Weathertight Homes Resolution Services Amendment Bill

I can say from the outset that the Labour Party will be supporting this bill. As a former Minister for Building and Construction, I am one who I think has been followed by a litany of them—from both sides of the House to be fair. There is a political graveyard of building and construction Ministers from both sides of the House, who, to be fair to them all, in their various ways have attempted to try to address this absolutely tragic issue that has been around—

💬 Chris Bishop: Oh, that’s very kind.

Pardon? Sorry? It has been around since 1994, and I think that to all of us who were members of Parliament through that period—Mr Bishop in his few months in the House may have dealt with the odd constituent who has had pretty tragic circumstances around this—this was a systemic failure right across the board.

In dealing with Part 1, particularly new section 125BB, “Eligibility for financial assistance measures”, in clause 5, I want to just ask the Minister in the chair, Michael Woodhouse, a number of questions. The first is that the then Minister Maurice Williamson, when this package was first announced, trumpeted it as a billion-dollar package—a billion-dollar package—on the back of, I remember, the taunts from the then Opposition spokesperson, Nick Smith, who when I was Minister was famous for, every time I would get up to answer questions on the issue, interjecting “Just write them a cheque.” That was his solution: “Just write them a cheque.” Then, again, as Nick Smith is wont to do, when he comes into Government, suddenly the scales fall from the eyes, and his position changes like changing socks. So I could say to Dr Smith in Government, why do you not just write them a cheque, as you said you would? However, the Government determined under Maurice Williamson that in terms of the package, it would be a billion-dollar package.

I am advised, Minister Woodhouse, that over the past 4 years the projections were that 16,000 victims of this would take up this package; I am advised that 86 have. My question is, although this package is well intentioned—and we all want a solution to this problem, and we all want these issues resolved for folk, and we have all had a crack over the years at trying to do it—the issue still remains as to why the uptake of this has been so low. Is it because, as I think is generally the case, people believe that they have a better chance of a swifter and more equitable resolution via the court system, where, yes, they would have to put up their own money, but they may well get a better deal than a 50 percent impost on themselves—matched, of course, by a 25 percent contribution from the local authority and a 25 percent contribution from Government.

But it was trumpeted as a billion-dollar package. It was estimated there would be 16,000, I believe, out of the estimate of around 42,000 cases, at a cost of anywhere between—the estimates were, in 2009, $11.3 billion. Other estimates more than double the number of claimants from 42,000 to 89,000, and estimate the costs could be around $23 billion. Again, I recall in Government the taunts from Dr Smith as he demanded quantification of the figures, and the truth is that none of us knew. And, as he has subsequently, I think, admitted in Government, none of us know. This is sort of an open-ended envelope. We do not know how far these difficulties go. The only thing we do know for certain is that there was a systemic failure right through the value chain, from the trades, to designers, to the local authorities, the drive-by inspections, etc., and this problem exists.

So I would like to know, firstly, does he have any updated projections on numbers of potential claims, and also what the latest costings would be? And if he could give us—you know, given new section 125BB in clause 5, and the previous provision with the eligibility criteria in it—some explanation as to why only 86 claimants have taken up the package, as opposed to the estimated 16,000, and, if there are any newer projections, or more updated projections, what they are likely to be?

As I say, we do support this. We genuinely hope it will work—we genuinely do. But the figures of those who are opting for it, the proof of the pudding is, if it is working—I had a go with the Weathertight Homes Resolution Service; some people opted for that. Others, in truth, again, saw the courts as a better remedy. This Government has had a crack at it, but, again, the figures tend to bear out that people are opting for the court system, which begs the question: is there a better way in terms of, perhaps, facilitating or assisting with court action? A 50 percent impost on people, depending on the size of their building, is a massive impost in many cases. It is a huge amount. And I note from some of the reports that are appended to this bill that the Government has said that it will assist in assisting weathertight homes folk in their liaison with banks, in terms of trying to get financial assistance of their own accord.

