Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill

Members, the House is in committee to consider the Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill. We start with the debate on Part 1, which is the debate on clauses 4 to 8, “Amendments to Parts 1 and 2 of principal Act”. The question is that Part 1 stand part.

Thank you very much, Mr Chair. Just to acknowledge, members, I’ll keep my opening remarks brief in the committee but I do just want to state for the public record that I was very pleased with the debate at the second reading. Members across the House engaged in good faith in the very serious undertaking that we are making. I am grateful for the support of the parties, not only in their comments but also with their votes—of course, importantly—and I acknowledge that Arena Williams was kind enough to signal a couple of areas in which she will be asking questions. So with no further ado, I will resume my seat and look forward to that discussion.

Thank you, Mr Chair, for the opportunity to take a call on this Part 1 of the Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill. Part 1 deals with the regulatory-making powers that will be set out for the chief executive and the Minister. Basically, all of the Opposition MPs’ questions will fit into these parts, because anything that the bill does will be sort of in those two parts. I have six questions to start off with the Minister for Building and Construction on around the intent of granting powers to the chief executive and to the Minister—whoever that Minister may be, as the Minister said in his second reading speech—about how to create the changes that the Government is proposing will be made by this bill and those changes that have sort of been advertised and well-canvassed with the industry. I want to make sure this bill is doing what it says it does on the tin.

So my first question of the six is: the Government is aiming to improve competition and lower building costs with this. What advice has the Minister had to show that these changes will actually lead to lower prices for consumers rather than just benefiting the larger importers and merchants? That’s something that the Transport and Infrastructure Committee heard a lot of evidence on from various groups. I think we had 44 submitters who were interested in the bill, but because they are all from disparate parts of the industry, it’s not something that any one submitter could tell us, and it wasn’t something that they were focused on.

The next question is: how does the bill ensure that recognising groups of overseas standards will not lead to a lowering of building quality or safety standards in New Zealand? That’s given effect in the next clauses, clauses 7 and 6. And the next question is: what process will be used to determine which overseas standards and certification schemes are robust enough to be accepted? Who will oversee that decision making?

My next question is: the aim of streamlining the use of international standards is something that the committee really grappled with, and I think other members in this House have discussed in their speeches a real enthusiasm to be using international standards which are at the same standard as or much better than New Zealand’s. So how do we streamline those standards by moving them into the new regulatory instrument, and how will that affect designers, builders, and consent authorities in practice? The worry here is unintended delays for people who are already using products which meet those international standards but might need to do it again. Many in this House will have had representations from industry groups or importers about this particular problem, particularly about confusion over the different rules that they could be using. Some of those rules that do let them use that now in the Act seem to overlap a little bit with these changes.

The next question is: the bill mandates that building consent authorities must accept certain overseas certified products, so what protections are in place to ensure that the products meet or exceed the durability and safety requirements that those building consent authorities have been using?

And the last question is: given that 90 percent of building products are already imported for use in New Zealand, how does this bill ensure that local manufacturers remain competitive and are not disadvantaged by easier access to overseas products? I ran out of time to discuss this with the Minister in my second reading speech, but it was something that the committee is also very interested in, about how those local Kiwi businesses that are making great strides to create eco-friendly or alternative options—perhaps they’re safer; perhaps they have a higher safety standard for their fire ratings because of New Zealand’s track record with fire risk, or perhaps they are using waste products to turn them into plasterboard. These sorts of businesses that are doing really interesting things in the New Zealand market because of New Zealand’s other challenges, like with recycling for these products, are businesses that we should be making sure have the conditions to thrive.

These are businesses that have already gone through what was a very, very rigorous set of compliance standards, so how will they be affected now by overseas products that are able to compete with them and not be at the standards that they were held to prior? Especially for those businesses that—you know, they’re absolutely not at a scale where they’re looking to export overseas; they’re looking for the domestic market because that is what their scale allows them to do. Now that they’ve met those very high standards, can they be assured that they will have some level of competitiveness in the New Zealand market, or are we just setting them adrift?

I apologise to other members of the committee, but am grateful for the questions—I counted, I think no fewer than six—from Arena Williams.

Going through those in turn: first, the benefit in terms of increased competition and adding some price pressure in a positive way for the Kiwi consumer is based on the idea, of course, that in a market economy the greater the degree of competition, the more that the price of the product—or the goods; or goods or services, for that matter—will tend towards the minimum at which it can be produced—including, of course, that with the benefit of innovation, one can get to that point much more readily. So we think that’s a useful mechanism. Countries like New Zealand have believed this for many years, and it was highlighted in the 2022 Commerce Commission report on building materials, on which the idea for this legislation is partly based.

I would just add, in addition to that point around competition and therefore price pressure, that innovation—which the member also, rightly, mentioned—and, of course, resilience are the aims of the bill in terms of opening up the availability of products from different places around the world.

Second, in terms of the standards, the assurance that we have given and that we will rigorously hold ourselves to as a Government—but relying on expert advice—is that the standards be equal to or higher than those that currently apply in New Zealand to the respective building material types.

Third, in terms of decision making, who oversees? I actually originally wrote the word “overseas” incorrectly—it’s “oversees” in the sense of oversight as opposed to non - New Zealand jurisdictions. So thank you for confusing me on that point, if not the others.

In terms of the oversight, then, that is provided, clearly there’s a process that’s set out in the legislation. And without going through it fully, I will note that, of course, the Minister for Building and Construction, from time to time—like the chief executive of the Ministry of Business, Innovation and Employment (MBIE), who has similar powers in terms of being able to approve products—is guided by the advice of MBIE. In turn, that is informed by expert opinion from outside MBIE—acknowledging there is expert opinion within MBIE as well—industry expertise; and, of course, all the users of these materials are able to contact the Government and be part of that discussion. The broader the discussion is, the more helpful it will be in terms of providing the kinds of materials, products, and therefore outcomes that we will see.

