quality
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Convenience •
On-site concierge and responsive maintenance team
•
Offerings such as cleaning and ‘plug and play’ utilities
•
Rent and all-inclusive bills paid through one online portal
Customer service •
Professional and incentivised staff
•
Guaranteed levels of service
•
Transparency
Place and community •
Interaction fostered between neighbours
•
Opportunity for existing friends to move in
•
Enhanced feeling of security with concierge and community
Flexibility and certainty of tenure •
Extended lease terms with tenant breaks
•
Potential to upsize or downsize to meet evolving lifestyles
•
Certainty that the property will remain a rented property
housing for rent as a cot• A lack of transparent tage industry investment. information and knowledge Source: Build to Rent: ULI Best Practice Guide Edition 2 (UK) (2016) This means BTR can proof consumer rights vide renters: • Power imbalance be1. Better value for money tween landlords, agents, experience and tenants 2. Greater security in the • High moving costs longer term The same themes can 3. A feeling closer to home be seen to apply in New ownership Zealand. According to The Renters Research from Stats NZ Journey by Dr Steven Curry shows that only a third (2019), many Australian of renters consider their renters are affected by: house to be very suitable • A lack of properties that compared to half of homesuit their needs owners. • A lack of supply responThose in the rental sector siveness in the market also report poorer quality 88 propertyandbuild.com
homes in terms of damp, mould, and worse heating provision than in owned residential properties. These and other factors such as a lack of consistency between landlords, no universal standards, ‘no cause’ evictions of tenants when an owner chooses to sell a property or move in their discretion and poor maintenance and repair regimes all add to the underlying belief that renting is inferior to home ownership. BTR investors and operators are purposefully setting
out to tackle these integral problems of poor value for money, a lack of tenure certainty, and overall dissatisfaction with their rental experience. The overall philosophy when considering occupiers for BTR products is to rebrand ‘tenants’ to ‘customers’ or ‘residents’. This simple non-adversarial and more positive concept immediately rebalances the mindset of the relationship. The operator or investor wants to provide their rental product for as long as possible and the occupier wants a nice place to live with the knowledge they can stay for as long as they wish. Overall, housing is an emotive issue but BTR has the ability to provide the renter with a much more positive and predictable experience which should equate to more success in the marketplace. Experiential value should eventually equate to financial return. Happy and content residents are better customers for their rental product and better retention clearly has a monetary value for investors. If BTR schemes can provide nice and well managed environments that are superior in experience to other rental options, they will be able to secure long term and sustainable rental income streams that provide predictable returns to investors even through challenging economic periods. Financial value The Australian and New Zealand BTR markets are largely untested in terms of capitalisation rates however we can look to the more mature global markets
together with local core sector yields to determine a relative context. The UK, Europe and US offered key insights into the behaviour and trends of valuation metrics as markets progressed through early-stage development cycles into operational and stabilised phases. This provides context of returns through cycles and trends as the market evolves. This is demonstrated by the more mature Multifamily market of the US together with the evolving UK BTR market. It is this global context together with a local comparison to core sector yields that creates the yield story. In the local context of New Zealand, the core real estate investment markets of office, retail and industrial, together with consideration for the active hotel investment and PBSA (Purpose Built Student Accommodation) markets in Australia provide the relativity when assessing opportunities at a regional level. As we experienced in the early stages of the institutional purpose-built student accommodation market (particularly in Australia), early movers enjoyed yield premiums to core sectors to reward their investors for the risks associated with entering an emerging and relatively untested market. As portfolio scale was achieved and the next wave of capital liquidity entered the market, we saw yield compression commence and more recently converge with core sector yields. We believe that a similar approach to that taken for initial PBSA assets will be adopted by early movers into the Australasian BTR sector. However, it must be noted that given the residen-
tial-aligned product design (when compared to the specialised nature of PBSA design) together with the broader potential customer base, we anticipate firmer yields from the outset and less of a compression story than was experienced in the PBSA sector. With these aspects considered, our view of where we anticipate New Zealand BTR yields will sit as the sector gains traction entering the development cycle. Overall, the investment drivers of BTR are compelling and reflective of current requirements for needs-based and defensive opportunities. Our continued discussions with global investors demonstrate the appetite for expansion into the Australasian markets which will ultimately drive a similar story as the sector progresses through the early-stage development cycle into the operational cycle. Underpinned by shortages of housing in key cities, the financial case for BTR has arguably never been stronger in New Zealand.