I would ask the Minister—that is all well and good, and, I think, very well-intentioned, but it would be helpful to know what that means in practical terms. I would doubt, given the language, that there is much the Government could do, unless it has struck a deal with the banks—and if it has, that would be great—in terms of encouraging the banks to lend to many of these folk. For many of these folk, of course, their capital investment has been gutted and destroyed. Their land is still there, but the value in their home has deteriorated because of the position it is in, and I know of many people whom banks simply will not look at to provide any finance at all, and then they are in a cleft stick. If they cannot come up with their share, they do not get the local authority’s share, they do not get the Government’s share, and they are back to square one. Many of those folk also cannot afford to get to court. I do not believe they get legal aid, because it is a civil matter to take these measures to court.

So there are some of the questions I think it would be helpful not just for Opposition members, and our learning as we go through this, but also to get on the record of the House—because these debates, of course, are cited in courts—to give people some certainty. I am glad the Government has moved on from the simplistic sloganeering of “Just write a cheque.”, because it was a pretty macabre response then, and it remains a pretty macabre response now, to people who are in grave difficulty around the country. At its simplest, people’s biggest asset generally, other than their family, of course—their biggest monetary asset is their home. They plough, over 20 or 30 years, all their resources into it—

💬 Phil Twyford: 50 now.

—or 50 years, in many cases, and many of these folk were let down.

I say this to the Government—and I said this when I was in Government, to be fair—the key responsibility lies, in my view, in the tradespeople, designers, or whoever. The building inspectors who—many of them specialised in what they call drive-by inspections, because a former building inspector told me that when I was Minister. The actual responsibility lies, ultimately and realistically, with those folk, many of whom have gone broke and done a runner. Equally, I have got to say, though, the National Government should remind itself of its conduct in the 1990s, when, of course, Dr Lockwood Smith then led the charge—in, I think, 1995—in deregulating the whole building industry. I said a couple of nights ago that, God help me, I could have strapped on a tool belt and called myself a builder, and I could not build a doghouse, let alone any other dwelling. People were just entering the trade without any quality control, not standing by their work, and doing extremely shonky work, and many of those people could not be pursued, because they went broke.

So I say, as we address Part 1, that those are the questions we would like the Minister to address, if he can, and I think it would be helpful across the board as we progress through this.

You know, you cannot walk around or drive around any of the newer suburbs in Auckland these days without coming across a house that is surrounded by scaffolding and wrapped in white plastic. It is just a sign of the times, really—these houses that are wrapped up in white plastic. It looks bizarre, but it has become an emblem of the kind of legacy of what PricewaterhouseCoopers calculated was a $22 billion calamity that afflicted New Zealand, really, over two decades.

💬 Hon Clayton Cosgrove: 23.

$23 billion, Clayton Cosgrove says.

I was baffled, just by way of a preamble to Part 1, by Paula Bennett’s recent comments that New Zealand has moved on and that it is over the leaky homes crisis, because this bill, and particularly Part 1, as we will see, makes changes to the qualifying criteria for the Financial Assistance Package. I thought it was baffling that she would say that and, in the same breath, would release her loopy rules task force report, which proposes that builders are able to self-certify—to sign off their own work. In the years since the early 1990s—1994, I think it was—when we saw the deregulation of the building sector, and all of the other factors that flowed through into the systemic breakdown that led to the leaky homes crisis, if there was anything that we should have learnt it was that clear accountability and a strong commitment to quality assurance and quality control is what is needed.

As my colleague Clayton Cosgrove pointed out, this Financial Assistance Package was trumpeted by Maurice Williamson at the top of the news bulletins and in the front pages of the newspapers as a billion-dollar rescue package—a billion-dollar rescue package—but it did not really turn out that way. What we actually have seen is that although the Government announced that the scheme was going to fix 16,450 homes, as of about a year ago, only 87 leaky homes had been fixed and the ministry said at the time that it had approved repair plans for another 364, and a further 3,000 had qualified for assistance. But one commentator after another—including people like Paul Grimshaw and Tim Rainey, two prominent lawyers representing the owners of leaky homes—made it clear that the Financial Assistance Package might have added another option for people who did not want to go through the courts and who felt that mediation or adjudication would not serve them very well. It gave them another option based on this concept of 25:25:50, with 25 percent of the cost to be picked up by the local authority, 25 percent to be picked up by the Government, and 50 percent to be picked up by the owner, or the claimant.