Fourth, in terms of how there is a streamlining effect: the member asks—and I hope that I’ve understood her question correctly—how we avoid the possibility that there might be unintended consequences whereby people who are already going through a different process might experience delays by seeking an approval under this mechanism. The answer is that this is an additional method by which products could be approved. If a tradesperson or a consumer—the Kiwi battler seeking to have a home built at a reasonable price—is already in the stages of getting approval through their local building consent authority or through the CodeMark regime, maybe on the basis of brands testing taking place and giving some comfort or assurance there, then they’ll be welcome to continue to do that. We’re not taking that pathway away; we’re actually increasing the range of methods by which it will be possible to have building consent or products approved.

In terms of protections, in terms of the assurance, again, leaning on expertise rather than it being the Minister himself—or herself in the future, as it may be—making the decision. So the assurances, for example, by reference to the Building Advisory Panel who are available for purposes such as this, providing that expert advice to Government.

Finally, for now, in terms of the point that the member rightly makes, that 90 percent of products at the moment are already sourced either wholly or in part from overseas, and thinking about the innovation that’s taking place in this country—of course, she’s right to reference the technique whereby waste materials are turned into boards. In fact, there’s an example of that a stone’s throw away in terms of the work that’s going on—it actually will be part of the new parliamentary precinct. Certainly acknowledging that point and those within New Zealand who are doing that work.

A couple of points: first of all, of course it’s important to consider suppliers, but from the consumer point of view it’s also worth considering the effect of competition being advantageous to them. But more importantly, from the suppliers’ and manufacturers’ point of view in New Zealand, the fact that they can measure their work against overseas standards, have that accepted in New Zealand, and immediately be export-available and export-ready and export-attractive, I think, would be actually quite helpful for them indeed. But, of course, it will always be easier for Kiwi suppliers and manufacturers because you don’t have the export costs and supply chain implications that those from overseas currently face.

I thank the Minister for Building and Construction for that very helpful answer. While he was giving that answer, I was helpfully handed, by the Chamber attendants, the Residential building supplies market study from the Commerce Commission that was published on 6 December 2022. It led to some very useful work by the Government of the day, and then by this Government, on competition in the sector. Given the Minister’s answers around the use of competition as a way to bring down prices of building supplies, I just want to delve into that with one question: does the Minister envision the regulations that are to be written in line with the two powers granted under the primary legislation to the Minister and to the chief executive of the Ministry of Business, Innovation and Employment —will that regulation likely consider the impact of both large suppliers and vertically integrated companies using their market dominance to block competition, as was suggested by this study?

Even with the easier access to overseas building products, this is still something that may be a feature of the New Zealand market for building supplies, given that, in the existing legislation, there is already a power to have recognised some overseas building products. This does, we think, make it easier. But there has already been that power, and a lot of the, I guess, scepticism from the industry about whether real competition will be brought about by this legislation has to do with whether that will be able to be taken up or whether the market dominance of the existing players in the New Zealand market will mean that new overseas products can’t really establish a market for themselves here.

Thank you, Mr Chair. I think there will certainly be more competition, not less, as a result of the legislation. As to whether bad-faith actors might, in the future, hypothetically attempt to act in a way that’s anti-competitive—if they were to do so that would be a matter for the Commerce Commission.

Thank you, Mr Chair. I just have two short questions, because I can see the Hon Kieran McAnulty is also keen to ask the Minister for Building and Construction some questions. First of all, thank you so much, Minister, for your explanations. I always find this Minister’s contributions to be particularly helpful and educational, so thank you very much.

I would like to just kind of follow on from what my colleague Arena Williams was referring to, particularly when we’re looking at clause 4 of this bill, which amends section 7 of the Building Act 2004. There are two things, one of which I have a question for and the other one’s on the back of something the Minister mentioned before. The first question’s around overseas standards organisations and also, in terms of when we’re looking at the broader context of this bill, when we’re looking at overseas building products, would the Minister be able to elucidate how that interacts with, for example, something like the Green Star ratings, both for commercial and also for residential? You will see that the way that we import some of those materials—or export some of the materials, potentially—will have an interaction, and just in terms of consistency with that overall level of compliance.

The second question I have is what the Minister mentioned before around trade and export, which I found particularly within my area of interest, and one of the things that the Minister might be aware of is that recently there has been this discussion around agreement on climate change, trade, and sustainability. It was one of the things that was announced a little while ago and was ratified a little while ago, as well—sorry, it was signed a little while ago. One particular part of that was around the removal of, for example, tariffs over environmental goods. I was just curious to know from the Minister, because the Minister mentioned some of these in terms of compliance in terms of exports, and particularly when we’re looking at things that are, overall, supposed to provide better sustainability and environmental goods, and timber potentially being one of them—do you see any potential interactions with the Agreement on Climate Change, Trade and Sustainability in that regard, knowing that that agreement still has reasonably few countries that are signed up to it, but something like this might potentially open doors to other available markets?

So those are my two questions, one on Green Star ratings and the other one on some of the broader ideas around trade of environmental goods.

Thank you, Mr Chair. I thank the member Lawrence Xu-Nan for his always thoughtful questions and—again, if I may reciprocate—educational questions, even in the way that they’re framed and put forward. Between the member himself and his colleague the Hon Julie Anne Genter in her comments at second reading, the focus, collectively, from the Green Party of Aotearoa New Zealand in relation to sustainable building practices that might be augmented—I think that’s a really helpful conversation.

