Building (Earthquake-prone Buildings) Amendment Bill

In relation to the Building (Earthquake-prone Buildings) Amendment Bill, firstly I would like to acknowledge and appreciate the input from engineer John Scarry. Over the last week or so since starting with my speech, Mr Scarry has provided some very good and considerable input into this issue. Secondly, I would like to provide the definition of an earthquake-prone building. It is a building that “will have its ultimate capacity exceeded in a moderate earthquake”. If it should “collapse in a moderate earthquake, the collapse would be likely to cause—(i) injury or death” or “(ii) damage to any other property.” It can be constructed from any material. Further, a moderate earthquake, under that definition, is an earthquake that is one-third the strength of, but the same duration as, the code-specified earthquake for a new building on the same site.

The findings of the Royal Commission of Inquiry into Building Failure Caused by the Canterbury Earthquakes are variable in quality, which is understandable given the enormous task the commission was confronted with. Its recommendations with regard to earthquake-prone buildings must not be considered to be without flaw. The best evidence presented to the commission on the performance of strengthened and unstrengthened, unreinforced masonry buildings in the Christchurch earthquake was provided by Mr Jason Ingham and Mr Michael Griffith. This clearly showed that strengthening to even 50 percent of new building standard has little effect on the performance of a building in an extreme code-level seismic event. Only strengthening to a minimum of 67 percent of new building standard does that. Strengthening up to 50 percent did not prevent complete destruction, but that was in earthquakes that had short durations of intense shaking, not 40 seconds or more as could be expected close to the main alpine fault line or in Wellington.

This Building (Earthquake-prone Buildings) Amendment Bill is not about life safety in a code-level earthquake event. The performance of unreinforced masonry buildings in the Christchurch earthquakes shows that, particularly in earthquakes with a long duration of intense shaking, even buildings strengthened to 50 percent of new building standard suffered heavy or major damage or were destroyed. Therefore, what is expected to be gained in a major earthquake if the level of strengthening required is only just above 34 percent? The term “new building standard” really applies only to the percentage of code loading. The assessment of existing buildings’ seismic strength in accordance with the New Zealand Society for Earthquake Engineering “Red Book” of 2006 is done on a much less conservative basis than that used for the design of new buildings. This means that a building that is at 34 percent of the new building standard has only about 25 percent or less of the strength of a competently designed new building. If we require a new building to have the equivalent of 100 percent code performance in order to achieve its life safety function in a code-level seismic event, what performance can we honestly expect of a building that has its strength equivalent to only 25 percent of current code performance?

This bill clarifies that once a building is classed as earthquake-prone, it need be strengthened only to be marginally above 34 percent of the new building standard to no longer be earthquake-prone. So why would we even bother? One of the very few useful aspects of the Building Act 2004 was a much more realistic treatment of earthquake-prone buildings. The one-third new building standard cut-off was used then as a means of identifying the most at-risk buildings, and it was then to be up to the local authority to determine what level of strengthening was required. The building stock that this bill is meant to deal with is enormous and varied—a very large number of buildings of extremely varied type, use, and location. These buildings were, in the main, designed without the slightest regard to seismic loading and have materials and structural details that are the worst possible from the point of view of achieving robust seismic performance.

The value of this building stock is enormous, the cost of strengthening or replacing it is immense, and the resources required to assess and strengthen it are formidable. It is essential that the Minister for Building and Construction and the Local Government and Environment Committee, which is dealing with this bill, not go through the motions to simply rubber stamp it, but, rather, to treat every submission on its merits, in order to lead to an Act that has the scope and flexibility to deal with the diversity of building stock throughout New Zealand.

Main streets throughout New Zealand will be greatly affected by the measures in this bill. The effects on provincial New Zealand will be huge. Many building owners simply will not be in a financial position to undertake the required upgrades. Main streets all over the country will literally be driven out of existence. What will that do for our provincial economies? Has full consideration been given to a reasonable compromise to help protect lives in the event of a sizable earthquake, such as, for instance, initially concentrating on checking and strengthening verandahs over pavements, which is where many people died in the Christchurch earthquake? Also, has the Government looked into the likes of tax concessions and other subsidies to support the landlords who will be required to strengthen these buildings? This will impose a huge cost to New Zealanders throughout New Zealand in terms of commercial and other buildings. This could be crippling for the economy. We, New Zealand First, are concerned that perhaps the Government has not thought this through fully and that main street New Zealand, particularly in small towns and small provincial areas, will be up for a huge cost.

