Towards New Zealand's Building Regulation Reform

Speech notes

Hon Maurice Williamson

Minister for Building and Construction

Towards New Zealand's Building Regulation Reform

Duxton Hotel, Wellington

Tuesday 17 November, 2009

 

Acknowledgements

 

 

Introduction

 

Good afternoon all, and thank you for having me along today.

 

After an interesting and challenging morning digesting the future state of New Zealand's building industry, many of you are perhaps getting a bit peckish.

 

I will try to keep my own thoughts inside the thirty minutes allotted before we break for lunch, and with enough time for some questions from the floor.

 

Today I would like to talk to you about the Government's priorities for regulatory reform in our sector, and the work we have underway to improve the business of construction and set us on our way to economic recovery.

 

I am confident that the work of this Government is setting a course for a better industry in terms of regulation.

 

But let me be clear: this does not mean more.

 

Quite the opposite is true. Wherever we can, the Government is streamlining building regulation to ensure, sensible, smooth running industry governance, with less red tape and bureaucracy.

 

Importance of the Building Sector

 

Let me start by telling you this: in the past year, building consents halved. Halved!

 

That means, effectively, that revenue dropped, and sadly, that people lost their jobs.

 

Seven and a half per cent of New Zealand's workforce is in the building and construction sector. The industry is worth $20 billion per annum.

 

We are still very much living through the recession.

 

Things are improving in part, but we are not out of the woods by a long shot.

 

With building such an integral part of the New Zealand economy, it is vital that we target investment to support it.

 

Earlier in the year, the Budget set aside millions of dollars for roading, housing and schools. Over the next five years, $7.5 billion has been earmarked to boost infrastructure.

 

Planning key investment projects will help keep the economy on the path to recovery and should alleviate the worst effects of the recession.

 

The Government can not do all this alone, however. Industry must work closely with Government to maximise opportunities and plan for change.

 

Productivity

 

One change we need to see sooner rather than later is an increase in productivity.

 

It's a sad fact that building and construction is one of the least productive sectors in the country.

 

The question of productivity, and how it could be improved, was considered by the industry-led Productivity Taskforce, who reported back to key industry leaders at the building and construction forum in July of this year.

 

The taskforce made a number of recommendations about action that can be taken to improve the sector's performance, including:

• government agencies and industry leaders working together to develop a sector-led skills plan for the construction sector
• industry and Government undertaking further research on key aspects of the sector's productivity record, such as New Zealand's comparative performance and the reasons for this.
• that procurement issues be advanced in alignment with the Government's procurement reform programme.

 

The ultimate aim of the work is to drive innovation and productivity growth. With greater productivity comes lower costs, and this will help drive - and this is where we find ourselves again and again - economic recovery.

 

Skills will be pivotal in addressing the productivity gap.  Better skills will also ensure the sector can sustain itself following on from the recession.

 

With this in mind, we have a range of other initiatives underway. I made two important announcements in August, both of which comprise regulatory reform and both of which will drive the industry forward.

Building Act Review

 

There are several key outcomes I would like to see from the Building Act Review, which is well underway.

 

One is streamlining building consent requirements. We have a consenting system that is adding time and cost to building work, and I hear frequently about the frustrations of builders and consumers being bound up in red tape.

 

This has to change.  I want to move away from the current ‘one size fits all' consenting and inspection process.  The process needs to reflect the complexity of the building work and the competence of the designer and builder.   For relatively low risk homes designed and built by competent practitioners, it should be cheaper and faster to get a consent, with fewer inspections by councils.   

 

In addition, low risk building work should be exempted from needing a consent in the first place.   There are exemptions in place now, but they don't go wide enough.

 

I also want to see better allocation of risk and liability in the sector. The issues around weathertightness may be less complex if risk was more evenly spread, and more transparent.

 

Too often the buck stops with the councils, which means disputes are less readily resolved, with one party trying to make it right all by themselves.  I want to see a re-balancing of risk, so that it lies with those best able to manage it, so that all parties face reasonable risk and liability, and have options for managing these risks.

 

In line with this, I also want to see more and better information out there for consumers, as well as more cost-effective and quicker ways of resolving disputes earlier.

 

There needs to be greater incentives for professional performance - I want consumers demanding skilled practitioners, with the level of building control linked to skill levels.

 

The review will also examine how we can rationalise building consent functions.  We currently have 73 building consent authorities.  To me, that is too many.  The building consent authority accreditation process has made the costs of undertaking these functions very transparent, and I think that it is unlikely that all building consent authorities will be able to sustain these costs going forward. 

 

The move to one council (and one building consent authority) in Auckland is a good start, and I am encouraged that the Wellington councils are looking at options for adopting a more regional approach to delivering building consenting and inspection services.

 

Lastly, there needs to be more investment in technology to allow many of these systems - building consents especially so - to run more smoothly.  For example, I am keen to see a national on-line consenting system developed and in place.  This would not only allow applicants to lodge consent applications on-line but also lead to faster, cheaper and more consistent consent decisions. 

 

On this basis, I have asked my Department to work closely with the likes of Local Government NZ on how such a system could be developed and rolled out.

 

In summary, the Building Act Review will identify reforms that will reduce costs, but not the quality of the building control system.

 

It would be easy to deregulate too heavily, but that is not the aim here. Rather, the Government is committed to using regulation only where non-regulatory options are unavailable.

 

In doing so, we will strike a balance between common sense building regulation and a safe, reliable building control system.

 

Subject to Cabinet approval, the Department of Building and Housing will be looking to undertake sector-wide consultation in early 2010, following extensive work with industry leaders.

 

We would be looking for legislative change by the end of next year.