In general terms, I’d observe that improving the range of products as well as, I suppose, the depth of the availability of existing products will be useful from the point of view of encouraging sustainable building practices. The innovation that’s thereby encouraged, I think, will be something we can recognise in coming up with systems that relate to recognising sustainable buildings—encouraging and enabling, if not mandating. More particularly, to answer the first part of the member’s question around the different rating systems—Green Star rating system and others, for example, NABERS, which is an Australia-based system, appropriately enough; everyone needs good neighbours.

But to the extent that these can and do already exist in New Zealand, there’s a degree to which those can sort of translate already. Certainly, those systems voluntarily being entered into and complied with—for want of a better phrase—in New Zealand can make use of the known properties of overseas products to the extent that those are also used in Green Star and other sustainable certification systems overseas. So I think it’s helpful in that regard.

Julie Anne Genter mentioned the high-quality and sustainable practices in the German jurisdiction that she’s aware of and, certainly, my layperson understanding is that in Germany and elsewhere in the EU, they are probably ahead of us in many of these respects. So it’s quite exciting to think that we’ll be able to tap into that—not a specific reference to plumbing products—in very short order.

In terms of opening the door to international agreements and trading along these lines, I think it can only be helpful. I know that other countries in the world—other countries are of course in the world!—are interested in these matters and they will want to know that New Zealand is also interested in this space. We’ll be able to say more about what that might look like in terms of Government policy beyond the scope of this bill in due course.

Thank you very much, Mr Chair. I thank the Minister for Building and Construction for his answers. I want to build on a question asked by my friend and colleague Arena Williams and the subsequent response from the Minister around competition. Now, the Minister is correct in a sense that, after this passes, the Commerce Commission will be responsible for monitoring this, but now is the time to provide those reassurances. And I don’t think it’s satisfactory to just simply say that this will likely lead to more competition. That in itself, in isolation, is true. But we’ve got to recognise that the Commerce Commission has identified that part of the issue is not just supply but competition. Now, the two are actually different. So, yes, we’re going to see, as a result of this bill, an increase in supply from overseas-made and -assessed products, but a lot of those products will be made by large multinational corporations, who, actually, through their size, can prevent other overseas products coming in. We would like to know what provisions the Minister intends to include through regulation to ensure that that doesn’t happen.

Now, we’ve got to recognise that the supply chain here is incredibly complex, and it’s not just a case of accessing building material that is made and assessed overseas; it’s also a case of ensuring that local producers and manufacturers get a fair crack as well. Now, most members in this House will be able to point to local manufacturers in the areas that they live. I certainly can think of, where I live in Wairarapa, a number of manufacturers that are producing products that are of a high standard and that will be able to compete with overseas-produced products in terms of quality, but we need to ensure that they get fair access as well. A lot of the things that are happening in this bill is good news for local manufacturers, particularly the work around ensuring that the consenting authorities are open to different products. That’s been part of the problem, and many of the things that the Minister is putting to the House today builds on the work of the previous Government in recognising that, actually, this House supports this bill.

So these questions are in good faith. We need to ensure that this not only leads to an increase in a variety of products but in a true competitive market. Now, what we mean by that is not just ensuring that the Commerce Commission reports on it, because we know they will and they have, but that doesn’t necessarily lead to the solutions that we need. My fear is that what will happen in practice is this bill comes in and the new regime is under way—a review of that doesn’t happen immediately. We need to wait and see how it’s working and assess that and then reflect on that and then look at what changes could be made to improve it. If we don’t get it right now and the committee isn’t given the assurances it desires now, my worry is that local producers might be undercut and might go under in the meantime. So it is important, I think, Minister, that the House gets a clear understanding of your intentions from this bill to ensure that the market is truly competitive and that that doesn’t undercut and undermine local producers who, up until now, haven’t had a fair crack. The idea of this is to give them one, but we need to make sure that’ll actually happen.

Thank you, Mr Chair. I have a question relating to clause 6(1) of the bill, and also clause 8, which inserts new section 25B in the principal Act. It’s not a new issue, but I’m asking the Minister for Building and Construction how this bill deals with it differently, and it is around overseas building standards not being comparable to New Zealand’s because they verify it to a different level. Ours is based on the Building Code, which sets out minimum standards, whereas there are other overseas certification schemes that may have different thresholds for compliance and different levels of compliance. So the question is: how will the regulations ensure that imported products are tested in the system that they are authorised under in order to meet not only the basic compliance standards but also long-term performance standards for durability and other standards like insulation and energy efficiency that we are trying to test for?

My other question is: given that New Zealand’s Building Code sets minimum standards and it is that kind of regime, but some of those lag behind most international codes, particularly for things like warm, dry, energy-efficient products and their best use, what safeguards will we have in place to ensure that the overseas building products that we are bringing in—will we have a different way of treating products from regimes where those standards have sort of a minimum compliance and then another level of compliance, or will we test each level of compliance to see whether it complies with the New Zealand standard, rather than just sort of figuring that it meets our current minimum standards, and so we don’t need to go further than that?

Thank you, Mr Chair. I thank the members for their questions and comments. Starting with the points made by the Hon Kieran McAnulty—he’s right, of course, to highlight the centrality of the Commerce Commission’s role in all of this. I’ll just take us back to the year 2022 and the Residential building supplies market study and its recommendations, which included exploring ways to remove impediments to product substitution and variation. I do just want to note that as part of this broader piece of work, the easing of the rules around minor variations and customisations—actually, by allowing greater clarity in that space—I think, is part of the way that we can assist to introduce the products of New Zealand building suppliers and smaller overseas building suppliers into New Zealand buildings. Notwithstanding that a designer might have initially specified a particular product that’s well known to them or perhaps is produced by a large player with a big marketing and sponsorship budget, a builder or another tradesperson, or the designer himself or herself, could actually have that product substituted along the way more readily as a result of that.