With regard to the Government’s scheme to contribute 25 percent to leaky building repairs, it was widely stated that this could have cost the Government $1 billion if this had been taken up in full, but by the time GST, direct PAYE, and company profit tax were considered, the actual cost to the Government was almost nil. That was without considering all the GST and tax as a result of the economic multiplier that came from the economic activity from fixing the leaky buildings. Similarly, New Zealand First is of the view that if we are going to go down this track and require landlords throughout New Zealand to bring their earthquake-prone buildings up to a higher standard, there must be some compensation to landlords, there must be some concessions, and there must be some way that the Government would support this going on, because the economic effects and the work that will be generated as a result of this will be considerable, and therefore the tax that results from the PAYE, GST, company taxes, and other aspects will be considerable. The Government needs to take that into account.

The 4 September 2010 earthquake in Christchurch may have acted as a safety valve by damaging and making off limits many earthquake-prone buildings that would have otherwise caused numerous fatalities on 22 February 2011. However, it is a fact that over 70 percent of the fatalities on 22 February were caused not by the collapse of earthquake-prone buildings but by the collapse of two earthquake-risk buildings, namely the CTV Building and the Pyne Gould building, which were rated later to be at 40 percent and 50 percent of the new building standard, respectively. Therefore, New Zealand First urges that we do not try to impose something across the whole of New Zealand perhaps as a result of what happened in Christchurch but we look at this as it goes to the select committee, and that the Government does indeed listen to the experts in this matter so that we do not go down the wrong path and impose huge costs on the whole of New Zealand.

I call the honourable member Jacqueline Dean.

Thank you very much. I get called that when I am being particularly bad, which is not often, to be fair. The issue of managing earthquake-prone buildings is quite acute down in the Waitaki electorate and in particular in my home town of Ōāmaru, which is well-known and nationally recognised as having particularly beautiful heritage buildings. None the less, we absolutely accept the recommendations of the royal commission finding into earthquake-prone buildings. We have to listen to those recommendations because history has told us in the most cruel of ways over the last couple of years that buildings can indeed be deadly. That is why I fully support the intent of this Building (Earthquake-prone Buildings) Amendment Bill, which is to put in place a regime for assessing and monitoring buildings against national criteria and for requiring those earthquake-prone buildings to be brought up to a necessary level of safety so that both public safety and also people in their homes, if they live in multi-storey buildings, can feel safe in the event of a bad earthquake.

This is a good bill. I support it to the select committee.

It is no problem for me to take this call to support this Building (Earthquake-prone Buildings) Amendment Bill. I do agree with what the Minister for Building and Construction and earlier speakers said in their earlier contributions, in that this bill is seeking to strike a balance between public safety and the costs to be incurred by those individual or corporate owners. The bill is designed to improve our legislative system for managing earthquake-prone buildings, but there are several issues that we must address in order to enact a piece of legislation that will have the scope and flexibility to deal with the diversity of this type of building stock and the problems that presents. Before I start I would like to thank the submitters who raised valid points during the review of the earthquake-prone building policy, the Canterbury Earthquakes Royal Commission, and the stakeholders, professionals, and experts whom I have spoken to, particularly the structural engineer Mr John Scarry.

The first issue is what level of strengthening is required. Under section 122 of the primary legislation, namely, the Building Act 2004, a building with a seismic performance strength that is less than 33 percent of the design standards is defined as an earthquake-prone building. It is also known as the so-called one-third rule. The Christchurch City Council had earlier expressed a view in its submissions on other bills that the test should stay the same for the next 5 years while the Canterbury Earthquake Recovery Act 2011 is in force and the Canterbury Earthquake Recovery Authority exercises powers under that Act. In the Canterbury region the seismic loading factor changed in May 2011 and more buildings will now be classed as earthquake-prone without any change to the 33 percent test. For example, a building that had a strength of 34 percent in 2009 that is undamaged and in exactly the same condition in 2012 as it was in 2009 is estimated to have a strength of only 25 percent of the 2012 code requirements.

