Building (Earthquake-prone Buildings) Amendment Bill

I was waiting to say “Aye”, Mr Chair. Can I make two opening remarks about this bill. One is that, as many people have said throughout the passage of this bill, it is very important to honour the victims of the Canterbury earthquakes, and that is foremost in my mind, too. I believe that the best way to do that is to make sound public policy and actually enable New Zealanders to protect themselves against all the risks that they face. That is very much the intention of the two Supplementary Order Papers—Supplementary Order Papers 152 and 156—that I have on the Table today.

I will run through those Supplementary Order Papers, but, first, I have one other observation about the passage of the bill to this point. The Minister for Building and Housing, in the select committee process, was pushed back very, very hard, and, as he said in the second reading, he was surprised, despite having a PhD in civil engineering, to learn that earthquake risk varies around New Zealand. I found that unusual, but it explains a lot about how the bill got to this point.

Having accepted that there is a variation in earthquake risk around New Zealand, I think it is appropriate that we consider going one step further, because by having low-risk regions such as Auckland, such as Northland, such as Ōāmaru, and such as Dunedin included, what we are saying is that even though your chance of being in a severe earthquake in Auckland, for instance, is one in 110,000 years, you must consider the possibility of earthquake damage to your buildings being a risk, and you must be prepared to spend $10,000 to $20,000—according to the regulatory impact statement—to work out whether or not a particular building is in danger. The estimates in this second version of the bill are that rather than 700,000 buildings being potentially in need of assessment, only 30,000 buildings will need to be assessed, but that still gives you anywhere from $300 million to $600 million of cost in assessment alone, assuming that one already knows that the buildings being assessed are in that 30,000, which of course one would not know because the purpose of assessing them is to find out. So we are talking about hundreds and hundreds of millions of dollars in building assessment costs.

I would put it to the Committee that we can say that in the case of Auckland, Northland, Ōāmaru, and Dunedin, where the risk has been assessed by GNS Science to be so low that there is as little as a one-in-110,000-year chance of having a severe earthquake, that money is throwing good money after bad. There are so many other risks that New Zealanders would like to protect themselves against that it is almost impossible to conceive that that is a good use of half a billion - odd dollars, or at least the $200 million that we might expect to be spent in the one-third of the country—

💬 Phil Twyford: Over 50 years, though.

—that has been assessed as being low risk. And Mr Twyford is quite correct.

In addition to introducing a new set of risk categories, what the Minister has done is further trivialise the costs, or at least the perceived precautions taken against risk in those regions, by saying: “Don’t worry. The cost will be lower because you will have 50 years, and potentially 65 in the case of a heritage building, to assess whether or not the building is truly at risk.” The Minister cannot eat his cake and have it too. He cannot say that the danger is great enough that private property owners will be forced to spend between $10,000 to $20,000 finding out whether they are at risk in the first place, on the one hand, but also that the risk is so small that they need not concern themselves with mitigating against it for up to 65 years.

The fact is that New Zealanders face a very wide range of risks in their lives. If I could just give three examples of the types of risks that Aucklanders or Northlanders like myself face, the chance of dying of cancer in New Zealand in any given year is one in 500, and, as we know, there is a lively debate in New Zealand at the moment about how much of our community’s resource should be going into mitigating against that risk. The chance of dying in a car crash in New Zealand in any given year is one in 10,000, and we spend a lot of time in this country trying to mitigate against that risk with a whole variety of measures, including spending a lot of money trying to make roads safer. And the chance of being caught in a severe earthquake—not even the chance of dying, but just the chance of being in one—multiplied by the chance of being in a particular building, and multiplied by the chance of it being severe enough to hurt you is such an infinitesimal risk that we would be far better to exempt these regions from being forced to spend a large amount of money mitigating against it.

I would add that it is not only that they will be forced to spend money on assessment but also that buildings will be stigmatised by having to have notifications that the building is unsafe. It will take some time for that information to percolate through the community, and for a time it will undermine property values and damage people’s livelihood, which is another distortion and another reason to exempt those regions given the very small risk, which the Minister has acknowledged by creating new categories and by saying that you have up to 65 years to adapt the building, in any case.

The second Supplementary Order Paper that I have on the Table is somewhat more sophisticated and, I believe, possibly more important because it affects the whole country. If one talks to structural engineers, and I have spoken to some of the experts in the field on this topic, they will tell you that when a new building standard is calculated for a particular building, of course engineers—a profession with which I myself have some considerable sympathy—take into account the factors of the occupancy likelihood, or the chance of somebody being in a building at a particular time; the location and the probability of a severe earthquake in that area; and, of course, the type of building and its structural characteristics to try to work out what the new building standard should be in respect of earthquake risk. There is also considerable debate and dispute about whether or not the extent to which those differences are allowed for truly reflects the extent of differing risk to life in different buildings. Some will claim that, in actual fact, the Z factors of adjustment that are cited in the bill are insufficiently reflecting the true difference in risk.

The simple way to resolve that dispute from the point of view of this Committee is to take the advice of GNS Science and actually follow the principle that the law should be accessible to the citizenry. So if we believe that it is the intention, by having a new building standard, to take into account the probability of a serious earthquake in a given area, the probability of a particular building being occupied at a particular time, and the probability of a building of that type collapsing and doing damage, then what one needs to do is spell that out in the law.

So my Supplementary Order Paper 156 inserts new section 133ABC, which introduces the concepts of earthquake life risk into legislation. What that would mean is that buildings that do not wish to comply with the regime of new building standard—which I regard as a blanket approach right across the country and, therefore, inappropriate—will have the option of demonstrating that the risk associated with a particular building, given its location, its structural characteristics, and its occupancy characteristics, will actually be able to calculate the real earthquake risk to life in a way that is comparable with other risks. [Bell rung] Mr Chair.

The CHAIRPERSON (Hon Trevor Mallard): It is normally the case to give a member only two calls. Seeing as the member has an amendment, I am just going to ask Mr Foster-Bell to wait a minute and let Mr Seymour finish.

Thank you, Mr Chair, and these are quite technical matters, so I appreciate being given the time to be able to explain as much as I can of them.

So the idea is to introduce the concepts of life risk for a particular building. Going back to my initial remarks about paying tribute to the victims of the Canterbury earthquakes by making public policy that is human, what this allows us to do is empower the people of New Zealand to make decisions about what sort of risk is tolerable in the case of a particular building, to calculate that risk based on the real probability of life being lost, and to actually compare that with other risks and other threats and other resource destinations, if you like, that New Zealanders have as they try to grow and prosper and live their lives.

I suspect, based on the feedback that I have had from the Minister, that he will be unlikely to take on this particular Supplementary Order Paper and that his party will not support it. I think that that is a great shame. But I hope, pyrrhic as it may be, that other parties will come along and support these amendments for the simple reason that the best way to pay tribute to the victims of the Canterbury earthquake is to make good public policy to say that the transaction costs of establishing whether or not a particular building is an earthquake-prone building under the currently proposed regime are excessive for the risk that is faced in Northland, in Auckland, in Ōāmaru, and in Dunedin, and to say that if it is the intention of this House that people will actually be able to compare the risks that they face in different areas, then we should actually put that in the law and make it accessible to the people whom we are supposed to represent, who should be able to read that law.

There were a couple of questions raised by the Labour members that I thought were very good questions, which I will try to address in the remaining minute or two of this call. I think it was Phil Twyford who asked what would happen with a high level of variability of occupancy in a particular building. Well, Mr Twyford, I think the only way to answer that is to assume that any legislative proposal must be given strength by the regulations put in place. You can only hope that the regulations the Minister would put in place, if he was forced to regulate on the basis of this legislation, would allow at the very least for an annual cycle and not cherry-pick a particular part of the year—that would clearly not be in the spirit of the legislation—and, as the other Labour member, Poto Williams, pointed out, they would actually allow for liability to self-report whether or not the occupancy rates given at one time continued to be viable, because otherwise that would be a breach of the law. I believe the law as it is written does allow for that possibility, presuming that it is going to be enforced and adhered to by the parties to it.

Poto Williams’ question about the building in Christchurch—I think it was the Hotel Grand Chancellor, and I remember seeing it teetering in Christchurch before it was destroyed. She asked what would be the impact on neighbouring buildings and how the potential impact on neighbouring buildings would be assessed.

I can only assume that if we are going to legislate that the risk of a particular building, given its structural characteristics, is going to be considered, then you would have to have a consideration of the neighbouring environment and what other buildings might do to that building. So you are back where we started, with the law of neighbourly relations, which is that if you are going to impose that sort of danger upon your neighbours, then that is going to be a cost to them and they are not going to be too happy with you. So I believe that although I did not anticipate that objection in the drafting of this Supplementary Order Paper, I think it is a very good one. I would think that within the Supplementary Order Paper as currently drafted it would be considered in the interactions between neighbours, as it is now. I am quite happy to have that challenge.

Paul Foster-Bell—in calling the member, I want to thank him for his politeness in allowing a more coherent debate.

Thank you, Mr Chair, and it was a pleasure to yield to my colleague, even if I do not agree with aspects of his contribution.

