Hansard and Journals

Hansard (debates)

Building Amendment Bill (No 4) — First Reading

[Sitting date: 01 May 2012. Volume:679;Page:1822. Text is incorporated into the Bound Volume.]

Building Amendment Bill (No 4)

First Reading

  • Debate resumed from 28 March.

RAYMOND HUO (Labour) : My last contribution on 28 March has brought me to the fourth issue concerning New Zealand standards, but I am conscious of the time constraint so I would like to touch upon two important issues raised by Mr John Green. The first is the express exclusion of subcontracts in new section 362G(3)(b) in clause 44 of the Building Amendment Bill (No 4). Like Mr Green, I too find it very difficult to understand why subcontracts have been excluded, when one of the most significant objectives of the Building Act review is to improve consumer protection measures. The proposed caveat is completely contrary to the stated objective. It serves to vastly reduce sector accountability and consumer protection measures.

The second is the exclusion of diminution of value as a remedy for default in new section 362P in clause 44. Diminution of value measures the value of something before and after the causative act or omission creating the lost value, in order to calculate compensatory damages. New section 362P needs to be redrafted to account for this possibility in certain circumstances, and the word “completion” in the context of the building work needs to be better defined, to avoid argument and ambiguity.

I thank Mr John Green and look forward to the development of the Building Amendment Bill (No 4). Thank you.

NICKY WAGNER (National—Christchurch Central) : I rise to support this Building Amendment Bill (No 4) at its first reading. It was back in 2009 that the National Government undertook the Building Act review, and that review was driven by the need to improve building quality, to simplify the procedures in construction, to contain costs, and to remove delays in building consent processes. The review confirmed that change was needed, so that builders, contractors, and tradespeople could take full responsibility for the quality of their work, and to make sure that we had professional standards and outcomes. This bill is the second of two bills introduced to implement those Building Act review policy decisions. The Building Amendment Act (No 3) has now passed into law, and we are introducing No. 4 today. Today’s bill introduces the most comprehensive consumer protection measures. For example, it requires that we have written contracts for most residential building work, and ensures that contractors must fix any defect in a building that is reported within 12 months. It also provides processes for the enforcement of warranties. The idea of these measures is to give the consumers much more protection from poor-quality work, and to therefore increase their peace of mind during and after a building project.

The bill also seeks to clarify any exemptions from building consent requirements, and it does this by rewriting and reformatting schedule 1 of the Act. It is of particular interest to me as the MP for Christchurch Central that the bill also introduces a new power for territorial authorities to deal with buildings that are at risk because they are close to other, dangerous buildings. This is an issue that has come out of the Canterbury earthquakes, and it will be really good to have these procedures clarified in legislation. The bill increases the penalties of the offence of doing building work without a consent. The maximum penalty is now $200,000, which is up 100 percent from the previous $100,000, so it makes it a very serious offence indeed.

The bill also makes significant and well-considered changes to the legislation around dams, and considering the amount of work that is going into that area, it is a good thing to see that upgraded.

The building and construction industry is significant in New Zealand. It currently employs about 170,000 people, which means about one in 12 New Zealanders are involved in that industry, but when we think of the future of the $20 billion to $30 billion rebuild that is going to be focused on Christchurch and Canterbury, that number of people involved in this industry can only increase.

So I welcome this bill. I think we must do everything to make sure that we build quality buildings—quality industrial buildings, commercial buildings, and residential buildings—but also at the best possible cost. The 2009 Building Act review developed policies to improve both the quality of building and its cost-effectiveness, and I think the people of New Zealand really need to have confidence in the construction sector and the work it does. This No. 4 bill, I think, will deliver on those policies, so I commend the bill to the House.

PHIL TWYFORD (Labour—Te Atatū) : Labour supports the Building Amendment Bill (No 4) going to the select committee. It is, for the folks at home, the latest instalment in a long-running effort to improve the prospect and the performance of the building and construction industry. Ground zero for this story is the leaky homes catastrophe, which began in the early 1990s, and 14 years later some tens of thousands of New Zealanders had had their lives affected, and some $22 billion worth of homes had been constructed with weathertightness problems. It was a disaster born of deregulation, poor regulation, contracting out building inspections, inadequate product certification—which allowed the use of untreated timber to be used in New Zealand homes—and the abolition of apprenticeships, among other causes.

Thousands and thousands of New Zealanders paid the price for what was a terrible system failure in our building and construction industry. Since 2004, when the fifth Labour Government passed the new Building Act, very few leaky homes have been built, the experts tell us. Since then, there has been something of a cross-party consensus to further fine-tune the regulation of the building and construction industry, to improve the quality and durability of New Zealand homes, to build right first time, to protect the consumer, and to get builders, architects, designers, and other building professionals to be accountable for their work.

The 2004 Building Act reinstalled proper regulation, and since then there has been a lot of work to try to fine-tune building regulation, to lighten the load of compliance, while continually trying to improve quality and accountability. I pay tribute to the work of former Ministers Clayton Cosgrove and Shane Jones, and also to the work of the current Minister for Building and Construction, Maurice Williamson, who has continued with this work.

As I said, there have been, we are advised, very few leaky homes constructed since 2004, but a number of reviews in the intervening period have underlined heavy costs, which are ultimately borne by New Zealand families, who are paying the bill for new homes that are being built, with complexity weighing down the whole process, and long delays in the issuing of building consents.

The main thing on the menu with this bill is a new set of requirements for contracts for residential building. It requires pre-contract information that says a builder must not enter into a residential building contract unless that person has first provided to the client a whole lot of prescribed information. What else does it do? It provides that a residential building contract over a certain price must be set out according to a certain format and methodology, and contain all sorts of particular information.

