Local insights report: June 2023

Bay of Plenty's local insights report for June 2023.

Top regional insights

Shortfall in the region’s construction and infrastructure labour and skills supply

There is a clear shortfall in the region’s construction and infrastructure labour and skills supply when measured against the backlog of work currently underway and anticipated in the future. This is evidenced by Waihanga Ara Rau’s recent 2022 report and in a sector survey which found that 80% of the industry felt there was “plenty of work on...but not enough staff [to do it]”.

Bay of Plenty Regional Construction Workforce Planning & Development Report(external link) — Waihanga Ara Rau

BDO New Zealand Construction Sector Report 2023(external link) — BDO New Zealand

Lack of housing

Attraction and retention of workers in the region continues to be constrained by lack of housing. Rapid population growth has been a consistent story for the Bay of Plenty, for example Tauranga’s population increased by 72% since 2000. The region has been playing catch-up to try and match demand with supply, however regional stakeholders have said the restricted supply of accommodation is putting off workers considering coming into the Bay area as the high median sales prices and rents continue to impact on accommodation affordability.

SmartGrowth: Development Trends Technical Report 2022(external link) — Tauranga City Council

Inadequate transport infrastructure

Inadequate transport infrastructure in the Bay is constraining participation in the labour market. For example, a recent Quality of Life survey (Nielsen IQ) showed that Tauranga is currently tracking as the most traffic congested city in the country. Traffic bottle neck issues are negatively impacting on overall health (including mental health), and people are not willing to take on the stress of getting to and from work.

Increasing diversity in procurement practices will support Māori and Pasifika to raise capital for business

Unequal access has occurred due to declining home ownership and commercial lending criteria, however, local government opening up its procurement pipelines to diversity will help to inject much needed capacity and capability into the labour market via relevant business processes for these groups.

Residential construction and transport infrastructure considerations relate to the Group’s Regional Workforce Plan (“RWP”) through 3 key aspiration and action areas:

  • Workforce resilience particularly around worker mobility, well-being and mental health
  • climate change around supporting sustainable business activity
  • education around education-to-employment pathways.

Regional Workforce Plan

Top labour market opportunities

Programmes to pathway secondary school students into construction and infrastructure are seeing success in the region

Futures Academy for example is providing local employers value by offering opportunities for rangatahi to learn valuable work skills and build confidence while training. They are extending their delivery to span throughout the Bay from Tauranga, Eastern Bay of Plenty to Taupo. Students from Opotiki can now enrol in a Level 3 course, teaching them how to build re-locatable houses for Kāinga Ora.

2024 Programme guide(external link) — Bay of Plenty Futures Academy

This can potentially lead them into apprenticeships with BCITO, which will increase their skill levels and encourage them into meaningful employment in the medium to long term. This opportunity supports the education-to-employment transition actions in the RWP.

Action plan: Education

The Girls in Hi-Vis programme is promoting participation of women in the C&I workforce

It is gaining momentum in the region with Papamoa and Te Puke secondary schools having engaged in hands on experiences at a civil construction Rangiuru work site in June. Women are still underrepresented in the industry, and this programme aims to attract and retain college-aged girls to ensure they feel connected/valued to be part of the C&I workforce.

Female students learn about infrastructure industry(external link) — Bay of Plenty Times

The increased focus on sustainability from local clients is driving change in construction companies

BDO Construction Sector Report 2023(external link) — BDO

Clients are starting to demand infrastructure that is built to last using environmentally sustainable inputs/production techniques. An example is Tauranga City Council’s new head office, which will be the country’s largest mass timber office building. Tied to this are the skills and experience of “green friendly” production methods* that the sector will need to develop in its workers to transition to a net zero emissions economy (e.g. via a relevant micro-credential). This opportunity supports the workforce adaptation for climate change actions in the RWP.

Action plan: Climate change

Improving productivity and resilience by increasing skill level and workforce participation

The sector is seeking to improve productivity and resilience by increasing skill level and workforce participation (e.g. women and Māori/Pasifika). In prefabricated housing this includes exploiting procedural efficiencies using digital means and presenting opportunities to develop employees. Forecast demand suggests the region will need 27,105 more workers by 2035. Recent modelling suggests if productivity could be improved by 3.5% per year, this would reduce labour demand by 20% decreasing it to 21,919 workers.

