Chateau on the Park, Christchurch
Thursday 15 February 2007

Good afternoon, and thank you Francis Small for the introduction. I would like to thank all members of the New Zealand Centre for Advanced Engineering (CAENZ) for the opportunity to be here today, in particular your Executive Director Dr George Hooper.

I would like to start by congratulating the Centre for Advanced Engineering – or the CAE – for reaching the milestone of its 20th anniversary this year. And I am pleased to see the theme you have chosen to mark your 20 years of achievement – Gearing up for the Future: Investing in the Future – is being reflected in your practices.

Today, of course, is about the launch of the CAE's new Patronage Plan, which is an ambitious move to enlarge your programmes and activities through attracting more financial supporters and members. It is heartening to see your organisation - which provides an important think-tank and collaborative role in advancing engineering solutions in New Zealand - go from strength to strength.

I also note that CAE has recently announced new partnerships with the University of Auckland's School of Engineering and with the Institution of Professional Engineers New Zealand (IPENZ). Yours is clearly an organisation that is not resting on its laurels. Yours is an organisation looking to ensure a strong future.

Likewise, this Government is focussed on the challenges ahead. Prime Minister Helen Clark's annual statement to Parliament this week was a call to action on sustainability. She said New Zealand's future is dependent on long-term sustainable strategies for our economy, society, environment, culture and way of life. And building a sustainable nation requires smart, active government working with key stakeholders across the economy and society.

The expert advice provided by your organisation makes you one of those stakeholders. My Department of Building and Housing officials advise me that, for example, your projects such as the 2001 study on Domestic Hot Water: Options and Solutions is assisting the work they are currently undertaking on the energy efficiency performance of domestic hot water systems. Your 1994 and 2001 Fire Engineering Design Guide has contributed to the development of Fire Safety requirements in the Building Code and its Compliance Documents.

The CAE's earlier work on lifelines in earthquakes has helped shape the way in which critical infrastructure is developed and built. And your 2000 study on Management of Engineering Risk was seminal in the way we consider risk within a performance based Building Code.

The suggested subject of this speech was "effective participation in policy-making processes". Given that my portfolio as Minister for Building and Construction is directly relevant to a number of the projects you have undertaken, I would like to outline some of the thinking, the activities and the possibilities in the building sector, and offer some ideas on how we can engage with each other.

The building sector is a vital ingredient in New Zealand’s economic transformation and national identity as well as in the future wellbeing of our families young and old. You really cannot argue with that given the fact that 90% of New Zealanders’ net wealth is tied up in housing.

And let us not forget the sector's importance to the economy. The latest figures show that the number of people employed in the construction industry has increased from 181,000 in the June 2006 quarter to 188,300 in the September 2006 quarter.

If we look at the dollar figures - more than $10 billion was invested in residential building in the March 2006 year, and another $5.5 billion was spent on non-residential buildings. The construction industry's share of the GDP was approximately 5 percent in the March 2006 year.

This sector clearly is vital to New Zealand. It is an essential component of our national infrastructure. It needs to be future focussed, and sustainable. I can see the Government's long-term approach reflected in your organisation's planned expansion, and I welcome this shared vision.

The big picture – where we are at

The building industry, and building technology, is not standing still. In fact, we are undergoing perhaps the biggest transformation in New Zealand's history, greater even than the shifts of the late 70s or the post-war boom. This transformation is being led by the Government on the policy and legislation fronts, but it is also being driven by both industry and consumer demand.

New Zealanders want better buildings. It is that simple. They want buildings that are energy efficient and environmentally sustainable, as well as comfortable, enjoyable and healthy to live in. And the building industry wants a business and policy environment in which they can supply them.

To get there involves social, economic, and technological development in equal measure. It requires innovative developments that involve smart problem solving as well as co-operation across the sector, to succeed.

So where are we at this moment? And what do we need going forward? I tell you now, 2007 will be a watershed year. Many of the systems set up by legislation will come online. By December this year there will be:

·Voluntary registration for the first set of occupational licensing classes, a 'raising of the bar' for those who design or build in the industry
·territorial authorities will have been audited and accredited as Building Consent Authorities – a new regime that will ensure building consents are processed faster, more efficiently and to a higher standard.
·along with the core Building Act reforms, there will likely be new legislation on the housing front, including renting, multi-unit complexes, and improvements to dispute resolution services
·the revamp of the Weathertight Homes Resolution Service will be rolled out, providing faster and more effective outcomes for affected homeowners.

These are just some of the mechanisms in the pipeline.

The Government is investing in several consumer education programmes to make sure that people have the information they need to make smart decisions – this extends from what to look for when buying a home to protecting investments made in housing stock.

Just last week the Chief Executive of the Consumers' Institute, David Russell, and I launched the upgraded ConsumerBuild website which aims to improve New Zealanders' understanding about building, buying, renovating and maintaining their homes. The site features Checklists for homebuyers and for home maintenance, as well as new advice and information to help Kiwis recognise and properly respond to weathertightness issues. More consumer awareness campaigns will be rolled out this year.

I am pleased to say that all of these measures I have outlined today have attracted support from across the building sector. Why? Because this Government has been, and continues to be, committed to investing in strong networks. We need clear lines of communication with industry, local government, training organisations and consumer groups - to be able to work with professionals such as yourselves. We are working to build an environment where open communication is encouraged, and where knowledge from many disciplines can be brought to bear on the built environment as a whole.

