Building (Earthquake-prone Building Deadlines and Other Matters) Amendment Bill

Members, the House is in committee on the Building (Earthquake-prone Building Deadlines and Other Matters) Amendment Bill. We begin with the debate on Part 1. Part 1 is the debate on clause 3 to 30, “Amendments to [the Building Act 2004]”; and the Schedule. The question is that Part 1 stand part.

Thank you, Madam Chair. I wish members of the committee a good evening, and I just want to start by acknowledging with thanks the debate at the second reading. A lot of very pertinent points were raised in that debate. I think it was a very helpful discussion of the issues. Obviously, I’m in the hands of the committee as to the extent to which members may wish to revisit those issues.

In the spirit of helpfulness, I hope, I will just set out a couple of key points in relation to Part 1—which is really the main, substantive part of the legislation—in case that is helpful to anyone who is in any doubt on our position on these matters. First, it is just to acknowledge that there is an element of retrospectivity. That’s because the Cabinet decision was announced on 2 April of this year, and, of course, the mere announcement by a Government that it will all be changed isn’t the same thing as that it is all being changed. We don’t govern by fiat in a parliamentary democracy, so it is only now, or, rather, at the third reading and then at the Royal assent of this bill, that the legislation will become effective as a matter of law. We’re saying that back to that date at which we announced that that change will be made, that’s when the rule shall apply, with the rule being that an additional four years shall be allowed to remediate buildings in accordance with the earthquake-prone building regime as it currently stands.

I do also want to acknowledge a point that was emphasised during the second reading debate—particularly by members opposite, and I think that had a good point—which was, first, that this should not be an exercise in kicking the can down the road. So while there is, I think, a reasonable argument for allowing more time, given labour constraints and the capacity of the sector to physically conduct the works, there is also a requirement that we have settings that will enable people to do that in a reasonable and a proportionate way. There is a review taking place in which we think we can end up in a good place in terms of the settings, and so this is an exercise in allowing some time for that review to be conducted, and some certainty in the meantime from a legal perspective that that work can take place where able, or not, as the case may be.

In terms of the “Henry VIII” element, as it would be known in certain circles, which is where there’s an additional power for two years to be granted beyond that four years by the Government—or the Minister, technically—as opposed to that being locked in in primary legislation, I appreciate that the constitutionally minded among us may recognise that that’s an additional power for the executive as opposed to the legislature, but my assurance is that we will not use that power unless it is needed. What I mean by that is that if additional time should be needed following the review and any legislation needed to give effect to new settings, and then to allow a reasonable period of time for people to comply with the settings, particularly if they are in any way more onerous—we don’t expect that, but we cover ourselves for every eventuality. That additional time may be needed for people to get up to those standards. For that reason, we hope that there will be clarity and certainty provided through this mechanism. I’m grateful for the support we received at the second reading for that, and, indeed, harking back to the very constructive select committee process.

For the sake of completeness, and in the hope of getting as far along in the debate as possible in an opening contribution, I do note that some other changes to the Building Act are made. I don’t intend to go through those now. Again, it will be in the hands of the committee as to whether colleagues wish to ask us any questions or make comment on those. With that, I—through you, Mr Chair—welcome the discussion and the debate tonight.

Thank you, Mr Chair. Labour supports this bill, but we’ll work through clause by clause to ask the Minister to clarify some points which came up not only from submitters in the select committee stage but also in the contributions in the second reading, because there are remaining questions there.

What’s particularly important to, I think, both major parties is that we’re getting the balance here right between the safety of people who are in buildings which we know are earthquake-prone and the ability of the Ministry of Business, Innovation and Employment (MBIE) and of Government to work through the issues which need to be resolved and need to be resolved quickly underlying some of those decisions. It’s really important that MBIE is well resourced and well equipped to not only work through those issues but also to consult with people like the affected Wellington apartment owners, people in Christchurch, and many of the Auckland business owners, because that is, in fact, where most of the earthquake-prone buildings are in terms of numbers.

There’s a big piece of work to do in balancing all of those concerns of building owners as well as people who are affected by the earthquake rules more generally. Members of the public who find themselves in these buildings and might not have the right kind of information to make the kind of choices that homeowners do now.

We’ve also got almost every Labour Party constitutional law enthusiast down tonight to have it out with the Minister over his use of the “Henry VIII” clauses. This is something that I was happy to be able to join the Regulations Review Committee to work through. The Hon David Parker is here to—you know, there has been a good consideration of those issues. Ultimately, these are things that we need to work through, but also there will often be an appropriate place for executive Government to make a decision about using an element of retrospectivity and giving an amount of licence in the primary legislation to allow for things to be worked through.

The important point for me on the issues which were considered by the Regulations Review Committee is I would say that that level of flexibility worked into the primary legislation seems appropriate to me at this point. However, we need the assurance of the Minister that that’s not going to be used for, essentially, administrative purposes.

If we are serious about getting these rules right, we need to resource it. We shouldn’t be using extensions in legislation to allow for, essentially, problems of the Public Service being under-resourced and not able to complete the tasks in the time. That’s not what we think this is being used for, but it’s helpful for the Minister to put that on record.

First, let me move to clause 5, the unsexy part of the bill which gives stand-alone building consent authorities (BCAs) more direction in terms of paying their levies. I want to ask the Minister to explain the status quo to the committee and how it came to be—because the change being made here remedies quite an unusual situation which is not well understood even by the experts who submitted to the Transport and Infrastructure Committee—and whether this change interacts at all with his proposals generally to change the rules for BCAs, and then whether regional and consolidated BCAs of the future will be liable to pay under this provision.