So what this bill does, fundamentally, is it sets out to provide a bit of clarity. It responds to a Supreme Court decision that we will talk about in a bit more detail, and in doing so it slightly extends the eligibility criteria and the number of potential claimants.

But I want to comment particularly about Part 1 of the bill. It basically deals with a lack of clarity that the courts have commented on in relation to the eligibility criteria. The criteria basically require that they exclude any claimant from eligibility where the claimant has initiated civil proceedings against a council in respect of a leaky home, or has entered into adjudication. So you cannot have it both ways: if you have initiated civil proceedings and you are in court, court action is under way, or there is mediation or adjudication going on, then you cannot also proceed under the Financial Assistance Package.

So the main change in Part 1—[Bell rung]—is that it takes those eligibility criteria that have—

The CHAIRPERSON (Hon Trevor Mallard): Would the member like a call?

Thank you, Mr Chairman. The eligibility criteria were contained in the Gazette notice, and what this provision does is it moves them into the legislation proper “in order to avoid any doubt as to the intended effect of the criteria” and “so that there is no question of inconsistency with the Act.”

I would actually be interested to hear from the Minister, or even if there is a member who was on the Local Government and Environment Committee who heard the submissions. It is not entirely clear to me, based on the written material available, why there was any lack of clarity in the criteria, those key criteria in the Gazette notice. So I would be interested to hear that, because there is not a heck of a lot in this bill—only a couple of parts—but this is one of them. It seems pretty minor and technical to me, but I would be interested in hearing an explanation about why it was worth addressing in Part 1.

I am going to make a small but, hopefully, useful contribution to this Committee stage. As I understand it, the need for the bill is really to tidy up some definitions and to allow for claimants to qualify where they may not have qualified previously. There are three main components that are contained within Part 1. The first, really, is around the criteria with which claimants may access the Financial Assistance Package. It is very clear from the work that has been done through the Local Government and Environment Committee that the definitions around the criteria are very much aligned with what stage the claimant is at in the process. So it makes it very clear that if you are engaged in any type of proceedings or legal process, you exempt yourself from the ability to then be part of the Financial Assistance Package.

Also, part of Part 1 is around identifying what the actual built date is. The definition is not within the primary legislation, and I just want to say that it is really important to ensure that we get the definition right, because the definition of the built date, which we have here as running for 10 years from the date on which the code compliance certificate for the building work for the affected structure was issued, has actually provided an opportunity for a larger number of claimants to now be part of a claim where they would previously have been excluded. So it is very important that the built date is secured and defined within the Act. Just going back to the criteria for the Financial Assistance Package, it is important to have this defined to avoid any doubt of who is actually intended to be part of that.

But the main part of Part 1 is around “qualifying claimant”. I do have a couple of questions to ask about this. The qualifying claimant definition, as I see from one of the submissions that was made by the Law Society, does include a greater set of claimants now potentially being able to access the Financial Assistance Package, but there also may be a subset of owners who were previously ineligible who may become eligible under the Act. I would like to know who they might be, because, potentially, some of them might not qualify for the Financial Assistance Package.

The other question I would like to ask is this. According to the Law Society, in the bill’s current form some of those who are affected claimants, specifically those who repaired their homes after their claim was deemed ineligible, will still not be able to obtain financial assistance under the Financial Assistance Package provisions. So I would like to ask the Minister whether there has been any work to ensure that those claimants who are currently going to be ineligible will become eligible—whether he has made any recommendations or has written any Supplementary Order Papers that would include that subset of claimants within the bill.