 

Much of this work follows on from law changes earlier this year.   There were three key changes in particular, that aim to speed up building consent processes and reduce costs.

 

National Multiple-use Approvals have been introduced to reduce duplication and fast track the consent process for group home builders, who are using the same or similar designs across the country.

 

A new streamlined process for managing variations to building plans after a consent is issued has also been introduced. This will save time for councils and building consent applicants.

 

Lastly, Project Information Memoranda have been made voluntary as a means of reducing time and cost.

 

These changes got the ball rolling, but are not enough on their own. The Building Act Review will go much further in making building regulation more effective and efficient. 

 

Licensed Building Practitioner Scheme

 

Key to moving to delivering a balanced building control system that reduces cost but not quality, is the licensed building practitioner scheme.

 

In August, the Government confirmed its support for the scheme.  We did this because it

• Promotes enhanced practitioner performance
• Makes practitioners accountable for the quality of their work, and
• Provides consumers with access to information to help them make an informed decision about who they engage to do their building work.

 

There are however, opportunities for the scheme to be streamlined and simplified, so with less complexity and cost to applicants.   Drawn out application processes and having qualified builders bound up in red tape isn't helping anyone.  I want to see changes to the scheme along these lines in place early next year.

 

At the same as I announced our support for the scheme, I also announced what type of building work would be defined in law as being ‘restricted building work'.  This is work that is so important to the integrity of a building that it needs to be carried out or supervised by a licensed building practitioner.  This will apply from 1 March 2012.

 

Restricted building work on stand alone houses and small- to medium-sized apartments will apply to the design and construction of:

• foundations and framing - so the building can meet its vertical and horizontal loads under the Building Code, and
• roofing and cladding - so it's weathertight.

 

Restricted building work will also apply to the design of active fire-safety systems, such as sprinklers, in apartments.

 

Only allowing licensed builders to undertake this work - builders who have a proven track record and are accountable - will improve New Zealand's future building stock, and mitigate risk around issues such as weathertightness.

 

Quite naturally, initial concern about restricted building work was that it would have an effect on New Zealand's great DIY spirit.  The Government is therefore proposing an owner/builder exemption that addresses these concerns and ensures that enthusiasts can still do what they love, without worrying about government red tape.

 

And of course, any work that doesn't require a building consent under Schedule 1 of the Building Code is exempt too.

 

Between the Building Act Review and the LBP scheme, I feel we are making tremendous progress in having smart regulation of builders and designers, which protects consumers.

 

Product Certification

 

Back to the Building Act Review for a second, I would like to touch on product certification.

 

I recognise the need for a transparent product assurance framework that drives more consistent product approval decisions by local authorities.

 

There needs to be a simpler and more consistent way to achieve approval for building products.

 

Currently, we do have a voluntary product certification scheme, which is aimed at restoring confidence in the materials we use and at speeding up the consent process. The benefits of such a scheme are clear to me, and I support the principles behind it.

 

However, what we have now is too heavily focused on high risk or new products. On its own, it doesn't address all of the concerns around achieving product approval.

 

The current scheme is being looked at as part of the Building Act Review, so I hope to have more information on this shortly.

 

Weathertightness

 

We need a new approach to weathertightness.

 

The system we have is not working, and through the media and through my own contact with every day New Zealanders I hear about the heartbreak and stress leaky homes are causing around the country.

 

This Government is taking a fresh look at weathertightness issues and is committed to getting leaky homes fixed.

 

A comprehensive review of the approach currently taken to weathertightness issues is on-going. 

 

As part of the review, research was carried out by PricewaterhouseCoopers on the size and cost of the problem.  I have received a report from PwC that shows the problem is much larger than originally estimated. 

 

I intend to publicly release the PwC report in the near future.  Once the review is completed, the Government will decide on the best option to address the problem.

 

This is a complex issue and time needs to be taken to fully consider the most appropriate way forward.

 

No decisions have been made as yet, but the Government intends that any new approach will ensure homeowners have access to an affordable and effective resolution process.   We are also committed to providing more choices for homeowners to fix their leaky homes.

 

Housing Shortage

 

In early October, 2009, the media reported that a housing shortage was possible.

 

I have spoken today about a lack of productivity in the sector, as well as options for streamlining and cutting red tape; all of which work towards ensuring that the sector keeps pace with demand.

 

Strong population growth is expected to continue, but opinions are greatly divided on whether we are looking at the 25,000 home shortfall predicted by a New Zealand Institute of Economic Research report.

 

As we work to get the sector and economy moving again, and as we work to increase that productivity, the risk of such a shortfall is mitigated almost by proxy. But that doesn't mean we are taking such reports lightly.

 

I mention this as another key driver for the success of the industry. Regulatory reform that flattens out the consenting process, or allows for the use of smarter regulation like national multiple-use consents, helps to head off such issues before they become a problem.

 

My Department, and the Government, will be keeping a close eye on the trends over the coming months.

 

Closing Remarks

 

Today I have described some of the measures the Government is taking to lift the building industry out of the recession, boost skills and productivity and set it on the course for long term growth.

 

The reform of our regulatory environment makes up a substantial part of this overall programme of work.

 

Less regulation does not always mean worse; it usually just means smarter.

 

And smarter, business-enabling regulation is what this Government, and the industry, wants to see.

 

Together we can make a real difference to lifting the performance of a sector that touches the lives of every New Zealander.

 

If we get it right, more Kiwis can live and work in high-quality homes and buildings, purchased at a price they can afford.

 

I'd like to thank everyone for listening today, and trust I have already answered some of your questions about the Government's priorities and regulatory reform programme.

 

If any questions remain, I'm happy to take those now.

 

Thanks.