Building Amendment Bill (No 2)

on behalf of the Minister for Building and Construction. I move, That the Building Amendment Bill (No 2) be now read a third time. I am pleased to begin the bill’s final progress through the House this evening on behalf of the Minister. This bill refines and streamlines the building consent process and reduces compliance and transaction costs for a group of home builders, developers, and councils, with flow-on effects for homeowners, and that is vitally important.

I make three introductory remarks about the specifics of this bill. First, it introduces national multiple-use approvals that will fast track the building consent process for house designs that are used repeatedly by group home builders. Secondly, it defines a new streamlined process for managing minor variations to building plans, after a building consent has been issued. That will save time for building consent applicants and, indeed, for local authorities. Thirdly, the bill makes voluntary the requirement to obtain a project information memorandum, commonly called a PIM, which reduces time and costs for building consent applicants.

The bill provides for regulations to be made that will provide the operational detail needed to get the initiatives up and running. The Government is committed to rapidly progressing these regulations so that the initiatives can come into force as soon as possible and the sector can begin to benefit from that.

This bill is the first step in the reform of the Building Act 2004. Led by the Minister, the Hon Maurice Williamson, this Government is undertaking a wider review of the Building Act with a view to reducing compliance requirements and costs, but without compromising building quality. That is an important point. Broadly, we would like to achieve several things as a result. The first is to further refine the building consent process by looking at what really needs to be consented, based on risk, if at all. The second achievement is to facilitate greater use of technology by councils and building consent applicants, such as having an online national consenting system to reduce costs and get consistency across the country. The third one is to lift performance and skill levels across the sector, through builder licensing.

A couple of other points I wish to make is that the reforms that we are looking to make in the future will provide better information on the building code, and more examples of how to achieve or meet performance standards. Also, they will help consumers make informed decisions about building their homes and choosing the products they need. The final point is to consider how the liability and risk in the building sector is shared. That is an important point.

The bill before us tonight, the Building Amendment Bill (No 2), makes a pragmatic start to the reform of regulation in the building and construction sector. I acknowledge the work of the Local Government and Environment Committee, ably led by its chair, Chris Auchinvole. I also acknowledge the select committee staff, the Department of Building and Housing officials, and the Parliamentary Counsel Office drafters who have worked on this important bill. I commend this bill to the House.

I intend to take a short call on this legislation. Labour is happy to support the third reading of the Building Amendment Bill (No 2). This bill was drafted by the previous Government and was picked up by this Government. It is always good when we can get consensus between the two main parties on issues as important as these. In that respect, we also wish the Government well with the work being done on further reforms in this area.

💬 Hon Lianne Dalziel: It is building consensus.

That is a nice little late Thursday afternoon quip. I think we have all been here too long.

This is never an easy area in which to change regulations or legislation, simply because we never really know what the impact will be until it is enacted, until the rubber hits the road and we see what the consequences of the changes will be. In this country we have seen the pendulum swing wildly in this area, from complete deregulation—which caused a number of problems—to the changes that were implemented after that. The previous Government acknowledged that the changes went too far: that they put far too much compliance on the building sector. For that reason, and because it recognised that the legislation had gone a bit too far, it drafted this legislation and made the reforms.

It is important to say that the legislation was written in response to the leaky homes crisis, and a number of New Zealanders were calling out for far more regulation in this area. I certainly hope that this legislation proves to be a good balance between the need for quality homes to be built and the need not to put too much cost on to those who are building homes, particularly with the housing affordability issues we have in this country.

As the Minister has stated, the bill aims to improve the efficiency and effectiveness of the building consent process whilst ensuring that quality homes and buildings are being constructed. It extends the functions and powers of the Department of Building and Housing. It will allow the department to issue national multiple-use approvals for dwellings and buildings that are replicated on a substantial scale. This is an important point, and it will make a large difference. As we know, 40 percent of all new homes built in New Zealand are built by volume builders. So if we manage to get this right, and I hope that we have—and I join the Minister in congratulating the Local Government and Environment Committee on the work it has done—it will make a significant difference to the level of compliance in this area. If we get this right I think that we can achieve enormous efficiency. I was the former chair of the Local Government and Environment Committee. It is now under the careful stewardship of Chris Auchinvole, who was one of my little grasshoppers on that committee in the last Parliament. I feel very proud of him, and I am sure that he has taken every care to ensure that the legislation will stand the test of time.