The other part of Part 1 is about the contribution criteria, and that really just sets out the relationship between the Government and the participating territorial authorities as to who has what role in ensuring that they contribute to that criteria.

It is a pleasure to take a call on the Weathertight Homes Resolution Services Amendment Bill. I was not on the Local Government and Environment Committee, which considered this bill, but I am very interested in the whole process of it. In particular, I want to acknowledge the Osborne family for their part in bringing this legislation into the House by their pure perseverance with this issue. I was reading the regulatory impact statement also, absolutely staggered at the numbers in here—you know, “42,000 homes … likely to be leaky and the total economic cost (including repairs and transaction costs) to remediate them could be $11.3 billion.”, which is an enormous amount of money in anyone’s language.

Speaking in particular to the parts that through this bill widen the definition for qualifying as a claimant, I think it is really important that those claimants who are affected by this unfortunate incident of having a leaky home, through no fault of their own, will be comforted that they are now included in this and come under this bill. So the meaning of a “qualifying claimant” in clause 5 is the particular part that I wanted to look at. Also, we have the bill and I also have a copy of Supplementary Order Paper 125, which wholly replaces section 125BA and—sorry—

💬 Hon Clayton Cosgrove: Section 125BB.

—section 125BB, thank you. I think it is important that—and the part that I was looking at in particular was the situation where a claimant has already applied for adjudication. So taking this, which is new section 125BA(2)(ii), inserted by clause 5, it makes it quite clear that “the claimant must withdraw from the adjudication in accordance with section 67” so that “if the claimant has applied for adjudication under this Act … whether the claimant has commenced mediation or adjudication) and the relevant participating territorial authority is named as a party in the application or later joined to the application, then—(i) the participating territorial authority must agree to the claimant receiving a financial contribution …”. I think that is the main part that I wanted to acknowledge within this particular clause here.

I think, overall, Part 1, in addressing these three main areas, is important to acknowledge. That is all I have to contribute to this bill. Kia ora.

To be fair to the Minister in the chair, the Hon Michael Woodhouse, he is not the portfolio Minister, but I just wonder whether the portfolio Minister, Dr Nick Smith—who is, I am sure, here, although I cannot quite see all avenues of the Chamber—given that this is such an important issue, might be prepared to—

The CHAIRPERSON (Hon Trevor Mallard): I think the member is aware that drawing attention to the absence of—

I did not say that.

The CHAIRPERSON (Hon Trevor Mallard): Well, I think the member did indicate he is not in the Chamber, which is an indication that he is absent. So I will just ask the member to address the questions.

Well, I would hope, to put it this way, that the Minister in the chair, who, eminent Minister though he is, this is not his portfolio, can make a valiant attempt to answer some of these technical questions, which, ordinarily, given the gravity of this piece of legislation and the tragedy that we are dealing with—42,000-plus claims—I would have thought this was such an issue of moment that the portfolio Minister would, at least, take a call, wherever he may be.

I want to refer to the regulatory impact statement. I would like to ask the Minister a question on paragraph 4—and this covers the entire legislation; it is an interesting piece of prose—which says “Due to the sensitivity of the weathertightness issue and the negative impact speculation can have on leaky home owners to make informed decisions, and the impact [it] can have on ongoing discussion with territorial authorities and banks consultation has been targeted.” I can understand that to some extent. Then it goes on “Limited consultation means that the present analysis has to rely on limited evidence.”—well, that is self-evident—“Therefore there is uncertainty about the costs and benefits of the option(s).”

That is quite an interesting statement from officials. I will not name the official. I know the official. The official used to work in my office as my adviser—a very eminent official, actually. It worries me that an official of that stature would write this down on a piece of paper, and I take that official absolutely at their word. But it creates a whole series of questions around the cost and benefits when you have an official document—a regulatory impact statement—saying “Therefore there is uncertainty about the costs and benefits of the option(s).” I am sure others, for the avoidance of doubt for those who are following this debate who are subject to the difficulties that we are trying to address, would like an explanation from the Government in some way, shape, or form as to what that means.