The key next steps to take advantage of the societal value of the asset class and maximise the wider benefits to the housing market and rental population will require contribution from a wide range of non-direct stakeholders. Although a complex subject, the role of sustainability that BTR could play in future housing supply should not be underestimated. "BTR will deliver more environmentally and socially sustainable housing, including homes that are healthier and energy efficient (with features such as double-glazing, solar power, better ventilation, more effective heating and cooling)," says Michael Holloway of Outperform. "As a result, BTR has the potential to promote the wellness of residents and support the curation of strong and resilient local
communities.” Although the legislative and tax situation underpinning the sector’s potential is presently not optimal and will need changes to maximise the opportunity, goodwill to look holistically at what the sector could provide feels like it is gaining momentum politically. This sector needs to represent a win-win for all stakeholders and it certainly has the potential to deliver. We expect continued interest in the sector from global and domestic investors alike, as BTR forms an integral part of diversified real estate investment portfolios. While we do have the UK and US to look to for inspiration and learnings, the optimal solution will undoubtedly be a home grown product reflecting key requirements and customer expectations.
Social Value The final element of value to consider is an amalgamation of all the other three types of value discussed, creating a product with overall societal value for a wide range of stakeholders. There is a growing case from both a demand and supply perspective that BTR is a natural opportunity for a wide variety of stakeholders to seize the benefits that a professionally managed sector has to offer. Whether for practical and/ or social value, and for governments, investors, or individuals, there is clear merit and longevity in a quality-driven BTR sector in Australia and New Zealand. propertyandbuild.com 89
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October 2021 - January 2022
October 2021 - January 2022
What is holding N back build-to-rent in New Zealand?
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New Zealand represents one of the most opportunistic markets for Build to Rent investors in the world, but according to JLL research, it is being significantly held back by its high barriers to entry says Paul Winstanley
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ew Zealand is within touching distance of benefitting from substantial investment from the global living market, which is one of the two fastest growing major investment sectors in the world. Shifting capital allocations are favouring the living sector. Supply-demand imbalances, as well as an increasing number of transactions and liquidity are supporting the long-term investment thesis. Living investments also provide investment diversification benefits through cover upturns and down turns. Alongside China, India and South Korea, New Zealand boasts tremendous upside potential due to strong demographics and economic performance. However central governments dictating housing policy, including regulations regarding who can own and operate assets, is disrupting the market entry opportunity for experienced living owners, operators, and developers. There is no doubt that BTR is an exciting sector for investors, with growth opportunities significant and quickly evolving. But, the biggest winners in New Zealand were we to attract BTR investment and development could well be prospective renters. This is a real opportunity to raise the bar for rental accommodation in New Zealand to the benefit of renters. Since returning to New Zealand permanently in 2018, I have consistently promoted the benefits that BTR could offer renters throughout New Zealand. Personally and professionally, I am passionate about BTR primarily because I gained a great deal of experience working in the sector in the UK during its
October 2021 - January 2022 - International liquidity: through changes to the Overseas Investment Act’s treatment of BTR as a residential asset class - A commercial approach to investment: no restrictions on interest deductibility for taxation calculations - Depreciation relief for tax purposes: the same as for commercial buildings to reflect that buildings age and need to be maintained - Encourage BTR operators to offer renters flexibility: in tenancy length and notice periods to leave, but with certainty of tenure through commitments to rent to occupiers, renters or tenants for the long term. Minor tweaks to the payment timings of GST through the construction period and the practicalities of the Residential Tenancies Act would also be helpful. Will the Government support BTR and allow the private sector to deliver the new additional rental homes at scale if policy settings enabled viability? This doesn’t feel like it should be a difficult decision given the need increased investment for more housing, high quality living accommodation, and a better deal for renters. BTR can clearly be a significant part of the solution for some of New Zealand’s housing problems, and we need to take advantage of it now; the asset class’s global growth phase won’t last forever.
