Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill

I present a legislative statement on the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill.

ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.

I move, That the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill be now read a third time.

Firstly, can I pass on to you, Madam Speaker, my gratitude for the work that you have done in this space and for laying a very strong foundation for the continuation of this work. I mihi to you and I acknowledge your work in this space.

This bill was introduced to the House on 8 May 2020, and it’s with a great deal of satisfaction that I now bring it to its remaining stage in the House. The building sector is, as we know, under significant pressure to deliver durable and affordable buildings to meet a growing pipeline of construction projects. We need a building system that inspires trust and confidence, that lifts building quality and productivity, and that supports innovation. This bill seeks to address longstanding challenges in the building and construction sector.

It’s the first stage of a set of reforms that will promote a more efficient building system, lift the quality of building work, and provide fairer outcomes for those involved in building and construction. The reforms also support the Government’s broader housing priorities to speed up the supply of housing and to create an economy that grows and works for all New Zealanders.

The bill amends the Building Act 2004 in a number of ways. First, the bill introduces a mandatory building product information requirement to support better and more informed decision-making. Currently, the Building Act doesn’t require basic information to be provided for building products.

The importance of basic building product information cannot be underestimated. Poor information can lead to delays in consenting and increased cost, and it can lead to poor building outcomes if products are chosen that are not fit for purpose. The new product information requirements in the bill will help builders, designers, consumers, and others choose the right products for the right job in the right place, and they will help building consent authorities to make faster decisions on building consents and will reduce the number of requests for further information—and I know that’s a particular issue in my area.

Second, the bill introduces a new voluntary scheme for modular component manufacturers. New Zealand’s been relatively slow on the uptake to adopt innovative off-site manufacturing processes. Some manufacturers are experiencing difficulties in gaining consents for buildings that involve the use of innovative manufacturing approaches. This Government is doing more to support innovation in building and construction because modular component manufacturing has the potential to lift productivity, reduce building costs, and reduce building waste.

The new modular component manufacturing scheme will provide faster, more consistent building consent approaches for manufacturers who are able to meet quality and performance standards. In some cases, a building consent involving modular components will only need to be processed in around 10 working days. These changes will allow New Zealanders to make the most of the new methods of construction and will help building owners and building consent authorities to save time and money.

Third, the bill introduces a new registration requirement for product certification bodies so that the Ministry of Business, Innovation and Employment (MBIE) can have greater oversight over the CodeMark product certification scheme. Product certification bodies will need to be registered as well as being accredited before they may issue product certificates. The product certificates will also need to be registered with MBIE. These amendments address concerns about the level of confidence with the CodeMark scheme and provide greater assurance that certified products comply with the building code and will result in safe and durable building work.

The bill introduces new offences and penalties to support the new building information requirements and the new modular component manufacturer scheme. It also introduces higher maximum penalties for other offences under the Act, because many of these have not been adjusted since 2004. The bill also extends the time frame to file a charge so that enforcement agencies have more time to investigate complex cases.

Collectively, the changes to the enforcement provisions will promote compliance and deter bad behaviour. Other amendments widen the scope of the building levy and how the building levy may be used to support a more effective building regulatory system.

Phase two of the Government’s reform programme will progress reforms to occupational regulation focused on ensuring people have confidence in the engineers and regulated building practitioners and their work. I look forward to presenting these reforms to the House in due course.

I’d like to thank the many people from across the building and construction sector who gave their time and made submissions, and shared their experiences and expertise with the Environment Committee. I would particularly like to thank the Environment Committee for their efforts to improve this bill. Finally, I’d like to thank the select committee staff, MBIE officials, and Parliamentary Counsel officers and drafters who worked on this bill. I commend the bill to the House.

Thank you, Madam Speaker. I’m happy to take a call in the final reading on the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill. The Minister has given a pretty good outline of the context, the substance, of what has been, or will be, passed into law as a result of the completion of this final reading.

I want to state, initially, on this side of the House, we support the bill, and we have through all stages actually. The idea of a registration and certification system for modular or offsite manufacturing is a good one. I like the idea of being able to speed up that process of construction, to, obviously, have a clear set of rules and guidelines and penalties, potentially, around that if the rules aren’t followed. But speed of construction, confidence around the process, is critical for our sector. These are some of the areas where I think we have a real opportunity to make some headway. At the moment, there is a massive need for housing, but actually construction in general is facing significant pressure as there is a massive expectation on the construction sector to play a significant role in the recovery and the ongoing, I guess, growth of our economy post-COVID. So we really support that aspect.