In terms of the Commerce Commission, it’s true that a review in due course might have observations about how well the new regime is working, but it’s also the case that as part of the regulatory function of the Commerce Commission, they are able to undertake, at any time, reviews or answer questions of whether market dominance is leading to unfair results that are anti-competitive in their nature, along with individual practices that might be alleged to have occurred. So, I think, contemplating a review that might take place sometime in the future doesn’t actually represent the gap that Mr McAnulty is suggesting, if I’ve understood him correctly, given that the Commerce Commission has those other functions and powers in the meantime.

Second, in terms of assurances that I’m able to give about market dominance, including for the possibility of large overseas providers—well, I can’t give any such assurance. I don’t have a crystal ball, but I know that by increasing competition overall, it’s nearly inevitable that the Kiwi consumer will be better off in each individual case. And to mitigate away the possibility, theoretical as it may be, that there’ll be unintended consequences in any individual case, we can think about the fact that there are natural barriers in the case of overseas products, which is transporting the physical goods here—we’re very remote—so, naturally, there is a cost, and there is uncertainty associated with supply chains, always. In terms of barriers being established to the acceptance of products—be they overseas or local ones—to the extent that these are more difficult for smaller players to achieve, they represent a barrier that in itself represents the antithesis of a competitive market. So I think it’s reasonable, or more than reasonable, to assume and to expect that there will be an effective increase in competition, and a thumb on the scale will remain in favour of New Zealand suppliers and manufacturers for that reason.

Third, in terms of liability—and I think the member might have been referencing the point around building consent authorities having to take note of overseas-approved products or New Zealand products approved against overseas standards—of course, to the extent that local councils, being building consent authorities, are required to deem, as approved, these products under this regime, they will not be liable for any adverse consequences of doing so. In terms of the use of the product, to the extent that that’s checked by inspections, yes, liability will remain on the current footprint of the scheme, but that’s as you would expect. And just to be clear, we’ve outlined—I think, quite carefully—in the legislation that liability won’t attach to councils where they are simply giving effect to the policy choices made by central government through this bill.

In terms of Arena Williams’ latter contribution asking how we are to measure that minimum standards have been met—well, under the Building Act and The Building Code currently, we’ve got quite a flexible approach to the way that it can be demonstrated that standards have been met. There can either be quite a prescriptive following of certain ways of operating and systems; but also some flexibility can be demonstrated—the flexibility is a trade-off, of course, with the certainty of the other method. But, certainly, between those, at the moment, we’ve got a couple of different ways that you can demonstrate that a product complies. We’re not seeking to change that.

Kia orana, Mr Chair. Thank you. I thank the Minister for Building and Construction for his responses. I was a member of the Transport and Infrastructure Committee, which listened to a number of industry participants and others who were really keen to ensure that that level of competition and price point is driven down. One of the points that was a real point of conversation, I guess, was also the role that councils—so I’m pleased to hear that the Minister has confirmed the inability for liability to be attached to councils, provided that councils actually are making decisions in line with the legislation, although that would sit at that quality assurance level prior to that.

I have some questions for the Minister, and this really lends itself to the lower cost of building. I mean, that’s really a key driver behind the legislation, as the Minister has indicated. My question is around that monitoring aspect that the Government intends to take to ensure that that is actually happening. I appreciate that the Minister says he doesn’t have a crystal ball in terms of gazing into the future, but if we’re in a situation where the changes that are proposed are not leading to that price point dropping, as everyone anticipates, what provision in the legislation—if the Minister can point to a particular aspect in the legislation—identifies a mechanism or a lever for the Government to step in and do something in that space? Or maybe it’s not, but I’m just interested in—this is the genesis of it, but, in practice, if it’s not actually flowing through to consumers, then what is the approach within that?

The other part of that question to the Minister is: when we set aside the building products—in the context of the cost of building products, and this is an issue that many home builders and others in the consumer space are facing all the time—a large chunk of the actual cost when it comes to building construction lies within labour, lies within GST, and lies within the professional services that make up the bulk of those remaining costs. Has the Minister considered how the product innovation or process innovation to capture those particular aspects can lead to more competition in the driving-down of that price point? I’d be interested to get the Minister’s responses in those areas.

Thank you, Mr Chair. Thanks to Mr Tangi Utikere for the thoughtful questions. On the second point, process innovations are part of the building reform work that we’re doing more generally, but not within this bill, except to the extent that standards and certification systems and so on might lend themselves to improved processes.

So beyond the bill, I suppose it’s a matter of watch this space, but I think it’s fair to say in light of that point being raised by the member and also that conversation more generally about the liability of building consent authorities that the liability question as at now—joint and several for each of those councils—is something we’re looking to address more broadly, so I look forward to continuing to converse with him outside the scope of this bill on those matters.

The second point that I’m raising—but his first point—is in relation to lowered costs more generally. He’s right to observe that increasing the affordability of building, including residential homes but not only those, is a major focus for us. I know other members of the House are interested in that kaupapa too.

I would point out, however, in answer to his question, there isn’t a specific provision in this bill that would trigger some sort of particular Government reaction in the event that building costs don’t come down. I suppose I would be remiss not to point out that the aim is to apply downward pressure on prices. One doesn’t say that they’ll necessarily go down, because if they go up for other reasons—but nevertheless, as a result of this legislation, they’re lower than they otherwise might be. Obviously, I can’t—again, I don’t have a crystal ball, but we’re doing what we can and I think it’s a useful step in the right direction in this regard.