Paul Winstanley is the Head of Build-to-Rent for JLL Australia and New Zealand. JLL is a leading professional services firm that specialises in real estate and investment management.
25,000 build-to-rent homes at risk due to government policy New data from Property Council New Zealand suggests that over 6,100 build-to-rent homes could be in the market within two years if the Government loosens the reins on the legislative barriers holding the sector back. Further analysis suggests this number could swell to over 25,000 new homes within a decade. “This government has said they are focused on delivering more affordable housing, but history has shown that the private sector is often much better placed to build sustainably and at scale,” says Property Council chief executive Leonie Freeman. Unlike a standard residential development, where units are built for individual sale, build-to-rent (BTR) developments are designed and built specifically as long-term rentals. The properties are owned by institutional investors and managed by specialist operators, while tenants are treated as customers, enjoying the benefits of living in high-quality, tailored apartments with secure long-term accommodation and the freedom to give notice when they choose. “We like to call it ‘renting for the Netflix generation’,” says Freeman, “where rent is treated as any other pay-as-you-go service, like Spotify or Netflix. Tenants can plug-in and plug-out. They aren’t buying the house – they’re buying the living experience. “A survey of Kiwi BTR developers shows that there are 853 BTR units either currently under construction or completed across 21 sites, with an average of just over 40 units per development. “Over the next two years we’re estimating that with the right policy settings this figure could explode to over 6,100 units across nearly 40 sites. These are credible, planned BTR developments that are currently in the pipeline for delivery, greatly expanding New Zealand’s rental stock. “With government support, the BTR sector has the potential to deliver over 25,000 homes in just 10 years. Our members – who are primarily large scale commercial and residential developers and owners – tell us that delivery of these developments rely on several changes to government policy, including; 1. Better clarity on the Overseas Investment Act, which could currently disincentivise large institutional investment in Build-to-Rent in New Zealand. 2. Further definition of BTR as its own asset class – similar to that of student accommodation or retirement villages – which would make it exempt from recent interest deductibility changes. Reclassifying BTR as a commercial asset class would also change depreciation application and provide a genuine incentive to help unleash large numbers. “BTR has real potential to house more New Zealanders comfortably, quickly and affordably. But if we want large-scale BTR to be unlocked, then the Government needs to stop blocking the path to progress and accept that this could be a simple solution to help ease Aotearoa’s housing woes,” says Freeman. propertyandbuild.com 91
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development between 2008 and 2018. I saw first-hand the real difference that can be made to the renter experience when people live in professionally managed, customer driven, and community focused living environments. Yet, while we are starting to see great progress with a small number of pioneering investors and developers delivering quality longterm rental offerings, BTR schemes in New Zealand are not prevalent enough to make a real difference to most who live in the rental market. And critically, JLL’s research (carried out by our global research team from London and New York) has highlighted the challenges that New Zealand needs to overcome to deliver BTR at scale. It is paramount that we address these roadblocks to avoid the danger of missing the BTR boat in New Zealand altogether. The main thing holding us back is high barriers to entry – but crucially those high barriers are wholly at the discretion of the Government to lower. They are not insurmountable, but they do require Government leadership and action to be overcome. Thankfully, the requests of the Government are relatively moderate to make BTR a reality in New Zealand. To kickstart the sector we need policy settings that enable:
October 2021 - January 2022
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B