Thank you, Mr Chairman. I have two questions for the Minister in the chair, Chris Penk, neither about the retrospective nature nor the “Henry VIII” clauses. I think the report deals with those issues and the paper record of the interaction with the Regulations Review Committee can stand on its own stead, and I have no comment to make on that. I think it’s landed at a fair place.

My first question relates to what work the Minister now intends to carry out, enabled by this legislation, in respect of rarely used buildings. One of the issues that we have, particularly in lesser populated areas, is that there are some very significant historic buildings that are not utilised very often, are uneconomic to repair, and are risky if people were in them infrequently. When there was a bad earthquake, the risk to them obviously would be higher than if they were upgraded to a modern standard. None the less, those buildings are rarely used, and there is a case, according to some of the people who live in those areas, that they would like, with appropriate notification, to actually be able to, as a community, take the risk. Now, obviously, you wouldn’t want to be doing that for schools and hospitals, but will there be consideration given to that trade-off between frequency of use and economics of repair, or will the same standard apply to all buildings eventually, no matter what their rate of use is?

I thought that that was a piece of work that, actually, the Hon Dr Nick Smith tried to do but actually never quite got to the bottom of, and I suspect there’s some work that needs to be done, including in consultation with populations. In the end, obviously, the Government’s going to have to weigh all these issues in the balance and make a decision, but I would hope that the Minister is open to consideration of those complex issues.

The second question I had—and I’ve raised this issue previously with the Minister—I know some earthquake engineers, some very experienced earthquake engineers, including some who have been involved in writing the codes over the years. I’ve also refurbished some high-category historic places buildings myself—wasn’t a happy financial experience. I’ve had a career that’s had its ups and downs, and it’s fair to say this might’ve ended in a “down”. It was the precursor to the Civic Theatre in Auckland—the old Empire DeLuxe Theatre in Dunedin, for those that are interested. An unhappy experience for me and others, but through that experience and the interactions that I’ve had with engineers, I have come to learn that Japan, which has a very, very high earthquake risk and high earthquake standards, I’m told takes a more practical approach to the remediation of buildings which enables them to be unpicked and the design for the refurbishment and the strengthening of the building to be dynamic as the project proceeds.

Now, in New Zealand, the habit is that you can’t get the consent for the upgrading until you have proven that the upgrade will meet the new standard. You can’t get a contract that is looser than that with a construction firm because they require the building permit, and risk is reduced for the council and the contractor but the expense goes through the roof because in the absence of full knowledge of the defects in the building or the different ways it could be strengthened. If you can’t wait until you are unpicking the building before you design, you actually have to assume the worst and design for the worst, and therefore the cost can be excessive relative to a simpler regime that might be possible if people can have a system with trained professionals and appropriate checks and balances that enables the design work to be done as the project proceeds. I think that would be a very, very important thing to include in the new regime if we’re going to enable the strengthening of buildings rather than their demolition. I think often it will be the difference between historic buildings being bowled over and them being refurbished for reuse.

Thank you, Mr Chair. Since we’re moving clause by clause, starting with Subpart 1 of Part 1, I wanted to focus on clause 5 and particularly looking at replacing section 58(1) in the primary Act. One of the things that we’re looking at that’s making a change here is, rather than having the building consent authorities (BCA) paying the territorial authorities at this stage and then going on to, in this case, the chief executive of the Ministry of Business, Innovation and Employment (MBIE), the amendment moves around that—my understanding is that the BCA is then paying directly to MBIE. But then one of the things that I remember discussing earlier is that it brings up the question of the involvement of the local government in the context of the collection of levy payment and the distribution of levy payment.

My first question to the Minister for Building and Construction, particularly focusing on the earthquake-prone building component of this bill, is around the involvement and engagement with local government on this particular part of skipping the regional authority or the territorial authority in the collection of levy and potentially in the context of earthquake—sorry, this is actually not about the earthquake-prone; the earthquake-prone comes later. This is about the liability to pay for the levy. In the levy component, what is the advice or opinion or conversations that the Minister has had with local government and local authorities around skipping them in the levy-collection portion? More importantly, when it comes to the payment or the collection of levies, whether previously there were any portions that were allocated to local government and would the local government in this case be, I guess, in some ways, short-changed by skipping them and going directly from the BCA to a Government agency? If the Minister wouldn’t mind clarifying that, that would be great.

My question is a very small question, and I’m afraid it is not to do with the “King Henry VIII” clause either—I’m sorry to disappoint the Minister for Building and Construction on this—but it is to do with the definitions of “territorial authority”.

In amended section 7(1), inserted by clause 4, in the interpretation of “stand-alone building consent authority”, it means something “that is not (a) a territorial authority; or (b) a regional authority”, and that regional authority is defined in the principal Act as including a unitary authority, but in the Local Government Act, really, unitary authorities often operate as territorial authorities. Then, in replacement section 62, inserted by clause 7, there’s reference to—and it continues through—territorial authorities. I’m just wondering how that relates back to this separation of a territorial authority or a regional authority in amended section 7(1), inserted by clause 4(1), and if, in fact, at replacement section 62, inserted by clause 7, and other clauses, that will include unitary authorities, which I presume are often the building authority.

Looking forward to some answers about the—

CHAIRPERSON (Greg O’Connor): At this stage, we’ve had some good contextual questions, and now I’d quite like to see us going through a series of questions and answers. It does require the Minister and everyone to get involved, but it would be nice to give it a try.

ARENA WILLIAMS: Very good, Mr Chair. In relation to clause 6, the amendment to section 59, is it the case that this change means that a liability arises before the full amount of the liability is known?

Thank you for the opportunity to respond to a number of contributions that have been made in different areas. I’m grateful for the breadth of the discussion already, at this early stage—or perhaps this late stage, depending on how far we go, he said hopefully. Can I start by—

CHAIRPERSON (Greg O’Connor): Don’t book your taxi.

