Building Amendment Bill (No 4)

This debate has been interrupted twice now. This is the third time we have had a go at the second reading of the Building Amendment Bill (No 4). This debate has actually been a bit like the Government’s stewardship of the building review process, which keeps stopping and starting, never really reaches a conclusion, and, frankly, does not add up to much.

I want to just reacquaint the listening audience with what this bill is about and make a few points about why Labour is not supporting this bill even though we have supported, in general, the Building Act review process, which has enjoyed quite wide support from the industry, and goodness knows that New Zealand consumers—homeowners and buyers—are desperate for a bit of consumer protection.

So although we support the general process, we feel that the last bill and certainly this one are piecemeal, uncoordinated, and really fall well short of what the industry expects in terms of this reform process. There are one or two good things in here, but many of the provisions fall well short of what is needed in terms of giving consumers redress.

Like the Labour Party, the Green Party supported this Building Amendment Bill (No 4) at the first reading, but we find ourselves, unfortunately, unable to continue to support it at the second reading and beyond. And like our colleagues in the Labour Party, after listening to submitters and reflecting on the bill, and bearing in mind the disjointed way in which the Government has gone about implementing the Building Act review, we are concerned that the important consumer protections required in the building industry are not adequately provided by this bill.

It is vital that we get these consumer protections right, because this bill, along with other recent and forthcoming amendments to the Building Act and the Construction Contracts Act, puts in place the regulatory context for the building industry in the coming years. And never has the building and construction industry been more important to the country. We are facing, as we all know, a housing crisis in this country—a crisis of affordability, a crisis of supply, a crisis of housing quality. We have got a huge undersupply of affordable housing. We have got a market failure in the housing industry, which the Minister of Finance has acknowledged. In Auckland alone it is estimated that we need approximately 13,000 new homes to be constructed each year to meet the current demand for housing, and yet only around 3,000 each year are being built at the moment.

So to solve the housing crisis in Auckland and around the country will require a drastic increase in building activity. We must have building regulations that get it right for consumers if that is going to be done responsibly. Similarly in Christchurch, where the earthquake rebuild is under way, we need decent building regulations to guide the rebuild. We know that Canterbury homeowners are already vulnerable and stressed, and we saw a survey recently of Canterbury residents that really highlighted that. Those who are building new homes or reconstructing damaged homes need adequate consumer protections to ensure that their rights are protected and not further violated after 2 years of a brutal and frustrating process in Christchurch.

It was because this Building Amendment Bill (No 4) sought to put in place greater consumer protections that the Green Party supported it at the first reading. I will also note at this point that it does, of course, make changes to the regulatory regime for the construction of dams in New Zealand. Although these are interesting and important, especially for engineers, we feel that they are uncontroversial in relation to this bill.

From our perspective, the most important changes in the bill are those that introduce mandatory disclosure of certain information by building contractors, those that create new offences for breaches of these requirements, and those that add new powers for territorial authorities to deal with buildings at risk because they are near or adjacent to dangerous buildings. Similar provisions also increase the maximum penalty for doing building work without a building consent, and clarify the powers of the Chief Executive of the Department of Building and Housing, now, of course, absorbed into the Ministry of Business, Innovation and Employment, to review the performance of territorial authorities, regional authorities, and building consent authorities.

However, what became apparent in the submissions on the bill, and especially those from the likes of the Home Owners and Buyers Association of New Zealand, the Auckland Council, the Wellington City Council, the Christchurch City Council, Local Government New Zealand, and even Hawkins Construction, was that although the bill pays lip-service to greater consumer protections it is in fact quite weak in this area, and it should not be supported.

The bill still lacks a significant consumer protection element. It relies far too heavily on industry bodies like the Registered Master Builders Federation of New Zealand to design their own protection mechanisms, which in reality are not and will not be enforced. If the Government was serious about genuine consumer protections in the building industry it would introduce a mandatory warranty scheme administered by an independent authority. That would give true confidence for consumers that their warranties and protection mechanisms were fair and being enforced. Apparently it was considered by the Department of Building and Housing, as it was at the time when the policy advice was developed on this bill, but it was rejected after pressure from the Registered Master Builders Federation of New Zealand and others. I think that is a real shame. Let us not forget why consumer protections are so important in the building industry, and remember that we need think only of the deregulation of the industry by subsequent Labour and National Governments in the 1980s and 1990s.

