Hon Dr NICK SMITH (National—Nelson)
: This issue of New Zealand’s building regulations is impacting incredibly negatively on ordinary families, builders, and everybody who is associated with the building industry. From the day that the Building Act 2004 was passed the National Party has said it is a bureaucratic monster.
Today in the House I tabled the 110 pages that the Rodney District Council requires for even the most minor and simple building consent that one could think of. I drew to the attention of the House that the Nelson City Council had put its building consent fees up by 50 percent last week, the Tasman District Council had put its fees up by 35 percent, and the Dunedin City Council had put its fees up by 67 percent. The reason that matters is that it is impacting directly on the price ordinary New Zealanders are trying to pay to get into a home. So when I looked through the Building Amendment Bill, I was hoping and praying that I would see that the Government had seen sense, had realised the problem it had created, and was trying to redress it; what I saw was the Government making it worse. What we have in this bill are more costs being imposed on local authorities and citizens.
Let us look at the first clause in this part, clause 92. I will read it to the Committee. It states that for the purpose of determining the calculation of the levy on building work, the principal Act must be read as if at all times the definition is what it is now. So the
Government is saying that for the last 4 years it has been overcharging and it now wants to justify that and make it lawful. I say to the Government that that is not good enough.
You see, the Prime Minister got up in the House at the beginning of the year and said in her statement to Parliament that even she acknowledges that we have created a mad building bureaucracy that is costing too much. I was hoping, a month later, that if we were debating a Building Amendment Bill, it might contain something about that bureaucracy. In fact, this bill does nothing of the sort. So I say to members opposite that if they really believe their rhetoric about home affordability, let us do something about it and let us pull back the mad bureaucracy that was created with the Building Act 2004.
Where are the provisions in this bill to put some constraint on building consent levies? There are none at all. In fact, since the Prime Minister spoke we have seen building consent fees go through the roof. The Reserve Bank this morning had to confirm the second-highest interest rates in the Western World—the second-highest interest rates. What did the Governor of the Reserve Bank identify as one of the biggest inflationary pressures? He identified the Government’s regulatory costs. And right here in the Building Act there are huge increases in the Government’s regulatory costs—in building consent fees. How can the Government tell the building industry—the building suppliers—not to put their fees up too much, when in this part of this bill it is driving up building consent fees? The Government is saying that it is going to put up its fees by 50 percent, but it will get tough on anybody else who puts costs up. Well, the Government is setting an awful precedent by driving up its fees on homes.
I draw the attention of the Committee to what the Commerce Committee found out about building consent fees adding $30,000 of unnecessary bureaucratic costs to the price of a house. That was according to the Registered Master Builders Federation. What does the Government say about that? Jill Pettis is silent now; she does not seem to give a hoot about housing affordability when it comes to daft legislation like this, which will drive up the costs for ordinary New Zealanders to own their own home. The rhetoric of members opposite is hollow. If they were serious about trying to address the issue of home affordability—an issue that is huge for New Zealanders—they would not be passing on these unnecessary additional costs, for which the councils have only two choices: slap them on the rates bill, or put them on to the cost of a building consent. I ask the Minister in the chair, Darren Hughes, what his view is on that. Does he want rates to go up, or does he want to slap more costs on to what first-home buyers have to pay for a house? The Minister in the chair does not give a hoot about the cost for the people of Horowhenua. I know that their building consent fees have gone up by 38 percent, I say to Mr Hughes. How can he stand up and say he defends home affordability, when his own Government’s legislation is driving up the cost of getting a building consent by 38 percent? That is the increase in costs in Mr Hughes’ area, and here he is backing legislation that will only drive those costs higher.
The select committee heard council after council pleading with the Government to see what it is doing to the costs of building regulation, and to look at the accreditation costs it is imposing on them. This bill will allow the bloated bureaucracy of the Department of Building and Housing to dump that cost on the councils, and the councils will have no choice but to dump that cost on either rates or building consent fees. I simply say to the Government that the huge increase in rates and the huge increase in building consent fees are actually part of the problem of home affordability. Until Ministers like Mr Darren Hughes, who has responsibility for this mess, or other members of the Government start to recognise the problem they have created, they are making an awful mess in the building industry.