I would have thought that this is an issue of such moment that the Government would have, despite the sensitivities, to quote this report, done extensive consultation, would have gathered extensive evidence, and would be able to put, quite definitively, estimates of costs, and say with some authority, based on evidence, that it was certain about the costs and benefits of the options. This raises a whole can of worms, because it is a document produced by the Government that says, in essence, if we take it literally “We don’t quite know whether this is going to, you know, have any effect at all, whether it’s going to be beneficial, whether it’s going to achieve what the Government policy wants.” If you actually look at the point I made before about the estimates of 16,000 claimants—and we have got 87, actually, in the system; I think I said 86, but it is 87—then that evidence would bear out the uncertainty contained within this regulatory impact statement.

So I say, with all seriousness, this is a serious issue that is raised in the regulatory impact statement, one that, on the one hand, we are clarifying through taking out the criteria from the Gazette notice and placing it within the legislation for the avoidance of doubt to ensure there is total clarity, which we all agree with, and, on the other hand, we have a regulatory impact statement that basically says: “We don’t know which way’s up. We’re uncertain about the costs and benefits of the options.”

I have been in the odd select committee, and when officials come in to see you—I think there was some Inland Revenue Department bill we dealt with earlier in the year—you ask officials: “Will this work?”. When I have been a Minister, the first question I have asked officials is “Will this work?”. If they look at you strangely and they cannot quite answer you, then you realise pretty quickly, if the old grey matter is working, that there is something wrong inherently. Now we are at this stage of this bill—we have been through the select committee and are into the Committee stage and it went right through the Cabinet process prior to that—and we have got a regulatory impact statement that says the Government is uncertain about the costs and benefits.

So I do not know whether the Minister could indicate—and, again, in fairness, he is not the portfolio Minister, and these are quite technical issues specific to the portfolio, and he has, obviously, sort of been dropped in it tonight, so I do have a bit of sympathy for him. But, perhaps, he could gain from his officials some answer. You know, he is the sort of guy with his shovel behind the elephant. Perhaps he could ask his officials, who are learned, whether they could pass him some notes and give us some explanations to put some certainty and dissolve some of the uncertainty that has been raised by the regulatory impact statements. It is on page one, it is in paragraph 4, it is sitting there, it is glaringly obvious, and when you read it, you think: “Well, you know, why are we here? Why weren’t these issues resolved well before this legislation was put to the Parliament and put through the select committee?”.

So this is not just an issue of politics; there are people, there are lawyers dealing with the victims of leaky homes, and there are victims of leaky homes sitting out there hoping that this will provide them some assistance. They will be looking at this going “Well, what does that mean if the Government’s own officials themselves aren’t convinced of the validity of this policy?”—[Interruption] Well, you may want to wind it up, Mr—I cannot remember his name, the one who stood for Wellington Central.

The CHAIRPERSON (Hon Trevor Mallard): “You” is not winding anything. Well, you might wind something up pretty soon, actually.

Not you, Mr Chairperson, the gentleman beside the junior whip. I cannot actually recall his name. But, you know, he may want to wind up this issue. He may want to go around, perhaps, Wellington Central and other places and visit some of those folk who are in desperate need of assistance. We are trying to act with some goodwill over here. That is why we would like—you know, I know the member is new—some answers to pretty serious questions. The member has been in Government. Maybe if he gets a report like this that says “We don’t know the costs and benefits of a particular policy—we’re uncertain about it.”, you know, in his little world, maybe that does not mean much, but to other people it is sort of “Hang on. Is this going to work?”. He may be happy to push through legislation whether it works or not. It may be a political stunt.

I actually have some goodwill for the Government; I think it is trying to make a genuine effort. So that member may want to go around and, you know, tap on a few doors and ask a few people how they are doing in respect of their leaky home issues, and then wind up. So I would appreciate some of those questions being answered and getting some of this stuff on the record so that we can do away with the uncertainty that this particular document now puts before us.

Part 1 agreed to.

Part 2 Consequential amendments, validations, and transitional amendments