In speaking on this Building (Earthquake-prone Buildings) Amendment Bill in the Committee stage, I want to begin by focusing on a piece of this legislation that may not have been concentrated on so far, and that is the provisions around heritage buildings. There are two reasons for that. As a resident of Wellington, where we have some wonderful heritage that needs protection, but also as a resident of the second-most vulnerable capital city in the world to seismic events, after only Tehran, which is the No. 1 city vulnerable to seismic events, I think there are some balances that we have to strike in this legislation to ensure that our heritage is protected but that human life is also protected. As someone who not only works in this beautiful heritage building 3 days a week but also lives in a heritage apartment block from the 1930s, it is something that is on my mind and, I know, on the minds of many Wellingtonians.

If we turn to clause 23 of this bill, which amends section 133AT of the principal Building Act, it talks about the owners of certain heritage buildings being given additional time. I think this is a sensible measure. If we look at the times that it would be required in Wellington, Wellington is the highest-risk area, so there would be a 5-year period for investigation and assessment of buildings, with a further 15 years provided to allow for upgrades and renovations to take place to bring the building up to standard. In addition to that, this particular section of the bill would allow an additional 10 years for the owners of category 1 listed historic places. Those are buildings that are listed in the New Zealand Heritage List, maintained under section 65 of the Heritage New Zealand Pouhere Taonga Act 2014.

Those are the most significant, most important buildings, and we have actually had a number of them feature in the media recently. There is the excellent work that has been done on the old Public Trust Office on Lambton Quay, for instance—on the corner of Lambton Quay and Stout Street. That is a building of significant architectural heritage that has been renovated up to a very good standard, using the latest technology, to allow it to continue to function as offices, including offices for the Ministry for Culture and Heritage but, also, it is rumoured to feature a new Jamie Oliver restaurant—another fine eatery for our capital’s entertainment sector.

The sort of work that would be required there may actually be significantly more expensive than building owners can afford to do, if it was required to be delivered within that 20-year period of assessment and renovation that would usually be provided for in an area like Wellington. So I think the addition of the extra 10 years for those most important buildings, those very significant, perhaps even unique, examples of that style of architecture in New Zealand—for them to be preserved, that is sensible.

But we have other issues here in Wellington. The Harcourts building further down Lambton Quay; it is not a category 1 building. It is a less exceptional example. Having previously worked in that building—it is used in part by the Ministry of Foreign Affairs and Trade—I can say it is not actually a fantastic building in its current state. It is not, in my view, particularly aesthetically pleasing. However, it does have certain protections applied to it, and that has complicated the renovation and strengthening process there.

I think this part of the bill strikes a sensible balance between the need to protect human life and giving building owners of those heritage buildings sufficient time to undertake the work, so I particularly want to applaud and welcome that provision in the bill that is clause 23. Thank you.

Could I begin by thanking David Seymour for his contribution on the Building (Earthquake-prone Buildings) Amendment Bill, because although I might disagree with the way in which he has implemented his intention to properly assess risk and not misallocate precious resources, I actually agree with the philosophy. What I would say, though, in respect of Dunedin, which is one of the examples that he points to as being lowest-risk, is that—and I am from Dunedin—in my lifetime I have been in earthquakes in Dunedin that have had chimneys fall over. So although it is right that it is lower risk than other parts of the country, it is actually not without risk.

I would also note that in Dunedin it is an interesting case in point as to how much can be achieved. Some members will know, but other members will not, that already, under the code that is proposed in respect of upgrading for earthquakes, lower levels of upgrade—or, if you like, an upgrade to a lower level—are proposed in respect of areas that are lower risk than areas that are higher risk. For example, a building that was in Wellington or Queenstown, both of which are high earthquake areas, will have to be upgraded to a higher standard than a Dunedin building because the assumption is that the earthquake risk is higher in Wellington and Queenstown. It is true that the costs that have been put upon building owners in Dunedin are lower than they are in Wellington, and that is prudent—that is prudent, in respect of both Wellington and Dunedin. It is also true that a lot of building owners would like to avoid any cost of upgrading their buildings, despite the fact that they have a latent defect that, from a public policy point of view, it is proper to protect the public from.

In Dunedin because of when it was built, which was in the late 19th and early 20th centuries, there was an incredible building boom following the gold rushes and at that time, partly because of civil disturbances in the rest of the country and partly because of geographic location relative to ports, Dunedin was the most populous and wealthiest city, indeed through to about the 1920s. That building stock is now very old and a lot of it dropped to close to nil value with people claiming that there was no economic use for those buildings. Once those buildings, and the owners of those buildings, were forced to, effectively, internalise to that building the future cost of upgrading those buildings to a decent earthquake standard, a lot of them dropped to very close to nil value, but they were then economic to repair. It is quite pleasing in Dunedin that a very substantial proportion of the buildings that were in need of repair, these two or three-storey brick buildings, have now been repaired, and more of them are being repaired to high standards.

The final point I will say before sitting down is that it is really important in the implementation of this legislation that we do not let the Building Act get in the way of sensible outcomes. The cheapest way to do up buildings that are earthquake risks is to allow them to be unpicked, and then almost have an iterated process using engineers, at the time that they are being unpicked, to design the most cost-effective solution. If you try to do it from the plans before the building is unpicked and before all of the defects are uncovered, in order to get a consent, you drive an outcome that is far more expensive because you have to design against the possibility that there might be a defect, rather than the reality that it is.

In terms of the implementation of this, it is actually the Building Act and the interface between engineers, this code, and the building processes that we need to get right. Because if we do not allow that process—and I have seen examples of this in Dunedin and, indeed, I have been involved in some personally—if we do not get the practical engineers who are able to unpick and say “Well, actually, there are different ways that we could do this but we won’t really be sure until we pull off all of the internal linings and the building is unoccupied and we’ve got all the ceilings and the wall devices off.” you will not get to the most cost-effective solution.

Sitting suspended from 6 p.m. to 7.30 p.m.

It is a pleasure to take my first call on the Building (Earthquake-prone Buildings) Amendment Bill in the Committee of the whole House. First, I would just like to acknowledge everyone who has been involved with this bill through the legislative process. I feel like there has been a lot of listening and there has been a lot of learning. For my region of Canterbury, it is quite a sensitive issue as well. I think where this bill currently lands is in a very good place.

There are just a few things I want to talk more specifically on, and that is around clause 23 and a few of the sections there—133ABB and 133AA. Basically, I think where clause 23 is landing at the moment is giving people a framework. It is setting out very clear expectations, and it is, ultimately, giving confidence. So I suppose when you look at section 133, around the three seismic-risk criteria, it is very clear in that framework. It sets it out—high, medium, and low for identification of earthquake-prone buildings, which is just under 34 percent of the new-build standard. There is 5 years, 10 years, and 15 years respectively, and then the subsequent response stage for strengthening those buildings.

In my electorate of Waimakariri it is very often canvassed that we call the earthquakes the Christchurch earthquakes, but, of course, what happened in my region were the Canterbury earthquakes, because an area like Waimakariri was very hard hit. But I would call it the tale of three towns, because towns like Oxford, Rangiora, and Kaiapoi clearly demonstrate different layers of this legislation, and specifically clause 23, about the impacts of the earthquakes. So when you look at Kaiapoi, that was very hard hit. The impact of the earthquakes was very visible from the buildings. Then you go 15 kilometres to a town like Rangiora and you would look at the buildings on the high street and say that possibly they got away OK. But it was not until the buildings were inspected that they realised there were a lot of buildings under the 34 percent. Those investors or building owners invested heavily into those buildings to bring them back up to code.

So I think what we need is a very clear framework that gives people set times and expectations, because, being a Cantabrian myself, I probably would not have grown up in Christchurch thinking that we were at risk from such devastation. So we need some evidence-based approaches that will allow people to have a very clear framework of expectations. But it is not only that; it is then the continuum either side, and the provisions inserted by clause 23 clearly talk about that in terms of the polar ends of the continuum of buildings that possibly do not need to be included and buildings that need to be prioritised.

It probably sounds like common sense, but one of them obviously needs to be hospitals. I worked for the Canterbury District Health Board—not at the time of the earthquakes—and colleagues would tell me stories of how they responded and provided health care services in the hospital in Christchurch at the time. They told me that they needed to ensure people were safe when things were falling off walls and out of ceiling cavities. It is common sense that you need a very structurally sound building for the continuation of health care services in a disaster. That is why health and education buildings are prioritised. I think we have listened and we have learnt about the inclusion of unreinforced masonry in terms of prioritisation for buildings. We know that there were a lot of fatalities and injuries caused by that in the Christchurch central business district and we have seen that in the Rangiora high street as well.

Let us look at Oxford, another town in my electorate. It was affected, yes, with earthquake-prone buildings, but it does not have the commercial income that towns like Rangiora have. A lot of the farmers in that area are thinking about where they are going to find the money to fix up buildings or structures on their farms. Some structures would have no impact or potential harm to the public, so we see in clause 23 the exclusion of farm buildings, retaining walls, fences, bridges, wharves—there are probably not too many wharves in the farms in Oxford—tunnels, and storage tanks. So I think, overall, that clause 23 identifies the continuum and is not a one-size-fits-all approach. It is about understanding the best approach for that area.

Tēnā koe, Mr Chair. Tēnā koutou katoa e Te Whare. I am very pleased to take a call on the Building (Earthquake-prone Buildings) Amendment Bill. I would like to talk, in this call, about heritage buildings. Paul Foster-Bell outlined, in his contribution, clause 23 and the new section 133AT, which outlines how the owners of our most significant heritage buildings—those with category 1 status or listed in the National Historic Landmarks List—can apply to councils for an extension of up to 10 years to strengthen an earthquake-prone building.