Hon CHRIS PENK: I might have already.

Hon David Parker: You sound like Prince Charles talking about himself in the third person.

Hon CHRIS PENK: The Minister couldn’t possibly comment. The points made by Arena Williams make a very valid point around the need for balance in general. Of course, the proportional approach in a scenario would be looking to balance risk, life safety, and also the resilience of buildings on the one hand but also the cost, and therefore the ability for people to make the changes, is a major theme in all this work.

In terms of the balance that she identifies about the need to operate at speed but also to get the detail right, I think that’s a very fair point to note, including in relation to the extensions. In terms of the Ministry of Business, Innovation and Employment (MBIE) having the resources to conduct the required work in the relevant time period, I’m very confident. I can say I’ve been highly impressed and grateful to the good people of MBIE for working with me very closely on this matter from the very start, including in relation to the establishment of the expert review panel. They comprise some of the membership of that, but there’s also a broad range of individuals who are very expert from a number of different perspectives, including local government and led by an excellent chair in Dr Erica Seville. She has a PhD in risk management, so a very relevant background to these questions—and a background in engineering too, I might add—that we are grappling with.

In terms of the review, I do note that the legislation is in relation to an extension rather than the review, but to the extent that people have made valid points about the subject as a whole, I do want to address those, with your indulgence, because they’ve been posed in good faith and represent a very articulate expression of some of the key things that we do need to deal with. Of course, the only reason that we are seeking—well, one of the reasons that we’re seeking an extension, is to enable that review to take place and these questions to be addressed. To Arena Williams, I say that I’m very confident that MBIE itself, and the panel that will be working closely with MBIE, is well resourced to carry out this work.

In terms of clause 5, which is a non - earthquake-related point that she makes, and others have made too—I’ll try and tie the points together, regardless of them having come from different parts of the Chamber—I note that it will be more efficient for a stand-alone building authority to make the payments directly to MBIE. I’ve not heard from local government any sense in which they would somehow be shortchanged by not being the conduit of that payment. It’s actually quite an unusual scenario; it’s actually unique at the moment to Kāinga Ora (KO), that’s the only stand-alone building authority—well, the only stand-alone building authority full-stop—that is to say, it’s the only building authority that currently exists that is not either a territorial authority or a regional authority. That is a fine distinction that the Hon Rachel Brooking rightly makes, but I think it’s worth noting that there is such a thing as a territorial authority with responsibilities under the Building Act that are separate from the building consent authority, or BCA, functions that are exercised at the moment only by territorial authorities—roughly, in another language, district, and city council.

I think at the moment the key distinction there is that there’s a building consent authority—that is, Kāinga Ora—that is not currently accounted for, and because the legislation doesn’t currently contemplate its existence, what we’ve got now is a situation where KO needs to pay to the relevant local authority a levy which then in turn needs to be passed on to MBIE. It’ll be more efficient to act in that more direct way. I should note that, even in terms of the law as it currently exists, there is potential for stand-alone building authorities that are not Kāinga Ora, and there’s at least one organisation that is seeking accreditation. That’s not a decision for me. The question is, at the moment, whether such an outfit would have adequate “means” to fulfil that task, but separate to that, and going to another question posed by Arena Williams, the legislation here doesn’t actually contemplate reforms that we have since announced, whereby we’re interested in the possibility that BCAs might be something other than the current, essentially, council-based, set up along the lines that there may be a regional approach on a voluntary or involuntary basis.

In my remaining time, but also highlighting that I’d be keen to continue just to address all those questions that have been asked. In terms of underutilised buildings, I think the point is very well made, and the Hon David Parker, in addition to the hat that he’s worn in relation to that very worthy work of the Regulations Review Committee, makes an excellent point which demonstrates the difficulties that are faced at the moment in terms of how risk is recognised, how it’s weighted, how it’s understood and also accepted. I’m pleased to say that the terms of the inquiry explicitly includes an item to be addressed whereby disclosure might, at least to some extent, be regarded as meaningful in terms of accepting risk of those who use buildings. That is to say, if informed consent to a degree of risk might be accepted by users—perhaps by owners, by occupants—then that is something that we are keen to explore in a very holistic review of the settings.

Hon David Parker: Otherwise, no one would ever go into the Leaning Tower of Pisa. 

Hon CHRIS PENK: Yeah—well, quite. The point about the Leaning Tower of Pisa is—for those who missed it—I think, an apt one, but I also would add that we do need to be mindful of the risk also associated with those who are perhaps passersby, those who are involuntarily or unwittingly required to be in the building. I say “unwittingly” in the sense they might know the building but might not be in a position to assess the risk by carefully reading a notice, whether that’s for reasons of a language barrier or in terms of their understanding of what the risk is that they’re actually acknowledging and accepting. Even that’s not a straightforward question itself, but at least it is a possibility. As I say, the terms of reference for the review have contemplated that.

To the question of frequency of use: again, that goes to a broader question of a proportional approach; a benefit-cost analysis, again, specifically contemplated and, I think, actually required by the terms of reference. Of course, it’s difficult to calculate benefit versus cost when we’re talking about a huge amount of cost to mitigate risk in a very unlikely event in any given year, but which would have huge consequences were it to take place. These aren’t straightforward matters, even mathematically, to work out—let alone philosophically—but that’s the task with which we’ve engaged.

Interesting about the Japanese scenario. We’ve, again, explicitly contemplated, in the terms of reference, that overseas jurisdictions’ handling of the same questions, essentially, along different fault lines geographically but with the equivalent issues being faced elsewhere. It was actually just this very day that I was talking with the Japanese ambassador about exactly that, and the disconnect about the point around needing to have plans consented in a way that doesn’t necessarily enable that work to be understood and accepted and contracted for, let alone carried out, I think, is a well-made point.