This bill requires that once a building is classed as earthquake-prone it needs to be strengthened to be marginally above 34 percent of the new building standard in order to be no longer earthquake-prone. But the performance of unreinforced masonry buildings in the Christchurch earthquakes shows that even buildings strengthened to 50 percent of the new building standard are likely to suffer heavy or major damage or be destroyed, particularly in earthquakes with a long duration of intense shaking. Therefore, what is expected to be gained in a major earthquake if the level of strengthening required is only just above 34 percent?

The Building Act 2004 provides a more realistic treatment of earthquake-prone buildings. The cut-off of one-third of the new building standard was used then as a means of identifying the most at-risk buildings and it was then up to the local authorities to determine what level of strengthening was to be required. Wellington City Council’s current policy on earthquake-prone buildings, for instance, states that the council wants strengthening to at least 67 percent of the new building standard and that any strengthening less than that will not prevent the council demanding further strengthening in future, should the council get the power to do so.

Having said that, I note that we now have two identical but different terms to define the buildings in question. One term is “earthquake-prone buildings” and the other is “at-risk buildings”. We can learn a huge lesson from the 4 September 2010 earthquake, because it is still a fact that over 70 percent of the fatalities from 22 February 2011 earthquake were caused not by the collapse of earthquake-prone buildings but by the collapse of two earthquake-risk buildings, the CTV Building and the Pyne Gould building, which were later rated to have been at 40 percent and 50 percent of the new building standard respectively. The very large and modern Hotel Grand Chancellor was only seconds away from collapse. So from these examples we can see that this bill does nothing to require earthquake-risk buildings—that is, those rated at between 34 percent and 67 percent of the new building standard but containing critical vulnerabilities—to be strengthened at all. Therefore any claims that this bill is about life safety in extreme seismic events is, to some extent, misguided.

The other side of the coin is the social, economic, and environmental impact this bill may have on the building owners. A survey by Wellington City Council last year indicated that around half of earthquake-prone building owners had difficulty getting insurance and that many faced premium increases of more than 50 percent. We do not want to see businesses go belly up, nor do we want to see community character and heritage interests overlooked. Submitters at the policy review stage were also eager to communicate that a lack of insurance impacts on the building owners’ ability to obtain a loan in order to pay for the strengthening work to be done, and that this process, sadly, can be a costly chicken and egg situation. Submitters such as the Heritage NZ trust board noted that although many heritage buildings are privately owned, these places are often of value to society as a whole, yet private owners are shouldering these costs single-handedly. I urge the affected parties and stakeholders to make their submissions to the Local Government and Environment Committee and have their voices and concerns heard.

One idea that has been floated among affected and concerned parties is about tax concessions and subsidies. With regard to the Government scheme to contribute 25 percent to leaky building repairs, it was widely stated that this could have cost the Government $1 billion if there had been full take up. But according to some experts—and this point has been addressed earlier by New Zealand First MP Mr Andrew Williams—by the time GST, direct PAYE, and company profit tax were considered, the actual cost to the Government was minimal. Whether or not it is a good idea for us to deliberate with regard to tax concessions and subsidies, I think the affected and concerned parties should seriously consider this option and make their views known to the committee, because, as I said, this is kind of a chicken and egg situation, and many private owners, or even corporate owners in this situation who may have similar problems as well, have issues with insurance companies and with their banks. So, to conclude, we have no problem in supporting this bill at this stage, but we urge the affected and concerned parties to make submissions to the committee and to make their voices heard. Thank you.

The purpose of the Building (Earthquake-prone Buildings) Amendment Bill, as others have outlined, is really to strike that balance between making sure that buildings are safe against earthquakes and also that they are not terrifically expensive for the people who have got the buildings. There are a number of complicated issues around it, many of which I see on a weekly basis in my own North Shore electorate.

In Devonport we have a number of earthquake-prone buildings that need to be restored to heritage level, and the integrity of the architecture has to be preserved. So, as you would imagine, that presents a number of challenges—many of them rather expensive challenges, as well. So what needs to happen is we really have to clarify for the people who own these earthquake-prone buildings the threshold for defining what exactly an earthquake-prone building is. Is part of the building earthquake prone? Does the whole building need to be earthquake strengthened? These are the kinds of issues that people are grappling with and need some leadership on.

