What do consulting firms need from the next government?
Aotearoa New Zealand voted for change in the 2023 General Election and National and ACT are now working to form the next government. We asked a selection of our members about their key challenges and what they need from the new government to succeed.
SMEs need more certainty, a focus on productivity, and a reduction in compliance costs
Chris Short, Chief Executive, CGW Consulting Engineers
SMEs in New Zealand are facing a raft of challenges right now and they’re under a lot of pressure. The high cost of labour and inputs, and rising overheads are squeezing margins and reducing profitability. Additional obligations and compliance costs imposed in the last couple of years, combined with a ‘hangover’ from COVID-19 have really tested the resilience of business owners and managers. In the consultancy sector, the tight labour market has meant competition to attract and retain people has reduced productivity, particularly for SMEs. With higher interest rates and inflationary pressures, clients are being cautious and conservative, which is understandable. ACE New Zealand members face significant uncertainty about what the regulatory environment will look like moving forward and issues like the infrastructure deficit and housing shortages are significant and systemic. This, combined with economic headwinds, is slowing down important investment.
The next government needs to focus on conveying clear details about policy direction and outline priorities to give certainty as soon as possible. They need to map out a long-term investment trajectory to give transparency to the pipeline of work and confidence to the market, even if this means borrowing more money to invest in long-term deficient and productivity improvements. We also need to know what the future shape of regulation in the built and natural environment will be right out of the gate.
SMEs need more certainty, a focus on productivity, and a reduction in compliance costs to help us thrive. We need an environment where equal opportunity to participate and compete in the marketplace for SMEs is promoted right now. As we move on, get the foundations right. Invest in the workforce of the future through initiatives like structured literacy in schools, co-investment in better housing for all, and a functional well-funded health system. The current and future SME workforce must be healthy, capable, and productive to meet the challenges ahead.
Climate change - who pays and how much?
Cushla Loomb, Business Director - Climate Change Risk and Adaptation, Beca
With the increasing frequency of large, damaging storm events there’s a very real risk of insurance retreat if risks become too great in the future. This will exacerbate social inequities and cause major disruption to our economy if we don’t plan for it. Options for reducing this risk are expensive and funding – who pays and how much – is an issue.
The incoming government needs to make sure there are dedicated central funds available to assist with proactive climate risk planning – as a country, we can’t afford to be constantly suffering from expensive damaging events. This central funding source should also be accompanied by a dedicated central delivery agency whose role it is to work alongside poorly resourced councils to provide an appropriate level of support. And all of this needs to be supported by legislation that ensures we focus on this important issue, for example, mandatory climate risk assessment and adaptation planning in high-risk locations.
Funding is an issue everywhere. In Australia state governments hold the funds and local councils are required to implement climate adaptation planning (much like NZ). This is a contestable fund and those local councils that collaborate with each other have more ready access to the funds. This incentivises more collaboration (both in terms of risk assessments but also planned adaptation) which will be needed in NZ (given the complexity of the various different asset owners with differing roles and responsibilities).
In regards to infrastructure, there will be an increasing need for infrastructure to be designed to be flexible to accommodate the inherent uncertainties with climate change – we can ill afford to keep designing expensive and fixed infrastructure that doesn’t get a return on investment before it is already redundant (either due to communities that move, or infrastructure that rapidly becomes incapable of its designed level of service). In Europe they are incorporating circular economy principles into design that allows for the flexibility needed for the uncertainties of climate change. For example, bridges that can be moved (rather than fixed in place).
We need a 30-year infrastructure plan that's less exposed to political whims
Ian Blair, Managing Director, WSP in New Zealand
Key challenges for larger firms in the consulting sector in New Zealand are uncertainty around the pipeline of work, and therefore uncertainty around the resources we need. Projects start and stop for a variety of reasons, which makes committing resources problematic, and the lack of consistency drives additional costs for Aotearoa.
The next government needs to provide a long-term plan for infrastructure that enables all service providers to resource themselves to ensure we have capacity. We need a 30-year infrastructure plan that is less exposed to political whims.
Alignment crucial for urban development
Alastair Cattanach, Director, Dunning Thornton
There are plenty of key challenges in the urban housing development space – building consents are unpredictable due to non-compliance with timeframes, regional differences and lack of skills for processing consents.
There’s been poor development and completion of NZ Standards, and these can be slow to be cited, or appear unpredictably, under the Building Code.
Businesses operating in urban development need the new government to focus on aligning the Resource Management Act, densification and district plan goals.
We also need the Ministry of Business, Innovation and Employment to upskill with ENGINEERING staff to assist with the development of standards and guidelines, and to be able to support local authorities in processing building consents (including options for centralised consenting).
Be bold and lead the way on gender and ethnic diversity
Josie Fitzgerald, Steering Committee Chair, The Diversity Agenda
New Zealand businesses are facing skills shortages and a lack of diverse talent. We also face retention issues with women leaving the industry at a faster rate than men. We know from the 2023 Diversity Accord impact report that in engineering we need to increase participation of Māori (currently at 2.42%), Pacific peoples (2.13%) and women in leadership (at 28%). This has a knock-on effect to the demographic make-up of our business leaders and key decision makers.