The other key bit of it is around implied warranties. The bill sets out in some detail a whole lot of implied warranties that will follow as a result of these contracts being put into place—for example, that the building work will be carried out in a proper and competent manner, that all materials to be supplied for use in the building work will be suitable for the purpose, that the building work will be carried out in accordance with all the laws and legal requirements, and so on. There is nothing wrong with this idea. I do not think anybody on this side of the House will dispute the basic intention of this bill, which is to bring clarity and some accountability to residential building contracts.

There are a number of other bits and bobs in the bill. One of them that is probably worth mentioning in this debate is the question of dams. Lord knows how this particular issue got shoehorned into this particular bill, but it is here, nevertheless, and what the bill does is try to focus the requirement for regional councils and their monitoring of dams. It changes the threshold so that, I think, 40 percent fewer dams will be required to be classified for a certain level of monitoring. That will save something like $1.1 million in compliance costs for dam owners. Let us hope that the officials have got the numbers right. Let us hope that this example of risk-based consenting and risk-based management is appropriate.

The main thing I want to say is that even though there is a high level of cross-party consensus for the ongoing process of the Building Act review—and we will be voting to send this bill to a select committee—I do want to note that in the face of the huge challenges that are before the building and construction industry, this bill, like its predecessor, the Building Amendment Bill (No 3), is a masterpiece of incrementalism. To say that it is a modest effort is an understatement.

The challenges facing the building and construction industry are massive. It suffers year in, year out, from a chronic skills deficit that has not been helped by the under-investment by this Government in apprenticeships in the industry. The industry is buffeted by the boom-and-bust cycle, possibly more than any other industry in our economy. Every time the cycle goes down, skilled workers head across the Tasman, and we have seen that time and time again.

In our country’s largest city, the building and construction industry is probably the most glaring example of market failure that we see in the economy today. In Auckland every year we are building more than 10,000 houses fewer than we should be just to keep up with population growth. So the market is failing utterly to meet demand in Auckland, and the consequences are appalling. Year on year, that deficit compounds and the scarcity drives up prices, and as a result we have some of the most unaffordable housing in the Western World.

The building and construction industry is plagued by low productivity. We rank near the bottom of the OECD for productivity of our building and construction industry, and as a result we have very expensive homes—unaffordable homes. And, finally, we are killing people in this country on building sites at more than twice the rate that people are dying at in workplace accidents on building sites in Australia. So something is terribly wrong in the building and construction industry, and in the face of those challenges, what we see in this bill and, I believe, in the bill that came before it, the No. 3 bill, is tinkering by this Government.

Instead of tackling the real issue about accountability by bringing in proportional liability, what does this Government do? It legislates the definition of roles among contractors, clients, designers, builders, and architects. Instead of protecting consumers through a mandatory home warranty scheme backed by insurance, what does this Government do? It writes into a bill screeds and screeds of so-called implied warranties.

Instead of trying to smooth out the boom-and-bust cycle, the Government makes no changes to its procurement policies, and there is no programme of building State houses. But what does it do? It basically gives up in the face of this challenge and brings in overseas workers. This bill is tinkering in the face of massive challenges faced by the industry, but we will support it going to the select committee and see what comes of it.

HOLLY WALKER (Green) : I am pleased to take a call on behalf of the Green Party on this Building Amendment Bill (No 4). I spoke before the adjournment in the Committee stage of the Building Amendment Bill (No 3), which preceded this bill and which has subsequently passed its third reading in this House. That bill, as we have heard, and this one form part of the Government’s response to the Building Act review, which was completed in 2009. Although the Green Party supported the previous bill at its first reading, we were concerned when we heard the submissions at the select committee stage at the piecemeal approach that the Government had taken. And we have just heard from Mr Twyford that the Government is taking a very incremental and tinkering approach to the Building Act review. Those submissions on the previous bill highlighted the shortcomings of that approach. Especially because the previous bill lacked reference to consumer protections, we in the Green Party found ourselves unable to support the previous bill at its final stage. I am therefore pleased to see that this bill, the Building Amendment Bill (No 4), does address the very important issue of consumer protection in the building industry, and the Green Party is therefore pleased to support the bill at its first reading tonight.

Before I talk a little bit more about the provisions in this bill, I want to provide some of the really important context in terms of why we must ensure that the regulatory environment gets it right for building and housing in New Zealand. We have a housing crisis in New Zealand, and it is a crisis both of housing affordability and of housing availability. Nowhere is that more apparent than in Christchurch, where demand for rental housing is out of control. We have seen people needing short-term rentals while they wait for their own homes to be repaired, we have seen people needing long-term rentals if they have had to relocate out of a damaged rental property, we have seen homeowners selling investment properties or moving back into their rental properties and displacing tenants, and we have seen an influx of tradespeople putting extra demands on the rental market in Christchurch. Many State, council, and community houses are damaged and unavailable at the present time, and in that context we need to be thinking about what the building regulations are and what the regulatory environment is going to be as we repair and rebuild Christchurch.

So far the Government has been satisfied in Christchurch to more or less let the market find the solution, but the market will not favour those on the lowest incomes, those in the most need—beneficiaries, sole parents, and people with disabilities. There is a real crisis brewing. There has been some movement, we think, but not enough.

As well as short-term intervention in Christchurch to deal with the housing crisis that we are seeing there and temporary assistance from the Government, we also need, longer term, a better regulatory environment for building and construction, because there has been a similar crisis brewing in Auckland. We heard from the previous speaker about market failure in the building industry in Auckland. The result is that people are finding it extremely difficult to find a home and extremely difficult to afford to either rent or own their own home.