The timing, of course, is contentious. Should we be doing this within a time frame of within 20 years or pushing it out to a longer limit? There are a number of various viewpoints you could take into account on that one, and I guess affordability comes into play but, again, we must keep in mind that very important aspect of public safety. This is a very significant issue and it has a high level of public interest.

It is estimated that between 15,000 and 25,000 buildings across New Zealand could be earthquake-prone. So it is something that we really need to do very carefully. We have to make sure that there are no unintended consequences and that people are not unfairly penalised, but also that public safety is paramount. So by doing this, we need to move to a system that has a significantly greater role for central government, particularly in terms of providing leadership and direction. We need to make better use of the capability and resources of central and local government. In other words, we all need to work together to make this bill the good piece of legislation that it is. Thank you.

Just before I recognise the Hon Damien O’Connor, this is to advise the House that this is a split call.

I will speak briefly on this Building (Earthquake-prone Buildings) Amendment Bill. This is a very important bill for provincial New Zealand. There are many, many building owners and business people out and around there in New Zealand who are fearful of what this bill might deliver for them. It could be termed the “Risk Management Bill” because, as the poor people in Christchurch know full well, you cannot guarantee anything absolutely. We are in a country known as the Shaky Isles. It is inevitable that we will have earthquakes in the future, and we have an obligation as a Parliament to try to reduce and, if possible, prevent any harm occurring in the event of another major earthquake.

It is, however, virtually impossible to do that. Speakers before me have raised the issue of balance, and my good colleague Raymond Huo has spoken about this on numerous times. The bill, as the Government has presented, could potentially cripple many hundreds and thousands of small businesses up and down this country. I am speaking to them on a regular basis. Greymouth and Motueka are two towns in particular, where we have many, many buildings that are way below code. They are occupied by people who are battling away to try to survive in business. They are confronted with internet purchasing. They are confronted with the big chains that have built brand new buildings—coming in, riding into town, and, of course, squashing opportunities for those people to survive. The last thing they need is to be confronted with an unaffordable situation around their tenancy.

I spoke to a person who is closing down a business, a sports store, in Motueka. They have got 18 months still to run on their lease and they have to try to find someone to sublease to. It is in a building that needs a lot of work done to ensure that there is protection for the people who come in to buy and for the staff in that building. It is a real dilemma, and there will be, as I said, thousands of people around the country like that. We have to trust that the Local Government and Environment Committee—and I am sure that the Labour members from this side will do their very best—will get the right balance. I know that that will be important.

I would like to take the opportunity to just mention the heritage buildings. There is one, in particular, in Hokitika, and that is St Mary’s Catholic Church. I have to mention it because I had the very sad occasion of the funeral of a dear friend and a stalwart, Jim Keenan. He was a stalwart also of the Catholic Church, and one of the greatest, I guess, losses for him was his inability in his last months to attend Mass at St Mary’s Catholic Church because it has been deemed by the Catholic Church in Christchurch to be unsafe and unfit for service. It is a beautiful building. I am not sure how the passage of this legislation will affect the Catholic Church’s ability to do up that church and restore it to a usable building. It is a heritage building. It is magnificent. But we now have the tensions between building owners with a responsibility to people who utilise the building and then the huge costs facing an organisation, in this case a big one. In many other cases around the country small landlords or individual business owners are faced with a real dilemma. So I hope that the select committee does the very best it can to find that right balance.

I guess this is a word of warning. The National Government has not been very good at sorting out the leaky homes situation. I hope it does better at the shaky homes situation. That is what we are facing here. Councils up and down the country clearly need direction from central government. They are doing their best and using their own initiative to delay some of the implementation time lines that have been laid down. But they are not sure what legal liability would then occur if there is a terrible situation of another major earthquake in any one of those towns.

We need clarity for the councils and we need clarity for the building owners, but, more important, we need some security and protection for the business people who already have their backs to the wall in terms of provincial New Zealand. They need to know that they can carry on safely and that they can do so without having to pay ridiculous fees and costs of upgrade. So we wish the select committee all the very best in its considerations.

It is my pleasure to take the second call for the Green Party on this bill, the Building (Earthquake-prone Buildings) Amendment Bill. I want to start by saying that the Green Party is very much in support of a programme to systematically earthquake strengthen buildings in New Zealand, but, as my colleague Mojo Mathers has outlined in her substantive contribution to this first reading debate, we are at this stage opposing this bill. We are doing so on human rights grounds, and that is human rights grounds on the basis of access to buildings.