It was in this vacuum, in this period of deregulation, that the leaky homes crisis was allowed to occur. We have seen the terrible consequences for homeowners when poor regulation and poor building and construction standards conspired and allowed that to take place. After years of toing and froing we have now a process for dealing with the leaky homes disaster, but it is a limited process, it is time constrained, and there are many homes out there that are yet to even begin to demonstrate the signs of damage. So it is barely the tip of the iceberg. In that context and with those lessons in mind it is vitally important that we get it right for the future. We in the Green Party believe that this bill is a missed opportunity to do so.

Finally, I wish 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 for homeowners and builders. When a homeowner finds that something about their property is dangerous or that it is no longer habitable, they need mandatory warranties administered by an independent authority to back up their rights, and this bill fails to provide that. But we urgently need to think 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.

I think it is clear that building to the code alone is not enough. There are many who would argue that the code, in fact, needs to be stronger, more ambitious, and promote higher standards of energy efficiency, sustainability, accessibility, and intelligent design. We do ourselves a disservice with our existing building code.

There has been a review of the Building Act. As we know, that has resulted in this piece of legislation and others, but I think it was a missed opportunity to really address our building code, and whether it is in fact producing the kinds of buildings that we need for the 21st century in New Zealand. A decent review of the Building Act, I think, would take those issues into account.

We have not been convinced by the Government’s approach to the Building Act review. We are not convinced that this series of building amendment bills will result in any substantial improvement in the quality of New Zealand’s housing stock, will facilitate the construction of more affordable housing to meet the demand especially in Auckland and Christchurch, or will adequately improve consumer protections. For these reasons we can no longer support this bill.

I do wonder whether that Green member, Holly Walker, is reading the same Building Amendment Bill (No 4) as I have been reading and studying throughout the select committee process, because far from, as the member contends, lessening the protections, I think this bill goes a good way towards implementing the Building Act review.

I am going to go through what this bill does do. What it does do is quite considerable, in my view. It reduces compliance costs, reduces complexity and delays by reducing reliance on building consent authorities, and makes building contractors much more accountable than before by requiring disclosure of information. The information that is going to be required to be disclosed includes the legal status of the contractor. That might be whether the contractor is operating under a limited liability company. We are all very aware of a number of building companies that have simply closed the books, closed the company, walked away, and re-formed in another incarnation, leaving behind them a litter trail of poor homeowners with many problems to fix but nowhere to go.

We are requiring information about the people who will carry out the building work. We want to know about their track record, their dispute history, their skills, and their qualifications. We want to know what, if any, financial backup or insurance they have to cover the cost of fixing faults. If that is not providing more protection to homeowners, please tell me what is. The bill protects consumers by requiring written consents for most residential building work—information that, in a contract for building, could include the parties; the dispute resolution process, should things go wrong; the process for varying the consent, should that be required or desired by either party; a time frame for performing the contract; and the payment process.

The Labour-Greens have a view on this and what is actually contained in the bill. As I sat through those very same submissions to the Local Government and Environment Committee, I do not recall seeing that member Holly Walker, but that is by the by—or the Labour member Phil Twyford, for that matter. When I sat through the submissions on this bill, I recall a pretty robust debate, as always, but a certain acceptance that the protections built into this Building Amendment Bill (No 4) were, in fact, making a vast improvement. It protects consumers by requiring written contracts for most residential building work, and if the parties do not have a written contract, or their contract does not contain a required clause, then regulations will prescribe default clauses that will be taken as being included. So even if they are not put in the contract, there will be, by regulation, default clauses providing additional protections.