This bill is important because it sets the regulatory context in which the construction and the rebuild of Christchurch will take place, and it puts in place, as we have heard, very important consumer protections, which the Green Party supports. We have heard already in the debate so far that the bill will introduce mandatory written consents for work valued over a prescribed amount. It will introduce mandatory disclosure of certain information by building contractors. It creates new offences for breaches of these requirements. It adds new powers for territorial authorities to deal with buildings that are at risk because they are near or adjacent to dangerous buildings. It increases the maximum penalty for doing building work without a building consent. It clarifies the powers of the Chief Executive of the Department of Building and Housing to review the performance of territorial authorities, regional authorities, and building consent authorities, and, as we have heard, in a rather unrelated clause it makes some amendments to the dam safety scheme, including giving regional authorities the power to investigate and refer dams for classification.

We think that the consumer protections in this bill, particularly around mandatory written contracts for building work over a prescribed amount and mandatory disclosure of certain information by building contractors, are very important. The reason that they are important is because of the vacuum of regulation in the building industry that we have had previously, and that was born out of the deregulation of the industry by subsequent Labour and National Governments in the 1980s and 1990s. As we have heard, it was this vacuum of regulation, this period of deregulation, that allowed for the leaky homes crisis to occur, and we have seen the terrible consequences for homeowners when poor regulation and poor building and construction standards allowed that to take place. So we think, in that context, that these consumer protections absolutely need to be reinstated because what we saw with the leaky homes crisis is that many homeowners were left with very inadequate protections, and when everything went pear-shaped and when their homes were found to be substandard they did not have adequate protections and we have had to legislate to make up for that fact. So in that context it is really important that we get it right when things go wrong for consumers who have taken the plunge to construct or build their own homes. We support the protections in this bill.

However, the Green Party wishes to emphasise that better warranties and better consumer protections, although they are important, are only the ambulance at the bottom of the cliff. When things go bad—God forbid—and a homeowner finds that something drastically has gone wrong with their property and it is no longer habitable, these protections are great for that scenario. But we need also to be thinking about how to regulate to ensure that buildings are constructed to a higher standard before things go wrong and before we need that ambulance at the bottom of the cliff of greater consumer protections. We have not been convinced by the Government’s approach to the Building Act review, in the form of the previous Building Amendment Bill and this bill, that the Government’s approach to the reforms is going to achieve an improved regulatory environment that means it is less likely that buildings will be constructed to poor standards to begin with.

We are looking forward to the contributions in the Local Government and Environment Committee on this bill, but I think we would echo the concerns of the previous speaker that taking such an incremental and tinkering approach when what really is required is a more fundamental review of the building regulation environment in this country means we are unlikely to make the really fundamental changes needed to ensure that we do not have to rely on these consumer protections, although it is important that they are in place when things go wrong.

I do want to thank and acknowledge the Minister for Building and Construction, Maurice Williamson, for the way he has engaged with parties across this House on this legislation and I do look forward to hearing the contributions at the select committee, and particularly hearing from consumers about how the consumer protections will affect them and whether they are adequate to meet the needs of building consumers. The Green Party is pleased to support this bill at first reading, and we look forward to engaging further in the debate.

JACQUI DEAN (National—Waitaki) : The Building Amendment Bill (No 4) represents a fundamental shift in the building industry in New Zealand. It makes you reflect that building a home—or any kind of building, but particularly a home—for anyone is a big undertaking. It might be a person’s most significant asset that they ever have in their life. It is the place where you have your family, where maybe your kids grow up, or where you retire to—whatever. It is a big deal. It would be good to know that that building has been constructed right the first time, and that if there are going to be any issues with the construction of that building, then the consumer has recourse back to the builder who constructed that home.

It is interesting, is it not, watching the television advertisements—and there are a number of ads on at the moment—for home builders. What they are doing in their advertisements is they are signalling that they understand the content of this bill, in that they are now beginning to offer guarantees. They are saying: “We will build on time, at the price we quoted.” The language has subtly shifted, and I think what that shows is that the building industry is picking up what is coming through Parliament here—and, I dare say, welcoming it.

What this bill does is that it will have the happy consequence for the homeowner and the home builder of reducing compliance costs. It will also reduce complexity for the homeowner and the home builder and also delays in the process by reducing reliance on the building consent authorities from the local authority and putting the responsibility on to the builder and on to the building firm. So what will happen is that the person building your home will become much more accountable to the homeowner because they will have to disclose certain things to you when you are contemplating building a house. There will be information that they have to tell you about their company, who it is who is working for them, who is gong to be working on the construction site, and a bit about their track record. Consumers are also going to get a written contract from their building company that says—and which I have just outlined is being picked up by the building industry already—that there will be a written contract for most residential building work.

There will be specific methods for enforcing warranties, and so consumers will know that if something does go wrong, they will have recourse. In fact, building contractors will be expected to fix any defects in their work that are reported within 12 months of the completion of the construction. So you have lived in your home for a year, you have gone through the seasons, and if something is defective and you make a notification of it within 12 months, then you can expect to get a remedy out of that.

Of course, there will be penalties for failing to comply with building consent requirements, and those penalties are doubling. They are going from $100,000 to $200,000. We have got a busy time ahead of us in places like Auckland but also in Christchurch in the construction industry, and within the next few years, particularly in Christchurch, there is going to be a huge number of new builds going on. So rather than loading up the local authority with all those compliance requirements, this bill is enabling the building industry itself to take charge, if you like, of the situation and provide a good service to the people whom they are building new homes for.

You know, it is like I said at the beginning of my contribution: building a home is a big deal. It can be the biggest asset that many people have in their life, and they want it done right. And if it is not done right, then you want to have recourse to have it put right. So this bill carries out those functions.