I just note, members, at the moment, that we’ll be looking for some reasonably specific questions now. The Minister, unlike many of his colleagues, has been fulsome and actually quite direct in his replies; therefore, he is covering a lot of this ground. So I just invite members to now point to some specific part of the bill to accompany their question.

All right, Mr Chair. Then my question to the Minister for Building and Construction is: what impact will the regulations made under clauses 5 and 6 in Part 1 have on offsite manufacturers who both purchase key building materials and supply prefabricated components or modular builds? I ask the question because Fletcher Building’s Clever Core prefab house-building factory in my electorate of Manurewa, in Wiri, will shut today, and it will be replaced next year by a PlaceMakers frame and truss plant. The reason I ask that is because one of the reasons they cited for that closure was “unfavourable Government policy”. The building products regulations are something that could help the sector in New Zealand that creates and supplies modular builds and prefabricated components.

My second question in that is whether off-site manufacturing has the potential to improve competition and efficiency in the building sector, as this bill aims to do, and whether this bill will give the regulation-making power required to be able to enable some of that competition being driven at that part of the supply chain?

Thank you, Mr Chair. The member makes a good point. Offsite manufacturing, or OSM, represents a huge opportunity for greater productivity, including by way of economy of scale and other associated benefits in terms of the way that buildings are constructed in this country, and I’m thinking of worker health and safety, and so on, as well as the productivity gains in their own right.

I think it’s fair to say that this kind of regime will enable that purchase at scale of products, which, again, through the competition that the bill will enable to increase will have a positive effect for the likes of the soon-to-be-closed Clever Core factory. I regret its closure. I note that they’ve found it difficult—according to public reporting—to operate over the last few years. Clearly, the construction sector in general has taken a major hit over the last three or so years, but we wish its successors on that particular site—which I too have visited—all the best, along with everyone else looking to come out the other side of a difficult time for the construction sector.

Thank you, Mr Chair. I appreciate being able to take my first call on this, and the Minister for Building and Construction’s excellent answers. I’m really interested in clause 8, inserting new section 25B(2), thinking about the list of building product specifications, and I’m really mindful of the decarbonisation efforts that we have as a country and the reform of our science sector from Crown Research Institutes to Public Research Organisations—wondering where the bioeconomy fits into this?

If we’re thinking about products like hempcrete, for example, or wool insulation, to support our rural communities, to support the restoration of manufacturing in the country, to think about what we can do with timber that we haven’t yet done—things that Scion is an excellent advocate for and has been working on—and how we might retool some of the manufacturing plants that have closed down to start building and manufacturing, how do those things fit, and how do proponents of really local systems that have had challenges in our construction sector, such as earth building, light earth, straw bale—how do they fit? If we’re thinking about the decarbonisation efforts, they are also a really important part of the construction sector.

We recognise—and we are in support of this bill—that it has been dominated by very few players, and my concern is, I guess, that we don’t want to simply add on cheaper products from other jurisdictions when we also have a wealth of innovation here in Aotearoa. How are we going to ensure that we bring that to the fore and that we support those? And what are the ways in which—if I can grab my colleague’s document—under section 25B, if we’re thinking about the physical properties, the installation, the fabrication—(b), (e), and (g)—are these elements that are going to be considered by the Minister, when we’re thinking about how we make sure we have a construction sector that has access to materials and a cheaper, more localised way of doing things, to speed up innovation in the sector?

I do have a slight follow-up—I think I’ve got a little bit of time, if I can—and I’d like to reflect on the honourable member Tangi Utikere’s presentation on product innovation and process innovation. If we think about local producers like Formance, for example, who use structural insulated panels, which is, sort of, a clip and a screw-and-glue approach to do fast builds, what are we doing particularly with process? I know that the Minister has addressed this, but we already have products here that can—we can build so much quicker, and we’ve got an example of that when Railways used to build all those fantastic railway homes. Are we thinking about that type of patterned build, using known products that we already have but that struggle through the Building Code? So this is a code question as well.

Thank you, and I thank the member for his very thoughtful questions. I love that he’s emphasised the wealth of innovation that we have already here in Aotearoa, to use his phrase. Of course he’s right, and of course he’s right, too, that there are many products—I use that term in the broad sense of the phrase—that could be used much more extensively than they already are. Although, again, he rightly references wool, which is known to have very helpful products in terms of health and sustainability and other desirable features. So it seems strange if I put a product like wool in the same sense as innovation, because of course, in a way it’s back to the future. Looking at the terms of new section 25B, inserted by clause 8, and the word “manufacture”—I mean, he’ll know the etymology; it’s sort of literally making by hand, and yet obviously in the modern parlance, that implies great factories with industry 4.0, churning out physical products that are anything but natural.

However, of course this points to the right one, but I do emphasise that the legislation is agnostic as to type of material. I mean, it’s my personal belief that we can and should make much better use of such products. It seems to me there’s nothing here that would preclude that. I mean, I take the point that he is, I think, arguing for something that would be more positively moving in that direction. We’re not moving away from it, put it like that.

I would just, perhaps, put out a more general challenge to the building sector in this country and say to some extent these are legal or legislative questions, but to some extent they’re cultural too. I think we have a very conservative building sector and there are good reasons to be conservative where there are questions of quality and, obviously, we don’t want people to be at risk of having homes or other buildings that are substandard because we’ve been experimental. But at the same time, I think there’s scope for being more innovative, and it’s my hope that this will allow that, from overseas but also in terms of Kiwi manufacturers who can measure against standards that are known and accepted. For example, in the likes of Germany, as referenced by the Hon Julie Anne Genter, and through that we will be better off in the way that the member’s described.