The bill will have specific methods for enforcing warranties. That is really designed to give consumers the peace of mind that they will have recourse for shoddy building work, which is what this bill is all about, and seeks to protect homeowners. Building contractors will be expected to fix any defects in their work that are reported within 12 months of completion. Once again, that is added protection for homeowners. And, finally, it increases the maximum penalty for failing to comply with building consent requirements. That goes from $100,000 to $200,000. Please tell me, Labour-Greens, if that does not add protections into the building industry that specifically protect the homeowners and buildings. With those few words, I commend the bill to the House.

I take a call on the Building Amendment Bill (No 4). New Zealand First will not be supporting this bill. We have grave concerns about aspects of it, in keeping with the long-held history of the National Government—not only in this term of Government, but back in the 1990s—of creating the leaky building syndrome. We are, as a nation, still suffering from the change in legislation that the National Government brought about in the 1990s, which now sees this country in for $20 billion - plus of leaky building repairs, because of changes to the building code back then. Here we are now seeing the 2013 version of the same, which could well result in the same.

When you look at the Building Amendment Bill (No 4) and you see what is exempted in terms of building work, and what will not require any consent in the future, it is a little bit daunting in terms of what could be the situation if you jump ahead another 10, 15, 20 years and imagine the next group of MPs sitting in this House, when we are all well gone—well, maybe not all of us, but most of us will be well gone—looking back and saying: “How did they in 2013 allow that to happen? Why did they not learn from the mid-1990s, when they created the leaky building syndrome situation?”.

When you look at the exempted work, it includes as exempted “Single-storey detached buildings not exceeding 10 square metres in floor area”. They do not need a consent. Well, in many parts of Auckland at the present time, where there is great pressure on housing and people are living in garages, caravans, and all sorts of things, a 10-square-metre building can actually be an outhouse and can actually be dwelt in. It can be used as something that can be attached to a home, out on the back lawn, but in this legislation it can actually be put up with no consent whatsoever. So any sort of jerry-builder could actually put up any sort of dwelling on the back of any property in the Auckland area under this legislation, and there would be no control on it. That is what will happen. Under the current district plans that are in existence under the legacy councils, this sort of thing was not permitted to occur. I certainly know from the North Shore perspective that we did not want people putting up rabbit hutches on the backs of their properties and people living in all sorts of dwellings on the backs of properties in order to get around the building code. That is one of the things that will happen with this. Certainly in a place like Auckland, that is what will happen.

Also exempted are things like pergolas. A pergola is a structure, and if it is not built correctly, it can be very dangerous. They can fall down. Under this bill, building work in connection with a pergola is exempt. So, basically, again, any jerry-builder could put up a pergola. With a group underneath that pergola or with things hanging from it, or with things on top of it, if it were to collapse, people could be injured. But under this legislation, it is exempt.

Repairs or replacement of outbuildings is exempt. Again, basically, a lot of people will be able to get around the law because they will be able to say that it was just an outbuilding and that they were just repairing or replacing it, so they did not get a consent, and they will, effectively, rebuild the jolly thing without any consent. In places like Birkenhead, Devonport, or many heritage areas in the Auckland area, this is the sort of thing that goes on in terms of getting rid of heritage buildings. They basically leave one old window frame there and then rebuild the whole rest of it into some other sort of structure, and get around the heritage issues in respect of that. Basically, old parts of the city get slowly destroyed because people who are not sympathetic to heritage use loopholes in the law, such as this, saying that they are just repairing or replacing an outbuilding, can actually get rid of an outbuilding that could well have heritage value.

Also exempt are interior alterations to existing non-residential buildings. Alterations within a commercial building or non-residential building can be done, and, again, that can have extensive implications in terms of safety and in terms of the integrity of the building if it is being done as just repairs and changes with internal walls. In that respect, it also says here that internal walls and doorways in an existing building are exempt. If you do start playing around too much with internal walls and doorways in an existing building, it can have a big impact on that building. Again, less reputable builders, perhaps, less reputable developers, or people doing modifications to existing homes or renovations of existing dwellings could easily say: “Well, sorry. We didn’t need it, because we were just doing internal walls, internal doorways, internal renovations—all those sorts of things.” They could, in fact, be putting the building structure at risk.