Of course, this bill and also the Building Amendment Act of 2012 are the result of quite a comprehensive review of the Building Act 2004, which was carried out in the first term of this Government in 2009 and 2010. What that review found was that there was too much of a reliance on your local authority, so responsibility was not so much on the builder but on the local council. That was identified as a result of that review. These changes will enforce in law, once the bill has been through the Local Government and Environment Committee and we have heard submissions on it, what is already best practice in the industry. This is a good bill, I look forward to its consideration in the select committee, and I commend the bill to the House.

ANDREW WILLIAMS (NZ First) : I rise on behalf of New Zealand First as the building and construction spokesperson to speak on the Building Amendment Bill (No 4). New Zealand First has said previously in this House that we will support good policy, but we will oppose bad policy. In this case we are opposing this bill because we believe it contains a certain amount of bad policy that is not in the best interests of New Zealand or New Zealanders.

We seem to not learn by our mistakes of the past and we seem to go full circle and repeat our mistakes. We went through the whole episode of the leaky homes saga in the 1990s and through the 2000s, which has cost this country in excess of $20 billion. As a result of that, this country now has a huge debt hanging over its head that can only get larger, not smaller, and in fact more and more leaky buildings are being found by the day. That does not just mean leaky homes; that includes leaky schools, leaky hospitals, leaky commercial buildings, leaky all sorts of buildings, and leaky buildings of any nature in this country.

What we are basically doing in this bill is now opening the books even wider to allow self-regulation in the sense of the building industry to a great extent. It is basically taking the regulatory side away from the local authorities and the councils, who would, at this point, be overseeing much of this work, and giving it back to the industry to say: “Well, you self-regulate. Here are the rules, this is what you will do, and you must comply with it.” As we all know, rules are there to be broken and that is exactly what has occurred throughout the leaky homes situation, and that is what will occur again through this Building Amendment Bill (No 4). I am sad to say that probably in 10 years’ time we will be looking back on this and there will be amendments required to this bill—significant amendments to this bill—because people will say: “How did we ever allow much of that to go through? Why did we go back to the wild west in New Zealand? Why did we turn New Zealand back into a situation where basically virtually anything could go up without too much oversight by the local authorities?”.

I was a hearing commissioner for 9 years in local government and I sat on many, many, many building consent and resource consent applications. When you have sat as a commissioner and you have heard the applications before you, you do understand why it is necessary to have a regulatory authority that is, at least, having an oversight to much of the building process that is going on. For instance, and I raise the issue of heritage, nowhere in this document do we hear the mention of the word “heritage”, yet much of this work that will be allowed to occur without any consent from any authority could have a great effect on the heritage buildings within this country. For instance, it says here in clause 7 of Part 1 of the schedule: “Repair or replacement of outbuilding—The repair or replacement of all or part of an outbuilding” is permitted. So basically an outbuilding could be there that might be 100 years old, it might be 120 years old, and somebody without a permit can literally just replace it as long as it is within the same footprint, and build a new building on the same footprint. To my mind we could see decimation of heritage buildings throughout New Zealand, based on that clause alone.

It also says here under clause 10 of the schedule that interior alterations to existing non-residential buildings will be a permitted activity, so in other words shops, offices, libraries, factories, warehouses, churches, or schools can be retrofitted internally without a consent. Well, again, we have wonderful buildings throughout New Zealand, heritage buildings, but basically they could be stripped out, gutted, completely removed on the inside and replaced, with no consent from an authority. So again we could have decimation of our heritage buildings. This also allows for things like carports to be put up without a permit. Again, can you imagine what sorts of structures could go up in the form of carports around the country. It also allows for retaining walls to be built as long as they do not exceed 1.5 metres depth in the ground. Well, a lot of retaining walls are right on boundaries with other properties, affecting neighbours, and if there is no consent given for a particular retaining wall you could have a huge impact if it does not have the required drainage put in it, if it does not have the right footings, and if it is not done to a certain standard. But if it is permitted to be done up to 1.5 metres, then this could have a huge impact on property owners and neighbours.

This bill allows for fences and hoardings to be put up up to 2.5 metres in height. Well, most fences in most cities are 1.8 metres and they have discretion usually up to 2 metres in height for most residential areas. This will allow fences to be put up up to 2.5 metres in height. Again this will allow, basically, large fences to go up all over the place without any authority or consent at all. If you carry on through, it allows signs to go up that do not exceed 3 metres in height. Again, large hoardings can be put up. At the moment authorities have control over signage throughout the country and can determine where signs go, how high they are, and that sort of thing. This basically allows for signs to go up that do not exceed 6 square metres and do not go higher than 3 metres. Again, we will have outright large-scale erection of signage around this country with no authority being able to intervene and stop it.

I look through this and I think there are not enough safeguards in here. I have a great impression from working with building inspectors and working with local councils and authorities on the North Shore and in the Greater Auckland area, and I have been very impressed with the work that the building inspection people do. They are the watchdogs for building. They are the ones who go out on site and make sure things are done to a certain standard. They have been the ones, unfortunately, who have been put in the invidious situation of having to approve buildings under the building code that allowed for the kiln-dried timber and the monolithic cladding that ended up in the leaky homes, but they were inspecting buildings to the building code that was passed by the National Government back in the 1990s. So they were approving what was an approved building code. However, in retrospect, many of those same building inspectors would say that the same buildings should never have been allowed to go up in the first place, and the building code should never have been amended back in the 1990s to allow those sorts of buildings to be constructed.

What we are seeing here is basically again a dilution of the building standards. What we are seeing is an opportunity for wholesale erection of all sorts of structures. For instance, pergolas—it will be a permitted activity to put up a pergola anywhere you like. And, again, pergolas do fall down. They do topple. I have personal family experience of a person who has come off a pergola because it was improperly constructed. This allows for tents and marquees to be put up any time you like, as long as they do not exceed 100 square metres in floor area. Again, sometimes in this situation you do have to have somebody controlling it because, again, these structures can be built on all sorts of land situations—slopes, hills, and all sorts of parks and recreational areas that are not really suited.

