Chris Bishop on why the Government can’t be blamed for construction downturn

Wednesday, 6 August 2025

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Infrastructure Minister Chris Bishop has blasted critics in the construction sector as “wrong”.

Speaking to reporters at Infrastructure New Zealand’s Building Nations conference on Wednesday, Bishop denied the Government had pulled back from infrastructure and building, deepening the construction downturn.

“We've built more school classrooms last year than we did in 2023, so it's just factually wrong,” he said.

“In net terms Kāinga Ora built 2600 new state homes last year, and… there was Chip [community] housing on top of that as well. It's just wrong.”

A downturn in the construction sector has continued to deepen in recent months, with data showing 12,000 construction jobs were lost in the year to June, and more than 1100 construction companies went into liquidation in the two years to June.

Industry leaders have told The Post that pauses and reductions in Government building was a major driver of the downturn.

“The main catalyst behind all this is severely reducing the pipeline of work coming out of central Government,” said Malcolm Fleming, chief executive of New Zealand Certified Builders, in an interview published Tuesday.

But Bishop said such a view was incorrect.

“It's the broader macro-economy. I mean, the Government is not the sole provider of construction jobs. There's like, 200,000 people working construction.

Minister of Infrastructure Chris Bishop at the Infrastructure NZ conference in Wellington, on Wednesday.

“We've had, obviously, some job losses, which no one wants to see. But that is not on the Government, frankly, that is on the broader macro-economy…we have been in recession for the better part of two or three years, unemployment is rising across the board.”

Bishop said the Government had built 583 school classrooms in the past year, compared to 444 the year prior, though he said there had been changes in both how the Government built classrooms and state houses.

In the case of classrooms, “we’ve moved towards modular, standardised design”, as government had been spending a “nuts” $1.2 million on each classroom. It was now down to $600,000 a classroom, and Bishop said he wanted it down further.

“So that probably means a bit less work for architects and engineers … but that’s in the interests of the country.”

Kāinga Ora had also been asked to get its build cost down, but Bishop said at 5% of the construction market any effect of this was “really on the margins”.

“The major problem with residential construction is building consents are down, because interest rates have been high, because the economics of building a house when interest rates are 7.5% compared to 5.5% … that's just the reality.

“OK, so now the OCR is coming down, you know, forecasted to fall further, that is flowing through to real interest rates, which will help stimulate the economic recovery. OK, that's just the economics.”

He said the economic recovery was forecast to be under way, and Treasury forecasts in the 2025 Budget said there would be 240,000 additional jobs over the coming four years.

But Labour leader Chris Hipkins, speaking at the conference, said there were 18,000 fewer people working in construction than on election day because the Government had “work put on hold, cancelled, or reviewed”.

“Some of that is to due to an economic downturn that no government would have necessarily prevented,” he said.

“But a good chunk of that is to do with the decisions that the Government has taken. So, stopping school rebuilds, hospital rebuilds, pausing most transport projects while the GPS [government policy statement] was reviewed.”