The Wellington City Council is much further ahead than many other councils, obviously because of the earthquake risk in the city, in identifying earthquake-prone buildings. It has identified 684 pre-1976 buildings in the city. Of these, 137 have heritage listing but only 21 have category 1 status, so they would qualify for an extension of time under clause 23.

It was certainly a major concern of submitters—the impact of this bill on heritage buildings. One of the submitters, Phillimore Properties, noted that a large number of quite beautiful heritage buildings were on the market because their owners could not face the cost of earthquake strengthening and because, in cities like Auckland, the land values are often worth more than the buildings. So there is a very real risk of heritage buildings being demolished in the wake of the legislation.

That would be a tragedy for cities and towns across New Zealand because of the contribution that many of our older buildings make to their character and identity. You only have to think of areas like Ōāmaru, Invercargill, and the loss of heritage in Christchurch. That is one reason that the Green Party is supporting the bill, but we are also supporting Ron Mark’s Supplementary Order Paper 160, because instead of weakening the regulatory regime that the bill sets out to provide, as one of Mr Seymour’s Supplementary Order Papers does, we have got to provide more incentives to the owners of heritage buildings so that there is some recognition of the benefit that the community gets from the protection of that heritage character and to assist them with the costs of strengthening.

Certainly the larger metropolitan councils like Christchurch and Auckland have already been quite proactive. In Wellington the council set up a $400,000 fund for built heritage, which is likely to be allocated on an annual basis to assist with the cost of earthquake strengthening. Wellington City Council also offer rates relief if a building is left vacant while that strengthening occurs and offers some rebates on building consents. Similarly, in Christchurch there is a built-heritage fund to assist with conservation costs, which can include earthquake strengthening. But this is a relatively small amount of money given the many building owners who will be affected.

So Mr Mark’s Supplementary Order Paper 160 does highlight the quite significant gap in Government policy here, and I would welcome some comments from the Minister in the chair in terms of whether the Government is making any progress in considering some incentives for building owners for earthquake-strengthening costs associated with heritage buildings. Because, as Property Council New Zealand has pointed out, a building owner can claim a tax deduction for a building that collapses with the risk of quite significant injury or potentially death, but it cannot claim a tax deduction for the costs of strengthening a building so that that injury does not occur.

So what we are seeing at the current time is those costs of providing incentives to the owners of heritage and other buildings falling on local councils, and the Government not stepping in to actually help fill that gap. The Minister has said it would be premature to address tax reforms before the policy provisions around earthquake strengthening are in place and before the bill has passed. We think there could be a tax working party set up to address this issue, because, obviously, tax legislation was written before the whole issue of earthquake strengthening was considered. As I understand it, at the moment, you cannot claim a tax deduction for earthquake strengthening because the Inland Revenue Department regards that as a capital expense because it is enhancing the building. But once this bill passes, it will be a legal requirement.

Earthquake strengthening is actually providing for the functioning of the building, so it should not be regarded as an enhancement. Even if Mr Mark’s Supplementary Order Paper is voted down because it is ruled out of order, as the Chair of the Committee noted, because this is an omnibus bill—well, it is not an omnibus bill, sorry—we think the Supplementary Order Paper is very timely in highlighting a major policy gap and the fact that the Government needs to be giving some incentive, particularly for the owners of heritage buildings, to strengthen them. We have seen in Christchurch the very infamous comments of the Minister Gerry Brownlee, calling a lot of our heritage buildings old dungers, and that leading to their demolition after the Canterbury earthquakes. This Supplementary Order Paper, we think, is a very useful initiative in highlighting the policy gap.

In the rest of the call, I would just like to highlight that we are very pleased with the changes that were made in the Local Government and Environment Committee, and I have talked before about the very good process that both Ministers and Scott Simpson, the chair, undertook to ensure that there were good changes made. The Green Party opposed this bill as introduced, because it had far too generous exemptions for building owners for meeting the current fire and disability access requirements when undertaking earthquake strengthening, and we pushed very hard for changes here.

There were submitters who were very concerned about this. The Human Rights Commission said that it was just highlighting that we were undermining our good human rights record by this retrograde step of not ensuring that those disability access requirements were put in place. There were a lot of submissions that presented evidence of heritage and other buildings that had been upgraded to improve accessibility without diminishing their heritage fabric, and there was recognition by groups like Age Concern that making sure that buildings are accessible promotes the well-being of all of the population. Whether it is parents with pushchairs, or senior citizens, it does not just provide a privilege for people who are in wheelchairs, but it promotes well-being for all of us, and it ensures that there are equal rights for all. So this change in the bill has been quite critical to the Green Party now supporting the bill and its progress.

There will be some other comments I would like to make later, but we support the Supplementary Order Paper that Ron Mark has lodged, and we are very pleased with the changes around disability access. Thank you.

In rising, I have to say that having listened to David Seymour’s speech earlier, one cannot help but empathise with some of the comments and observations he has made. In fact, the comment that there are risks in life, in general, which we face daily, was, I think, very pertinent. It is something that we have often dwelt on in regard to how far we go with legislation to try to curb risks, and what the economic consequences of that are to our ratepayers and to our taxpayers. I often wonder, if we were trying to build roads today for the very first time, how we would, under our current occupational safety and health laws, view the notion that we would separate two vehicles careering towards each other at 120 kilometres an hour by a piece of white paint. But we do—we have a piece of white paint on the road that, supposedly, is going to stop these two vehicles careering into each other at a combined speed of up to 240 kilometres an hour. But we do—we rely on that piece of white paint and we deem it acceptable that that piece of white paint is going to keep our road toll down. I would just say that we probably would not allow that to happen in this day and age, would we, under our current laws. So I think Mr Seymour does bring a degree of rationality to the debate with his views, although, clearly, not everyone is going to agree with his Supplementary Order Paper.

But my job is to speak to the Supplementary Order Paper that I have brought forward on behalf of New Zealand First—Supplementary Order Paper 160. I just want to restate that the Supplementary Order Paper does insert new clause 41C “to redress significant tax disadvantages faced by commercial, industrial, retail, and heritage property owners when looking to bring buildings above the earthquake-prone building threshold required by this Bill”. It does strike me as quite interesting that the Government would not support this Supplementary Order Paper, which—as chartered accountant firms like KPMG and others, Local Government New Zealand, and property owners have said—brings some sense and consistency to the Inland Revenue Department (IRD) when it comes to dealing with the tax deductibility of business costs.

We struggle a little bit here in New Zealand First with hearing daily how this Government wants productivity, wants to encourage business, wants to minimise red tape, wants to minimise compliance costs on businesses, and wants to ensure that earthquake-prone buildings are brought up to the new specifications as quickly as possible and that landlords—who have a lot invested in these buildings—are incentivised to do that. The only incentive I can see in the legislation, without Supplementary Order Paper 160, is a big stick, closing down buildings and forcing some landlords in places like the Wairarapa to boot their tenants out on the street if they do not have the money or the wherewithal to strengthen their buildings within the time frames laid down.

What is interesting is that we have gotten to this point in the legislation where, cross-party, we are all in agreement. There have been some massive changes to this legislation, to what was produced when it was first brought into the House. There have been some wonderful concessions made by the Government, by the Government members on the Local Government and Environment Committee; the Opposition has also moved into that middle ground, to a place where we have unanimity. Yet, on this simple issue of providing New Zealanders who have invested their money in purchasing buildings and have now had the misfortune of finding that those buildings are not going to be compliant with this piece of legislation that we are going to pass—they are being told by the IRD that when they so move to be compliant, they will have added to the value of their building.

They will not have added one shred—not one cent—to the value of their building. They will simply have repaired it to the standard required by this Parliament—repaired it, not improved it, not expanded its capacity or its capability. They will simply have repaired it to the standard that we are now saying, in this legislation here tonight, they must do. Why would we allow the IRD, in a rather narrow view, to not allow these people to treat those improvements as repairs and maintenance, and thereby accrue the tax deductibility concessions that we, in New Zealand First, believe in?

We are grateful for the support of the Green Party and the Labour Party, and of Mr Seymour from the ACT Party, that our view is the right view. I would like to seriously hope that before the end of tonight some Cabinet Ministers might have a quick chit-chat upstairs and have a think about it. Why would we need to wait for another piece of legislation to come through the House? Why would we need to put this off, vote this down, in the hope that in the never-never, somewhere along the line in some tax review, we readjust?

In the meantime, we have a whole bunch of people out there, and I can pick a few examples. We are very keen to preserve the fabric, culture, and the aesthetic appeal of many of our rural towns by making sure heritage buildings are looked after. We have made these concessions here, but not all of the buildings we are talking about that have high character value are considered heritage buildings. So what are we going to see? For many of these landlords it might well just be easier to run a bulldozer straight through the damn building—and there goes a cinema in Masterton that actually has typical rural appeal and high aesthetic value to that community. But if it turns out that the costs and the lack of any tax concessions make it easier for this owner to simply say “Well, I’ll tell you, we’ll knock it down and we’ll build a single storey building—you know, get a Skyline garage in and run our business out of that.”, that will add nothing to the cultural and aesthetic appeal of Masterton’s Queen Street. Or, for example, I can think of cinemas—what was the other one I thought of? We have got old pubs. All over New Zealand, in rural provincial New Zealand, you have some old pubs. They are not considered heritage buildings.