We have an industry pay equity gap to close (5.5%) and we need to address the participation gap. We’re confident The Diversity Agenda is making progress with an industry led approach and our DEI Leads group who are unified in tackling these issues head on. We’re stronger together.
Our infrastructure projects are getting larger, and we’re finding that inter-personal skills and a social licence to operate are key drivers in the successful delivery of projects. A diverse workforce brings these key attributes to our projects.
There has been positive progress in the past few years with the government achieving its target of 50% women on public sector boards and committees. We hope this evolves to include ethnic representation and expands beyond boards to government infrastructure projects. We have an opportunity to ensure the new government sees the value that diversity of thought brings when helping to build the future of Aotearoa.
Another positive step was the government’s recent announcement on pay transparency – about 900 New Zealand businesses with more than 250 employees will soon be required to publicly report their gender pay gap. This was welcome news for the Mind the Gap campaign, which launched Aotearoa New Zealand’s first pay gap registry showing which businesses are publishing their pay gaps for gender, Māori, and Pacific peoples. Here’s hoping we’ll see mandates to publish ethnic pay gaps soon too.
The gender pay gap will only close when we see more women in senior leadership roles, and a new government can support this through targets for government-funded infrastructure delivery. This will close the gender pay gap and also provide role models to retain our aspiring wāhine in the industry.
Parental leave is a hot topic and the National Party announced its policies with great fanfare. National has proposed allowing both parents to take parental leave at the same time, as well as continuing ECE funding for children over three years. They know it’s front of mind for many New Zealand families and we need the incoming government to deliver on this promise.
Consultancy firms need the incoming government to continue with the work that has laid the foundations for a better future and boldly set the scene on the importance of equity. Companies in the top quartile of ethnic and gender diversity outperform in their industry. If the incoming government can help demonstrate this by modelling diversity, equity and inclusion best practice in hiring and workplace culture – as well as supplying relevant policies, frameworks and programmes – our industry will be set up for success.
Transport sector needs confidence in the pipeline
Darren Wu, Client Director, Beca
The transport sector plays an important role in our economy and contributes to important social outcomes for communities. With ageing transport infrastructure, rising costs and a need to lower emissions, there is no shortage of work to do. Beca is committed to partnering with local and central government to solve these problems – but there are some headwinds.
A confident pipeline in investment, and the timing of this investment, enables businesses to upskill their people and grow the resources to deliver projects. If there is low confidence in the pipeline, there will always be a lag in how the industry can partner and help.
Productivity is another key challenge. Studies shown New Zealanders often work longer hours but are less productive than most of our OECD comparisons. In the transport sector, one of our key challenges is the complexity and length of time associated with decision making. While it’s important to take the time to make good decisions, we need to balance that with the impact on productivity.
The transport sector has some fundamental building blocks that need to be addressed for Aotearoa to be able to accelerate momentum. We encourage the incoming government to provide strong and decisive leadership around funding, resilient infrastructure, lowering carbon emissions and future communities so we have confidence in being able to deliver the infrastructure that’s needed.
One phrase I’ve been hearing recently has been the importance of “progress over perfection”. We need to acknowledge there’s often no perfect solution and be pragmatic at moving New Zealand forward.
Another area of focus for the incoming government will be to classify what is in the short, medium and long-term transport infrastructure pipeline. This way we will know what the immediate priorities are while preparing the industry for the future.
Consultancy firms are prepared to and want to appropriately invest in building resources, capability and innovation that benefit the government’s objectives for the future transport needs of Aotearoa.
We’re proud of our collaborative culture in the ways that we work and deliver in the transport infrastructure sector. We should also be proud of our ongoing learning to partner with mana whenua and iwi to deliver transport infrastructure. The government plays an important role through procurement to drive delivery outcomes that are unique to our country – the success for Aotearoa collectively is success for us.
Be inspired by global public and private collaboration
Ceinwen McNeil, Head of Strategy and Clients, Harrison Grierson
The challenges of our times, characterised by volatility, uncertainty, complexity and ambiguity, require an unparalleled level of dedication. We all know that politicians and public servants cannot achieve what is required to transform an economy like ours alone so that’s where the private sector and industry leaders come in.
Our contemporary insights driven by the pulse of market dynamics and global trends act as catalysts. We have a continuous evolution and relentless pursuit of excellence and the world's pace is quickening, urging industries and sectors to be agile, bold, and innovative.
We need to take inspiration from global frontrunners like Australia's Nightingale Developments, procurement incentives in innovation in Singapore and a synergetic approach between the construction sector and government which has led to transformative regulatory systems in the UK.
Harnessing global experiences, fused with local expertise, can make nations attractive destinations with the goal to create vibrant communities underpinned by vision, optimism and diversity of perspectives.
Achieving this vision mandates a policy of open engagement. Historically, economies that have witnessed profound transformations have one common thread: deep-rooted collaboration between public, private and not-for-profit sectors.
In a world where boundaries are increasingly blurred, such collaborations can light the way forward, ensuring democracy remains not just a right, but a lived experience.
I look forward to working with the incoming government, but also continuing to work with a multifaceted range of stakeholders across our networks to achieve amazing outcomes for Aotearoa.