In terms of Lawrence Xu-Nan, I thank him for that point around the levy payments and I hope that I’ve addressed that satisfactorily.

Finally, in relation to “Henry VIII”, because we do really have some sort of regulations review reunion band gathered on my left, I think the point that Arena Williams made there is well made—just to assure her that there is no sense in which the Government would be minded to give or create that additional two-year extension merely for the sake of administrative efficiency. If we can substantively do the review and have settings that are known and able to be acted upon within that four-year period, then certainly we’ll do so.

Thank you, Mr Chair. I’m bringing the Minister in the chair’s attention to clause 6, the amendment to section 59 in the original Act, which is liability for territorial authorities and when that liability arises. My question is: is the effect of his amendment that the liability will arise for a territorial authority before the amount of the liability is known by the territorial authority?

Thank you, Mr Chair. This is going to be just a reasonably short call, just while the Minister in the chair is contemplating the previous speaker Arena Williams’ question. Thank you, Minister, for responding to my earlier question. I just want to kind of get some further clarification in terms of my question. This is an area that I’m not 100 percent familiar with, and so I need some clarification from the Minister.

When we’re looking at clause 7, and specifically more looking at amendments to section 60, the current version in the principal Act is around the fact that the territorial authority may retain 3 percent of the levies. Instead, in the new version, it says, “A building consent authority may retain 3% of the levies”. I think, just going a bit further, not knowing clearly where the delegation between the building consent authority (BCA) and the territorial authority would be in this case—with a retainment of 3 percent levy that, I guess, in the new version the territorial authority would no longer retain because it’s going to the BCA themselves, and they have the ability to retain it. Is that simply to cover administrative cost? Or is that something that is going to potentially throw off the balance in terms of accounting?

Also, I’m saying this not knowing what the actual amount is in general for the levy—whether 3 percent is like a couple of hundred dollars or 3 percent is like $3 million. It’d be quite good to get clarification on the fact that, yes, from the replaced section 60 and the original section 60, the 3 percent levy is retained by different authorities and how would that work?

Thank you very much, Mr Chair, and thank you to the member for that question. Answering that latter question first: it seems to me that the 3 percent retention by a territorial authority is in recognition that the territorial authority acting in that way has certain obligations under the Building Act. An example would be in relation to issuing notices to buildings that are dangerous in a way other than covered by the earthquake-prone building regime, and also in relation to administering building warrants of fitness. Fire safety is touched upon elsewhere in this legislation.

I give that merely as an example of the kind of function that what is, to all intents and purposes, the council, but also at the same time a territorial authority with those functions, and also at the same time invariably also a building consent authority. Where the building consent authority that’s overseen the work in the area is not the council, then the council would otherwise miss the opportunity to retain at least some—and in this case, as we say, we’ve settled on 3 percent—of the amount of the levy that’s been paid. I hope that makes the subject clearer—not the other way. No doubt the member will let me know if he’s now as confused as I am.

In terms of the question by Arena Williams, I don’t think it’s the case that clause 6 would mean that a levy would need to be paid and that the territorial authority would be liable for doing so, not having that information. I think it’s more that it would be redundant within legislation for it to be liable and to need to know the amount of the levy to the extent that it’s not been paid to, essentially, that council. It is really a consequential amendment to that broader point about where the money flow needs to take place.

Accepting the Minister’s answers, then, to the questions about timing and the information required of territorial authorities, can I just ask him one broader question about the impact of this, which is: is the real-life problem which is being solved here that the old legislation’s terms were inappropriate, or was there a real market practice problem that was happening where the time frames didn’t match up between the Ministry of Business, Innovation and Employment’s collection and the territorial authorities’ collection of those levies?

I thank the member Arena Williams for the question. I think it’s more a matter of the terminology needing to contemplate the existence of Kāinga Ora, although, actually, I do return to the point that she made earlier that there may be building consent authorities in the future that are not either councils or Kāinga Ora. In that case, we’ve gone with language that’s suitably broad as a stand-alone building consent authority might mean a number of different things to futureproof this section in the event that those other reforms do take place in the future.

Thank you, Mr Chair. I’ll now turn to the amendments that the Minister in the chair is proposing at clause 11 and 12. These have an impact on the requirements for a building warrant of fitness, and also the duties of independently qualified persons. I’m going to open this up for the Minister, because it was something that actually the committee received some very helpful submissions on from the industry and they were generally calls for further work. That this was an accepted set of changes that were being made for the industry, but they had an impact on the liability of independently qualified persons.

That seems like a good idea to have reasonably stringent punishments proposed by this legislation, and by the Minister here, but the industry put it to us that, alongside these punishments, extra policy work was required to ensure that people carrying out this work were then helped to meet the new requirements and were not running afoul consistently of the new punishments. There’s a question about whether people in the sector are reasonably qualified, and that their qualifications are protected, and that the work they do is protected work.

There were also, then, a separate set of questions around the kind of information that independently qualified people could expect to get from councils in order to do their work properly. Just for the context of the committee, I’m talking about here, if you’re an independently qualified person and you are being asked to make independent assessments about something like, say, the fire safety of a building, you’re also really reliant on the plans that you receive from the council to tell you where fire protections are meant to be, and whether the kinds of walls that you were looking at are in fact the kinds of walls that were put on the plan and have the kinds of fire protections that you would expect to find there.