The other aspect I’m excited about within this bill is broadening the scope of use for that levy. I think there’s real potential there to run the rule over some of the different standards, to have a look at how we are ensuring compliance, the opportunities and methods we can streamline as a result of having this surplus levy, some $50 million-odd that’s currently sitting there as surplus, being able to utilise that in a range of different areas. So I’m really looking forward to hearing some of those initiatives, and we haven’t heard any specifics yet around what that might be. Looking forward to seeing or hearing of those in due course.

So this is all good stuff, and I’ve been fortunate enough to visit some offsite manufacturing companies, Concision down in Rolleston, Clever Core up in Auckland, Builtsmart in Huntly—companies that are doing really innovative and really exciting stuff. I think there’s huge potential in this offsite manufacturing space to really ramp up productivity within our construction sector. They can churn out residential properties very quickly, pretty cost-effectively, and very precisely. Those are all factors that I think are desperately needed in the sector and will be greatly received as well. The ability to speed up some of the consenting process by this bill is great in that regard. I’d really like to thank those three companies in particular that I’ve just mentioned for the time they’ve given me to understand their concept, what they’re doing, what they’re looking for, some of the challenges they’re seeing at the moment in terms of the limitations placed on them—they could do even better, so, hopefully, some of that is addressed with this bill. But I still think there’s more that can be done as well. So we’ll continue encouraging the Minister to expand the opportunity for offsite manufacturing in particular.

So these are all good aspects but there’s a lot more that needs to be done in our building and construction sector as well. There are some big priorities that we haven’t heard much about yet from this Government. I would really encourage the Minister to place more urgency on things like their licensing and certification process. Have we got the licensed building practitioner scheme right? There’s plenty of feedback I’ve had as I travel around the country talking to a number of building and construction businesses who are saying that, no, we haven’t quite got it right. What about self-certification for plumbers and drain layers? That’s not on the table yet. Well, if you’re a gas fitter you can self-certify your work, and that’s, in many cases, the exact same person as a plumber, drain layer, and gas fitter. They can sign off part of their work but not the other parts. So let’s have a look at that process, self-certification.

Obviously the critical aspect to this, and the licensed building practitioner scheme as well, is having a clear set of guidelines in place but also ensuring there’s accountability and maintaining that quality assurance throughout that process. So having that aspect of it dial in really tightly is critical. But I really think there is huge scope in that space in particular to speed up the process. I am hearing consistently every business I visit in this industry tell me they are being held up by the consenting process, by the inspections process, by not being able to sign off some of their work—any number of factors that end up causing months of delays in the construction process. At a time when we are just screaming out for new houses, that’s not good enough. That’s something I’d really like this Minister to be focusing on more strongly and presenting a solution to this House with urgency. So I would encourage her to really pick that up. There are plenty of experts out there in the industry who would be more than happy to give feedback on this, how to streamline this process whilst ensuring we manage that quality throughout it as well.

The consenting aspect is another biggie. We are seeing far too many consents taking far too long to get through the building consenting authorities. There are a huge number of requests for more information (RFIs), that are being sent back out to the submitters of these applications, asking for more information. In some cases, perhaps, that’s a delaying tactic because the council simply haven’t got the capacity to process. In other cases, councils are finding they’re just not receiving the necessary information. I’ve talked to a number of council consenting authorities in this regard as well, and so, absolutely, the blame is not simply on one side of the fence. But this is an area that we can really tighten up. This bill addresses part of that by reducing that consenting time frame down to 10 days in particular circumstances, and that’s good. But the 20-day time frame to provide a consent is quite long, and it’s quite inconsistent. So whether you’re building a pretty basic, straightforward run-of-the-mill house, it’s 20 days versus a multi-storey apartment building, also 20 days—obviously, slightly more complexity in that process. So we need to have a good look at that. That’s an area that, again, I really would like to see some strong focus on from the Minister.

These aspects can make a significant difference in our productivity. We can really ramp up our ability within the sector to deliver if there is a lot more work put into streamlining some of these aspects that I’ve just mentioned.

But the other big one as well, and we’ve heard some encouraging news around the high number of consents that have been issued recently—fantastic, but actually you’ve got to be able to build them. Our challenge at the moment—again, I’m hearing this message consistently as I travel around the country—is that we simply don’t have enough skilled workers in the building and construction sector. We need some of those migrant workers coming in here to contribute to our economic recovery, to provide that expertise that we are lacking in some areas. We simply can’t train them fast enough. It’s been encouraging to see a significant increase in the number of apprentices, and I do want to acknowledge the Government for some good work in that space, but that’s going to take years to deliver for the industry. Right now there’s a pressure point where you have a shortage of labour, and we need to address it. I’m not hearing from the Minister a solution to address this. We absolutely need to be driving strongly to see more migrant workers coming in to support this desperate need now to get the construction curve ramped up even further.