Let me tell members what is happening. Only yesterday I had people from a building company in my office saying that their builders were so frustrated with the Building Act
that they are shooting through to Australia. It is not just because of the lack of income or because of this Government’s high tax policy; it is the bureaucratic laws, like the stupid Building Act, that are sending good tradespeople to Australia. That is a tragedy for New Zealand.
National says that the Building Amendment Bill will not do. It does absolutely nothing to address the issues that are facing thousands and thousands of people who work in that industry. It is doing absolutely nothing to address the issue of home affordability. Since the Building Act 2004 came into being, the result has been a huge increase in the cost of homes. Let me just share the figures from my own electorate. Between the 2001 census and the 2005 census, we saw the biggest drop in homeownership levels in this country since the first census in 1893 asked the question about homeownership. I will say that again. We saw in that census data that over those 5 years there was the biggest drop in homeownership since the 1890s. This bill is part of the problem. What the Government has done with its bureaucratic Department of Building and Housing and its Building Act 2004 is add to the costs, add to the bureaucracy, and add to the delays in building a home in New Zealand.
I just want members of the Government to take some responsibility for the mess they have created. They have accepted that it is a problem. The Prime Minister, in her own statement to Parliament, has said that the costs for building a house are unreasonable. That is what the Prime Minister has said. Well, whose fault is it? It is the Government’s fault because it passed the 2004 Building Act. Darren Hughes, the Minister in the chair, was one of those who voted for the Building Act 2004. My question for him is this: is there anything, any clause, in Part 2 that the Minister can say will address the issue the Prime Minister identified in her statement to Parliament? The truth is there is not one iota. In fact, it will make it worse. This bill is about driving up building costs, making homes unaffordable, and sending good members of the building industry across to Australia because they have had a gutsful of the bureaucracy. It will be a very different building amendment bill that National brings to this House to try to inject some common sense into this important industry.
PHIL HEATLEY (National—Whangarei)
: I would like to bring some clarity to the issue of where the costs fall when we are talking about the building levies, which have skyrocketed in recent years. They have skyrocketed to support the bureaucracy that has to underpin bills like this Building Amendment Bill that are passed in this Parliament. I would like to read to the House comments from the transcript of the Finance and Expenditure Committee meeting that dealt with the annual financial review of the Department of Building and Housing. This is from the chief executive: “The Building Act activities are funded from the building levies. They are not Crown-funded.” Heatley: “That’s right. So the levy payer essentially pays; it’s not the taxpayer?”. Chief executive: “That’s correct.” Heatley: “How are the levies collected again, roughly?”. Chief executive: “They are collected by the territorial authorities and they are part of the consenting costs.”
So the levies are part of the consenting process. And who pays for the consent? The consent is ultimately paid by the first-home buyer, or in this case the first-home person who is contracting the building work, the building of his or her first home. This is just another bill for those people. So when we talk in Part 2 about the validation in respect of levies on the estimated value of building work, we are talking about the first-home builder, if you like, paying, and it is just another cost on top of all the other costs to do with consenting, particularly the Resource Management Act consent costs, that ultimately the first-home buyer has to foot the bill for.
At that select committee meeting we were astonished to discover the wastage of the building levies that are to be validated here in Part 2. I will give the committee an
example of that. It appears that the Department of Building and Housing employed Unisys to develop a computer system that was to record the registration or licensing of builders across this country. Unisys was supposed to develop, for $1.2 million, a system that would record the name, date of birth, and contact details of licensed builders, as well as the registration number, the name of the company, the status and history of the person’s licence, and whether the licence had ever been suspended. Unisys ended up having to set aside all that work—and I will tell members soon how much that work was worth—but the levy payer had paid for all of it. That work is now in the dustbin; Unisys was paid to go away. How much was it paid? It was paid $653,000—$653,000 of building levy costs were thrown at Unisys, and Unisys, in turn, put its work in the dustbin.
