Building (Earthquake-prone Buildings) Amendment Bill

I move, That the Building (Earthquake-prone Buildings) Amendment Bill be now read a first time. I nominate the Local Government and Environment Committee to consider the bill. The issue of managing earthquake-prone buildings has been considered by the Royal Commission of Inquiry into Building Failure Caused by the Canterbury Earthquakes, and a comprehensive review has also been undertaken by the Government. This is a significant issue with what I think is a very high level of public interest. About 15,000 to 25,000 buildings—and I guess that one of the first problems we have is that no one knows exactly how many—across New Zealand could be earthquake-prone. I stress that this does not include residential buildings. It does not even include apartments if they are less than two storeys. They have to be multiple-storey apartment blocks to be included.

Five hundred and thirty-five submissions were received on the Government’s consultation document, which we released in 2012, outlining the proposals to improve a system for managing earthquake-prone buildings. More than 1,000 people attended the public meetings and the stakeholder meetings held all around New Zealand on the issue last year. I attended a number of those meetings to hear very firsthand the public’s concern about the issue. Although rare, major earthquakes stand out from other hazards in terms of the very large impact they have as a single event, both in terms of fatalities and injuries as well as economic losses. The Christchurch earthquake of 22 February 2011 provides a very dramatic example of that. Both the Canterbury earthquake royal commission and the review undertaken by the Government identified problems with the current system for managing earthquake-prone buildings, including significant information gaps and issues with consistency of practice. A clear view has emerged from society’s perspective that the current system for managing earthquake-prone buildings is not achieving an acceptable level of risk.

Many earthquake-prone buildings are not being dealt with in a timely and cost-effective manner. This bill introduces a revised system for managing earthquake-prone buildings that, in my view, strikes a balance between protecting people from harm in an earthquake and managing the cost of strengthening or removing buildings. In a nutshell, we do not want to make every building in the country meet the gold-plated standard, and actually make nearly every building unable to be economically used; on the other hand, we do not want people exposed to higher risks of fatalities and injuries because the building owners are not required to do anything. So it is about striking a balance. The bill is very broadly in line with the recommendations in volume 4 of the Canterbury earthquakes royal commission’s final report, while also taking into account views of submitters on the public consultation document and feedback from the public and stakeholder meetings.

The bill moves to a system that has a significantly greater role for central government, particularly in providing leadership and direction, to make better use of the capability and resources of both central government and local government. I now want to outline some of the key changes contained in this bill that I think are really quite useful. The bill is to provide better information and disclosure, and so it will require territorial authorities to undertake a seismic capacity assessment of existing non-residential and multi-storeyed, multi-unit residential buildings in their district within 5 years from the commencement of this legislation. That was what the royal commission recommended, and we thought that 5 years was a realistic time. If you take 25,000 buildings and you divide that by five, you get 5,000 a year, and if you divide that by 52 weeks, it is 100 buildings a week that will need to be assessed. That is a lot of work to be done, and while a lot of engineering capacity is being soaked up in Christchurch with the rebuild, any time frame shorter than that would have put a huge demand on supply in the engineering fraternity.

Councils will follow a methodology to be specified and published by the Ministry of Business, Innovation and Employment when undertaking those assessments, so the first concern we had was that it would be a different regime all around the country. Well, no. The guidelines and the methodology will be very, very set for how you do the evaluation. The bill also provides for a public register containing information on the seismic capacity of buildings to be held by the ministry, and I would actually like to go further. After we have got that public registry, I would like to get it on to Google Maps and handheld devices, and actually have people even walking into a building to have a cup of coffee being able to tell what the seismic rating of that building is. Boy, would you see some market changes then, when people were not prepared to use a building because it was not at a realistic level.

Setting the threshold for defining an earthquake-prone building and the level of strengthening required involves, as I have said already, balancing risk versus cost. In this respect, the bill does it. It clarifies the current threshold for defining an earthquake-prone building, including that it applies to parts of the building as well as the whole. That has never been the case in the past. So it might be just the parapets or the verandahs or, you know, a lion or a gargoyle or something on the front of the building that could be the earthquake-prone bit; the rest of the building may actually be OK. So this is the actual part of the building or the whole, and in practice the threshold that is often referred to will be that of 34 percent of NBS—the new building standard.

I want to first get a response in to Business New Zealand. When Mr O’Reilly first saw this policy he said: “Oh, I don’t like it because it’s one-size-fits-all.” Well, let me give it to you again: it is 34 percent of the new building standard, and the new building standard is different in every town across the country. Kaitāia has almost no earthquake-prone building issue at all. The new building standard is almost zero, and 34 percent of it is almost nothing. Wellington, on the other hand, has a higher standard than Christchurch, even after the February earthquake. So to Mr O’Reilly I say that, no, it is not one-size-fits-all. This policy is about 34 percent of the risk faced by the specific location and the seismic risk that is identified.

The bill also clarifies that the level of work required to fix an earthquake-prone building is only such that the building or the affected part is no longer earthquake-prone. There will be no requirement to go beyond the 34 percent. I would hope building owners do that where they think it is economically viable or where their customer base wants it. I know that, for example, the banks have been demanding that every building their staff is in is 67 percent, but that is their call. It is a market call. They are individual private companies that can do what they—I do not know, for Mr Shane Jones’ edification, what the supermarkets are demanding as their seismic standard. They may actually have one. After tonight I think they will need one.

To help ensure that earthquake-prone buildings are dealt with in a timely manner, the bill sets a national time frame of 20 years for buildings to be strengthened or demolished. That is slightly different from what the royal commission said. The royal commission said 15 years. We felt that was just too tight on building owners from the time they were given it, and we have moved it out by 5 years, to 20 years. The territorial authorities have 5 years for the assessment and then 15 years after the assessment, giving them 20 years. The bill provides for work on certain buildings defined in regulations to be prioritised. Things that are found to be quite life-threatening right now are to be given the first priority.