I’m going to talk to my proposed amendment to clause 8 of the bill, which adds a proposed section 25B(5) to new section 25B, which is proposed by clause 8 of the bill. Now, I know, looking around the Chamber here, that it just drives everyone in this committee crazy about the rise of the administrative State. Whether it’s a consequence of word processors and computers or the internet, I don’t know what it is. It’s a combination of these factors. But the mad level of detail that is required, across just about any area that has been regulated in this country, drives us all spare. I see the Hon Andrew Bayly there, and I’ve spoken to him about the biblical length of prospectuses that is now required for new capital raisings, which is so long that people never read the damn things. And the big risks are missed in the mass of detail that is there for people to wade through.

I know that the Hon Andrew Hoggard has experienced similar frustrations with farm plans, with the inability for us to do a practical farm plan without requiring repetition for what’s already been done by industry organisation plans tweaked a little bit. I’m completely on side with both the Hon Andrew Hoggard, with his efforts in that regard to make these things practical and cost-effective, and Andrew Bayly’s efforts in respect of the prospectus space. But it’s even worse in the building control space, and I suspect just about everyone in this House has experienced it.

Just this last week I had an architect of over 50 years’ experience—Malcolm Walker—come to see me saying he’s putting together a group of architects to go to complain to the Auckland Council about what they’re doing because, now, you can have a product that is an acceptable building solution for which there is a specification, and, now, the council will require you to lodge the specification, not just list the product. So the specification already exists. We’ve already got a licensing regime for architects and for licensed building practitioners, and they’ve got the obligation to build these things in accordance with the specification. But these people in Auckland Council are saying, “When you file the application, you’ve got to refile the specification.”

The papers that are now being filed for what used to be a very simple application—it probably would have said, “I’m going to build this house in accordance with building standard NZS 4605.”—I think it was; I might have the wrong number; was it NZS 3604?—“Here’s a bit of a design as to what the outline was and the distance from the boundaries, and the building is going to be built by a licensed builder.” They could just go and build the house. Now, they spend $100,000 before they start building the house, in part because of the ridiculous level of detail that is required by building consent authorities when they are issuing the consent.

I’ve experienced this myself. I’ve got friends who are architects, who I know are amongst the best architects in New Zealand. Even if they’re building a single-storey house, they’ve been put through this ridiculous level of detail, which brings me to my amendment.

CHAIRPERSON (Greg O’Connor): The Chair is very relieved, Mr Parker.

Hon DAVID PARKER: Minister, I think this amendment that I have could not only save the hair of most architects—male and female—that’s falling out around the country as a consequence of their frustrations with building departments and of their mayors and councillors, who hate it too. In addition to that, this amendment will save tens of millions of dollars of wasted expense every year, and that can then be spent on either a lower-cost house or a better house. But this amendment is very simple, and it says, “Clause 25B”—and I might not be able to quite finish this in the 44 seconds that I’ve got—

CHAIRPERSON (Greg O’Connor): I’ll probably give you more time.

Hon DAVID PARKER: Clause 25B of the bill, in respect of these new products, says that “(1) The chief executive may, by notice, issue building product specifications that may be referred to in an acceptable solution or a verification method. (2) Building product specifications”, at proposed subsection (2) of that same section, “may include specifications for building products in relation to any of the following: (a) manufacture: (b) fabrication: (c) testing: (d) quality control: (e) physical properties: (f) performance: (g) installation: (h) maintenance.” And what my amendment says is “Where a building product specification is issued under this section, the building consent authority is not permitted to require the refiling of that specification or method of use when an application for a building consent is applied for.”

I would say to the Minister for Building and Construction that that simple sentence will save tens, if not hundreds, of millions of dollars every year, which is currently being passed on to consumers, and it will mean that building consent authorities can turn consents around faster than they currently do. And, accordingly, I ask that the Minister give his support to this amendment so that we can leave this House, thinking that we have made a little push there for the licensed building practitioner, for the architects, for the homeowner, for the builder that wants to do this work, for the subcontractors, and for us politicians, who are constantly getting it in the neck—as are councillors and mayors—for the fact that building consent authorities are asking for the refiling of what is within the ambit of an existing product specification and what the licensed building practitioner and the architect are already responsible to deliver.

Oh, thank you, Mr Chair. I simply have to respond to that and it’s a bit unusual, but I agree with every word that the member, the Hon David Parker, said. How glorious. I will note that the member, before coming to this place, was a lawyer. Sounds like he could have been an architect—

Hon David Parker: And a builder!

Hon CHRIS PENK: —and a builder, he claims. Having read his handwritten amendment, I also wonder if he could have been a doctor. But I think I understand it well enough, including from his very impassioned speech. I suspect he’s trying to provoke me to be more lengthy and loquacious than I probably should be in the committee of the whole House stage.

But he said it all. The only flaw in the plan, so far as I can see, is that the bill actually already deals with the problem that he’s identified. To be specific, at clause 7 introducing new subsection (2A) within section 25 of the Act—

Hon David Parker: It doesn’t stop the council doing it.

Hon CHRIS PENK: Well, to the question of whether it stops the council doing it—I’ll come back to that if I may—but it should stop the council from doing it.

First of all, “An acceptable solution or a verification method may refer to building product specifications.” That being so, there is no reason that a council, as a building consent authority, should be able to inquire behind the approval of a product under this regime. Now, they can inquire as to whether a product is being used correctly, whether it’s being installed correctly after the fact, but they shouldn’t be able to do that. And by the way, they shouldn’t be able to do that already, which is why your friend who’s the architect is so outraged. I share his outrage; I share your outrage.