This is, again, basically an attack by the National Government on local government. It is very clear that National does not like local government. They see this as another way of diluting local government. This is basically kneecapping the whole process of local government in terms of its regulatory role in overseeing building inspections. New Zealand First certainly supports the reduction in fees and the reduction in costs in terms of the building sector. We certainly support the reduction in the cost of inspecting the works and finding cost savings, but we have great concerns that through this, and in years to come, what we will see is a lot of shonky building going on. We will see a lot of what we would call replacement of buildings, and replacement of structures, when in actual fact they will be new structures. We see this as potentially affecting significant heritage buildings throughout New Zealand because people will simply turn a blind eye to what is replaced in an existing situation. So New Zealand First will not be supporting this bill and we will be opposing it through this reading.

NIKKI KAYE (National—Auckland Central) : I am pleased to speak on the Building Amendment Bill (No 4). I want to start by acknowledging the Minister for Building and Construction, the Hon Maurice Williamson, and I also acknowledge Nicky Wagner, the chair of our Local Government and Environment Committee. I think it is really important to acknowledge that we have got support across the House from Labour and the Green Party. I do recognise Andrew Williams and the contribution he has made. I think it is important, as well, to take a step back and look at the history in this area. We know that there was significant reform in 2004, and I want to acknowledge Clayton Cosgrove and Shane Jones for the contributions that they made.

But I do want to address an issue that was raised by Phil Twyford previously in the debate. He said the leaky homes crisis was ground zero. He made a number of comments about the 1990s, but do you know what he never mentioned? He never mentioned that the last Labour Government actually denied that there was a leaky homes crisis. I was a researcher in this building at the time and I watched for a significant period of time when the last Labour Government actually would not even acknowledge that it was an issue. I do want to say that subsequently there was reform in 2004, but I do want to correct that piece of history because I think it is important for this debate.

Hon Lianne Dalziel: We set up the Weathertight Homes Resolution Service. Is that not acknowledging the problem?

NIKKI KAYE: The member opposite is making comments about the Weathertight Homes Resolution Service. What that member does not realise is that I actually was a researcher who helped draft a piece of legislation that went to Michael Cullen and that formed the basis of the Weathertight Homes Resolution Service. So she may not be aware of that.

Secondly, I just want to talk as well about the contribution to the sector that the construction industry does make. It is worth $20 billion, 170,000 people are employed in the construction sector, and it is worth 5 percent of our GDP. So we need to acknowledge this evening how important this sector is to New Zealand.

I also want to touch on some comments that have been made about the Canterbury rebuild and housing affordability in Auckland. We know that it is very important to have this legislation through the House, but also the reform around the Resource Management Act, because we have several significant issues in New Zealand. Part of the issue is around what is the best regulatory environment. The other issue is around the Resource Management Act and whether we have got our consenting provisions right. But the key thing I want to mention, and it is actually mentioned in the regulatory impact statement, is that this has been driven by a number of things that did not happen in 2004. I want to read this statement from the regulatory impact statement: “While consumer support was emphasised in the Building Act 2004, through a purpose statement and implied warranties, no specific measures were included to assist consumers to understand their rights, enforce their rights, or hold practitioners to account other than through the disputes tribunal … and the courts.” So I think that is a very important point, because all of the provisions within this legislation make a number of changes that are targeted to ensure that consumers can enforce their rights, and I want to mention some of those changes.

We are obviously focusing on three things. The first thing is there is going to be a bit of a stick there. So we are going to increase the penalties from $100,000 to $200,000 for failing to comply with building consent requirements. The second thing we are going to do is to ensure that there are written contracts for residential work and that is about, again, protecting the consumer. The third thing we are going to focus on is to ensure that building contractors are more accountable by requiring disclosure of information. That will include information about their company and the people who carry out work and their track record. I think that is a really important point, because we need to ensure that there is greater transparency around those practitioners who are out there.

I am pleased to be supporting this legislation. I think the key and the major change of this legislation is that homeowners are going to be able to better identify the difference between a professional and someone who may be considered as not a professional in this industry. I think we need to recognise the huge contribution that the construction industry makes to New Zealand—5 percent of our GDP. I think we also need to reflect on our history and we need to be honest about that history: the contribution that has been made by the last Labour Government, but also the fact that the reason we are here is that there was not the ability in the 2004 reform to ensure that consumers were adequately protected. That is why I am glad that there is support across the House to be able to address this, and that the bill will go to the Local Government and Environment Committee. I am very pleased to support this legislation in the House. Thank you.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I thought that was an extraordinary contribution, because the member Nikki Kaye stood to describe what the Building Amendment Bill (No 4) was apparently designed to address, and this is what the member quoted from the regulatory impact statement: “While consumer support was emphasised in the Building Act 2004, through a purpose statement and implied warranties, no specific measures were included to assist consumers to understand their rights, enforce their rights, or hold practitioners to account other than through the disputes tribunal (for small claims) and the courts.” And, actually, nothing that this bill does addresses that issue. There were three things that she said were designed to address the flaws in the original legislation, which was a major reform in 2004 taking over from the 1991 building legislation, which I think National passed in that year, obviously with the contribution of a previous Labour Government having done some of the groundwork. This is not something that I would reflect on with any sort of particular goodwill, actually, because I think we both made terrible mistakes, and, as a result, people have paid for them with their lives and with their livelihoods. So I do not think anyone has anything to reflect on with any particular joy in that regard.

