Building Amendment Bill (No 4)

I am pleased to take a fairly brief call at the beginning of this. I hope I will cover off what I think are the key issues in this bill, the Building Amendment Bill (No 4). It is indeed a piece of reform that got started well and truly before this Government came into office. I give some commendation to the Hon Shane Jones, who was my predecessor. In fact, there are many people out there who will say that I am the best Minister for Building and Construction since Shane Jones. Given that I am the only one since Shane Jones, that is at least a compliment.

The reform of that whole sector, which started with the Building Act 2004, now has to have a number of other things added to it. This bill has got some elements about consumer protection and about needing written contracts if the work you are engaged in with a builder is worth over $20,000. But there are some issues that I think were raised along the way. I just want to try to cover them off quickly, and then I will shut up and allow the members to make their comments.

First, I think the almost slightly valid criticism was that this bill is a bit piecemeal in dealing with the sector because it is only a certain part of it. I make no excuse for the fact that I have had to do this in tranches. When we did the Building Amendment Bill (No 3), this bill’s predecessor, it had stuff about risk-based consenting, which, by the way, we can trigger only once this bill is through. That has enormous impacts for Christchurch. If we are going to really make some progress in the Christchurch rebuild, we do want to have risk-based consenting—that is, the very, very low-risk stuff will have almost no relative scrutiny compared with stuff that is at the very high end of the risk. So this bill completes probably the last of the criteria needed to trigger the regulations for risk-based consenting.

But I could not get it all done in one hit, even though I would have loved to. I would love to have had one huge building amendment omnibus bill. So we did the No. 3 bill, got that through, got it in place, and when the No. 4 bill tonight is finished, it will allow us to trigger things like risk-based consenting. So I would hope that instead of members seeing this as being a bit piecemeal, this was stuff that needed to be held over while we got through.

The second thing is that I have heard people say that the bill should provide for proportionate liability in the building sector, particularly in light of the Supreme Court decision on The Spencer on Byron Hotel, and so on. Can I say that this is the greatest bugbear of my life about the building sector: I think that joint and several liability is wrong. I think you should be held accountable for the things that you do but you should not be held accountable for things that you did not do. But, sadly, under our current liability rule, which is called joint and several liability, you are joined with everybody else, and if they did something wrong, you can be caught in that web, as local authorities found to their chagrin.

It is a harder issue than any of the members of this House will give credit for. We have kicked it off to the Law Commission, and it is doing an in-depth piece of work and will report back to us—hopefully, by the end of the year, maybe, or early in the new year—as to whether we could go to proportionate liability. I want to say to members that other jurisdictions around the world do have proportionate liability and it works, so I do not see why we could not. I will repeat it again: you should be held accountable for the things that you do; you should not be held accountable for things that someone else did wrong, but then you are the last man standing. I know that a number of territorial local authorities got caught up in all the leaky home syndrome when in fact they ended up being the last man standing.

I think that one of the other issues raised before the Local Government and Environment Committee was that the bill should require mandatory home warranties. That is pretty closely related to that whole liability issue, and it is, again, a real pet hobby of mine. I would love to go to some mandatory warranties. If you buy a new car, you get a warranty. If you buy a new plasma screen, you get a warranty, and it is guaranteed fit for purpose. But, sadly, under the current regime, if you get a new house, there are some issues about what liabilities are sheeted home to whom, and whether there is a warranty. So we will have to wait for the Law Commission’s report, but I give members an absolute watertight guarantee that if the Law Commission gives us some room to move, then I will be pushing to move to proportionate liability.

One of the other issues raised at the select committee, I think, was that the bill does not go far enough in protecting consumers. Although I think that that is always going to be an issue, I am hopeful that this bill has got the balance right. It requires everybody involved in work over $20,000 to have a written contract. I think the amendments in the bill will be supported by the consumer information that is there. Education and advice over the next few years will tell people involved in the building sector what their rights are and how to get better information. And I think an effective monitoring regime also in place to track improvements in consumer awareness is part of what we are bringing in here.

