8. Building and Construction Industry—Government ProcurementsANDREW BAYLY (National—Hunua) to the Minister for Building and ConstructionBuilding and Construction Industry—Government Procurements8. ANDREW BAYLY (National—Hunua) to the Minister for Building and Construction: What procedures if any will she put into place to ensure Government agencies adhere to MBIE's Government procurement guidelines for construction projects?Hon JENNY SALESA (Minister for Building and Construction): The Government rules of sourcing are undergoing a general review which will strengthen the provisions relating to construction contracts. As indicated yesterday I will be seeking Cabinet's agreement very soon to make it a requirement for Government agencies to demonstrate that they have applied the provisions set out in the Ministry of Business Innovation and Employment's (MBIE) procurement guidelines. These guidelines were developed together with and in consultation with employers and industry and they set the rules and they set best practice for construction procurement.Andrew Bayly: How is risk to be apportioned between Government agencies and their contracting counter-parties under MBIE's Government procurement guidelines?Hon JENNY SALESA: The Government procurement guidelines—at the moment they're not mandatory. What industry tells us is that too many of their members don't even utilise it or consider it as they are negotiating contracts. What I'm seeking my Cabinet colleagues to agree to is to ensure moving forward that we actually utilise these guidelines because they will assist us in ensuring that there is a reset—that as we move forward we actually utilise these guidelines. I'm also doing a piece of work that's called risk and liability reallocation. That is another piece of work that I'll be taking to Cabinet in the next few months. That would also assist us in ensuring that risk and liability are fairly allocated.Andrew Bayly: How is whole-of-life costing to be assessed under MBIE's Government procurement guidelines?Hon JENNY SALESA: As I said in my earlier answer I will be taking a Cabinet paper very soon. This is one of the things that Cabinet will look at and decide on the details of. Right now the way that contracting over the last 10—if not more—years has been focused is on lowest-cost pricing. What we're looking at doing is ensuring that we look overall at the whole-of-life of buildings of developments because at the end of the day it is us as taxpayers—when we actually have to maintain and fix a lot of these buildings it really does come back to us. So we're looking at a reset to ensure we look at the whole-of-life of our developments moving forward.Paul Eagle: Who will monitor that agencies have complied?Hon JENNY SALESA: Chief executives are responsible and accountable for giving effect to Government's expectations and the usual mechanisms for holding them to account will apply. This includes working with the Government procurement team at MBIE.Andrew Bayly: When she met with leaders of the construction industry earlier this week what changes did she promise to make to MBIE's Government procurement guidelines?Hon JENNY SALESA: I did not promise to make any changes to MBIE's procurement guidelines. As I said in my earlier answer what I said I would do is I would go with a paper to Cabinet to seek agreement from my Cabinet colleagues. This is not an issue just in my sector as Minister for Building and Construction; this is a whole-of-Government approach that we are taking. We're looking at all of the work that Government actually does. But can I say I'm only talking in terms of vertical construction of 18 percent. Government is only responsible for 18 percent of vertical construction sector work.Paul Eagle: Will this new approach to Government procurement apply to all construction projects in New Zealand?Hon JENNY SALESA: It is in all of our interests to have a strong vertical construction sector. Government is taking a lead for the 18 percent of construction projects that we have responsibility for. As I said I will be taking a Cabinet paper very soon to my colleagues to seek their agreement. This is a crucial issue that we must address and in terms of the meeting that we had with leaders from vertical construction we agreed that we would do this together in partnership.Andrew Bayly: Does she believe that costs for Government construction projects will increase as a result of enforcing whole-of-life costing? Hon JENNY SALESA: What I personally believe in terms of whether or not the cost of whole-of-life will be more expensive versus the lowest cost is a personal belief. What I can say though is—in terms of all of us as taxpayers—in terms of moving forward it is in all of our interests to ensure that the cost of building and maintenance of Government buildings is actually of good quality. In terms of lowest-cost procurement what we know—for instance let's look at Middlemore Hospital. Some of those buildings that have been built over at Middlemore Hospital—we know now it's going to cost us millions and millions of dollars. This is us as taxpayers that it comes back to. So we are looking at a different way of contracting whole-of-life moving forward.