It provides for exemptions for certain buildings from requirements to undertake work. It provides that owners of buildings that are category I historic places under the Historic Places Act may apply to the territorial authority for an extension of another 10 years. So we are trying to keep the historic places a little bit protected and not force them to meet the same time frame as normal commercial builders, but owners must manage the risk if any extension is granted.

The bill will also enable territorial authorities that are building consent authorities to issue building consents for required work on buildings that are earthquake-prone, without requiring any upgrades to other circumstances. I know that the disability community was quite keen on making it mandatory that if you had to bring your building up to standard, you should have to bring all of the disabled access elements into it as well. We think that is just too hard an ask on a building owner. Where it is possible, I hope they do, and where it is economically viable, I hope they do, but in the end we are not going to mandate it. The royal commission said we should not mandate it, and we have agreed with the royal commission.

So, in a nutshell, I think this bill is good. I think it helps give some protection to our heritage buildings, but it makes sure that commercial building owners get out and get their buildings assessed. It makes sure the public can go to a register, look for their building, and find out. The bill will, in my view, ensure that earthquake-prone buildings are dealt with in a timely manner by way of a nationally consistent system. It will strike a balance between protecting the public from harm in an earthquake and managing the cost of strengthening or removing buildings, and it will ensure that information about earthquake-prone buildings is made available to the public. I commend this bill to the House.

We will support the Building (Earthquake-prone Buildings) Amendment Bill, which may be in contrast to various other things I have not supported today. We will support this bill largely because we do want to assure the public—and I think this is an area where bipartisanship is in order—that the dwellings, the buildings, and the structures that they occupy, work in, and visit are moving towards a higher level of compliance.

We on this side of the House have been contacted by people fearful that buildings in Feilding, Palmerston North, and, dare I say it, Kaikohe may actually be lumbered with a higher cost structure in order to meet the standard. So it is important that those owners do not have a single option, which is demolition. I cannot see how that is going to serve the purposes of the community or the owners in our rural townships. I could think of Kaikōura. I could think of areas around Manawatū or even in my own rohe, Tai Tokerau. We have other problems in the north. The last time I checked, earthquakes were not one of them. We have Hone Harawira, but that is another matter. I suppose that in itself could be a threat to a building, but, that aside, it is important that we all join together to strike the right balance and that we get the right submissions to the Local Government and Environment Committee.

I actually do have some sympathy for those trusts, some of them church trusts, that have as their assets on their register these kinds of buildings. If we go ahead and demolish all of our old heritage buildings, we are such a young country that I think that is an unwise step. But the reality is that we observed two things in the aftermath of the earthquakes. In one sense we have got to sort of guard against the loss of life or limb, and on the other we have got to come up with a pragmatic solution that enables people to economically continue to own buildings, use buildings, and not be lumbered with a level of compliance of cost, such that in some cases I genuinely fear they will just walk away from the buildings. I fear they will walk away because, No. 1, the buildings may become uninsurable, and, No. 2, because of the cost structure associated with upgrading the building, they will never get a rental stream that will enable them to cover the costs of the upgrade work.

I think that the Minister for Building and Construction has genuinely tried—or at least I am told that he has listened and tried. There is a duty, however, on the bureaucrats in the Ministry of Business, Innovation and Employment, which is where I think the building department is currently located. There is such a confusing array of planets in Steven Joyce’s solar system, otherwise known as “MBIE”, but there is a set of onerous responsibilities upon them. I only hope that as this regime is eventually implemented, consultation is the hallmark of what the bureaucrats do in dealing with not only the public advocate groups or advocates but also the owners, or their proxies, of these buildings.

The notion that this is one size fits all—popularised by Philip O’Reilly, the only member of the National caucus who is not a parliamentarian—I think needs to be dismissed. It needs to be dismissed because there is nothing that that advocate says on behalf of Business New Zealand that does not reflect a view that inheres in the National Party caucus. So when we hear his name or his advocacy, it is irrelevant. In fact, I am told that Mr O’Reilly is thinking of going to Europe. I am not in a position to purchase him a ticket, but he has outlived his usefulness in terms of the way in which he contributes to these debates, and I support what the Minister said about Mr O’Reilly. His assertion that this bill—which we do want to support, and it will be refined as it goes through the select committee process—is so constrictive that it will not cope with the inevitable differences speaks more of his inflexible mind and, quite frankly, of the ideological claptrap that we have become accustomed to hearing from that fake representative of the New Zealand business community. I think I have served the Lord’s purpose in describing him, so I shall move on.

My colleague Mr Raymond Huo has already contributed in this debate, and we know, in standing with the Minister and shepherding this bill off to the select committee, that there will be people who feel that not enough has been done. What will the Crown do? Will it change the tax regime to actually enable the costs to sit as a type of expense that building owners can write off as a cost of owning such capital structures, or will the costs continue to sit as a work of a capital nature, the cost of which can only be written off over a very long period of time?

I should imagine that for the property developers and owners who are advocating that perspective—I guess we will hear from them in the select committee—that could be a very big number. And the slender number of New Zealand owners who are offended by the fact that these additions and these improvements remain as capital additions probably are in inverse proportion to the amount of money it will cost the New Zealand taxpayer base, if we accede to their request. But, having said that, we live in a democracy. They are entitled to come forward—as long as they are giving a balanced and accurate depiction of the situation—because they do fulfil a valuable purpose, i.e., the development and ownership of capital assets. But they cannot expect to write off all of that expense if it reflects an inordinately difficult impost on what is probably a sort of strained fiscal situation in relation to how much of that can be written off on to the State.

Debate interrupted.

The House adjourned at 10 p.m.