There are two or three other items. All parties—that is, consumer building professionals and building consent authorities—continue to be financially exposed even for defects that are not their making. Again, that is under the liability aspect. I think it is fair to say that we have just got to wait for the Law Commission. Hopefully, we will get a good report.

The bill does not address the huge skill deficit in the sector. That is true, but it is not the role of this bill. I was with my colleague Steven Joyce today out in Pētone, where we were launching a new construction training unit at WelTec. The new apprenticeships scheme has got 8,000 more enrolled in the building apprenticeship scheme than we had anticipated. So, yes, there will be a skills shortage from time to time. That is just the nature of this industry—peaks and troughs. And Christchurch is coming on stream. When it does come on, it will be huge. With the shortage of housing in Auckland, there will be a big demand.

I can forecast now—and I want to go on record now—that the big complaint that will occur in about 18 or so months from now is that there are not enough skilled practitioners in the field. But let me actually add the next complaint. In about 3 years from there, maybe 4 years from there, there will be a complaint that there is not enough work for all the skilled practitioners. That is just the nature of the cyclical beast of the way this industry works.

There are a couple of other bits in the bill that are sort of almost add-ons, but I just want to cover them quickly in the 2 minutes I have got. There was a complaint that the bill is weakening a dam safety scheme that is currently in the Building Act. I want to make it clear that we think that this is about the right level of risk management without imposing unnecessary compliance costs. A number of local authorities and regional councils have been to me and said “Please don’t make it that we have to get involved in a lot of bureaucracy on quite small pools of water that shouldn’t be called a dam. But we understand that if they are big pools of water with a lot of height and a lot of volume, they can pose a risk.” I think that what we have done in dam safety in this bill will target dams that are higher risk and that should be subject to the scheme and improve the effectiveness of the dam safety scheme.

Finally, the last of the complaints was that a select committee change to the definition of a large dam captures even more small dams, making the regulation more onerous. I would say that amendments in Supplementary Order Paper 357 will remove that unnecessary compliance cost while ensuring the select committee’s intent—that is, to address potential safety concerns.

I am going to sit here. I am not going to take too many more calls, because I think people get sick of hearing from me, but I think this is an integral part of the Building Act reforms. It is a very exciting night for me with this No. 4 bill going through, because I think it completes them. I want to repeat that I give some credit to my predecessor, Shane Jones, and, actually, a number of building Ministers before him, because I think Labour had about six building Ministers within 6 years. This was the path that had already been set out when I read my briefing as an incoming Minister. This reform of the sector was already in train. I am delighted that we are going to get it through the House tonight.

Ni hao. Following the good spirit of the Minister for Building and Construction, who has just resumed his seat, I would like to acknowledge the Hon Shane Jones, Labour’s spokesperson on building and construction, who was an experienced Minister for Building and Construction, as the current Minister just acknowledged. I am lucky to be his associate and to be his understudy.

I would also like to acknowledge the current Minister for Building and Construction. I should say that the more I have got to know about the issues involving building and construction, the more I appreciate the complexity involved in the Building Act review. I do feel for the Minister for Building and Construction, especially whenever he was accused of taking a piecemeal approach, for various reasons, as he just outlined in his contribution. But that does not mean that he is exonerated.

Last but not least, I would like to thank the officials for their thorough analysis, for their thorough departmental report, and for their advice, which was very, very helpful. The departmental report on this particular bill, the Building Amendment Bill (No 4), is one of the best of this kind. The departmental report, and, indeed, the Building Amendment Bill (No 4) itself, covered a number of issues. Some of them are outside of the scope of this bill but are a very important part of the Building Act review.