It also says here that closing in of an existing veranda or patio will be exempt. Well, again, under the current situation and in terms of the coverage of a home on a property and the footprint that that home takes up, often patios and verandas can be quite sizable. Again, under this legislation people will be able to start filling in existing verandas and patios. That starts to become a thing where a house can incrementally change—you know, there is a patio there, there is a bit of a veranda there, or whatever. Just start easing out the houses. In a place like Auckland, suddenly more and more bedrooms are being conveniently tagged on to properties without a lot of legislative oversight.

We are seeing some real loopholes being put into the law here—for instance, carports. Carports will be exempt. Again, a carport usually has a decent-sized roof, and it is usually of reasonable substance. Are we going to have another situation like with Cave Creek, where we have to have a carport falling down on somebody because it has been improperly constructed for somebody to ask: “How did they ever exempt carports from being in the legislation? Why did they not require that these be checked by the appropriate authority to make sure that they were built right?”

Many other structures are also the same through here. We really do feel that the National Government should have learnt from its mistakes with the leaky homes. If you start deregulating and taking all the controls off and if you start watering it down to such an extent, and if you combine that with tradesmen of questionable ability, and where they may have learnt their building trade is questionable, you could end up in a situation where Auckland—and I particularly apply this to the likes of Auckland—in 10, 15, or 20 years could have some very, very shoddy building works going on under this legislation, and we could all say: “How on earth did that legislation go through under the National Government of 2013?”. New Zealand First will not support that.

I rise to take a short call on this bill, the Building Amendment Bill (No 4). It is interesting to follow New Zealand First. Mr Williams is an old-style regulator, who is terribly worried about the prospect of freedom stalking the land and about people like me—jerry-builders—going out and knocking up things on my property.

💬 Hon Simon Bridges: Who’ve you been knocking up?

Well, funnily enough, at Christmas I erected a trampoline. It was quite a large trampoline and it could fall over. I might have done it wrong, and I am sure that if Mr Williams had half a chance he would have the council inspecting that, at great expense, no doubt. The horror of horrors of people building outhouses and things like that and doing what they like on their property should never, never happen, according to Mr Williams. So I do think we need to strike a more practical line of approach.

The building sector accounts for around about 5 percent of GDP in this country, which is about the same size as the agricultural sector, and it employs 171,000 people—and 100 extra, I am informed. About one in 12 is in the building sector so it is an important part of the economy, and we need to make it as efficient and effective as possible, given particularly the great burdens and requirement for housing in this country, in Auckland particularly, and in Christchurch.

This bill is part of a suite of legislation that flows out of the Building Act review. We have dealt with the Building Amendment Bill (No 3) formerly, and this bill tidies up those matters that we have heard about around making contractors more accountable through the disclosure of information.

My colleague Jackie Blue talked about the concern that a lot of people have around people wrapping themselves up as a company and disappearing the next year, after they have built a particular house, and not being around. So this legislation is about making it clear that people know the history of their builder in terms of their contractual arrangements before they go into any contract.

Quickly running through it, the Local Government and Environment Committee heard a lot of submissions and has recommended quite a number of changes to the legislation around all sorts of things, from the measurement of dams and canals, the meaning of affected buildings, the classification of dams, to the classification of canals.

We listened a lot to the submitters over the course of the weeks that we listened on the select committee, and I have no doubt that as a result of that this legislation is better and is not going to have—there is always the risk of unintended consequences on this kind of complex legislation. I think that over the course of the select committee’s work we did iron out a few kinks. We have got this legislation into a good shape, and on that basis I commend it to the House.

I rise to speak to this second reading of the Building Amendment Bill (No 4), and I want to go back to some of the history and the overview of where this bill came from. In 2009 the Government agreed to terms of reference for a review of the Building Act 2004 in order to reduce the costs of building but not the quality of the building control system. That review found that the building regulatory system was not broken but that it was very costly and it was inefficient. The review noted—

Sorry to interrupt the honourable member. The time has come for me to leave the Chair.

Debate interrupted.

The House adjourned at 10 p.m.