But this is part of the problem that we’re having to deal with. If I were to be generous and fair to all concerned, I’d say that building consent authorities feel that they need to be risk-averse because they’ve got the threat of joint and several liability hanging over them, and for that reason they want to tick every box and then a few extra besides. But they don’t need to, currently. And certainly in terms of the current Building Code or the requirement to comply with the Building Code under the Building Act at the moment, section 19—that one that I referenced and my friend has very helpfully put in front of me—in terms of the current law, and I quote, “A building consent authority must accept any or all of the following as establishing compliance”, etc.

I finish as I started: as a lawyer by background, he’ll appreciate the significance of the word “must” to the extent that building consent authorities need to stay in their lane or get in their box, as some would say. I wouldn’t necessarily use that language myself but your architect friend might—that’s already a problem that should not arise. We’re dealing with it as clearly as we can in this legislation and dealing with building consent authorities. The problems that they face in terms of liability is another story for another day.

Well, the problem with that answer—

CHAIRPERSON (Greg O’Connor): I will invite succinctness.

Hon DAVID PARKER: Well, it’s very relevant. I’ll do this within five minutes. What’s this two-minute thing?

Hon Chris Penk: Wishful thinking.

CHAIRPERSON (Greg O’Connor): Not wishful thinking on the part of the Chair, I can assure you.

Hon DAVID PARKER: The problem with that answer is that that’s not what happens in practice. Now, what happens in practice is that if you’re a licensed building practitioner who can file an application for a consent, or an architect—who is automatically a licensed building practitioner—you file your application and they say, “Give us all this information.” Well, what are you to do if you’re the architect or the building person? Are you to take judicial review and say, “I’m sorry, you’re exceeding your powers. You can’t require this.” Because that’s, effectively, the only option they’ve got.

They’ve got to go along with what the council requires, otherwise they get another bill from the council for another hour’s work at $300 an hour. They suffer another month’s delay because they go to the back of the queue in terms of the clock running on the building consent application. Every time, city hall wins. In order to change this, you don’t need to just add more building product specifications in—which is part of it for alternative products coming from overseas—you’ve got to drag out the successive regulatory overreach by councils.

Now, I hear the Minister for Building and Construction when he says there is a problem with risk allocation in the building system; I absolutely agree with him. My own view is you’re never going to get over that until you remove liability from councils—all care, no responsibility with compulsory insurance against major defects with a large excess, not insurance against too many scratches in the woodwork, but a failed building envelope, or a failed foundation—the big things you should insure against. Then let the insurance industry effectively regulate their premiums against johnny-come-lately with a $100 company building with a monolithic cladding and untreated timber, compared with Fletcher’s building another brick and tile single-storey house with a tanalised frame. The premium will take care of the problem.

But that is no excuse for not dealing with this problem when we can now. The status quo isn’t working. I would say to the Minister that this amendment doesn’t change this aspect of the law that isn’t working. My amendment does.

CHAIRPERSON (Greg O’Connor): We’ll treat that as an interlude, shall we?

Thank you, Mr Chair. I have two very specific questions for the Minister for Building and Construction, but I have to say that I thoroughly enjoyed that. It’s nice to see the Hon David Parker being so passionate and lively about something that the Minister is also in agreement with.

I have a question around, first of all, clause 6, which amends section 19. I understand that under the new section 25B, in clause 8, and particularly we’re looking at (3), at the chief executive being able to amend or revoke some of those building product specifications. But when we’re looking at clause 6 with section 19 amended, when it comes to overseas product certification schemes, there isn’t such a mechanism for there to be revoked or to be amended—understanding that we are basing on what the overseas scheme is.

However, what I don’t know and am seeking the Minister’s clarification on, is how would the chief executive then review these overseas schemes and how frequently will they be able to review something like this? Because looking in the principal Act of section 19, it also actually doesn’t specify any review mechanism when it comes to that level of consistence and compliance. So that’s my first question.

My second question is with regard to clause 8, so the new section 25B. I want to focus on—the Minister mentioned before the use of the word “must” and how “must” is used in legislation, and that segues very well into my question around, in (2)—the use of the word “may”. I understand once a decision is made the reporting and public notification and availability mechanism under new section 25C, but I wanted to check with the Minister that he doesn’t clarify in new section 25B when the chief executive determines this. What consultation process will it go to under the specifications of (2)(a) to (h)? This could be from a perspective of complete ignorance, not understanding how building product specification normally works, and I always defer these kinds of expertise to my colleague Cameron Luxton, who is an actual builder.

But I want to know, leading on in terms of some of the consultation, what sort of confidence they have to the industry, but also to people who are interested in this and the level of transparency of it that things aren’t going to be changed or that they have confidence in knowing that these will always be consulted. Because “may” means that some will be consulted, some may not. It might be very much up to the material itself, but just wanting a little bit of clarification around that.

Mr Chair, thank you for the opportunity to respond. To the second point, a fair question is raised around the difference between “may” and “must”, such that “An acceptable solution or a verification method may refer to building product specifications.” That is to say, we’re not precluding other acceptable solutions or verification methods. But in terms of the point that I was making in response to the Hon David Parker, certainly a building consent authority doesn’t have the discretion not to allow the use of a product if it’s been approved under this regime. I hope that’s clearer, but if not, I’m happy to re-engage.

In terms of the way that the process of advice and then decision making is set out—actually, already provided for—the chief executive, meaning the chief executive of the Ministry of Business, Innovation and Employment (MBIE), may amend or revoke the building product specifications at any time, and I see there needs to be reasonable opportunities for consultation and comment on those. So in general terms, technical expertise, consultation requirements—and, of course, this is part of a broader picture of engagement that MBIE is constantly undertaking with the sector and, for what it’s worth, I have also been engaging on these past 15 or 16 months.