Labour supports the Building Act review, but our position remains the same, and that is that we cannot—at least at this stage—support the passage of this bill. Two events would have played a certain role in affecting our position. As stated in our Local Government and Environment Committee minority report, given the range of serious issues that have been raised by the submitters, and the fact that the Government would be considering the findings of the report of the Royal Commission of Inquiry into Building Failure Caused by the Canterbury Earthquakes, it would make more sense to separate off the elements of the No. 4 bill that relate to dams and to hold back the provisions that deal with consumer issues in relation to residential properties. If that happened, as indicated in our minority report, we would have no problem in supporting the provisions in relation to classifiable or referable dams.

The second event is related to the review of the non-ductile column buildings built between 1982 and 1995 with three storeys or more. The purpose was to establish whether there were any buildings with similar design flaws to the CTV Building, which collapsed in the February 2011 Christchurch earthquake, killing 115 people. I should say the approach taken by the Minister for Building and Construction was sensible and professional. There are two building owners who have refused to engage with the review despite the council asking them to get an engineering assessment. The status quo does not give councils or the Ministry of Business, Innovation and Employment the power to compel at-risk building owners to have their at-risk buildings assessed and their problems addressed. I agree with the Minister who found it unacceptable and I understand he has been investigating options to increase accountability.

The options that the Minister has been investigating are either a Supplementary Order Paper to this bill or stand-alone legislation. If the Minister introduces such a Supplementary Order Paper it may affect our position with regard to the bill in its entirety. It is more in sorrow than in anger that we have no other choice but to decide to vote against this bill. Having said that I should reiterate that our position as stated in our minority report in the Building Amendment Bill (No 3)—now the 2012 Act—has remained the same as well. It is an opportunity lost in that the Minister has so far taken a piecemeal and uncoordinated approach.

I do find the Minister’s explanations to some extent acceptable. However, I am not quite sure how many stand-alone bills the Minister is going to introduce or when he is going to introduce, for example, the Building Amendment Bill (No 5), (No 6), or (No 7). It sounds like the Minister is competing against Steve Jobs in releasing iPhones 5, 5s, 6, or 7, but the building sector needs certainty. We legislators need to look beyond the status quo to introduce effective measures to prevent a repeat of the man-made leaky buildings saga and to prepare us for rainy days, both in the literal and figurative sense.

There are some other issues that I would like to touch upon at this Committee stage. The first one is related to the Weathertight Homes Tribunal. The No. 4 bill states that owners of dwellings that suffer from building defects that are not remedied by the liable parties can seek redress through arbitration, the Weathertight Homes Tribunal, or the courts. These courses of action are already fully available to aggrieved owners. But certainly in the case of the courts, and even the Weathertight Homes Tribunal, they are ruinously expensive.

This bill does nothing to reduce this cost, to improve the technical ability of these judicial bodies to arrive at technically correct findings or, as stated above, to ensure that responsible parties are held accountable. Whereas the Government could reasonably claim that a review of joint and several liability vis-à-vis proportional liability—by the way, I do accept the explanations given by the Minister in his earlier contributions—and the technical performance of the courts are matters for the Law Commission to consider, the effectiveness of the Weathertight Homes Tribunal should have formed a major part of the Building Act review, and, as a consequence, this suite of legislation.

The other related matter is a mandatory home warranty. I support Wellington City Council and Christchurch City Council, two of our largest city councils, and a number of other submitters who have called on the Government to introduce a home warranty insurance scheme, and urge the Minister to refer the matter to the Law Commission for review. As pointed out by the Home Owners and Buyers Association, if the parties responsible for defective building work have either gone out of business, died, or left New Zealand, the consumer is left exposed and faces having to cover the costs. Building law should be amended to offer greater protections. Oddly, the Local Government and Environment Committee, which considered the Building Amendment Bill (No 4) now before the Committee to be passed under urgency, was forced to amend its report to the House. The committee and public were led to believe that the Minister had referred the matters of both joint and several liability and the mandatory home warranty scheme to the Law Commission for review. However, the Law Commission later informed the chair that mandatory home warranties had never been referred.