As we know, this bill, although it sets out the parameters of a strengthening programme for buildings around the country, gives building owners the possibility of being exempt from meeting fire access and disability access requirements when they undertake that strengthening work on their buildings. That is a real problem from our point of view in the Green Party, because what that does is lock people with limited mobility out of buildings. We are talking about a significant number of buildings—potentially between 15,000 and 24,000 buildings—around the country that require earthquake strengthening and that could potentially be made inaccessible long into the future by exempting building owners from the responsibility to upgrade the accessibility of their buildings when they undertake strengthening work.

This breaches several international human rights covenants that New Zealand is a signatory to, and it is an issue of extreme concern to the disability community, as outlined by Mojo Mathers in her speech earlier in this debate. It affects not only those with impairments but also many other parts of the population. Parents with strollers—which is something that I have experienced myself recently—as well as older people with limited mobility all face being locked out of buildings if we do not take the opportunity that arises when buildings are earthquake strengthened to improve their access.

We in the Green Party think that with an ageing population, this is a significant missed opportunity, because a very significant portion of our population will have mobility impairments in the future, and they have a right to access buildings around the country. This could be an opportunity to make sure that that access improvement takes place alongside the required strengthening work, and we are missing that opportunity if we allow the bill to pass as it is currently drafted.

At the moment earthquake-strengthening work is one of the only triggers in the Building Act that requires an upgrading of access, and if this is removed, it means that some buildings in our built environment may never be made accessible to those who need to access them. We do recognise that in a small number of cases it may simply be impossible or completely impractical to make certain buildings accessible. This is the argument that the Minister for Building and Construction has advanced to defend the exemption that he is proposing, but we consider that this is already covered by the fact that in the existing Act you can be exempt from making those access upgrades on a ground of reasonable practicality. We think that is perfectly fair and would continue in the future. So for this reason, we cannot support the bill as it is currently drafted. We would very much like to support it in subsequent stages if the Local Government and Environment Committee can adequately address these concerns. We will work constructively with all parties on the select committee to try to ensure that this happens.

Aside from the access issue, which is the substantive reason for our opposition to this bill at its first reading, there are some other elements of the bill that we would like to explore in more detail in the select committee. I will briefly touch on these now. They include asking the Government to consider the cost implications of the bill. As we have heard from other speakers, the cost to building owners of doing this upgrade work could be substantial, and there is a case to be made that the Government needs to come to the party with some measures to assist. We would also like to see that if some buildings are going to be given an exemption from carrying out earthquake-strengthening work, there should be criteria set out in the Act to set out who qualifies for those exemptions and why. That is missing from the bill as currently drafted.

We think that there could be opportunities taken, when improving access, to look at ways to make buildings greener and more sustainable. Again, it is another potentially missed opportunity in the bill as currently drafted and is worth some consideration by the select committee. We want to address the issue that Raymond Huo raised in his contribution earlier about giving building owners some certainty that once they have undertaken strengthening work, they do not need to do so again for a decent period of time as the code changes over time. These are examples of some of the issues in the substance of the bill that we would like to get into in more detail in the select committee, and we look forward to working constructively to address those and the fundamental issue of access. Thank you.

National is ensuring that earthquake-prone buildings are dealt with in a timely manner by way of a nationally consistent system through this bill, the Building (Earthquake-prone Buildings) Amendment Bill. There is no magic here. Building strengthening, like access work, costs a lot of money, and there are real-life trade-offs involved. Buildings could be abandoned, businesses closed, and jobs lost. On the other hand, we are very concerned about greater public safety. These are very difficult trade-offs, and this legislation is trying to provide a context for doing that in a rational and consistent manner.

I do want to draw attention to the work that has been done before bringing in this bill. After listening to feedback during the consultation period, the time for strengthening or demolishing has increased from 15 years, which was originally proposed, to 20 years from the legislation taking effect. There have been special provisions written in for heritage buildings being given potentially another 10 years, and we do look forward to the Local Government and Environment Committee drilling down into the details of that over the next couple of months. On that basis, I do commend this bill to the House.