But she talked about penalties going up for building consent issues. Well, that does not improve things for consumers at all. She talked about better information for consumers. Well, that does not actually protect them when the company has got no money when it actually collapses. And I would like to refer her to the particular section of the regulatory impact statement that she has avoided reading to the House: “Officials have also considered arguments for shifting to proportionate liability, which would be a major change to the liability framework. While not without benefit, it would also have drawbacks including likely requiring mandatory surety”.

And that is what this Government cannot stand. It cannot stand anything that provides real protection. It is all smoke and mirrors. We are going to let this bill go to a select committee, but I am saying that we are going to be certainly calling on people—not just consumers, but people in the building industry themselves—to have a real good look at this legislation and ask themselves the question whether it provides protection for anyone. I can speak as somebody from Christchurch who has had the recent experience—not so pleasant experience—of having lived through a series of earthquakes that have caused great damage to our city. I am deeply concerned that the Minister who is responsible for this bill, Maurice Williamson, heads a department that is about to be folded into this new big—

Darien Fenton: MoBIE

Hon LIANNE DALZIEL: MoBIE—what does it stand for? The Ministry of Business, Innovation and Employment. I want the next speaker from the National Government to answer this question: why would you roll in the two departments that are the subject of royal commissions of inquiry before they have reported and before they have made a single recommendation to the Government? Why would you fold them into a single department before that? Well, I have to say that the commission of inquiry into Pike River obviously relates to the Department of Labour practices, and that is why it is so vital that this concept is put on hold in the meantime.

But let me also say that the royal commission into the Canterbury earthquakes and the building failures that occurred there is going to produce some extremely useful information, not just to this current Government, but to Governments in the long term. It is the most resourceful of commissions of inquiry because it has actually managed to bring together in one resource a range of informants and information, people who have made submissions, and people who have been asked to make submissions, and we are gathering the best possible information in relation to building safety that this country will ever have the opportunity to have. And if we are to actually respect those who lost their lives in that earthquake, then to learn the lessons from what that teaches us is the most important thing that we can do. I urge the House to think on this very carefully.

The reason why Labour, unlike New Zealand First, is supporting this bill to select committee is that we want to show good faith to a Minister who has shown good faith to us. He briefed us on this legislation; the Green Party mentioned that he had done so. He has worked, I think, in a very open way with members of this House in ways that perhaps some of his colleagues do not always see as important. But when you are dealing with buildings, which are not just around the safety issue, but people’s lifetime savings are committed to their family homes, you know these issues are important and it is important to engage with all political parties. So that is why we are going to let the bill go to a select committee. But I have to warn this House that unless there are substantial changes to the detail within this legislation, then our support for it will not carry on beyond its report back to this House.

But I believe that we actually have a Minister who has taken the issues of building and construction very seriously and does want to see significant changes in this area of the legal framework, which is so important to our daily lives. We are willing to work with him to get the changes to this legislation that will make it work.

I want to say that the legislation itself does focus very much on residential homes, but we still have major problems with buildings in this city, in Christchurch, and in Auckland that have been built to a standard that is not sufficient to stand up to the seismic activity that—we now know—parts of our country are exposed to. There are buildings in this city where I will not go, and the reason is that I believe they are not safe. I believe it is important that we understand all of these issues very carefully, so that we are able to provide the best possible support to those in the industry who require that support, and also to enable them to speak out without fear of having their reputations destroyed, as it were, by those who want to avoid fronting up to the issues they are raising.

So I think it is very important that we take this bill very, very seriously. But it is not good enough. I am actually quite concerned about the issues that New Zealand First has raised. Members have been talking about self-regulation, but in the environment that we have been in, in respect of Pike River and the collapses in Christchurch, I think one should be very, very careful about going down that track.

Although we are not talking about self-regulation, it does not have to be expensive. It does not have to be difficult. It does not have to be problematic. It actually can be done in a way that is commensurate with the degree of risk that is faced, and it can be risk-based, and it can be proportionate in that regard. We have a real difficulty in Christchurch at the moment. We have detailed engineering evaluations being carried out on buildings on a daily basis at the requirement of the Canterbury Earthquake Recovery Authority. I know there are engineers who are refusing to do those reports. They are refusing to do them, not because they are not competent to do them, but because they are fearful of the consequences of not getting it right, and ending up in front of a royal commission at some time in the future.

I am saying this out loud, because I think we in this Parliament have to be very cautious sometimes about what we do here, and the impact that it has on behaviour out there. I think it is really important that we get the regulatory balance right, so that we offer the protection that needs to be offered in these circumstances but also enable industry to develop in a way that supports the economic growth of our nation. We have got to get that balance right. I think it is really important that we think about this carefully. So we will support the bill’s referral to a select committee, but we really want to see significant change before we support it any further.

MAGGIE BARRY (National—North Shore) : I spoke to the Building Amendment Bill (No 3), which was passed in March 2012. This Building Amendment Bill (No 4), of course, is the companion bill. It is the second of two bills to implement the review of the Building Act 2004. This is all part of the wider picture with National’s Better Building Blueprint for better building, which is designed to make it easier and cheaper for New Zealanders to build good quality homes and buildings.

The cowboys prevailed for too long. Others have documented the human misery and anguish that have resulted from people inadvertently buying homes that were completely unsuitable. This bill in particular addresses some of the issues around consumer protection, and I think it also makes the builders, who are the people who should be accountable, more accountable, and that is partly why I support it. The punishments are more severe, and I think that when you increase penalties for failing to comply with building consents from $100,000 to $200,000, you are going to get people paying attention to that.