The legislation also reduces the statutory time frame for processing a building consent application from 20 working days to 10 working days where the application uses the national multiple-use approval. That will be an efficiency that the building sector will be very grateful for. The bill differentiates between major and minor variations to consented building work to support best practice in managing amendments to building consents. It makes it voluntary for an owner to obtain a project information memorandum from a building consent authority that is a territorial authority.

I know that during the select committee process the Historic Places Trust in particular was a little bit concerned about the move to make project information memoranda voluntary. It is important to say that its use has not been adequate, even though the idea was very good, which is why it was supported in the first place. Project information memoranda were meant to be a one-stop shop for all the information relating to building work that required consent. It was envisaged that they would save time and money—that is why they were put in—but only a minority of them were applied for prior to the building consent, which undermined the entire point of having them. It did impose a cost on the owner or the developer. The benefit of them was not being realised by the advance warning process, so it seemed sensible to move along the path that the select committee recommended. Even though we acknowledged the concerns of the submitters who were opposed to this move, on balance we have to acknowledge that it was the right thing for the committee to do.

I will finish by saying that this is an important move in terms of addressing the issue of affordable housing, but it will not be a silver bullet. Any reduction we can make to the cost of homes is important so that New Zealanders can afford to purchase their own homes. We hope there can be an accrual effect with a number of different changes adding up to a significant difference. However, I believe that we need see more movement in the area of affordable housing.

I think a lot of people expected that during the course of this recession housing would become more affordable and there would be a natural correction to the housing bubble that was created in the past few years. In fact, that has not been the case. What we have seen across most of the country is that housing prices have not dropped significantly, and certainly not as much as people thought they would. Interest rates have dropped, but at the same time more people are unemployed. Fewer people are getting pay increases, or even cost of living increases, so that their pay is keeping pace with the cost of living.

💬 Darien Fenton: Pay cuts!

People are getting pay cuts. So the ability of people to save for a deposit and to purchase their own home is dropping and it is doing so faster than the interest rate cuts, which are not being passed on in full so that homeowners can see the benefits of those cuts in their bank balance.

I implore the Government to please show some leadership on the issue of affordable housing. This bill is good. Every little bit is good. But what we have also seen, and it was indicated in the Budget, is a number of cuts across areas like Welcome Home Loans and the shared equity scheme. It was an underspend. They were cut simply because those mechanisms were not deemed to be necessarily appropriate for the time, even though the number of applications for Welcome Home Loans has increased in recent months. In the area of affordable housing we need constantly to be looking at what the best mechanism is to assist people into their first homes. Labour and National had a similar policy at the election, which looked at using Government-owned land to get people into their first homes. The only difference between our two policies was that in Labour’s policy the Government retained ownership of the land, so that the house was affordable in perpetuity—it would always be affordable because when it was sold on, only the cost of the house was sold—whereas National’s policy was to have the homeowner buy the land after 5 years. Apart from that the policies were very similar. National’s policy did not get funding in this year’s Budget, and I was disappointed with that, because I believe that it would have been an important tool particularly to help New Zealanders to get into their first homes.

I reiterate that we will be supporting this bill. We think that the select committee did a really good job. We certainly hope that the legislation strikes the balance that this Parliament has been striving to strike for a long time, but we do need to see more action from the Government on affordable housing.

I thank Moana Mackey. C’est toujours un plaisir à suivre Mademoiselle Mackey.

💬 Chris Tremain: You’ll find that was “Oh Grasshopper”.

Ha, ha! I am not quite sure of the grasshopper.

💬 Hon Lianne Dalziel: You’ll have to get a Māori pronunciation sheet from the Māori Party, though.

I shall do that.

It was a pleasure to hear the Building Amendment Bill (No 2) being introduced by Minister Nathan Guy. Let us remember—and this side of the House has always acknowledged—the contribution to this bill made by the Hon Shane Jones in his drive to get it going.