The sector raised with us, “This is all well and good, but what other work is going on in the background?” It would be helpful if the Minister could talk through the impact of new section 108A, inserted by clause 12, and the new offences that he proposes, given that there’s a real willingness and a real goodwill there to meet these new requirements that he’s introducing. What else is going on to make sure that people can meet them, and that the Government is being reasonable about helping people along to meet these obligations?

Thank you, Mr Chair, and I thank the member for her question. It’s a very good point. It’s one, essentially, that’s been made to me probably by the same people as she’s heard from in that sector. It does go to education as being needed alongside enforcement, and they’re right, and she’s right. Education is needed both in the sense of territorial authorities working constructively with people who are making certifications, but also education in the skills, in qualification, and recognition of that.

That is work that is ongoing, I’m pleased to say, and it connects with the fire safety review that probably would have and should have taken place anyway at around this time, with periodic review of such important rules being important, but particularly motivated by the tragedy that was the Loafers Lodge fire and the loss of life in that, and I acknowledge that work started under the previous Government. I’m pleased to be able to continue that and it’s important work for obvious reasons. It is that this mechanism here which actually spells out in black and white for the first time that an independently qualified person has responsibilities and, therefore, liability in the event that they don’t meet those. That work is necessary but not sufficient.

I do also want to point out that in terms of the offence that’s created about supplying a false statement, there are also a couple of defences that are set out. For example, a reasonable mistake having been made or a reasonable reliance on information supplied to the defendant by another person, and also that the defendant took reasonable precautions and exercised due diligence. I imagine the most likely scenario in which that would arise is exactly what the member has said around reliance on a set of plans provided by the council, which may not be accurate, but, nevertheless, on which she or he is entitled to rely on making those certifications.

Thank you, Mr Chairman. I have two more questions relating to the period of the extension. One of the lessons from the terrible earthquakes in Canterbury arose from collapsing parapets and other façade features of, primarily, old brick buildings falling on to the street, the most public of which was probably the collapse of a building on to a bus in Canterbury, which killed a number of people and injured others, including Ann Brower, I think her name was. She became quite active to encourage the Government to introduce rules requiring faster remediation of some of those external features than might have applied to the whole of the building. I would like the Minister to explain whether, during this period of extension, some of those easier-to-remedy problems—whether there’s still a duty on the owners of those buildings to do what they reasonably can to advance those issues in the meantime, or are all of those things being delayed? I would hope that there is still some pressure on the owners of those buildings to do what they can.

My second question relating to that relates to the possibility of extension. I’m from Dunedin, originally. It’s been interesting, in Dunedin, that a lot of the commercial buildings that were said to be uneconomic to repair in the end were economic to repair for the subsequent purchaser, who purchased in the knowledge of the defect but at a price which took account of the defect. One of the risks that there is in enabling an extension to the extension is that people take advantage of the extension to the extension because they don’t want to realise their loss. Their loss is occasioned by a defect that is already present in the building but will not be crystallised until they’re either forced to do the work or sell to someone who’s able to or willing to do the work.

I’m interested in the Minister’s views as to what incentive he is creating here to just cause delay, rather than as occurred in the old buildings around Vogel Street, Water Street—those areas in Dunedin which have, largely, now been remediated. The values of those buildings dropped close to land value before the buildings themselves were then economic to repair. It’s actually been a very good outcome for Dunedin, long term, because the economics in the end proved that those buildings—once the value dropped to close to land value, because, you know, knocking the building down and building a new one was more expensive than remediating them, once the value dropped to an appropriate amount. The Minister has to be careful that we’re not creating an incentive here to delay that sort of outcome, which has been a good one in Dunedin.

Thank you, Mr Chair. The point that the Hon David Parker makes about creating an incentive to delay action, to avoid crystallising losses, I think perhaps doesn’t take into account fully the point that a purchaser would be on notice that those losses would be crystallised at a future point in time. If there’s an additional four years, or six years, for that matter, for that to be the case, that doesn’t alter—

Hon David Parker: No, it’s the existing owner I’m talking about. The existing owner just delays.

Hon CHRIS PENK: —the real-world reality that either the existing owner would crystallise that loss or a purchaser on notice would know that that loss would be crystallised. You would have to think that they would take into account, in a purchase price that they would offer, the fact that—albeit that as at, let’s say, 2025 the requirement isn’t such that they are now falling foul of the law, but nevertheless, in 2029 or 2031, they might be. I think that whether the current or a future owner is disincentivised is really beside the point in terms of the fact that at some point the loss will be crystallised to the extent that it exists. Of course, the purpose of the review is to try and minimise cost as much as possible, while, of course, at the same time, understanding and recognising and protecting against those life safety risks.

In terms of the onus that exists on building owners in the meantime, it’s a very good point that the member makes. I think—to highlight that there are things that are in the category of relatively easy wins—the reality is that after a decade, most of the easy wins probably have been achieved. To the extent, however, that there are other things that are within the budget and physically able to be done to repair or remediate or perhaps even just secure loose masonry, for example, there’s nothing to stop a person doing that. There are aspects of the legal framework elsewhere that do incentivise that, in addition to what one might regard as a moral obligation—and I’m sure that those in Dunedin are moral people and would want to do that for the benefit of their fellow citizens. I refer to insurances, for example, as an incentive to have an earthquake-prone building of a reasonable percentage new building standard, because, for tenants, they might have that requirement that they would not enter into a tenancy unless there was a certain percentage. There are other legal obligations—and, I mean, nuisance, I suppose, would be one that one wouldn’t have to imagine too wildly might come about, if there was a known risk that could be mitigated but nevertheless was to cause injury or loss emanating from that property itself.

The broader point is that I certainly would not wish anyone who is able to remediate their building or to strengthen their building or to secure their building and thereby avoid damage and injury—we wouldn’t want to discourage them to do that. We’re merely taking away the legal compliance enforcement requirement that currently exists, at least for four years and possibly six.