The overall situation is that if you are a consumer and you are wanting to buy a property, or to buy land, either to amend a property or to build one from scratch, how do you tell who the cowboys are? How do you know who is the right builder to go to? From now on we are going to be actually getting proper disclosure of information, if this bill goes through. It will include information about the company, about the people who will carry out the work, about the skills they bring to the job, and also about their track record. So it will be a lot harder for the individuals who have been involved with shonky practice or who are not properly set up, and it will be easier for the consumer to not accept them and not have them build their house.

This was difficult in the past because the cowboys were pretty well hidden. For a very long time we were held in their thrall, and I think this bill goes a long way to help consumers understand how to spot the cowboys and make the sort of informed decisions that we need. After all, the rebuild in Canterbury is about to start—$20 billion to $30 billion worth of building—and we have to be extremely careful that we do not get into the situation that has arisen in the past.

I think that on both sides of the House we have all admitted that there have been problems, and as Alan Martin used to say in the old TV ad: “It’s the putting right that counts.” Maurice Williamson is to be commended as the Minister for Building and Construction for working across parties and trying to come up with a piece of legislation that is going to be able to be passed, and the bill’s referral to the select committee, of course, is a very important part of that process.

But this began back in 2009 when we undertook the Building Act review. It was considered at that time that there was too heavy a reliance on building consent authorities for building quality, so that responsibility had been taken away from the builders and the professionals and given to another entity, which often ducked for cover. Change was needed. A culture change and an attitude change were needed of the builders, and I think that the incentives for building professionals and tradespeople to step up to the mark are there. They need to take responsibility for the quality of their work and stand behind it.

So consumers will have the knowledge that they will have mandatory written contracts for work that is valued over a prescribed amount. You will also have mandatory disclosure of this information by building contractors, as I outlined, and there will be these new offences for breaching those requirements. I think that the new provisions that are involved and inherent in this No. 4 bill are going to give more protection for consumers, and I think that is a commendable thing.

I think it is also important that you have the remedy of the defect, and you need to have a time frame, and I do agree that 1 year is a good period of time for all parties concerned. So if, for example, there is a problem with a building and you notify under the residential building contract within a year of completion, there is an onus of responsibility on that builder to put it right. Those are the sorts of provisions in the bill that make it an important part of the overall package that National is bringing through, so I am happy to stand and speak in support of this bill.

Dr MEGAN WOODS (Labour—Wigram) : I am happy to take a call on the Building Amendment Bill (No 4). Labour supports sending this bill to the Local Government and Environment Committee. As many of my colleagues have said, we would like to thank the Minister for Building and Construction for the collaborative approach he has taken with regard to this legislation.

I think that what we are seeing here tonight during this debate is that Labour supports the broad direction of this review but can see that there are some problems that need to be ironed out. My colleagues who have spoken previously have pointed to the fact that New Zealand First has raised some real issues that need consideration. The reason we are supporting this bill at its first reading is so that it can go to the select committee and be heard in this forum.

What it is for us is that we see that this is a piece of legislation that is looking to fix and unpick a period of our history, throughout the 1980s and 1990s, when we removed many of the regulations around our building industry that were there to protect consumers and the people who were living in those buildings. As we have heard tonight many times over, it was the removal of these regulations that gave us the leaky homes situation, and it is also this situation that has made people feel unsafe in terms of the Canterbury earthquake and the surety of a house. Like my colleague beside me, Lianne Dalziel, as someone who lives in Christchurch, the need to have good regulation around housing and home has become more apparent to us in the last 18 months.

This is not about protection just in terms of whether the architraves in your house are right; this is about protections in terms of whether your house is going to hold up and you are going to be safe within the building, and whether you will trust that that building is not going to be part of your demise. So we consider that this really does need to be given a good chance for these issues to be considered. We cannot just think about regulation in terms of building in terms of red tape, and as something that needs to be skirted around. We cannot think of this as something that we have to remove to make an industry more efficient when it comes to something as fundamental as buildings in which people’s lives can be put at risk if we get this wrong. We have heard tonight over and over again that if we as legislators in this house get this regulation wrong, then we do put people’s lives and we do put people’s livelihoods at risk, and we need to ensure that we get this right. This is not consumer protection in terms of whether or not your television is going to work 6 months after you bought it. This is consumer protection in that you are protecting the biggest investment that anyone is going to make in a monetary sense, and an investment that people are making in terms of their safety.

We need to send this bill to the select committee, as my colleagues have said. We need to give people a chance to give their feedback and talk to us about how it is that we can get these regulations right. It is our duty as legislators in this House to do this. We have to get these protections right. So I am happy to stand here in support of Labour sending this bill to the select committee. Thank you.

GARETH HUGHES (Green) : Kia ora, Mr Speaker. Ngā mihi nui ki a koutou. Kia ora. I rise to take a call on the Building Amendment Bill (No 4). We have heard countless times in this debating chamber the problems we have seen with deregulation in the sector and the leaky homes crisis. I would just like to kick off by acknowledging the comments by the member Lianne Dalziel. Countless times I have heard in this Chamber this side blaming that side, and that side blaming that side. It was good to have some responsibility, because actually it has been a cultural problem that we have had in our country. I would like to acknowledge that honesty, that frankness. This is what we need to have going forward: a realistic appraisal of the issues facing us.

As many members know, the Green Party opposed the Building Amendment Bill (No 3) because it was piecemeal, because it did not contain consumer protections. That is why we will be voting for this bill, the Building Amendment Bill (No 4), its companion, which came out of the building review of 2009. We have got those new sections 362A and 362S, which relate to consumer protections.