Regional Construction Workforce Planning and Development report 2022(external link) — Waihanga Ara Rau | Workforce Development Council

This opportunity supports the actions relating to individual and industry workforce resilience in the RWP.

Action plan: Resilience

Top labour market challenges

Housing affordability in Tauranga

Tauranga drives the highest demand for workers across the region but is the least affordable housing market in the country according to a recent Core Logic report.

Housing affordability is only getting worse(external link) — Core Logic

The key reason why the city is so unaffordable is its value to income ratio (11.9 which is a new record). As stated, one consequence of this is impinged worker mobility with many working locals struggling to meet rising cost of livings and any potential workforce considering moving to the region are dissuaded by unaffordable and scarce accommodation. This persistent challenge around unaffordability deepens the issue of not being able to attract new individuals to the labour market or retain current (including within C&I).

National infrastructure deficit in heavy and civil construction

Employment would need to double in order to close the national infrastructure deficit in heavy and civil construction by 2035. The Infrastructure Commission’s 2021 report stipulated that current levels will need to reach around 100k by 2050, while shorter-term projections from BCITO indicate a shortfall of 118k C&I workers by 2024.

New Zealand’s infrastructure challenge report(external link) — The New Zealand Infrastructure Commission | Te Waihanga

While these are national projections, they potentially impact more heavily in the Bay, due to the intensified challenges set out in this report, highlighting the problems around skills development and worker attraction/retention.

Lack of understanding of Environmental, Social and Governance (ESG) strategic requirements is a barrier to achieving net zero emissions

Firms are not able to perform relevant actions, including the development of decarbonisation pathways by upskilling their workers in greener production methods, due to a lack of capability.

Māori and Pasifika businesses need further support to enable effective uptake of opportunities within government procurement pipelines

Feedback from regional stakeholders is that opportunities exist, however there is a lack of capability in businesses to navigate procurement processes. This includes giving them a fighting chance to recruit and upskill mainly Māori/Pasifika employees to increase their participation in the labour market (especially in C&I).

The Bay of Plenty region

Pressure on housing and transport

Tauranga’s population causes pressure on housing and transport, with Tauranga City Council the only metropolitan council in NZ not able to comply with the National Policy Statement Urban Development land supply requirements, impacting on the city’s ability to retain and attract workers.

There are local examples of firms working well with regional stakeholders in the Eastern Bay of Plenty

One large example is the Ōpōtiki Harbour Development where HEB construction has been working with Ōpōtiki Council to employ locals including Ōpōtiki college graduates.

Tauhara Geothermal Power Station

The Tauhara Geothermal Power Station just outside Taupo will incorporate the world’s largest geothermal steam turbine once completed. This cutting-edge infrastructure project will include workforce employment and skills development opportunities for locals.

Significant infrastructure investment

Tauranga City Council has committed significant infrastructure investment to the region – $2.6b of which is allocated to transport infrastructure improvements. To link up on this investment, it is hoped that local businesses (especially those owned by Māori/Pasifika) will avail themselves of the procurement pipelines to boost their capacity and capability in the local workforce.

Focus for the next 2 months

The next round of TEC advice due in November 2023.

Trends at a glance

  • Construction was the 2nd largest contributor to employment in the region in 2022, behind health, and the 2nd highest contributor to GDP at $118.4M, behind professional services.
  • 118,500 – shortfall in construction workers needed by 2024 nationally. Source: BCITO.
  • 27,700 – construction employment forecast for BOP by 2024.
  • 11% of Māori employed in construction in BOP – the largest single employer of Māori in the region.
  • 1.0% - Population growth in 2022 (second highest in the country behind Northland) compared to 0.2% for New Zealand generally.
  • Population growth across the region averaged 2.2% over the last 5 years compared to 1.2% for New Zealand. Source: Infometrics: Bay of Plenty Regional Economic Profile and Community Profile

Prepared by the regionally led Bay of Plenty Regional Skills Leadership Group.

For further information, please contact: bayofplentyrslg@mbie.govt.nz