In many ways, the speeches given on this bill have been quite cathartic, in that they have reflected on the difficulties of the leaky home syndrome that occurred and frightened the industry. It certainly made councils risk-averse, and introduced very severe inspection regimes, and that sort of thing. It is good to hear members of the previous Government say that they maybe went a bit far with regulation. This bill addresses that situation. It is novel, it is clever, and National was very happy to proceed with it when National became the Government. As I mentioned yesterday, there was even a suggestion that we should have called it the “Shane Jones Building Amendment Bill”, but that would perhaps have been over-egging the cake.

The purpose of the bill, as the Hon Nathan Guy said when he introduced the third reading, is to allow the Department of Building and Housing to issue national multiple-use approvals for dwellings and buildings that are to be replicated on a substantial scale. I reiterate that it was interesting and a surprise to learn during the submissions that that relates to 40-plus percent of residential housing in New Zealand—40-plus percent. Those dwellings are separately designed and attractively designed; we are not building little boxes.

💬 Moana Mackey: We’re not building shipping containers.

That is right—we have a separate purpose for those. It does mean, though, that this bill affects a large proportion of residential building. It reduces the statutory time frame for processing a building consent application from 20 working days to 10 working days, where the application includes a national multiple-use approval. That makes a hang of a difference. Minor variations—whether someone wants a bath on one side of the bathroom or the other, or whether someone wants a little window here or a little window there— can be consented building works, so that minor changes can be made without going through a full process. This will reduce costs and save time. The bill makes it voluntary for an owner to obtain a project information memorandum—a PIM—from a building consent authority that is a territorial authority.

That is the basic cut of this bill. The background is relatively well known. It is designed to reduce both direct and indirect costs to property owners and developers, while ensuring that quality homes and buildings are constructed. Multiple-use consenting will drive improvements in housing costs and affordability by removing barriers to achieving potential economies of scale. These proposals follow consultation with the industry and with local government. It was a pleasure to see this bill go through the Local Government and Environment Committee, because, really, it attracted no partisan approach at all. It has been well received by both sides of the House. Support for this bill has been very much bipartisan. It has been one of those occasional oases in the desert of political cant.

It was a slight disappointment and a surprise to hear the only discordant speech on the bill thus far, from the Hon Maryan Street yesterday. That surprised me a little, because she is normally very temperate. None the less, she railed against the discussion on the bill for not giving the bill sufficient credit for being a step towards reducing the cost of housing. I feel that that has to be responded to, because she really was quite strong about it. The Committee stage is usually devoid of party political statements, I would think, because it deals with the clauses of the bill. But to reassure the Hon Maryan Street—and she made a valid point in saying that the bill is a step towards providing affordable housing—I checked the first and second reading speeches that I gave on this bill. I can reassure her that there were 10 separate mentions of cost reduction and housing affordability in the first reading speech, and 17 separate mentions in the second reading speech. I think my colleagues would say we have always had that as a priority.

💬 Dr Cam Calder: Undoubtedly.

Indeed. In a recent speech by the Prime Minister, given last Wednesday, I think, he emphasised the whole matter of businesses needing conditions that are favourable to them, and said that investors will put their money where they can get a good return for good processes. That is why this Government is focused squarely on improving New Zealand’s economic performance. There are lots of ways of doing that.

The Government is committed to increasing New Zealand’s productivity growth, and to maintaining high levels of employment. This bill will help to do that. Increasing our productivity growth basically means getting better at producing goods and services and getting them up and running. The reality is that although this bill has often been described as a small bill or a short bill, it is a very valid bill, because it does everything that a bill is required to do. The most fundamental problem facing the New Zealand economy is poor productivity growth. Whichever way we look at this bill, it is significantly designed to increase productivity. Our productivity is already low in comparison with that of other developed countries, and in recent years it has been growing more slowly than that of other countries. This bill is a small step towards acceleration. It will be followed, as indicated by the Minister who introduced the third reading, by far more profound bills that revise the Building Act.

As I said, it has been a pleasure to be associated with the bill, it has been a pleasure to be associated with its third reading, and it has been a pleasure to support the bill from beginning to end. Thank you, Mr Assistant Speaker Roy.