The bill does a number of small things. I think Phil Twyford was bang on the money when he said that it was a masterpiece of incrementalism. It does a few things, such as the enhanced, more comprehensive consumer protection measures. It clarifies exemptions from the building consents, makes some amendments to the dam safety scheme, and increases the maximum penalty. Our problem with the Building Amendment Bill (No 3) was the lack of the consolidated big picture with which we could have gone to the public of New Zealand and said that the Government had looked at the recommendations that came out of the 2009 report and was giving them a consolidated legislative solution. But instead we went down this piecemeal approach, which saw the Labour Party and the Green Party vote against it.

I will take only a short call, but there are a few risks inherent in this approach. It is a deregulation. We are seeing less local body oversight. I could speak about the whole broader context that is the attack on local government, which we heard about from Andrew Williams. This Government is reducing the role of local government. We have heard former Minister Smith trying to limit the functions of local government, blaming its debt problem. The real debt problem facing this country is at Government level; it is not local government, which is borrowing not half as much as central government.

We have some concerns on warranties, like what will happen if you have a fly-by-night company that does go bankrupt, leaving the unfortunate homeowner or business owner in the lurch. One area picked up in the Kensington Swan analysis of the bill, which I would like to see looked at at the select committee, is around the continued responsibility by the original major renovator or builder of a residential property, not by a professional builder, when it is subsequently being sold down the line. Kensington Swan had the scenario where you could see a house having changed hands six times from the time the original homeowner made the major renovation or built the house. They are still responsible. I think the outcome of this is actually that we will see fewer Kiwis doing it themselves and building their own homes. I do not think that is the message this Parliament wants to send those Kiwis. The bill is a masterpiece of incrementalism. It is a bit of tinkering, but we welcome it. We urge the public to make a submission.

The National Party was elected to Government on the pledge of building a brighter future; I guess it is building a future of some measure for Skycity, for Warner Bros, for the frackers, for the drillers. When we are talking about building, we actually need a bigger approach to these issues. Now is not the time for incrementalism. Now is not the time for tinkering. There are huge issues facing us, from the homelessness crisis, the housing affordability crisis in our big cities, the thousands of cold, damp rentals making our kids sick, the lack of State houses, and the myopic solutions, which, from the Government’s perspective, are simply to wipe people off the massive waiting list—at one point it was nearly 10,000 people—for State housing. Coping with the leaky home fallout, the earthquake retrofitting across the country, the lack of apprenticeships—these are huge issues that need serious thought by the Government and by this Parliament, but all we are getting is this bill. Still, we will be voting for it to go to the select committee. We urge the public and the sector to have their say, and we will be going into further votes with an open mind. Kia ora.

PAUL GOLDSMITH (National) : I am very glad to reassure the member who has just resumed his seat, Gareth Hughes, that we are indeed working towards a brighter future for all New Zealanders, not just for the people he mentioned. I am very happy to speak in favour of the Building Amendment Bill (No 4), and I agree with Lianne Dalziel that it is indeed important legislation and worth careful consideration at the select committee. I am looking forward to that opportunity.

This bill is about productivity and consumer protection in particular. We have heard many lamentations about housing affordability, and that is a serious issue for New Zealanders. There are lots or reasons lying behind that. I always find it intriguing, particularly when the Greens are concerned about housing affordability as they are very much on the side of those in councils who are very determined to limit the amount of land that can be used for building houses, which is one of the biggest drivers of housing unaffordability in this country. You cannot have it both ways. But certainly the building sector needs to be more efficient, and that is one element of the costly housing that we have in New Zealand.

This bill does a number of things, and I will not go into everything. Unlike the regulators over there in New Zealand First, I am very pleased to see schedule 1 listing a number of things that do not require consents. I think we should strike a blow for liberty from time to time, and the ability to build a retaining wall up to 1.5 metres on your property without having to go through hoops of fire seems to be a good idea to me.

The mischief that this bill is really focused on trying to deal with is the extremely risk-averse behaviour that is rife throughout the building industry, which is due in large measure to the leaky homes crisis, which has indeed been a terrible blight on many families and many house owners around the country. I have certainly renovated my house a couple of times in recent years and have seen tens of thousands of dollars added to the bill for apparently little benefit, aside from ticking boxes required by local government. I remember joking to one of the builders in my house that I did not actually need to land a helicopter on top, and that all this wood was perhaps not necessary. But that is the kind of—

Hon Member: John Banks might come and visit.

PAUL GOLDSMITH: There was nobody else involved, I am bound to say. This bill focuses on consumer protection. The problem is that frequently there is no formal written contract setting out the nature of the agreement and the rights and obligations of each party. Many consumers and builders are unaware of the implicit warranties. It is difficult and costly for consumers to hold practitioners to account, and the consumer has little leverage over the practitioner once building work has been paid for. There is little incentive for the practitioner to repair defective work or pay compensation. These issues are exacerbated very much by the fact that some developers and designers and builders actively manage or set up shelf companies in order to get around a liability.

So an important part of the bill is implementing the policy decisions about introducing enhanced and more comprehensive consumer protection measures, including mandatory written contracts for work valued over a prescribed amount, and mandatory disclosure of certain information about building contractors, such as what sort of company structure they have in place, and that, I think, will offer a considerable amount of clarity and openness, as consumers are making what is one of the biggest decisions of their lives. They will have much more information available to them.

Where does that get us? Well, I think the bill will support responsible builders and separate the professionals from the cowboys. I hope that further down the line, in the future, the bill will create an environment where greater trust is restored in this industry. Like any industry, I think that trust is the key to having an efficient industry, because you cannot legislate and regulate for every circumstance. You have to rely on trust, and that is what we are trying to rebuild through this legislation. That, I think, ultimately will be the key to having a more efficient sector. This is a complex area, and it is an area where you can make mistakes down the line. So I am looking forward to a careful consideration of this during the select committee consideration.

  • Bill read a first time.
  • Bill referred to the Local Government and Environment Committee.