Thank you, Mr Chair. I’ve got a few questions for the Minister in the chair, and this is a really important area. We’ve heard a bit about the bigger cities, but I just want to reflect on the streetscapes in some of our provincial towns. It’s a bit like the streetscape will have gaps of boarded-up buildings, demolished buildings, or just rundown buildings that look like the gaps in people’s teeth, frankly.

There is not much money in provincial local government. I mean, we hear about the woes of the cities in the funding, but at least Wellington City was able to put a significant amount in for the heritage funds—we would have lost a lot more of the character without that. Thinking of Masterton Town Hall is probably going to have to be demolished. Pahiatua, there are so many buildings; Dannevirke, all of these areas that my colleague across the Chamber is no doubt also concerned with.

What I want to know is: is this a temporary band-aid by extending the deadlines? If you’re talking two to four years, within that time, is there going to be more funding from central government or from some other tool that local government can use? Or is there going to be a sudden advance in science?

You quite rightly say that there is more to be found out about, for example, why do some old, old buildings survive and then something like the BNZ building on the waterfront has to be demolished? Is it just because of the ground waves in the earth or not? I mean, can we find out more about that? Possibly not in the next two to four years, but maybe there’s some funding for science there.

Base isolators were a huge technical breakthrough. I don’t think we’ve seen another breakthrough like that, and perhaps the Minister would like to address how we can actually fund science and technology better to produce answers to those questions. I do think there’s a little bit more about how we—

CHAIRPERSON (Greg O’Connor): Ms Wade-Brown, we’re on Part 1 of the bill. You just need to be a little bit more specific. You’ve been pretty broad to date. We’re looking for a question in relation to Part 1.

CELIA WADE-BROWN: Thank you, Mr Chair. The Minister’s nodding very wisely so maybe he’d like to respond.

In the hope that the Minister can speak is not—“as wisely as he was nodding”—referring to himself in the third person, and in so doing referring to himself again—myself.

The member, who I acknowledge is a former Mayor of Wellington City, not only a large city, of course, but one particularly with history in this area. I just do want to acknowledge the work of many in local government, including in this fair city and this connection, but, of course, the point about other areas of New Zealand, including regional towns, is well made. I certainly have engaged with mayors and other councillors in various parts of regional New Zealand, and it’s a major problem, as the member knows. We face the situation of demolition by neglect or, less charitably, demolition by legislation as opposed to the buildings being levelled by a seismic event, in some cases to the extent that people are caught unable to demolish or to rebuild.

It’s a very serious point and, of course, it’s overlaid with the heritage question, particularly when you then balance up the economic considerations—and obviously the cost of remediating is a major one, and we’ve talked a lot about that tonight—but the economic potential of heritage to some of those smaller towns whose tourism offering actually relies in large part on it means that these aren’t straightforward questions for the review to contemplate. They’re determined to do that as best they can—I hasten to add—and we’re giving them, and us, four years in which to do that, possibly six.

As to more funding being made available, of course, if local government is willing and able to make more funding available, then we would wish them all the best with that and, indeed, congratulate them on being able to do so, but from a central government point of view, the decision that we’ve made is that the best use of our resource would be to conduct a review that we hope will mean that repairs and remediation, even demolition, will be more cost-effective under new settings than it currently is. That’s been our emphasis rather than paying funds to people to remediate to a standard that may no longer exist in four or six years.

In terms of the science changing, on the positive side there are additional techniques—and I think there have been some other innovations. I’m no engineer and not qualified, therefore, to speak to what those are exactly, but suffice to say, there are a lot of smart people dedicated to improvements in techniques even beyond the base isolator breakthrough. On the other hand, science is also changing in the sense that we understand more about seismic risk. The bad news there is we understand that there is more risk rather than less every time that we learn a bit more—so definitely a double-edged sword in that sense. It does go to that bigger question, which is a public policy issue in general, which is that the irony of what we’re engaged in now—and I’m being more open than I should, but we’re trying to provide certainty in having a review. Of course, in the meantime, we’ve got the uncertainty, and we want people to be able to get on with their lives and make the changes they need and improve the buildings for the maximum degree of safety.

In the meantime, we’re providing a pause so that they don’t have to do things that they otherwise would have. It is a tension. We’re grappling with it as best we can. We think, in terms of the time frame, that we are achieving that balance as best we’re able, but, you know, reasonable minds can disagree about where to draw the line.

Just for those without the benefit of video, there is only one Minister in the chair.

Mr Chair, thank you for the opportunity to ask the first question that I have had the chance to ask about clause 17. It creates new sections 133AMA and 133AMC.

I’ve explained to the committee what this section is, because we are moving very, very swiftly through this bill, but this section is the big section in it. This section is the one that affects a small number of people extremely deeply—those are the apartment owners in Wellington, those are the homeowners, those are the building owners in Auckland and Christchurch whose life savings are caught up in these buildings and have a huge interest in what is happening tonight in the Chamber, and it would be unfair to them who are following along very closely to rush this part. It also affects all New Zealanders at some level, because the decision being made here is to extend the deadline to delay some of those remediations that Mr Parker has spoken about and is to create a period of time where there is extra uncertainty. It wouldn’t be fair for us not to address this part and not to give it a good, thorough going-over, which is the intention here, even though we are moving very quickly on this side of the Chamber.