I would just hope that the Government would reconsider its earlier statement. This bill deals with an issue where, quite frankly, we think the IRD is out of control. Quite frankly, we think that this concession is an easy one to make for the Government. It does incentivise property owners to actually get on with the task of rebuilding. If it saves them a few dollars and encourages them to get stuck into the task earlier, if it actually saves them enough money to make it worth their while doing that building up and not knocking it over, then why would we not do it?

We know that we need some sanity injected into the way in which the IRD is interpreting the Act. We know that we need to give the IRD some guidance. We think that the Income Tax Act of 2007 does need adjustment, and we would ask that the Minister seriously consider and support this Supplementary Order Paper. I know, for one, that Local Government New Zealand, property owners throughout New Zealand, and accountants throughout New Zealand would think that this Government has made, this evening, a very wise choice and a wise decision. Failing that, we do not want to hear anything more about the Government and about how it wants to see tax cuts for businesses and how it wants to see concessions made to businesses and to property owners so that they can do the right thing, because without Government members voting for this Supplementary Order Paper, which is a very simple one, all of those words are quite hollow.

I would like to just elaborate on some of Ron Mark’s points in his Supplementary Order Paper. I actually think it is a good idea for a number of reasons, and let me explain those, but let me provide a very clear “but” to what he said. First and foremost, as he alluded to, I am from Napier. There are two places where in the last 100 years people have died as a result of building collapse due to an earthquake: Christchurch and, in 1931, Napier.

Napier was completely rebuilt, from the ground up. A number of these buildings have not been designated heritage buildings for a number of reasons, but they were built like the proverbial. They were built not to fall down if there was another earthquake. So what we see in Napier is a whole lot of buildings where, if there is a massive earthquake, their structural integrity might be compromised, but these buildings are not going to fall down. There are a number of building owners there, and one in particular has a joke. He says: “How do you make a small fortune out of renovating old buildings? You start with a big one.”—a big fortune—because the cost of doing this, of getting it up to scratch, is immense.

We are very lucky in Napier that this one person in particular understands the heritage value and is a Napier man, born and bred, because the problem we have got, right across provincial New Zealand, is that often the cost of getting these buildings up to standard is actually more than the buildings themselves are worth. We have heard Wellington MPs speak and Christchurch MPs speak, but it is a different situation in provincial New Zealand. In Christchurch and in Wellington you can actually justify the cost of getting these buildings up to scratch because you know the yield you will get off these buildings is enough to cover the costs.

In fact, we have the former Minister for Arts, Culture and Heritage in the Chamber and I would love you to have just a 5-minute call, Mr Finlayson, to get your view on what should happen around heritage buildings that are maybe worth a couple of hundred thousand dollars but cost—

💬 Hon Christopher Finlayson: It’s all over for me, now.

Oh, it is never over for you—it is never over for you. In fact, you are in the ascendency, I would suggest. But it is a major issue in provincial New Zealand.

The member for Whanganui knows exactly what I am talking about, because there are examples of fantastic heritage in the main central business district, but the cost of getting those buildings up to compliance is such that I would bet a number of landlords are just not even going to go there. So there are two options. As Mr Mark suggested, they pull them down and they build something else, but what I suspect will happen in a lot of the smaller towns—and I was in Eltham recently; there are some beautiful old buildings there—is that they will just walk away from them. They will just say “It’s not worth it to me. I’ll walk away.”, so what we will end up with is these ghost towns because the buildings themselves are just not worth the price of even demolishing them. So the council, at some point in time, will end up having to take responsibility.

Mr Mark’s Supplementary Order Paper 160 brings up a very interesting point, and that is capitalisation versus expensing. But what I would really like to know before I, certainly, as our revenue spokesperson, make any comment on this is: what would be the fiscal cost of actually doing this? Because there would be a substantial cost. Let us understand what that cost is and then, once we do that, I think we could have a much more educated conversation around whether we want the Inland Revenue Department (IRD) to take this further. If it is literally millions and millions of dollars, that is a different question, as opposed to if it is not so much. So let us see whether we can get that quantified. I would like to ask the Minister of Revenue if, in fact, he would instruct the IRD to do some work around this, because I think it is very relevant and it is worth it.

The second thing I would like to talk about is Supplementary Order Paper 152 in the name of the ACT member, Mr Seymour. The reason for this is that I actually think that this is a good idea. We talk about managing risk, and we can always manage risk. We can mitigate risk; we can never eliminate risk. But in this bill, if we look at new section 133AC inserted by clause 23, it talks about the meaning of a “priority building”. Subsection (1)(b) talks about “a building that is likely to be needed in an emergency for use as an emergency shelter or emergency centre:”. I would suggest that that includes churches and sporting facilities like, for example, racing clubs that are used rather infrequently.

But I come back to the previous point—and I agree with Mr Seymour on this—which is that we are talking there about buildings that are used infrequently. Hawke’s Bay Racing might have—I do not know—five or six meetings a year, but its clubrooms are certainly not used on a regular basis. Yet with this legislation, as it stands, I would suggest that the cost of rehabilitating the Hawke’s Bay Racing clubrooms would be prohibitive, as it would be with a number of churches around the place.

So we are talking about high-priority buildings under the definition in the Act because they could well be used as a shelter, but we are also talking about buildings that are not used that often. So we are not talking about office blocks or anything like that, which are regularly tenanted. We are talking about buildings that have irregular usage, but—and this is where the “but” is—might be a little bit earthquake-prone. So, like Mr Twyford, I approach this with a very, very open mind, and, in fact, being from provincial New Zealand and understanding the costs and the issues around this, I have a tendency to support it.

I know that the Minister in the chair is not the Minister responsible for this bill, but I was sort of hoping that during the dinner adjournment the officials had a bit of time, had an hour and a half, to consider some of the points that Mr Seymour brought up and perhaps, through the Minister in the chair—even though, as mentioned, I accept she is not the Minister in charge of this bill—could provide some answers to this. I think there are many people right across provincial New Zealand, and, I certainly know, in my electorate, who are looking at this Supplementary Order Paper and saying: “This is pragmatic.”

Let me make it clear: we do not want people in buildings that are liable to collapse if a wolf blows on them. There has to be an element of safety in this, but again I come back to some of the buildings. I know that before the Christchurch earthquake the University of Canterbury was doing a whole lot of work around the structural integrity of wooden buildings. What was found is that wood in fact has massive structural integrity. I know that in the Napier earthquake a whole lot of chimneys fell down. The houses moved quite a lot, but they did not fall down. But under this definition here, I do not see wooden buildings mentioned—I suppose you cannot.

I know that Mr Twyford brought up some very interesting questions about the logistics—how we do this. I do not think that is a major issue to overcome, because what we are asking councils to do is to take the bulk of responsibility for this. I think that if we said to our local councils or the territorial authorities responsible for this “Hey, this is just another part of the bill. It’s another part of the legislation that you’re in charge of policing, or that you have responsibility for.”, then they would take that on, and they would develop a type of register or database, or whatever was necessary, to make sure that this part of the legislation was enacted.

That is all I will say for now, but there are some very important questions that do need answering. I think Mr Seymour has introduced a common-sense Supplementary Order Paper, but there are some questions. Thank you very much.

David Seymour—final call.

I would just like to briefly address some of the comments made about the amendment I have on the Table, Supplementary Order Paper 156, and also Mr Mark’s proposed amendment, Supplementary Order Paper 160. Can I preface these comments by saying that the simplicity of New Zealand’s broad based - low rate taxation system is one of the best pieces of public policy that our country has. I understand that on measures of revenue raised versus the rates imposed, it is in the top three in the developed world. We should be very, very cautious about any proposal that will erode the tax base and, therefore, erode that great competitive advantage that our country has.

However, when it comes to the definition of whether or not a particular piece of expenditure is capital expenditure, we find ourselves in a position where either this House or the Inland Revenue Department has to make a positive decision and define it one way or the other. As Mr Mark said, the person who brings their building up to standard has not had an increase in capital, unless you assume that the purpose of this legislation is to lower the capital stock right across New Zealand, and I do not think for a moment that that was the Minister for Building and Housing’s intention. Therefore, I think that I am very inclined to support Mr Mark’s amendment, in particular because we have not had the opportunity in this whole Committee stage to hear from the Minister in charge of the bill and hear what his rebuttals might be, whether this proposal been considered before, and, if it was, why it was rejected, so that members might consider those issues, as well. It is unparliamentary to speak of the absence of a member—

The CHAIRPERSON (Hon Chester Borrows): Then do not.

—but, hypothetically, if the member were present, he might have done a number of things. He might have addressed the debate that many people around this Chamber tonight would like to have. He might have demonstrated empathy and a genuine concern for the imposts that this Government puts on New Zealanders and their property through regulation. That would have been a very positive contribution to make, but I digress.

In respect of Supplementary Order Paper 156, Poto Williams raised a very good question about how that particular amendment would function in the case where there are multiple buildings. The scenario she may have had in mind was the scenario where there are two adjacent buildings, one of which is very seldom used but somewhat earthquake-prone and is next to another building that may be more frequently used, and the collapse of the former building may mean that it had additional impact on life risk by collapsing on the latter building. I think there was an implicit assumption in what the member had to say, which was that the life risk calculated for a particular building pertains only to people within that building.

Upon reviewing the amendment, I can give a much better answer than I did before the dinner break, which, I have to say, was uncharacteristically stilted. It is very clear that in new section 133AZAA(2)(f) on my Supplementary Order Paper we have the reference to the “location in relation to other buildings or building types;” being part of the methodology used to estimate the probability of injury or death referred to in this amendment. So there is an explicit reference to that concern that Poto Williams had, and I apologise that I did not point it out earlier. But it was a very good objection, which certainly stumped me for a second.