uild to Rent (BTR) is on the rise; the sector is gaining traction in Australia with an estimated pipeline of 15,000 apartments worth more than $10 billion—over 895 under construction and 2326 complete. Covid may even be a catalyst for faster growth. In the US, BTR has been the first asset class to recover post-GFC with people moving from ownership to rental. Post pandemic there is a predicted growth of demand for rental, as job insecurity impacts our willingness to take out a mortgage or expose ourselves to financial risk in an unstable climate. What’s more, during lock-down, people have re-evaluated where and how they want to live. When you’re stuck in your home 24 hours a day, seven days a week, it suddenly throws your living conditions into sharp focus. As a result people are looking for more space, better amenity, easy access to outdoor spaces, and locations where they can walk to the shops. What’s more, they are willing to pay for it. BTR has the right ingredients to take advantage of this shift in mindset. When BTR is done well, the benefits are numerous and compelling. Purpose-built for long-term tenants, it usually offers onsite concierge, cool locker storage for grocery delivery, on site immediate maintenance, accessible rooftop podiums and/or outdoor spaces with amenities, plus integrated F&B options. Great BTR buildings develop programming that creates and supports a true sense of community, where likeminded individuals can live, meet and socialise in 92 propertyandbuild.com
Wrong name, right product Consumers would flock to build-to-rent, if only they knew what it was, but the label is confusing, leading people to either overlook or actively avoid engaging with this globally significant sector, the Urban Developer reports something akin to clubstyle living. There is also the huge appeal of dealing with a professional organisation, not multiple mum-and-dad landlords. Successful BTR developments treat their residents like customers, aiming to deliver superior services and experiences. As a result positive experiences result in longer tenant tenure and mini-
mised vacancy. With such a substantial list of benefits, what’s in the way? The big challenge preventing BTR from achieving the success it’s capable of is its blurry image. While the industry might understand the name, the public in this country does not, so they fail to engage. People don’t understand if this product is affordable housing, co-living, social
housing or build-to-rent-tobuy. Adding to the problem is uncertainty about who is delivering what. Will the developer manage the building or will it be another organisation, and if so who? While some names linked to BTR are well known property developers, the public is unsure if they’re qualified to manage residential on a day-to-day
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October 2021 - January 2022
basis. You see the problem. Commercial office product is not called Built for Offices. Retirement living is not called Built for Old People. Recently the industry has started referring to off-theplan as Built to Sell, merely to help differentiate it from BTR. ‘Build to Rent’ is not a consumer-facing brand, it is an industry descriptor or jargon that fails to deliver convenience and clarity for the public, also known as the target audience. The property industry is fixated on talking about BTR as a ‘property category’, but this doesn’t translate to or resonate with potential residents who, at the end of the day, just want a better living solution. So how do we reposition the sector so it offers clarity
and attracts the sort of public attention that has made it so successful in the US and UK? One decisive and effective way would be to rename BTR for the benefit of its audience, rather than for the convenience of the property industry. If we want BTR to succeed, then it’s vital we clearly position it to resonate with the public, thereby increasing market traction. The new name needs to emphasise the delivery of services and tenant experience over the product sector. A better way to describe this compelling residential solution would be ‘Renting with Benefits’ or ‘Renting Made Better’. What if BTR changed its name to ‘Rent by Design’ or ‘Rent2Live’? ‘Rent2Live’
plays on the notion that people work to live, not live to work. Rent so you can LIVE and not get bogged down with huge mortgages and household maintenance. This is particularly relevant to a Millennial audience, 66 per cent of whom say they will never be able to purchase a home in a location they actually like. We’re also seeing a structural shift away from ownership amongst younger generations, part of a trend towards a share economy. The result could be a generation who don’t rely on home ownership as wealth creation. Instead they will rent where they want to live, using mortgage savings to invest in other asset classes. Demand will also rise for this residential option as
people find themselves increasingly more isolated and therefore in need of social connection (a situation accelerated during the past 18 months). BTR can deliver a sense of belonging and connection through shared amenity spaces and resident community engagement. Studies show that residents with friends in the same building are more likely to stay on a long-term basis, which is why supplying facilities and programming that help build community spirit are so important to this flourishing business model. Ultimately, we need to work harder to engage the audience who really matter: the people who will live in these apartments.
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October - January 2020 - 2021
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