For the general public it does not matter as to who misled the committee, but I continue to urge the Government to refer this issue to the Law Commission and establish a system that provides meaningful and effective protections and guarantees for consumers and consenting authorities. We must legislate to prevent a repeat of the man-made leaky buildings saga, especially in light of an imminent construction boom in parts of the country. New Zealand consumers deserve protection, and the Minister needs to make sure that the law ensures that contractors and suppliers will be held accountable. The Government’s piecemeal approach will not work, and introducing inadequate measures or partial instalments is not the answer.

I would like to acknowledge the Minister in the chair, the Minister for Building and Construction, and my colleague Raymond Huo, who until recently was shepherding this shadow portfolio through our caucus, and I endorse a number of the things that he has pointed out this evening. I am quite sure that the Minister himself realises that it is a work in progress.

I would say that the difficulty with this bill, the Building Amendment Bill (No 4), is that the train has left the station and it is on its trajectory. This debate is about how to get the balance between those consumers who want efficiency, speed, and the delivery of the product, because many of them have upset wives or husbands at home and they do not want the hammers being bashed around too long for renovations etc., and those—and my colleague Raymond Huo has highlighted their identity—who believe that the fallout of the leaky homes saga is such that we should always go for a belts and braces approach.

It is a rather unique collection of individuals we have here. We have Mr Cosgrove, a former building Minister; we have the Hon Maurice Williamson; and we have my good self. The problem I have is that I was also the Associate Minister of Immigration, and I can tell you that that was far more hazardous than being the building Minister. But having said that, quite a few of the things in the bill we do think will work, but it did not quite get there, from our perspective.

But having said that, we are conscious of what the Minister said. A number of these refinements—it is the genuine belief of the Minister and his colleagues, and I guess the professional advisers—will expedite work in Christchurch, but not the highly technical, demanding work that needs a whole panel of engineers. And I am not talking about the disgraced engineer Alan Reay, whose name, unfortunately, blighted the splendour and majesty of this Chamber recently. But that aside, I am talking about those who are proud of their profession. I am talking about those who realise that to have a durable city, you need accountable professionals.

I do feel that we should, if we can, at all times, enhance the importance of consumer protection whilst at the same time giving a bit scope and space, because, as we go forward during this transition, nothing is static, and there will be a need to refine it as we go forward.

I will not talk too much about dam safety, although unless Nick Smith’s stewardship of the Ruataniwha dam fiasco proposal improves, this bill will not ever have any application in Hawke’s Bay in terms of dam safety. That is a bit of a shame, because I was born and bred on a farm and I realise the importance of irrigation etc., but now that I am a professional politician and a member of the august Labour Party caucus, the importance of process has been brought home to me as well. The processes that we had in Awanui and Kaitāia were possibly a tad more pragmatic than what I have learnt to accept is resource management law—but that is for another discussion.

I would say that this is work that we initiated, and the Minister for Building and Construction has carried it on. Phil Twyford looked at it, and more recently Mr Huo has looked at it. Let us acknowledge that there are areas that we slightly agree on. We are all deeply committed to ensuring that the building framework meets not only the needs of consumers but also the needs of the regulator. I hope that they can make a call and shift the balance. I am of the view that if you can rely on an electrician and if you can rely on a plumber, then what we thought we were doing—the Hon Clayton Cosgrove and I, in Helen Clark’s time, quite apart from listening to every word that she ever uttered—[Interruption] Well, there were one or three words that I conveniently overlooked. But it was as the Minister for Building and Construction that I recall saying: “I don’t think it’s a good idea that we should actually regulate for the amount of water that comes out of the showerhead.” I was acquainted with the fact that it was Green Party policy and I should defend it—it is sad that nobody came to my defence when I was caught in the trenches, but you learn these things when you are No. 18. We cannot support the bill, but we support the sentiments in there. Kia ora tātou.