I am pleased to take a short call on the Building Amendment Bill (No 2). I have to say I was getting a little bit concerned about the level of agreement in the House. This consensus is getting to be a bit of a habit on Thursday afternoons. I was with Chris Auchinvole all the way until he started to talk about productivity, then we absolutely parted company. I am really looking forward to the debate on productivity led by the wonderful Dr Don Brash. I am looking forward to seeing what silver bullets he can come up with. I am looking forward to being able to challenge his answers, because I suspect they will be the same as they were in the past. They will be the same old things we have heard in the past.

However, I do not want to finish on a discordant note on a Thursday night. On behalf of Labour I add my support for the bill. As many people have already observed, Labour introduced this bill while in Government. The purpose was to help reduce unnecessary delays in the building consent process that cause frustration among builders and make it more expensive for the owners. The bill will reduce both the direct and indirect cost to owners and developers associated with the construction process while ensuring that quality homes and houses are constructed.

This bill was part of a coordinated approach from the last Labour Government to assist in increasing the supply of good-quality, affordable homes as part of a package of programmes introduced by Labour. As my colleague Moana Mackey observed, the package was largely picked up by this Government. Again, it is really interesting to see we have consensus on these things. It will be more interesting when we get past all the bills that Labour introduced in the last Parliament—bills that we are now passing. Every day we are voting on good Labour bills that National agrees with. I suspect that once we get to the Government bills, we will have a lot of disagreement.

I congratulate the Local Government and Environment Committee, as others have, on the work it did. It received 17 submissions on the bill, including submissions from local government, industry bodies, private companies, a Crown entity, and a community advocate group. I am sure others have set out the main changes that the select committee recommends, which I think are very sensible. I am really pleased that this important Labour bill has found favour with the National Government. I look forward to its measures making a difference to the affordable home market.

The Green Party is very pleased to join in the consensus in this House on the Building Amendment Bill (No 2). A previous speaker talked about how wonderful it was to have consensus between the National and Labour parties. I remind members that there are other parties in this House as well. I believe that all parties, including the Green Party, ACT, and the Māori Party, are joining in the consensus, the reason being that the bill is an eminently sensible amendment bill, which was originated by the previous Government and is being carried through by this Government.

The bill provides for multiple-use approvals for houses that are built on a large scale. We think here of Lockwood Homes, Golden Homes, etc. One small point I would like to mention, which no one else has mentioned, is that during the consideration of this bill in the Local Government and Environment Committee, which was ably chaired by Mr Auchinvole, we managed to make a small but, I think, important concession. We ensured that Lockwood Homes could also benefit from this bill. Previously, there was a regulation that prevented Lockwood Homes from benefiting from this bill, as it was not able to be considered to be a volume builder. I am very pleased about that change. Actually, at the start we were told it was impossible for it to be considered to be a volume builder. The committee persisted, and we included Lockwood Homes. That was a small thing that the committee was able to do. I am sure that Lockwood Homes, which is an important and iconic New Zealand company, will be very pleased that it is not excluded from the provisions of this bill.

The bill does many good things. It will streamline, as many others have said, the building consent process. It will, hopefully, produce economies of scale. It will make homes more affordable, and it will speed up the approval process and enable houses to be built more quickly.

A previous speaker mentioned that we really will not know the consequences of this bill until it has been enacted, and I would like to mention a couple of cautionary notes that we need to have in the back of our minds. Other speakers have pointed out that, really, this bill is a reaction to the previous building bill, the Building Amendment Bill, which, of course, was passed in response to the leaky building problem, and arguably went too far and created too many hurdles in the Building Act. But there is a danger that the pendulum will swing too far, and we will end up once again cutting corners. The Minister said when he introduced the Building Amendment Bill (No 2) that it will bring down the costs of building while not compromising building quality. Others have repeated that statement, but nobody has explained to me how this bill will ensure that we will not compromise building quality. I have no idea how we will ensure that we will not compromise building quality or slip back to the days when poor regulation resulted in the leaky building crisis—and it is indeed a crisis and a growing one. So we need to have that at the back of our minds.