So those are some of the issues that I would really like to see a strong focus on from this Minister. Pretty good work with this piece of bill, some good stuff in here that will help, but actually there are some other priorities that we really need to see around the certification and registration for labourers, for tradespeople, also the consenting process, and of course getting more labour in here. Those are three key priorities that I’d really like to see as a stronger focus from this Government. But we do support this bill, and I’m looking forward to seeing a lot more work from this Minister for the building and construction sector. Thank you.

The question is that the motion be agreed to.

Talofa lava, Madam Speaker. Thank you for the opportunity to talk on this, the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill.

We all know that housing is of utmost importance to New Zealanders. We want good buildings and good houses that we know are safe, that will provide good, healthy environments for people to live in, but also that we can produce the best houses as quickly and efficiently as possible. That is what this bill is trying to do, or trying to address in part. We’ve heard the Minister say already that this is stage one of a series of reforms. On the previous Minister, the Minister who spoke, the Hon Poto Williams, she has also got a housing portfolio. So there’s some real synergy in this Government in trying to deal with housing, not just to say there’s a magic bullet for housing but looking at a whole range of issues, being very, very proactive, and not just sitting still on anything.

We’ve heard today as well from the Hon Grant Robertson, who’s the Minister of Finance and also, relevantly to this to this housing issue, the Minister for Infrastructure. He said today in question time that building consents are at a record high at the moment. There’s over 42,000 of them, closer to 43,000. People are working hard, this Government is working hard, to get housing for people.

💬 Hon Scott Simpson: Can’t live in a consent!

💬 Hon Dr Megan Woods: Good speech, Rachel. Keep going!

Thank you. So it’s great to be part of this Government that actually cares and gets on with the job.

Now, we heard, in the committee stage, there was quite a lot of questioning about the new definitions of building product and building method and also about the regulations that can really spell out what these things are. So I think it’s important that we go and we have a look at these. So the bill introduces, at clause 7, a new 9A and 9B. Now, 9A is the meaning of a building product. So it says, “In this Act, building product means a product that (a) could reasonably be expected to be used as a component of a building; or (b) is declared by … by Order in Council.” And it goes on. At 9B we have the meaning of the building method. And, again, it says, “In this Act, building method means a method (a) for using 1 or more products or things as part of building work; or (b) for carrying out building work that is declared by the Governor-General by Order in Council to be a building method.” So what those regulations do is they can really say what a building product is and what a building method is.

There was concern in the committee stage about the consultation requirements around that regulation-making process. So it’s useful to go to section 403 of the primary Act and to look at what those consultation requirement are for making regulations. This section is amended very slightly by the bill but only to be specific that these new sections 9A and 9B, that I’ve just read out in part, the consultation requirements for making those regulations apply.

So at 403 we see that “Before making a recommendation for the making of an Order in Council or regulations under those sections, the Minister must be satisfied that the chief executive has consulted in accordance with subsections (3) and (4).” So we’ll go to that. At subsection (3) “The chief executive must (a) do everything reasonably practicable on his or her part to consult with the persons or organisations that appear to the chief executive to be representative of the interests of persons likely to be substantially affected by the making of the relevant Order in Council or regulations; and (b) advise the Minister of the results of that consultation.”

Moving on to subsection (4), “The process for consultation should, to the extent practicable in the circumstances, include (a) giving adequate and appropriate notice of the intention to make the Order in Council or regulations; and (b) giving a reasonable opportunity for interested persons to make submissions; and (c) adequate and appropriate consideration of submissions.” This is a good process for those regulations that are going to help us define what a building product and a building method are.

I think it’s useful also—we’ve seen in the legislative statement that’s been referred to by the previous speaker, Tim van de Molen, a number of really useful things that are happening in this bill. One of them is that the building levy scope is widened to enable monitoring and oversight of the building system, and that is an important change. Another one is that the time for prosecution goes from six months to 12 months. It’s very difficult, first of all, to hear about a problem, gather your evidence, and then initiate prosecutions, particularly if there are delegations that you need to obtain, in a six month process. So that 12-month extension is a very sensible measure.

Also, there’s a new offence for misrepresentation. If you misrepresent yourself as a product certification body or you make some sort of false certification around a product, that’s a new offence in this bill.

In summary, this bill is an important piece of legislation, one I think you introduced, and I am very happy to commend it to the House because it moves on with making the tough decisions, doing the job of actually improving our system so that we can build better. Thank you.