It may come as a surprise because you don’t often hear politicians say this, but this Government recognises that it doesn't have a monopoly on all knowledge. Throughout all these processes we have been consulting with stakeholders and the public to make sure we are delivering what is wanted, what is needed.

This approach is leading us to a network of trust and advantage. And we will use this network to correct underinvestment and reduce waste – for example in research, to cut down on duplication. The advantage of a central regulator should be precisely this ability to take a wide view and co-ordinate resources.

CAE has for many years been a leader in engineering research, but even more than that, you have championed the bringing together of knowledge. It is too easy for ideas to fragment, for the best-intended projects to end up isolated and even orphaned, if that oversight is lacking.

Expanding your partnerships in the sector, with the Faculty of Engineering, with the Institution of Professional Engineers through the Patronage Plan, is ambitious. And it is exactly the kind of approach that is needed. To build the sector we must look across Government, industry, and consumers, because the future of our buildings and our lifestyles doesn't recognise them as being separate.

Energy efficiency

Indeed, it is interesting just how closely things can intertwine – for example in energy efficiency, which is a clear meeting point of technology, consumer demand and good building practice.

Late last year, I announced a set of proposals around energy efficiency as part of our programme to reduce the amount of energy required to heat new homes, to heat water in new and existing homes, and to light, heat, ventilate and air condition commercial buildings.

The main initiatives in this work programme are higher thermal insulation performance requirements for new homes; making it easier to install solar water heating systems in new and existing homes, and improving the heating, ventilation, air conditioning and lighting systems in commercial buildings.

There is strong public support for better energy efficiency and conservation, increased use of green materials and less carbon emissions from buildings. And we all stand to benefit, as well as the environment.

Preliminary work by the Department of Building and Housing in New Zealand indicates that building such an energy efficient home could cost an additional 3 thousand to 5 thousand dollars, but consumers would gain through lower power and gas bills and, importantly, increased capital value on their homes.

Think about that in the context of a family with three children under the age of 7. The washing machine and dryer are in high demand, the house has to be at a comfortable temperature, and all of these things cost money. But by taking some fairly straightforward measures to increase the energy efficiency of their home, this family is going to reap the rewards financially for years to come. Not to mention the benefits of having a dry, warmer and healthier home.

International trends

The broader work behind the energy efficiency initiatives, of course, is the full review of the Building Code, which is due to be reported back to Government in November this year.

Public consultation so far has clearly shown the key issues and expectations: the need for leadership and ‘lifting the game’ for building performance requirements; desire for greater sustainability and energy efficiency; stronger focus on affordability; awareness of the differing needs of different groups within the sector; and the need to improve the interface between the various pieces of building legislation.

Again, the technology-demand-good practice connection could not be much clearer. It has been challenging and even a little daunting to see such high expectations coming through again and again, but it lets us know we are on the right track.

The ability of technology and good planning to maximise energy efficiency has clearly been on your organisation's radar for some time – your 1994-1996 project entitled Energy Efficiency: Current & Emerging Technologies is clear evidence of that.

Since you are in the business of being a think-tank on these issues, I would like to put a possible concept to you that is getting some attention overseas. This approach involves the what has become known as the 'embodied energy' of buildings and their components.

The theory holds that given that a good deal of carbon emissions arise directly or indirectly because of buildings (according to the Stern Report), the approach has to take the full carbon emissions impact of buildings into account.

Every building component, even the tiniest screw, has a carbon cost, or simply the amount of greenhouse gas emissions that where created in making it. In a truly ‘green’ building, that cost might be included in the building's overall energy efficiency. For example, consider home insulation: it may reduce energy demand and thereby lower carbon emissions, but how much carbon did it take to make it in the first place?

I understand that overseas, factors considered in studying the concept of the so-called embodied energy of buildings and their components include the total energy cost needed to produce buildings and their components, the relative expected lifetime of alternative building types, and the projected lifetime energy expenditure.

This is a good example of the possibilities that are emerging and the concept may be something you may wish to turn your minds to?

Participation

There is a demand in New Zealand for innovation. A requirement for what we build to match how we want to live as a nation.

You may ask, as an organisation, how can you effectively participate in this? What role can you play in shaping this transformation? How can you engage with both policy-making processes and their implementation?

I suggest that one of the ways is to keep the big picture in focus, to look towards the policy intent of legislation and of Government action.

The key is relating innovation to overall outcomes rather than short-term processes. Hence, for example, we have retained a performance based Building Code, but it will be one based on clear, known standards that innovators can design and build to.

A second way to effectively participate is to work to understand the machinery and timing of Government, just as Government must work to understand the concerns and drivers of industry.

I can see the potential of your new Patronage Plan initiative for extending your connections and thereby by your technical expertise into strategic influence. I encourage your efforts to work even more closely with the sector and with Government, and to disseminate best practice and innovative thinking as far and wide as you can. Through this, you will be helping to bridge any perceived divide between policy intent and technical solutions, because ideally, in the best cases, that divide does not exist.

If we are to really invest in the future, it will take planning and a willingness to look at the big picture. New Zealanders need good houses and buildings. They want smart thinking about the choices that involves. Quality houses cannot exist, like some orphaned research project, if separated from a strong building sector. And a strong building sector will not exist without innovation and smart thinking to drive it.

We want dissemination of best practice. We want innovation and genuinely strategic thinking to drive better standards for local industry, creating better buildings for everyone. And we want the long-term gains from this approach to spread well beyond New Zealand, as the strong environment we are creating, makes us more competitive in the world market.

I applaud your continuing work towards these ends, and thank you for the opportunity to speak with you today.