I would like to make a short contribution. The Green Party is opposing this legislation, and I want to just briefly set out why, for the Committee’s information. The Building Amendment Bill (No 4) deals with consumer protection recommendations from the Building Act review. We supported the bill at its first reading and we were interested to hear the submissions and the response to the legislation, because there had been concerns with the previous bills that came out of the review about the piecemeal approach to dealing with the original review’s recommendations. So we did support the bill going to the Local Government and Environment Committee. We have heard the responses from submitters. It is our view now that the bill does not deal with consumer protection sufficiently to justify our vote, so we will not be supporting it any further.

We did support the original bill because we are very much in favour of increased consumer protections. It is crucial that the regulatory environment for building and housing in New Zealand is first class. There is no room for substandard regulatory reform. There is no room for substandard consumer protections. Of course, we have had far too many lessons in this country that prove how necessary it is to have a first-class set of regulatory laws around building and housing.

We have the substandard quality of most of the rental housing stock in this country, which is largely old stock that is poorly insulated, often poorly built, damp, and makes our kids and our families sick. We have had the debacle of the leaky homes, which was the direct result of a previous National Government’s deregulation obsession. It has cost families and councils and communities millions and millions of dollars. Of course, there are the weaknesses tragically discovered after major events like the Christchurch earthquakes. Given the very dynamic nature of New Zealand’s environment and our land, and the importance of housing and building to the safety and protection of our families, there just is no room for a substandard approach.

So from our point of view, having looked at the bill and heard the submissions, we do not believe that this bill makes the sufficient reforms to justify the support. We did want to see a higher minimum standard, if you like, set in place. We agree with the Home Owners and Buyers Association that a mandatory warranting scheme with an independent authority was a better option. We do understand that there is likely to be more reform in the future, and we are pleased about that. We welcome that and we will look very seriously at supporting future measures where there are stronger consumer protections. We look forward to more debate on that in time. But until those protections are genuinely stronger and provide sufficient support, we will not support something that is substandard. So, unfortunately, this is not the bill that provides the kinds of protections that we would like to see put in place. We look forward to future legislation that does that. Until that time, we will be voting against this bill. Thank you.

I take a call on behalf of New Zealand First on the Building Amendment Bill (No 4). It was somewhat disappointing to hear the Minister for Building and Construction, the Hon Maurice Williamson, use most of the time in his address to talk about what was not in this bill rather than what was in this bill. To hear the Minister say that low-risk building will have next to no scrutiny—low-risk building will have next to no scrutiny—really does raise alarm bells for New Zealand First and, indeed, for many New Zealanders throughout New Zealand who have seen the effects on building such as with the leaky building situation that came out of the National Government in the 1990s.

This bill is more about excluding things and, if you read the bill, it seems to exclude more things than include things. When you start looking at what is exempted, you see that it exempts in the future any compliance requirements from a local authority to build the likes of carports, pergolas, outbuildings 10 square metres or less, and interior alterations to non-residential buildings. It moves into retaining walls and all sorts of other things that become excluded. When you start excluding all these various things, you open up a situation where consumers, the public of New Zealand, start being put at risk. People do stand on decks. People do stand under pergolas. People do walk through, or park in, carports. And if many of these structures start to be thrown up by any old person without any compliance requirements at all, we will end up with a very, very Mickey Mouse situation in building in this country. I can foresee that, as we saw in this last decade with the leaky home situation, when much of this is now going to be self-regulating—the likes of the Registered Master Builders Federation and other such entities will be self-regulated—there will be far less scrutiny by local authorities and councils. As a result of that, we have the potential here of setting up for the next decade, and the decade after that, another whole leaky building situation brought about by yet another National Government.

It would seem that the National Government does not learn from its past mistakes. Minister Williamson certainly appears not to, having been in a National Government in the 1990s, which changed the building code, which allowed monolithic cladding to be applied directly to kiln-dried timber, and then we ended up with that very monolithic cladding cracking and moisture getting into the untreated timber and rotting houses as a result. That same National Government, some 15 or 20 years later, now is saying: “Let’s take away a lot of the safeguards. Let’s remove a lot of the local authority controls in terms of oversight of building. Let’s have a much more self-regulated building industry.” on the premise that this will reduce building costs. Although it might on the face of it reduce some compliance costs of building, what is the long-term cost to New Zealand? What is the long-term cost in terms of health and safety of New Zealanders if structures are put up that basically do not come up to scratch?