Thank you, Madam Speaker. I know that there are rules in this House about reading speeches but it seems that there are no rules about reading their legislation. So we’ve had a classic example of the misconnection between academia and the real world in the last speech, because the last speech from the member who has just resumed her seat, Rachel Brooking, focused entirely on the technical detail of the legislation, which is exactly part of the problem that this Government has in terms of delivery—and that is, too much focus on not really getting things done. They don’t deliver—they don’t deliver and they don’t get things done—and that has become the hallmark of this socialist Labour Government: high on words but very, very slack on delivery.

ASSISTANT SPEAKER (Hon Jenny Salesa): I invite the member to come back to the bill.

Well, this is a bill that is involved with trying to make a small step in the right direction in terms of solving the housing dilemma that the Government is faced with. It’s a small step and it’s one that we’ve supported throughout the processes. We supported it a first reading, at select committee, at second reading, and now at third reading. But I don’t want to traverse the minute detail of the bill; others have already done that. But what I do want to do, is talk a little bit about the potential for real impact from this legislation.

Now, in my electorate in the Coromandel, there is a builder, Cherrywood Homes, and they build a range of homes that are all to a standard plan: standard fittings, standard design, standard cladding, standard roofing, and standard in every particular way. The issue that they have is that their ability to provide economic homes to that standard is hindered greatly by undue red tape and process: for instance, the three or four local district councils all have different rules and regulations in terms of consenting those standard homes that this bill, hopefully, will minimise, if not completely remove entirely, and that will be a good thing.

So, for instance, if a standard build house is being built, for instance, in the Thames-Coromandel District Council area, there are different rules and regulations for a house that is identical in every respect save for maybe the colour of the roof or the colour of the cladding or the colour of the taps and light fittings; but every other way—but every other way—it’s similar and identical. Then if you go to the Hauraki District Council and have exactly the same building, maybe with only a different roof colour cladding, then the rules are different. So the real advantage of this bill is not the establishment of the regulatory regime, not the establishment of the registration and certification system. That’s a given and that’s what a competent and delivering Government should do. Those are in the bill and so we give them a small tick for that.

But the real benefit is in the ability for prefabricators to actually get the economies of scale and to achieve some real benefits in terms of standardisation of design, standardisation of componentry, and standardisation of delivery. And these will be the real benefits to New Zealand homeowners, because it will mean that some of the large firms that have been wanting to prefabricate, and actually have been trying to do so for some time, will have the regulatory weights that have been constraining them removed, and I think that that is a good thing. On this side of the House, we are very supportive of the projects, for instance, that a business called Panasonic Homes has been able to achieve at Te Kauwhata. There they were able to build a prototype house using prefabricated componentry in a way that will only be able to be sped up by this process. The real skill and the real ability is if we can have an opportunity to use this piece of legislation as a piece in the jigsaw puzzle that would allow New Zealand prefabricators to do as is done in many other jurisdictions around the world.

For instance, in the UK, in Australia, and in the United States of America there are very significant benefits to be had from economically built constructed homes that are constructed, essentially, in much the same way that one might construct or manufacture a car: literally on a prefabrication assembly line. Those are design and manufacture techniques that this bill will enable the prefabricators to actually improve more efficiently their processes. Some of the red tape will be removed. There will be sufficient control in the legislation—and we heard at select committee from a number of submitters who were quite happy with the underlying rules and foundations that were going to be presented—but still a freeing up of the mire that they have currently had to work their way through. And when I look at some of the modern, economical, and very attractive prefabricated homes that are available to citizens in some of those other jurisdictions that I mentioned, particularly in the United States of America, there is a big market for homes that are built, essentially, in a large factory environment, with economies of scale, that can be transported by vehicle to a location and then put on a property, and suddenly, then, the more affordable range of the market can be fulfilled.

So this is a piece of legislation that does provide a small piece in the jigsaw puzzle that we hope will provide a little bit of support for those innovative businesses that want to get on and help create better housing options for people, particularly at the lower end of the pricing spectrum. This will be something that I think will be welcomed, not only by the manufacturers, not only by the designers and the builders and the prefabricators, but hopefully, also, by those people who want to get into their first home, maybe, who can secure a piece of land that is not exorbitantly priced, and then not be straddled with the sometimes prohibitive costs of construction that have been foisted upon them because of the existing framework and the existing regulatory regime. And so I commend organisations and businesses like Panasonic Homes, but I know that they will be bringing their unique prefabrication technology and methodology—

Order! This debate is interrupted and is set down for resumption next sitting day. The House stands adjourned until 2 p.m. tomorrow. Fa‘afetai tele lava, manuia le po.

Debate interrupted.

The House adjourned at 10 p.m.