Finally, in the beginning of the proposed amendment—and, actually, in several places throughout the Supplementary Order Paper—it talks very clearly about the potential risk to life; never expressing life in a particular building that is being assessed. So I believe that that objection, although very plausible, is well answered within this amendment. In closing, I am mindful that this is—

I will be concentrating my comments on the Building (Earthquake-prone Buildings) Amendment Bill to new section 133AA in clause 23, about which I think David Seymour has a Supplementary Order Paper, but I will come back to that later in my submission. This is a necessary piece of legislation. I acknowledge all the Christchurch members of the Committee, but also say, being a Wellington member of this Parliament, that because we are in a high-risk area we are also very aware of the need for this legislation.

New section 133AA points out some buildings that are exempt from the purview of this piece of legislation. We are taking this bill as one question, and I am very happy about that because it gives me the opportunity to pose some questions to the Minister around section 133AA from a layman’s point of view. I was not on the Local Government and Environment Committee, and I realise that the Minister in the chair, Judith Collins, is not the Minister responsible for this piece of legislation, the Minister for Building and Housing, but I note that there are some officials who might be able to help us because I think there might be some valid questions from the public out in New Zealand about some of the exemptions here. I certainly am looking at some of the exemptions and scratching my head.

If it is not the territorial authorities that are responsible for looking after these, I guess you can say, buildings, or entities, then who is? Subsection (1)(a) talks about a building that is used “mainly for residential purposes”, unless it is two storeys and used as a boarding house, a hostel, or specialised accommodation—I can understand that. Paragraph (b) is “a farm building”, and I guess that is probably some intervention by Federated Farmers. We also have paragraph (d), which is “a fence:”—I can understand that. Paragraph (e) puzzles me a little bit. It is “a monument (including a statue), unless the monument is capable of being entered by a person:”. That may sound strange, but my own Anzac memorial in Porirua is quite a large memorial. It is probably about the size of just up to the roof here. I would be worried if that was not necessarily sound. It was erected by the Porirua City Council, so who is actually responsible for making sure that that is not earthquake-prone? God forbid, you would hate for that to come down and fall on somebody.

The next one is paragraph (f), which is “a wharf:”. If the territorial authorities are not responsible for the sturdiness of the wharf, then I would like to hear from somebody in this Parliament as to who is. There may be a simple explanation for that that was explained in the Local Government and Environment Committee, but I cannot see in this piece of legislation who is responsible for a wharf. With Wellington being a port city, there are a couple of wharves in Porirua, there is a big wharf in Pētone, and there is quite a sizable wharf in Wellington. Who is actually responsible for making sure that wharf is not earthquake-prone or is up to standard, because, according to section 133AA, a wharf is exempt?

The next paragraph, paragraph (g), is “a bridge:”. If I were driving over a bridge or walking over a bridge when an earthquake hit, I would like to think that someone had checked that bridge to see whether it was up to code. Again, maybe the officials could help us. I hope that there is a simple explanation about this and that someone is looking after that. Maybe it is the New Zealand Transport Agency, but if it is not the territorial authorities, I would like to know who it is. Unfortunately, we are only up to paragraph (g).

The next one troubles me a little bit more. It is paragraph (h), which is “a tunnel:”. A tunnel is not somewhere where I would like to be if an earthquake hit. There is one tunnel I travel through regularly, the Karori Tunnel. It is only a small tunnel. It is an older tunnel—probably the oldest tunnel in the Wellington area—and if an earthquake were to hit I would not like to be there, but if someone told me that it was OK, I would feel a lot safer. Unfortunately, under this piece of legislation a tunnel is exempt, so if someone could tell me what the story is with a tunnel—I would hope that it was the New Zealand Transport Agency that was responsible for that, but can someone please tell me who is responsible for tunnels. Paragraph (i) is “a storage tank:”. That may not be such a big thing if it only a 100-litre tank, but there are some very big storage tanks out there in our communities, I know.

The focus of my talk tonight will be around the improvement that the Local Government and Environment Committee made to the clauses around upgrading fire and disability access. This was absolutely critical to the Green Party for securing our support for this bill. Originally, the bill gave a very broad exemption to building owners for providing and upgrading fire safety and disability access when undergoing earthquake strengthening. The exemption was so broad that you could have driven a bus through it, and it would have set back the modernisation of our building stock by many decades. This was a major concern not only for us but for many of the submitters on the bill as well.

CCS Disability Action and Disabled Persons Assembly did a very strong submission that was endorsed by 15 other disability and community organisations. They really highlighted some key points. The submission highlighted the fact that the Building Act already enables considerable exceptions around fire and disability access requirements. It made the point that the case that had been built for a law change was very unconvincing because there was already flexibility in the law to grant an exemption if it was going to be too financially arduous for building owners to provide these, or if it was physically impossible for them to provide the required upgrades. In fact, of all the submissions on the bill that I sat through on the select committee, there was only ever really one concrete example of a building where the building owner walked away from the building because they did not want to pay the cost of fire safety upgrades. They claimed they were too expensive, but, actually, an exemption could have been provided for in that case. So it seems like the scale of the problem that originally justified the rationale for providing this massive loophole was actually not grounded in reality.

The submitters also gave examples of statements being made by many companies that highlighted the misconception that exists out there in the sector around the purpose of providing disability access. They seemed to think that it is all about if you have got a person in a wheelchair, then it is solely for the benefit of that person in the wheelchair. They seemed to be failing to recognise that, actually, if you have universal access, then it benefits all the users in the building, and not just, potentially, someone in a wheelchair. It is also about building a society that is genuinely inclusive and genuinely enables equal access to employment and participation in society.

One of the major telecommunications companies, Chorus, was saying: “Oh, we’ll never need to provide disability access”. It was failing to recognise that, actually, as a major employer it should have accessible buildings because then it could ensure accessibility not just for someone who has a permanent disability, but if one of its employees became injured and wanted to return to work in a wheelchair, they would want to continue to work in the same place. You can enable that continuity of employment if you have undergone earthquake strengthening—you can upgrade disability access at the same time. The New Zealand Institute of Architects made just that very point—that there is a false economy in proposing that you exempt parts of the Building Act when undergoing earthquake strengthening, because it represents a lost opportunity not to undergo that work at the same time, which would actually streamline costs and save money in the long run, as well as building a building stock around the country that is both safe and accessible. Surely, that is what we want as a society.

What the clause is now has much greatly tightened what was an enormous loophole and, basically, said that we are going to allow exemptions only on a case by case basis. Basically, what happened here is that the committee picked up the wording that was proposed by the Human Rights Commission, and the legislation now allows the territorial authorities to grant an exemption from a full upgrade of fire and disability access only on a case by case basis in limited circumstances and, in particular, the building owner must demonstrate that full compliance with fire and disability upgrades would be unduly onerous.

In the commentary we have noted that it is not intended that financially capable building owners will not undertake the disability upgrades, because that is what is happening at the moment. We have been seeing this in Christchurch, where last year the Green Party was looking for offices. We wanted accessible offices in Christchurch, and what we discovered is that there are very few accessible offices in Christchurch and that there are, unfortunately, building owners and developers who are using every trick in the book to get out of providing full disability access and meeting their obligations under the Act. It was leading to some quite bizarre situations.

For example, there was one building where all that was required was a simple ramp at the back entrance and we offered to actually pay for that upgrade ourselves. The building owner declined to have his building made accessible because he would lose $30 a week from a car-park that would be taken up, in part, by the ramp. That was a major property developer.

So when I hear stories about “Oh, property developers can’t afford that money.”, I kind of have to believe that sometimes I am quite cynical, because, actually, we have encountered the opposite, where property developers could absolutely afford to provide that upgrade and choose not to. That is why it is very important that the regulations and guidelines that will be developed under this bill absolutely do address and uphold the spirit of what the committee agreed to—that financially viable property developers would be required to be compliant with fire safety and disability upgrades when undergoing earthquake strengthening. There are a number of these developers, as well as those who may genuinely not be able to afford that. So the regulation provided for in this bill gives the opportunity to strengthen and tidy up the bit of a dog’s breakfast that is happening in the inconsistency around the country with stipulating what the requirements for upgrades are.

I also notice that the Department of Building and Housing is developing a plan to ensure that building owners are better informed about the legal requirements and about what universal access involves—what are the needs of disabled person when entering buildings—and to ensure that there is better information spread around the building owners, building developers, and designers, and all the people involved in ensuring the built environment around us. I understand that work is under way at the moment, and it is absolutely critical that that work continues and it gets implemented because it will make a huge difference to the day-to-day lives of people trying to get around the city, trying to access employment, and trying to access services. They cannot do that if they are treated like second-class citizens. That is why we are very pleased that the committee listened to the submitters and made the appropriate changes in the bill, and why it is a pleasure to now be supporting this bill because of these changes that were made. I want to thank the committee for listening to the submitters, taking their concerns on board, and supporting these changes to be made.

That is very generous of you, Mr Chair, to give me another opportunity. I do thank you for giving another member the call. It gave the Committee 5 minutes and the Minister an opportunity to see whether any of the questions I posed could be answered. Because they have not been answered, I would just like to continue with the last few examples of new section 133AA, in clause 23.