The second issue I would like to touch on is that some submitters, as is noted in the select committee’s report, raised concerns that the national multiple-use approvals could lead to a proliferation of standardised housing that is not designed with reference to the specific environment. I share those concerns. I think there is such a possibility. We know that 40 percent of new homes will be built by volume builders, and there is the risk that we will have standardised, identikit houses—absolutely identical—one by one and side by side, because it is cheaper to build them. Someone said we are not building little boxes with this bill, but the possibility does exist that that would be the consequence, and that we would end up with a lot of little boxes that are not built in harmony with their environment.

One needs only to travel briefly to Europe to recognise the importance of building homes that are not ugly and are in harmony with their environment. One of the huge appeals of tourism in Europe is that there tend to be, in many areas—not all, by any means, but many—buildings that are in harmony with the environment. We can think of areas where they are not in harmony with the environment. There are, for example, huge multi-storey buildings on the Spanish coast. They tend to be very ugly, and tourists are often put off by them. So we do need to be mindful. We do not want to create a whole lot of ugly, standardised buildings all looking the same as a consequence of this bill. We need to make sure that that does not happen. We will not know whether it will happen, as someone said, because we will not know the consequences until these regulations are put into effect.

However, on the positive side, the bill will help, in some small way, to enable affordable houses to be built. Everyone agrees that it is a huge, huge problem in New Zealand that homes are not affordable, we have a huge number of New Zealanders living in overcrowded homes, and there are not nearly enough homes being built. This bill may take one small step towards making homes more affordable, enabling them to be built more quickly, and reducing compliance costs. For those reasons the Green Party is pleased to join in the consensus on this bill. We very much hope that our fears about identikit, standardised, ugly houses being built as a consequence of the bill will not be realised. Thank you.

I am delighted to stand to take a call in support of the third reading of the Building Amendment Bill (No 2). I think that having unanimous support for a bill around the Chamber is a really nice way to finish a parliamentary week. It is important to acknowledge that members of the previous Government have recognised that perhaps some of the regulations around building had gone a bit too far. They have become a barrier in terms of affordable housing and have added layers of bureaucracy that are not ideal. The National Government has picked up this bill, put some urgency around it, and focused on some areas where we know that we can get some quick wins that will have an impact in terms of housing becoming more affordable.

I will recap on the three main initiatives of the bill. The first is around the national multiple-use approvals. The building consent process for the 40 percent of houses that are currently built in New Zealand by group building companies will be far more streamlined. Their designs are replicated on a substantial scale, so less work will be involved for 40 percent of the houses built in New Zealand.

The second area is around the streamlined process for making minor variations to building plans after a building consent is issued. These are minor changes in building plans. They are not significant, and the process of making them in the plans was too complex.

The third main initiative, which is the final part, is to make voluntary the requirement to obtain a project information memorandum, or PIM. Again, this initiative reduces time and costs for building consent applications.

It was very pleasing to see that as well as these changes receiving support from around the House, there was strong support for them from the industry. Good, targeted consultation was undertaken during this process, and I am sure that has made the process and the submissions far more encouraging and supportive. The 17 submissions that came in were encouraging in terms of supporting both the changes that are specifically recommended in this bill and the wider reform of building legislation. A review was started in March of this year to further refine the building consent process, to lift performance and skills through builder licensing, and to increase the use of technology by councils.

I was working for one of the councils when the Building Act amendments came in. It was an interesting process seeing how councils came to grips with a very difficult and complex process. They will be extremely relieved about the changes that will come in, not only now with this bill but also with the wider building reforms. Those reforms will improve the use of technology for councils and will provide more information and education for consumers, so that they can have better access to what is going on with their building consent.

The review will also look at responsibility, liability, and risk. As we know from the leaky homes issue, which was a major issue when the initial changes came in, there was a concern that the solution to that problem went too far. We need to make sure that we continue to look at that issue in terms of managing the risk and deciding where the risk should sit.

It is really encouraging to see that everyone in this House is supporting this particular bill in order to make sure that housing is more affordable for hard-working New Zealanders. I am sure that New Zealanders out there will see that it is great to have a Parliament that can work together and great that all members can agree on something that it is so important to this society. It is the dream of New Zealanders to own their home and we will give it to them.

Debate interrupted.

The House adjourned at 6 p.m.