The first question I have about 133AMA is the concern at the select committee. This was a unanimously shared concern but for different reasons. I want to put it to the Minister for Building and Construction that it was capacity in the infrastructure sector to implement the bill even in these time lines—in the four-year period—whether the infrastructure sector, whether the builders can, in fact, do this. Many members around the table had questions about the capacity of the building sector, particularly in Wellington, to make the remediations that are required along the way, and if all of them are extended in the same way, whether they would all fall at the same time, and whether that is the right balancing exercise. Members on the Labour side of the table also had concerns about the way that the building sector is being impacted right now by not only economic decisions but the pause in the pipeline of Government work which keeps many of the builders within the building sector active. There are 12,000 fewer building jobs today than there were on the day of the election.

Are we ready as New Zealand? Do we have a building sector that is sufficiently tooled up to be able to make the remediations that are being required by this bill in the kind of time frame in the section of the building cycle that we will be in then? That’s my question to the Minister.

Thank you, Madam Chair. I think we’ve got a chicken-and-egg problem, to some extent, in this country. Yes, it’s been a low couple of years for the building sector and they do want more work as quickly as possible, but until such time as we enable them to get on and do that work—and in the case of the earthquake-prone building work—then they don’t have an incentive to remain here in those occupations.

In terms of the capacity, I’m confident that the capacity will meet the demand to the extent that it’s able, but the key point there, really, is to understand that the deadline extension of four years will mean that we still have a staggered approach, because the staggered approach that was set up by the regulations that followed the legislation a decade ago was such that areas that were deemed more critical by reason of them being in a more seismically risky part of the country would need to be done first. There was a strong element of risk mitigation and proportionality in that decision, and we’re not going away from that. Everything’s shifting right but by the same amount. I’m hopeful that that work can be done.

I suppose the only way to avoid questions of capacity would be to allow an infinite period of time or at least a much longer period of time, but, of course, we’ve discussed between us tonight—haven’t we?—the fact that that in itself represents a danger not only in terms of increasing the chances that a seismic event will take place in the meantime but also that trade-off again between certainty versus the desire for change that will enable people to do the works.

Bringing the Minister for Building and Construction’s attention to new section 133AMC, inserted by clause 17, the power of the Order in Council here—I think there is a level of comfort now that the Minister has assured the committee that the circumstances for using the Order in Council power will not be administrative ones. The Regulations Review Committee heard from officials that, for example, if there was a major event like COVID that significantly delayed the Public Service’s ability to finish work like this, then that would be a reason things might be extended. Is that the kind of circumstance he’s thinking of; serious major events, big things that throw off the ability of everyone to get this work done?

Thank you, Madam Chair, and thank you to the Minister for Building and Construction for answering some of the previous questions around the levy. I know that there’s been ongoing conversations around the earthquake-prone buildings, but there’s one other section of this particular bill that I would like clarified by the Minister, and this is new section 108A, inserted by clause 12. This is something that is quite separate from the other sections, because it’s around the “Duties of independently qualified person” in the context of, for example, building warrants of fitness.

It is my understanding that a new offence has been created for the “Duties of the independently qualified person” because we do see bad-faith actors who may not be reporting accurately in terms of some of the inspections and maintenance. However, what’s really drawing my attention to this in particular is that in the new subsection 108A(3), it is up to the defendant—in this case, the independently qualified person—to prove that the failure was due to one of the criteria—i.e., “a reasonable mistake;” or “reasonable reliance on information”. I think that, in terms of the “reasonable reliance on information supplied”, it can be maybe easily proven, but I’m just curious, or maybe want some clarification from the Minister, in terms of the burden of proof in this case—the fact that the burden of proof is on the defendant themselves, and particularly when it’s around a reasonable mistake.

How would the Minister consider that a person is to appropriately prove that it was a reasonable mistake in that case? This is quite a severe offence if we are going by new subsection 108A(4), inserted by clause 12, in terms of the amount for an individual: “a fine not exceeding $50,000:”. It is quite a substantial fine, so I want to know if there’s a much higher threshold, or a lower threshold in this case, for the defendant to prove that it was a reasonable mistake. Yes, if the Minister would clarify that particular point. Thank you.

Thank you, Madam Chair. Taking that second point first: in terms of the burden of proof, the member Dr Lawrence Xu-Nan is quite right to identify that the onus sits on the defendant, which I think is due to a couple of factors. One, the defendant himself or herself would be best placed to state exactly why it is that they had relied on a particular assumption, presumably a set of plans that they’d been operating of, or in reliance on maybe even a verbal statement made to them by perhaps a council officer or the building owner or a building tenant. The fact that that person would be best placed, as well as having the motivation, to make out that defence would be a relevant point there. Also, more broadly, with significant public interest—which I suppose is another way of saying the seriousness of the consequence of failure—we think it’s appropriate that when events could be made out, on the face of it, there’s got to be some sort of reasonably high threshold and onus and burden on a person to say why it was that they didn’t meet that standard.

As to the question that was asked prior by Arena Williams, and I remember she made this point actually in her second reading remarks, I suppose it might be the case that a major event unrelated to the circumstances, such as a global pandemic—God forbid—in the next four to six years, might be the reason that there is a cause of delay such that an additional two years is needed. That’s not something I was particularly contemplating. Again, I’m actively hoping that that’s not the case, but, nevertheless, that might be the cause of a reason. I think it’s more likely that if a review were to take—for example, two years, followed by a year of legislation, to really thrash out the issues and ensure good public buy-in—immediately we’re at the three-year mark, and then there’s one year for people to implement the changes necessary to their buildings to meet that. That would be within the four years, but any slippage on that whatsoever would be in the realm of six years. I think that’s the more likely scenario in which extra time would be needed.

Thank you, Madam Chair. I have some questions relating to stand-alone building consent authorities, and, in the style of the evening, perhaps the Hon Chris Penk could consult the Minister for Building and Construction and, having done so, respond to his alter-ego before providing information to the committee.