Just as I was finishing up last time, we were discussing storage tanks. If they do have tens of thousands of litres in them and are perhaps on the top of a building or at the top of a hill, you would be concerned if their structural integrity was not up to standard. So, again, I pose the question—if the officials could be useful—as to who is responsible for making sure that those storage tanks within new section 133AA are up to standard, and why they are exempt.

The next two examples that are specifically laid down in new section 133AA troubled me some more as well. Again, there may be a perfectly good answer for this, but in new section 133AA(1)(j), the item that is exempt is “a building that is a dam.” If an earthquake were to hit and the structural integrity of a dam was not necessarily up to scratch, and someone was charged with making sure that it was up to scratch, I would hope that someone was looking after it. It could be the fact that it is a simple answer, and it is that the power generator that is responsible for that dam is responsible for making sure it is structurally OK. But I cannot see that, and I would potentially like an answer from the officials. And paragraph (k) also says “a part of a building that is a dam.”, which I think goes to continue on our concern there.

I would like to turn now to Supplementary Order Paper 152 under the name of David Seymour, which looks to add to the list of exempt buildings by including a new paragraph (l), and that is “a building located in an area of low seismic risk.” Is that correct, Mr Seymour?

💬 David Seymour: That’s right.

OK. I think there are two ways to look at this. I think, as one of the members on this side of the Chamber said, if you look at it in the sense of being in a low-risk area and it is not quite up to code but it could be expensive to get it up to code, and doing so might not improve the safety of the building and risk to people, then you might look at it in a pragmatic way and say: “Hey, is it really worth doing this in a low-risk area?”. I think building owners might think: “Do we need to go to this expense? We’re in a low-risk area. If something catastrophic does happen, it’s not going to make much difference. Why do we have to pay this money out?”.

I guess you could look at it from another point of view as well, and say that if someone was in a high-risk area and is in exactly the same position of, I guess, the percentage of code compliance, they could say: “Well, I’m in a higher-risk area, I’m 25 percent and I’m not up to code. Why should I have to do this if someone in a low-risk area doesn’t have to do it?”. I do not know whether the member’s Supplementary Order Paper is going to get across the line—I wish him luck—but I guess there are two trains of thought as to whether or not that should be included in this piece of legislation.

I do not want to take up too much more time, but I hope that the officials can take the opportunity to answer some of those pretty basic questions around new section 133AA because they are exemptions. They will not be caught under this bill, and I think if someone at home was to read the list, they would be a little bit troubled, as am I.

Kia ora, Mr Chair. Thank you very much for the opportunity to contribute to the Committee stage debate on the Building (Earthquake-prone Buildings) Amendment Bill. Firstly, I want to acknowledge that this bill stemmed from recommendations made by the Canterbury earthquakes royal commission in volume 4 of its final report, which was released by the Government in December 2012. The recommendations focused on the legislation, policies, and practices underpinning New Zealand’s approach to earthquake-prone buildings in the wake of the Canterbury earthquakes.

I specifically do want to focus most of my contribution on Supplementary Order Paper 152 by David Seymour, and his wanting to add after new section 133AA(1)(k) in clause 23: “(l) a building located in an area of low seismic risk.” It is relevant for my electorate because the examples used are Auckland, Northland, and Dunedin. So, as an MP based in South Auckland, obviously it is highly relevant to my community.

One of the things you do when you are given an opportunity to speak on a bill that is actually incredibly technical—I want to take the opportunity to also congratulate the Local Government and Environment Committee on going through a process of being able to present a piece of legislation to the House that fulfils those recommendations of the royal commission, because I can see that it was a highly technical bill. The next piece of information I am going to share is actually highly technical, as well.

What I did was find a GNS Science report that was presented to the senior hazards adviser of Auckland Council, and it is titled “Benefits of strengthening earthquake-prone buildings in Auckland” and is dated 18 February 2014. The interesting thing about this piece of evidence, as I will call it, that is relevant is that what it went through was an exercise of identifying all the deficient buildings in Auckland. Believe it or not, there are 526,000 buildings in Auckland, and what it found was that there were 9,794 buildings that were deficient. What it then went through was a process of modelling that asked, if we were to look at—and this is where it becomes really interesting—earthquakes in a 200,000-year-long, synthetic catalogue of earthquakes and if we were to look at buildings that were not strengthened, and then if we were to actually strengthen these 9,794 buildings, what would the impact be?

I am going to read it out because it is actually incredibly fascinating. What it, essentially, says is that for the buildings that have not been brought up to standard, I suppose, every 10,000 years there is a probability, or a chance, of a severe earthquake that is 0.0001 percent, and within that category there would be 107 deaths, there would be one critical injury, there would be 71 serious injuries, and there would be 922 moderate injuries. The other interesting statistic is that, in fact, of those 526,000 buildings, 87,755—or 17 percent of the total buildings—would be affected. So at the high end of the spectrum, 107 people would die.

At the low end of the spectrum the probability of an earthquake every 200 years is 0.005. There would be two deaths, zero critical injuries, four serious injuries, and 61 moderate injuries, and 12,663—or 2.4 percent—of the buildings would be affected. These are buildings where, for those 9,794 buildings, we did nothing to them—so we did not do anything.

Here is where it gets really interesting, because the next modelling is, OK, if we made all those deficient buildings sound, and these are the statistics. For the most severe—so, a 0.0001 percent chance every 10,000 years—there would be 104 deaths, so it is actually only a reduction of three deaths. There would be one critical injury, there would be 69 serious injuries—a reduction of two—and there would be 890 moderate injuries, which is a reduction of 32. At the low end of the spectrum where a person might die—0.005 percent probability every 200 years—there would be two deaths, there would be zero critical injuries, there would be four serious injuries, and there would be 60 moderate injuries, which is a reduction of one in moderate injuries.

So I think that when you look at those statistics, it is interesting. I actually think David Seymour has brought an incredibly important issue to the table, and his Supplementary Order Paper, therefore, based on this evidence, should be supported, but with one caveat. It is a caveat in the report itself, which says that there are some shortcomings in terms of the modelling. This, in fact, reinforces what my colleague David Parker said. It was very hard to estimate casualties arising from the fall of wet brick chimneys, architectural ornaments, and unbraced parapets. Although, overall, the results of this particular piece of research say that the earthquake risk in Auckland is small and that the benefits of upgrading earthquake-prone buildings to a minimum of 33 percent of the new building standard are very small, it also must be remembered that the earthquake risk in Auckland is not zero and that these chimneys, architectural ornaments, and unbraced parapets should be classified as dangerous. I guess that is the lesson from Canterbury. As my colleague Poto Williams says, maybe there is some merit in actually doing something about those items on some of our buildings.

My contribution, really, is in support of David Seymour’s Supplementary Order Paper. It is going to be interesting to see how it is voted on throughout the evening, but I have really appreciated the opportunity to do a bit more investigation into this piece of legislation. It is a very serious issue. I have lots of aroha for the people of Christchurch, but obviously this piece of legislation is relevant to everybody, and so the contribution that I have made hopefully will provide some relevance to the people of Tāmaki-makau-rau. Kia ora.

Kia ora, e Te Kaiwhakahaere. It is my pleasure to make a contribution on the Building (Earthquake-prone Buildings) Amendment Bill. It is really interesting when we hear a lot of the talk from people who do not come from Christchurch but are speaking. I think that what I am hearing is something that we have seen a lot of in Christchurch ever since 2010, and it is called cherry-picking. It is about taking different points or facts and then trying to contribute to changing this legislation. If we go back to the Christchurch earthquakes we will remember that the first one was back on 4 September 2010—and these are the major ones, the major events. The main event, as we know, was on 22 February 2011. The next one was on 13 June 2011, and the next one was on 23 December 2011. Then, of course, this year there was another major one, which we call the Valentine’s Day earthquake or event.

What I am talking about here is looking at the pathway of this bill, right from the Local Government and Environment Committee. There were so many specialists, engineers, and victims who came to submit, and so when we look at this legislation, we see that there was a lot of work done by the select committee. I hear different speakers talking about trying to change the balance. The main change is a varying timetable that is used for strengthening relative to earthquake risk. So then we are looking at the high, the medium, or the low risk. Then there was the prioritisation of public buildings—schools, emergency services, and all of that. That was well-thought-out, and this was part of the balance. Then there was a reducing of the number of buildings that were covered, and Kris Faafoi went through the list of those buildings that were exempt.

If you were at the select committee you would have heard the reasons why these buildings were exempt. When you talk about a tunnel, what you have got to understand is that the epicentre of the February 2011 earthquake was at the Port of Lyttelton, and the Lyttelton Tunnel was probably one of the safest places to be in. Two or 3 days later the tunnel reopened. So I am just looking at those sorts of reasons for exemption—the situation with these exempted buildings.

Let me come to where I am based, in the Port Hills. When we look at the Port Hills, we have got Halswell to the western side, which was hit in the Darfield earthquake, which was in 2010. Then from there, if we keep moving east, what we are seeing is we get to Somerfield and Lower Cashmere, and then we continue through, heading east, to where 20 percent of the buildings are still looking for resolutions. Those buildings were damaged or destroyed, and come under this legislation because of the fact that they were in the February 2011 earthquake and events after that.

What I am saying here is that we have got to manage the actual safety factor and then balance it with the actual costs. What is being said here, even around the amendments, is that it is not conducive to the information that we received as a select committee, and this is the reason. What you are seeing is a reflection here, in this legislation, in terms of why we have done what we have done. The situation is that we have got to manage the cost of strengthening. The other part of it is when we bring in the facts around historic buildings or heritage buildings. That is another difficult part. But right throughout this whole thing, the thing that we did not have at the beginning was an information database around these heritage buildings, these historic buildings.

