Building Amendment Bill (No 4)

I speak on the second reading of the Building Amendment Bill (No 4). Just to recap, this is a companion to the Building Amendment Act 2012, which came into force on 13 March 2012. This is the second of two bills to implement the Building Act review. What this bill does is it reduces compliance costs, it reduces complexity, and it reduces the delays in the building process. But it is also about protecting consumers, and it has got a number of provisions that will add to consumer protection. The first is that it makes contractors more accountable, and it makes them more accountable by requiring them to disclose a significant amount of information. The sort of information that they have to disclose to help people make a choice about their contractors is the legal status of the contractor and whether they are operating under a limited liability company. It needs to talk about the people who will carry out the work. It talks about their track record, their dispute history, their skills, and their qualifications, and also any financial backup or insurance that they have to cover the cost of fixing faults.

It also protects consumers by requiring written contracts for most residential building work. We heard quite a lot of stories from submitters about really complex situations that had come out of not having a contract that everybody could see, that was in writing, so that they could be sure of the quality of the work that they were going to get. These contracts must have specific information. First of all, they have to have information about the parties, about dispute resolution so that people know how they can go about a process if there is a dispute, and about the process for varying the contract. One of the stories we have heard, and we probably all know this, is that the costs of varying a contract tend to be very high. Sometimes people believe that a contractor will tender for a job, but if you make any changes to that, that is where they make their money. There needs to be a process laid out, so that people understand that. Also there is the time frame for the contract—basically, so they know when it will be finished—and what the payment process is. Often disputes are about how that payment works out in reality.

It also protects consumers even if the parties do not have a written contract. Of course, they are supposed to have a written contract. But just suppose you went ahead and started a building project without a written contract and it all turned to custard, there are regulations in this bill that will prescribe default clauses that will be taken as being included. So there will be no way for anybody to be able to escape just because it is not in writing.

The bill also has specific methods for enforcing warranties. The problem behind this is that often there are warranties but consumers have not necessarily read the fine print, and they have not got the peace of mind if something goes wrong and there is some shoddy building. This gives specific methods for enforcing those warranties. And building contractors will be expected to fix any defects in their work that are reported within 12 months of completion. They will have 12 months to discuss the project, and any damages or faults in the work must be fixed by the end of those 12 months.

The bill also increases the maximum penalty for failing to comply with building consent requirements. Up until now it has been a $100,000 fine, but this has been moved to a $200,000 fine just to show how serious we are about making sure that people get their building consents correctly done and that that protects consumers as well.

I have to say that the Local Government and Environment Committee worked hard on this bill and we did make a series of changes and, I think, improvements in response to submitters’ ideas. There are four or five key changes, and I would just like to work my way through them. First of all there is clarification about who is a building contractor and who is a client. That sounds pretty basic, but you would be amazed at the amount of confusion and the number of disputes that have arisen out of that. There is further detail on the purpose and the content of the checklist. The checklist is an important part of this bill. It means that both the contractor and the client will know what work is expected and they can work their way through the checklist to make sure that both are delivering on the contract. There is further detail on the content of the mandatory written contracts and how non-complying contracts will be dealt with. This is the idea that even if your contract is non-complying, there is a process to deal with that.

💬 Andrew Little: What’s in this bill for the builders?

Finally, there is a new clause outlining what product manufacturers are responsible for under the bill. It is quite interesting to hear the question from the other side: “What’s in it for the builders?”. One of the problems that builders have had trouble dealing with is how much is their responsibility and how much is the product manufacturers’ responsibility. So there is a specific part of this bill that will outline what happens if a building product fails, even if the builders have done good work.

Debate interrupted.

The House adjourned at 6 p.m.