This bill, as the Minister also said, does not address building skills in New Zealand. So we could be faced with a situation during this whole period through this decade, as a result of this legislation, that builders may not necessarily have qualifications that would be expected of them, because they may, for instance, not have been trained in this country. They may have been trained under different circumstances in other countries, where perhaps their building codes are not quite the same, or their building practices are not quite the same, as in New Zealand. We may well find in the future that questions are asked as to why a carport fell down or why a pergola suddenly dropped—[Bell rung] Mr Chair?

The CHAIRPERSON (Lindsay Tisch): Andrew Williams.

Thank you, Mr Chair. You did not have to look around—I was the only one standing. But thank you, Mr Chair.

The CHAIRPERSON (Lindsay Tisch): I always look around.

Yes. It is very fortunate this debate will be in Hansard, because if it is in Hansard, where the warning bells are given and where the Government is on notice that what it is doing is once again revisiting a potential situation of putting New Zealanders at risk, then let us look at this Hansard recording perhaps in 10 years’ time and ask how this happened. And why did we change all these things, bring in self-regulation, and bring in this legislation that basically saw the leaky homes thing revisited all over again?

It mentions in this bill that contractors who exceed $20,000 worth of work will be required to provide a written contract. But what happens if the contract is for $19,999.99 and that contractor does one bit of the work, and his brother who is a different contractor does another bit of the work for $19,999.99, and then his cousin does some more of the work for another $19,999.99, and multiples of that? What happens then? Where is the written contract for that, and where are the safeguards for New Zealand for multiples of that? The bill also says that these entities will be required to give written contracts and their background as to their capabilities. Again, how often have we seen Mr XYZ Builder 2008 Ltd. not being around and then disappearing and starting up a new thing as Mr ABC Builder 2010 Ltd. in a totally different guise? How will that be addressed? I would ask the Minister to take a call on this and tell us how these sorts of things will be addressed.

How will multiples of under $20,000 be addressed? How will people going under various names or through various window companies or through various other entities that they may be operating—how will that be addressed? How will the building skills requirement be addressed? How will we know that builders who may not have been trained in New Zealand and who may have come from other jurisdictions with other practices in building are doing what is right by New Zealanders? And how will we know, for instance, because there is no requirement for any permit in the case of buildings that are less than 10 square metres—and that is a reasonably sized room—that these small structures will not be going up all over the back lawns of Auckland because of the housing shortage?

For many people in Auckland who are currently squeezed into three-bedroom homes with large families, how will we ensure that they are not themselves putting up substandard 10-square-metre outhouses on their back lawn for children or family or extended family to live in, with next to no scrutiny by any local authority as to how that structure was built, whether it is fire-code compliant, whether it is structurally sound, or anything? Tell us, Minister, how will we stop people putting up such structures of under 10 square metres across Auckland back lawns, all through Manukau, and all through your electorate, Minister? So there are a lot of questions in this.

The Minister also mentioned about the situation of joint and several versus proportionate liability. Again, that is long overdue and it should have been addressed before now, as it has been in other countries, because the last man standing in this country always tends to be the local authority, because everybody else has disappeared. They have gone west. They have closed their companies, or they have shot through to Australia, or wherever else, and the only one remaining tends to be the local authority that perhaps was involved in signing it off. So New Zealand First would like that addressed as well. But there are many, many things—you could drive a bus through half of this.

But, at the end of the day, this bill is more about exempting things. This bill is more about National making it easier for things to be done without compliance, and this basically means that New Zealanders face another risky decade or so coming up, where, perhaps, New Zealanders will be asking how we lowered the standards once again.

The question was put that the amendments set out on Supplementary Order Paper 357 in the name of the Hon Maurice Williamson to Part 1 be agreed to.