It is really interesting when you talk about the fact that a lot of those buildings are not used much. We are talking about racecourses, farm buildings, and all of that. If a racecourse is used only five times a year—and someone has quoted that usage time—what has been found is that the upkeep and the maintenance has not happened. You will find that a lot of those buildings are probably a bit more dangerous than we think.

Finally, I come back to the cherry-picking. We talk about Auckland and we talk about Wellington. When you look at Wellington, you see that Christchurch was never in that really high seismic risk area—Wellington was the one. People can say that Auckland is not going to get hit, and that such-and-such a place is not going to get hit, but you actually have to come back and listen to the experts, listen to the scientists, and they will tell you exactly and bring you back to this bill. A lot of work has been done on this bill. This bill should suffice and go through. It is common sense. Kia ora.

Indeed it is an honour, as a neighbour of Canterbury, to get up and speak on this piece of legislation, the Building (Earthquake-prone Buildings) Amendment Bill, and acknowledge, I guess, and respect the terrible tragedy and the loss that that region incurred.

This piece of legislation, of course, is a somewhat pragmatic approach to dealing with the issues of earthquake risk. As is said here, “The intent of the bill is to balance the protection of citizens from earthquake-prone buildings:”, keeping in mind the primary objective of protecting life. But we do hang around in buildings quite a bit and so we just have to make sure that we are in reasonably safe buildings.

The legislation does differentiate what it calls high-risk or priority buildings from others, and I want to make reference to priority buildings because in my particular case, the West Coast is where indeed it has always been forecast to be the centre of the biggest earthquake that is about to come. In fact, we have many reports saying that our sitting on the fault line means that we are probably more likely than other places in New Zealand to have the big quake. So what we have is a hospital, which is a priority building by virtue of this piece of legislation, and in 2012—in fact, I think it was July—the National Government Minister Tony Ryall sent out a press release saying that there was a section 124 notice on Grey Base Hospital. That means that it did not meet 34 percent of earthquake standards.

Indeed, this legislation goes to address those tricky issues around existing buildings. Indeed, many parts of Grey Base Hospital meet only 12 percent—12 percent—of earthquake standards. By any person’s measure it is not safe. Indeed, it is somewhat ironic that when people go to a hospital for safety, they walk into a building—and, in fact, the emergency department at Grey Base Hospital meets about 12 percent of earthquake standards. So you kind of toss up, if you are in a car accident, whether you stay in the car on the side of the road or you go to the hospital. That is perhaps a little bit extreme—the point being, though, that the Minister and others have acknowledged the need. They have said that bringing the buildings up to meet the requirements in this piece of legislation and previous legislation to ensure personal safety cannot really be done, and so they are going to have to build a new hospital. We welcome that initiative.

The question is—and I want to ask the Minister in the chair, the Hon Judith Collins, to say, although I am talking about a new building, whether the principles and precedents laid down in this legislation around priority buildings mean that in building a new Grey Base Hospital we should have a priority building standard? That is Importance Level 4, or IL4, which means that the building will stand up and protect life in a big earthquake. But, in fact, the bureaucrats in the National Government have said: “No, you can have an IL3.” Well, what does that mean? That means that the building will stay intact, but you had better get out of it after the first earthquake because there is no guarantee it will stay up after the next one.

Indeed, what is going on in Greymouth is that we are building a new recreation centre with two basketball courts—quite a big building. That is built to Importance Level 4 standards. So what is going to happen is that, in spite of our best intent here to protect life in existing buildings, the Government is building a hospital to Importance Level 3 standards, which are less than what we would expect through this piece of legislation. This is because the legislation identifies priority buildings and says that it is up to the local councils and others to work out risk assessments—and I think that is very, very fair. But what we have got is territorial authorities, and in this case the Grey District Council will have to report on Grey Base Hospital as it is now and as it might be built.

Aside from all the other buildings that will be caught up in this legislation, I accept the wisdom and the general purpose of it. But we have to accept the precedents that this will lay down, and, indeed, if we do have hospitals as priority buildings, then I would expect the West Coast people to be able to get an Importance Level 4 hospital, the same as the people in Canterbury—

I have been listening to this, and it has been really interesting tonight. Just a couple of things. There have been some, I thought, genuine questions from some members of the Opposition who obviously were not on the Local Government and Environment Committee, because otherwise they would have raised the issues in the select committee and they would have got the answers from the officials, or, if they were on the select committee, they were clearly not taking much notice. The officials have said to me tonight and have assured me in relation to tunnels—which is apparently an issue of great importance to people, and I think that is an absolutely genuine issue—that the New Zealand Transport Agency has more rigorous standards, which it complies with, in relation to tunnels than are actually covered in this bill. I am sort of surprised that the members who did ask the questions did not ask those of the officials on the select committee, although perhaps some of them were not on there.

💬 Kris Faafoi: I wasn’t on it.

You were not on there, like I said. The other question was about railway bridges. Apparently, KiwiRail, under its legislation, has more onerous requirements on it than are in this bill. So I think that that is actually a really good answer, I thought, from officials, and I am happy to share that with the Committee because I do not want anyone staying up all night worrying about that.

It was good to hear the Minister in the chair, the Hon Judith Collins, clarify some of those points, because they were very important issues that Mr Faafoi raised. Now we can sleep at night, or in tunnels, if there is going to be an earthquake.

I would like to just raise a couple of issues around process and the expectations that the Building (Earthquake-prone Buildings) Amendment Bill sets for local government authorities. If we look at new section 133AB, “Meaning of ‘earthquake-prone building’ ”, it goes through what constitutes an earthquake-prone building. We have talked enough about this. But the interesting thing is subsection (2), which says: “Whether a building or a part of a building is earthquake prone is determined by the territorial authority in whose district the building is situated:”. That makes sense on one level because there is a lot of complexity here, and there is an immense amount of work to be done.

Let us make an assumption, which I think is probably reasonably true, that a territorial authority has the greatest ability to determine whether a building in its own district is earthquake-prone or not, or whether it could be. It knows its district better than anyone else, so why not put the compliance back on it? I do have a slight concern about this, though, because I think that what this will do is load significant cost on to a council. Obviously, it is not going to get compensated in any way, shape, or form for this. It is going to need to employ a whole lot more people, and that means a rates rise. Well, that is maybe the cost we have to pay for living in a civilised society and in buildings that are safe for citizens to live in, but let me work through the process on how this going to work.

New section 133AF is about identifying earthquake-prone buildings. This is the responsibility of the territorial authority. First and foremost, the council’s time frame will depend on whether they are in a high, medium, or low seismic risk area. It also depends on the priority of the buildings, for example. What has to happen is that, until the end of the applicable time frame—and I will get to that in a minute; that is new section 133AF(2)—the territorial authority must report to the chief executive on the progress in terms of identifying buildings or parts of buildings within its district. So if the whole district is low seismic risk, then the territorial authority has to report to the chief executive officer on progress every 3 years. Let us not get confused: that is not progress on completing the task; it is just progress. If it is a medium seismic risk but with no areas of high seismic risk, then it is every 2 years, and if the district includes an area of high seismic risk, then the territorial authority must report to the chief executive officer every year.

The next clause is interesting, because I am not too sure why it was put there. It says in new section 133AF(3): “After the end of the applicable time frame, a territorial authority may, if has reason to suspect that a building or a part of a building in its district may be earthquake prone, identify the building or part as potentially earthquake prone, whether or not by reference to the EPB methodology.” This is a clause that has been inserted so that if a council or a territorial authority believes that a building may be earthquake-prone, it can actually require an owner to undertake a seismic test without going through the proper methodology. So what this could do, in effect, is to impose a cost of—I do not know—$5,000, $10,000, $15,000, or $20,000 on a building owner without going through the methodology set out in the Act, which I think is a little risky when we do this. This is because we have set down a methodology, but then we are saying “But if you don’t like it or you have concerns, don’t worry about the methodology.”, which is a little bit of a concern to me.

If I look at new section 133AF(4) of this bill and the “applicable time frame”, when I talked about being within the applicable time frame, this is the period commencing on the day on which, obviously, the Act comes into force. So for each area of low seismic risk, the expiry is 15 years after the commencement date—it is a long time. For an area of medium seismic risk it is 5 years for priority buildings and 10 years for other buildings. In an area of high seismic risk, it is 2 years and 6 months for priority buildings and 5 years for other buildings, and we have talked about the definition of “priority buildings” and other buildings. In an area of high seismic risk—and let us take Wellington, for example. It is a big city. I am assuming there are a lot of buildings here that are classed as priority and a substantial amount of buildings that are priority buildings, and the council has probably started this process anyway. But it has 2 years—

It is a pleasure to take a call on the Building (Earthquake-prone Buildings) Amendment Bill—my first call. As a member representing my constituency in the Canterbury region, I know how very important this piece of legislation is. Can I acknowledge all of the work that has been undertaken by the Local Government and Environment Committee and all the work done prior that has led up to this piece of legislation.

With this legislation we are dealing with buildings, we are dealing with earthquake-prone building assessments and the like, and it is very lifeless. We are dealing with inanimate objects. The bill talks about structures and buildings and the like, and I just really wanted to add another dimension to the buildings.