But that is not all. Let us wait; there is more! We discovered at that select committee that not only was that work put in the dustbin and $653,000 thrown at Unisys to make it go away but apparently there were more consultants’ costs, advisers’ costs, and project management costs that went along with that discarded project. Believe it or not, we heard from the XACTA Group, which supplied contract staff to assist with documentation and was paid $193,000. Its work is now in the dustbin. AMR Consulting supplied project management and contract staff to assist with the creation of that computer system, and it was paid $127,000 of levy payers’ money. Kensington Swan supplied legal services on options to end the contract with Unisys. So Kensington Swan came in to help to end the contract with Unisys and was paid $54,000 of levy payers’ money. All that added up, believe it or not, to another $646,000.
So on one side Unisys chucked its work on a computer system for the registration of builders in the bin and was paid $653,000 to make it go away, and on the other side all the consultants who supplied support work and legal services, and the suppliers of contract staff and project management were collectively paid $646,000 for the work that eventually ended up in the dustbin.
John Carter: And where did that money come from?
PHIL HEATLEY: Wait a minute—but wait; wait a minute. If we add up both totals, we get a grand sum of over $1.2 million of levy payers’ funds that was chucked in the rubbish tin—
John Carter: Gone in this bin.
PHIL HEATLEY: It has gone in there. There were $1.2 million of levy payers’ funds put in the bin.
We have described where those levy payers’ funds come from. Essentially, they come through the consenting process, and the first-home buyer pays them. First-home buyers in this country have paid $1.2 million for a computer system to register builders—to license builders—but none of it will be used. The Department of Building and Housing, which started with a clean sheet, will go through the process all over again. Yet the Labour Government and the Minister in the chair, the Hon Darren Hughes, are asking this House of Representatives, 121 MPs, to support them in this type of wastage—to support them in billing first-home buyers for $1.2 million that is going nowhere, that is being thrown away—and to support them in more regulation and legislation that actually snows those builders and first-home buyers with more documentation, more regulatory hoops, more plans they have to submit to councils, more forms they have to fill in, and more consultants they have to engage. And on it goes.
Why should this House of Representatives support a Labour Government that has introduced a Building Act that has been amended now—how many times? How many times did my colleague the Hon Dr Nick Smith say? How many times has this legislation been amended now?
Hon Dr Nick Smith: It’s No. 4.
PHIL HEATLEY: No. 4! The Government has introduced legislation to this House that has needed to be amended four times. Why should this House of Representatives support that, particularly when members see the wastage, and when we see builders rocking up to our offices right across the country to complain about the amount of regulation and red tape they have to deal with? And councils themselves are complaining now. In fact, we had the mayor of the Far North District Council go to see the building Minister. We had the mayor of Whangarei District Council go to the building Minister, and the mayors said themselves that councils have just had enough.
Interestingly, councils cannot even employ enough planners or building inspectors to work through the piles of paper that they need to. They cannot do that, and they are saying that their bureaucracies are growing and they have had enough. Yet this Labour Government has the nerve to come to us cap in hand for the fourth time to fix up its Building Act, when we have, lining up behind us, builders, first-home buyers, councils, and even mayors who tell us not to do this. They say they have had enough—that they want there to be no more paper from Wellington. The councils say they want to streamline themselves and cut the red tape, because they no longer want to pass on the costs to first-home buyers. They see the problem and ask us to please not support this legislation. Is it any wonder that mayors and councils up and down the country are looking to the National Party for solutions and are hearing the right answers?
I am concerned that the Minister in the chair has not stood to address any of the problems that we have put to him today, or last night for that matter, in the debating chamber. Do Government members not care about prospective first home buyers being locked out of buying their first home? Do they not care that homeownership rates are the lowest they have been in this country for 50 years? Do they not care that mortgage interest rates are now going through the roof? Of course, rents are rising as well. We will not support this legislation. Why should we? It is the fourth time.