In terms of the first point that he made around the ongoing review, if I’ve understood his question correctly it was about the time frames at which this might occur; there is no set time frame. It could be as often or as infrequent a period of time as needed to ensure that we’ve got a suitable regime, both in terms of the introduction of standards and systems but also the removal from time to time, if that should be warranted.

I move, That debate on this question now close.

These new points will have to be new and specific.

Thank you, Mr Chair. I really appreciate that, and I was heartened to hear from the Minister for Building and Construction earlier about the concern for the building sector and the culture of the building sector, which relates to new section 25C, in clause 8, which is the public notification and availability of information. If we think about the way in which the building sector is going to adopt the new materials, I would like to hear more from the Minister about—as the Minister referred to—the building sector itself and the culture of the building sector.

I wonder whether the Minister has engaged with BRANZ—the Building Research Association of New Zealand—on this, in particular, because one thing that is particular to the building sector is that once you have finished your apprenticeship, there is no requirement for any new training. I was made particularly aware of this when I was doing the rebuild—

Hon Member: There is.

SCOTT WILLIS: There’s no requirement. There’s the possibility, but there is no requirement, and I was made particularly aware of this when I was fixing up our old villa. I had to reline and had to fix and replace the wooden weatherboards. I was determined to put Mammoth insulation in, rather than fibreglass insulation, which, of course, we know degrades over time because it’s lofted with an acrylic glue, and that top 20 or 30 centimetres can drop in walls. So I really wanted an insulation that was going to endure over time, and the interesting thing was that the builder I had contracted had never come across it before. The only experience of it he had had was through working on my property, and he has subsequently adopted that material.

But if we don’t have a way to change the culture of the building sector to bring in innovation in the sector, it’s not going to help that we have all kinds of new materials on offer, unless we have ways in which they can be brought in, understood, and appreciated, and we have a requirement to adopt innovation or to reskill. This is something that we’ve seen in overseas jurisdictions. We’ve seen with the retrofit of buildings, particularly in Germany and throughout Europe after the Ukraine crisis. We’ve seen how the building sector really stepped up to build, essentially, passive homes—rapid, rapid innovation. Here, we’ve got something that we really do need, and I’d be very keen to hear from the Minister about his thoughts about ensuring that the building sector is equipped to adopt the new materials and to innovate, and to make it a requirement for them to do so.

That’s on the edge of scope, but the Minister may like to answer that.

Thank you, Mr Chair. It’s generous of you to allow me the chance. I would point out that occupational licensing and regulation is a very worthy subject of discussion for reform of the building system more generally, but there’s nothing particularly within this bill that contemplates it.

If I can just add before I resume my seat, even though I know I indicated I was about to, the point the member makes, along with the dissertation of the Hon David Parker, I think are very useful discussions that are much broader than the scope of this bill. I do note that after his first contribution, the Hon David Parker said he needed more time. I think after his second he needed a defibrillation—I wish him well on his recovery.

All right, Arena Williams, but I will indicate that this will be the last question.

Well, Mr Chair, I must use my last contribution, then, to encourage the Minister for Building and Construction to adopt the amendment of my colleague the Hon David Parker. It is a sensible amendment that would bring a measure of control to a system that is designed to speed up these processes for the people within the system, and also would be an amendment that would ultimately lead to lower costs at the council level, too. We think it’s something that would be helpful for all participants in the system.

But my question to the Minister is: is the net effect of clause 6(2) that large players that exist in the market already become the large importers of products, and has he had advice on that? PlaceMakers and Carters are vertically integrated companies that involve manufacturing, residential development, and construction. So what will the Government do to ensure that independent suppliers and merchants have the opportunity to import and compete with them?

This was a question that was raised by the Hon Kieran McAnulty, and we haven’t had an answer for it in this section. I want to give the Minister a chance to think about not only those players, but the five major merchants: PlaceMakers, Carters, ITM, Bunnings, and Mitre 10 that dominate the distribution of those then imported products and supplies, and whether the Government will progress work to address competition concerns related to their market power.

Thank you. I said to the Hon Kieran McAnulty that I couldn’t provide the assurance that he was after. The performance of those five major current players in terms of the retail outlets and any others in the system is not something I can personally guarantee or speak to.

I will say, however, that a more competitive system is one in which there is a broader and deeper range of products available. Of course, in terms of vertical integration and other ways in which the economies of scale and corporate design might make a company tend towards market dominance, it’s worth reflecting on the fact that economies of scale also do tend to produce products that are at least theoretically able to be offered at a lower price. So it’s a balance and we think the principled but also pragmatic approach is the one set out in this bill.

Thank you, Mr Chair. I just wanted to stand up and ask the Minister for Building and Construction to elaborate on the answer that he just gave prior to the member Scott Willis about the way the industry is trained and skilled up. The Minister did mention licensing and schemes, but I wonder, in regards to new section 25B, inserted by clause 8, do you think that as licensed building practitioners (LBPs) go about their training and reskilling, a points system which is currently in place, that LBPs, depending on what class they are, need either 12 or 18 points—do you think that schooling up on some of these new products and methods that are going to be coming into the country could be used as a way to add to those skill points for that two-yearly renewal of licensed building practitioners?

Mr Chair, thank you for the opportunity to respond to that point. I was remiss, perhaps, in previously not mentioning that to maintain the status of a licensed building practitioner, or LBP, that person must complete skills maintenance relative to their licence class every two years. I will say, however, that the member himself, Cameron Luxton, being a licensed building practitioner—I think the only one in the committee—will have an in-depth knowledge that I’d be grateful if he would continue to share with me, and I thank him for his contribution.

The question is that the Hon David Parker’s amendment to insert subsection (5) in new section 25B in clause 8 be agreed to.