If we look at the Christchurch earthquakes and, in particular, the role that the marae played in the immediate aftermath of the big earthquake in February 2011, especially. The marae—in Christchurch especially—were a focal point, were a refuge, and were a rallying point for the whole community. A lot of emergency services were based out of those marae. Two in particular that come to mind are Rehua Marae, right there in the heart of Christchurch, and also Ngā Hau e Whā, out in the east. Those marae withstood the full force of the rū—of the earthquake. Not only that, they withstood the earthquakes, and then also provided a valuable service to the communities. And they are still doing so.

It is the reference to buildings—in Te Ao Māori a wharenui is more than just a building. It is representative of our tūpuna. If we look at all the various parts of a marae, they are the parts of the body of our tūpuna, so there is more than just a bare-boned, inanimate-type object that we are referring to in this legislation. I think that is what this legislation fails to do—it fails to address the extra spiritual meaning that is applied to buildings.

Every building, I suppose, has a blessing to open it and the like. No matter what culture you are from, that is a very important part of the life force—of the mauri—of the house. When we look at wharenui, in particular, in all their respective parts, in the kōrero every part of the wharenui has a story—it signifies a tupuna, an ancestor. It is all very, very important. Likewise, if we look around this House of Parliament, this House is a war memorial, and this House, obviously, is representative of the supreme lawmaking body of the land, and it has its own history and tikanga in itself. What I am saying is that that dimension of buildings is not captured within this piece of legislation.

As an example, I mentioned the role that the marae played—so much so that the Ministry of Civil Defence and Emergency Management reached out to the marae post the earthquakes and said: “What a remarkable job you have done. We want to include you in our emergency management plans.” That is all well and good, but always the quid pro quo is what extra additional responsibilities and what extra cost will that impose on the proprietors of the marae.

So if we take all that background and we look at the critical section where the select committee has created some exclusions to which the earthquake-prone assessments will apply—if we look at the buildings that have been excluded, obviously there are residential buildings. But there is an exclusion for farm buildings and farm sheds. Well, arguably, we could also include wharenui—we could include marae if—[Bell rung] Thank you, Mr Chair, this is a very important point I am making.

💬 Hon Gerry Brownlee: It’s taking a long time to get there.

It is going to be good. [Interruption] See? We are experiencing the life force of this House right now. As I was saying, if a farm building or a shed that is located on a farm and used primarily for farming activities, or even an ancillary purpose, has been excluded from this part, then why should a wharenui—a marae—and its ancillary buildings not be excluded within that part? That does impose additional obligations, additional cost, and an additional burden on the proprietors of every marae up and down the country. As we know, it is not cheap running a marae these days—it is not very cheap at all. There are a lot of mouths to feed in each tribe—a lot of mouths to feed.

In all seriousness, I believe that consideration should be given to marae, to wharenui, in all building legislation, to encompass more than just the two-dimensional aspect to it but also the extra dimensions that I have mentioned, and also to give consideration for their exclusion from having to go through the earthquake-prone processes. If it is good enough for an ancillary-purpose farm building, then surely it should be good enough for a marae, particularly when those marae have withstood the most powerful earthquakes that this country has faced in recent times and have served a very important purpose in looking after the needs of not only the whānau but also the wider community. Thank you.

I appreciate the call and a final opportunity to say a couple of words again on my Supplementary Order Paper 160. I just want to raise a couple of interesting comments. I have just been on the phone to some people at Local Government New Zealand who, I need to tell the Committee, are hugely supportive—that is, all the mayors and all of the rural and provincial councils have just reconfirmed they are hugely supportive of the Supplementary Order Paper of New Zealand First. And they are a little bit bewildered as to why the Government will not accept it, as it has already indicated.

I just want to make this point: we have heard some expressions of concern, even from Labour. It does not know what the cost would be or how much money the Inland Revenue Department (IRD) would lose. It is the first time that I have ever heard Labour worrying about how much money the IRD is going to lose, but never mind, it is worried about how much money the IRD is going to lose.

Let us put it this way. Looking at the low-risk buildings and the time given to remediate those seismic risks, it is 35 years. So if the owner of a building in rural New Zealand is put in a situation where they find it unaffordable or less attractive or find that there is less incentive to earthquake-strengthen that building and they leave it sitting there for a period time, and if in that time there is an earthquake and someone does get killed—you know, a building out in Pongaroa or somewhere falls over and the one person who happens to be walking past there at 2.30 in the morning gets killed—it would be interesting if that landlord was then to say: “Well, actually, if there had been a tax break, I might have got the work done.”

It is also interesting that if half the building does fall down and he has to repair it, under this clause—under the IRD ruling—he will get the tax break. So if we wait until the building is damaged before he repairs it and then strengthens it, he will get a tax rebate, but if we do not pass this legislation here tonight and he goes ahead and does the work, he will not get a tax rebate. It is ridiculously ironic that we have a Government that says that it is pro-business, says that it wants to assist business, and says that it wants to incentivise it to do the right thing, but it will not change the IRD definition that is now capturing these landlords and providing a disincentive for them to complete their earthquake strengthening on a building.

What we will see, and I have already had it in the Wairarapa—interesting that they come and talk to me, but they do not talk to their electorate MP. I wonder why that is. They have come to me and said that they will walk away from buildings. I know that right now in rural provincial New Zealand there are people going around offering people who own buildings less than they currently owe on the mortgage because they know that these landlords are strapped. A small step like this by the Government—letting this Supplementary Order Paper go through, changing the way in which the IRD rules on this question, allowing the tax rebate on earthquake strengthening—we still believe would go some way to assisting those landlords, assisting those property owners, and incentivising them to get on with it.

I also want to come back to David Seymour’s Supplementary Order Paper. I am going to indicate here that New Zealand First will support his Supplementary Order Paper. We will do it not necessarily because we are 100 percent convinced right now that the compliance costs on councils may be more than we would want, but as an indication that where Mr Seymour’s thinking is is where ours is.

If you are looking at buildings in low seismic risk areas where the population is very low, why would you include those buildings—why would we? We raised this numerous times—I use the Pongaroa example. There is an old saying “If a tree falls in the forest, and nobody is there to see it fall, or hear it, did it make a sound?”. Well, in Pongaroa at 2.30 in the morning, if there is an earthquake, what is the risk of that wooden façade coming down on to the footpath? We discussed this at length, and those who were on the Local Government and Environment Committee actually agreed that the risk is very, very low.

We in New Zealand First think—and we have heard quite a bit of discussion over on this side of the Chamber—that although we may not be entirely clear as to the total consequences, we are saying that we think the principle of what Mr Seymour is saying is valid. We think that the consequences for rural provincial New Zealand in low seismic risk areas, where there is a one in 100,000-year chance of your being killed through an earthquake happening, is worth consideration. The principle of that is worth thinking about.

So on that basis, knowing that the Government is going to reject its coalition partner’s Supplementary Order Paper and knowing that the Committee will overwhelmingly reject it, we think the principle of what Mr Seymour is saying is valid and is worthy of some greater consideration, and, probably, if we had had more of a chance to lash about this at the select committee, we might have found a halfway house in there again. But the 35 years, 15-year periods that are designated for low seismic risk areas, as a committee we agreed on—we still agree on that. But I think it is fair to say that on the New Zealand First side we have a degree of empathy and sympathy for the principle of what Mr Seymour is saying. Thank you.

I just want to sum up, I guess, and give some context in my final contribution to the Building (Earthquake-prone Buildings) Amendment Bill. I want to speak primarily to Mr Seymour’s Supplementary Order Paper 152, and thank Mr Seymour for the work that he did to answer the questions that I had earlier on in this contribution.

There has been a lot of well-reasoned, logical debate on this piece of legislation this evening. Much of it is very sound and comes from a good scientific basis, and I would not argue with the logic of it. However, we are dealing with a situation that comes not from a place of logic but from complete illogic and emotion, and if you were to be unfortunate enough to be one of the families who experienced not only the earthquakes themselves but also the loss of a loved one, the loss of a business, or a loved, cherished facility, often logic does not sway the argument. I would say that in this case, there are many of us in this Committee who bring a level of emotion to this discussion, and it would not be right or proper to finish this particular discussion without including some reference to those people who lost their lives, primarily in the February earthquakes.

This is not an exact science. There have been many arguments about excluding particular low-risk areas from this piece of legislation. Christchurch is one of those moderately risky areas—it is not a high-risk area. So if we were to look at the logic of that argument, it is completely illogical because Christchurch would not fit within the bounds of the argument. The most risky area in New Zealand for earthquakes is the southern end of the Southern Alps—not Christchurch and not Napier. However, those two areas are the areas where we have had loss of life and loss of buildings. I am not going to continue much longer, but I will just say that in our review of this particular debate, do not forget the people who lost their lives.

The question was put that the amendments set out on Supplementary Order Paper 130 in the name of the Hon Dr Nick Smith to Part 1 be agreed to.

Amendments agreed to.

The question was put that the amendments set out on Supplementary Order Paper 152 in the name of David Seymour to clause 23 be agreed to.

The amendment set out on Supplementary Order Paper 160 in the name of Ron Mark to insert new clause 41C is out of order as it has an omnibus nature and is outside the scope of the bill.

Part 1 as amended agreed to.

Part 2 agreed to.

Schedule agreed to.

Clause 1 agreed to.

Clause 2 agreed to.

Bill to be reported with amendment presently.

House resumed.

The Chairperson reported the New Zealand Business Number Bill without amendment and the Building (Earthquake-prone Buildings) Amendment Bill with amendment.

Report adopted.