The serious point I want to make, or question I want to ask, is: the amendments that have been recommended at the Transport and Infrastructure Committee relating to stand-alone building consent authorities include the definition of the “standalone consent authority”, which is, essentially, a consent authority that isn’t a territorial regional authority, and then says that there’s a duty on the stand-alone building consent authority to pay levies. I want to understand what the purpose of those levies is, having regard to the experience that New Zealand suffered—and I use the word advisedly—when private building consent authorities were introduced, I think it was by the Hon Maurice Williamson, some time ago under building legislation not specific to earthquake-prone buildings, the outcome of which was that a number of rather imperfect inspections were done and councils or building owners ended up wearing the losses that resulted from those poor inspections.

In the end, the response of this Parliament was to do away with those private consent authorities because it hasn’t worked to appropriately protect either the councils or the citizens who were reliant on decent inspections of buildings as they were built before they purchased them. I mean, I might be mistaken here, but is the purpose of the levy to provide some sort of fund in order to have some fund to guard against those eventualities, or is it completely different? If it’s completely different, what mechanism is there in the legislation here to ensure that the prior experience in respect of private building consent authorities under the more general building legislation is not repeated here if we have private sector participants who could be an under-capitalised company without the deep pockets of a council in the event of something going wrong?

Now, that’s not to say that I think the existing allocation of risk in the building sector is right. I for one do not think that councils should be insurers of last resort. I would prefer consideration of a compulsory insurance mechanism which required the owner of the works or the head contractor—I don’t care which, really—to have major defects insurance. The insurance companies would appropriately price risk, and if it was a low-risk building project, the premium would be low, passed on to the consumer. If it was a high-risk new technology, that might be a higher premium that would be passed on to the consumer, too. I am concerned that, short of that work being done, the introduction of private, stand-alone building consent authorities could end in tears, as the prior experiment did.

Thank you, Madam Chair. The Hon David Parker makes a number of very important and interesting points that don’t particularly relate to the bill. We’re not doing anything that would make a difference in relation to what he’s described. The change of language in relation to stand-alone building authorities as at now merely describes the existence of Kāinga Ora. These other questions are ones that the Government’s contemplating, in conjunction with other political parties, I’m pleased to say, because the member’s right: we don’t want to move in the wrong direction in terms of liability, not only in relation to local government burden but also that of the individual consumer, homeowner, etc. We’re determined to get that right. It’s an important conversation, but, as I say, not one for this bill.

I move, That debate on this question now close.

I’m going to really home in now. We’ve had an hour on this section. I want to hear clauses and new questions, because I’ve been listening in. I’m going to take a call from Arena Williams, but I do note that the members who are on their feet currently have had a number of calls, so I’d like things to stay very brief and to the point.

Madam Chair, absolutely accepting your guidance. Two quick questions, then. On clause 22, dam compliance certificates—my question there to the Minister is really simple. Is the intention here that the person referred to in this clause is a professional person? The fines are kind of set at a level that you would expect for, say, lawyers—and conveyancers are at about the same level. Licensed building practitioners are set at about the same level. Are these fines set in line with the expectations that Government has for professionals?

Clause 23—Madam Chair, in line with your instructions about brevity—were any authorities inspecting spa pools, and is that the reason for this change?

Dr Lawrence Xu-Nan—and the same: very brief, to the point, thank you.

Thank you, Madam Chair. Two questions from me as well, one just kind of going a little bit deeper into what the Minister mentioned before regarding clause 12, inserting the new section 108A.

The Minister mentioned something—that it could be a reasonable mistake, or reasonable reliance could be an oral conversation or even a written conversation from the building owner, for example—but I just want to check what happens in the case where the building owner themselves does not realise what information should be provided. Would that be something that the qualified person would ask very specifically? For example, “Hey, how many times has your ventilation system within this building broken down over the last 12 months?” I just wanted to check with the Minister: would there then be some sort of training with an independent qualified person to actually start asking those questions and those particular prompts, so that way they do get the right information? That’s my first question.

The second question is relating to Schedule 1AA amended, which is part of clause 29, which is still part of Part 1 of the bill. This is particularly to do with new Part 5, clause 17, around offences. Now, the Minister previously talked in terms of some of the retrospectivity of this particular bill, but I want to get clarification from the Minister for subclauses (1) and (2). It talks about offences specifically, and it gives the date of 1 April 2024, which is retrospective. I want to check with the Minister: is that 1 April 2024 a date determined arbitrarily, or is there a specific reason for that date? I think anyone who falls on either side of those days will either be really annoyed or breathe a sigh of relief. Thank you.

Thank you, Madam Chair. I don’t want to interrupt any contributions that may be made on my right-hand side. In terms of the points made by Arena Williams: no, it’s not just professionals who would be caught by the phrase “any person”, and the relevant section spells out that it could be a natural person or a legal person that is not, namely, a body corporate. I don’t think that it’s intended that it would only be a professional who’d be subject to the fines for failure to display a sign on a certified dam.

As for whether the small pools are necessarily spas, I don’t know—if I would just put that, I might get in hot water, so I’m just going to leave that.

In terms of the point made by Dr Lawrence Xu-Nan regarding offences, I think to describe 1 April 2024 as an arbitrary date might be a bit harsh, but, nevertheless, it’s a pretty convenient date. So often 1 April is decided upon for these matters. I don’t think it’s any more arbitrary than any other line in the sand that’s drawn on a particular date, but the fact that it’s April Fool’s Day, I suppose, might lead the member to draw whatever conclusions he may wish.

I move, That debate on this question now close.

The question is that debate on this question now close.

Motion agreed to.

Part 1 agreed to.

Part 2 Amendments to other legislation