By the Minister for Building and Construction, Jenny Salesa
I’m proud of our building and construction industry, and the hard-working individuals that fill the wide and varied roles that make up the sector. It’s our fifth-largest industry by GDP and fourth-largest employer, accounting for nearly 10% of the workforce.
As a Government, we’re also dependent on a high performing construction industry to deliver the quality homes, schools and hospitals that we know are a central requirement for the wellbeing of all New Zealanders.
The sector is growing at a faster rate than much of our economy. However, it also faces a number of long-standing problems that are holding it back. These range from low productivity and inefficient practices and processes, to skills and labour shortages, and poor health and safety.
I want to make sure our construction sector is something that we can continue to be proud of – a sector that is healthy and sustainable, and meets the needs of New Zealanders. We want to make sure quality is lifted, so things go right the first time, and, there are fairer outcomes if things do go wrong.
This is the basis of the proposals in the Building System Legislative Reform Programme.
What’s being proposed in the Reform Programme?
Over the past year, MBIE officials spoke with people across the sector about problems with how the regulatory system functions. The conversations revealed three common themes:
- Roles and responsibilities are not clear.
- Information isn’t available when it’s needed.
- It’s difficult to hold people to account for the quality of their work.
As a result, a package of proposed reforms was developed, making up the most significant reforms since the Building Act was introduced in 2004. The aim is to create a high-performing sector that delivers safe and durable buildings, builds it right the first time, and has an efficient regulatory system that people have confidence in.
The changes proposed are wide ranging and affect most parts of the building system. Here’s a brief summary of the five key areas where changes are proposed:
Building products and methods
With around 600,000 building products available on the New Zealand market, it’s important that regulations help people choose products that meet the performance requirements of the Building Code. The current regulatory settings for building products have gaps and disincentives that make the system less efficient and slow down the building consent process.
The system also isn’t optimised for modern methods of construction, such as off-site manufacture, which are playing an increasingly important role in the sector.
The proposed changes include:
- requiring building manufacturers and suppliers (including importers) to provide a minimum level of publicly accessible information about their products, so that better decisions can be made about what products will comply with the Building Code
- placing an explicit responsibility on manufacturers and suppliers to ensure a building product is fit for its intended purpose, so they can be held accountable if it fails due to the way it was designed or manufactured
- making consenting easier for modern methods of construction such as off-site manufacture.
Occupational regulation
Occupational regulation aims to protect the public from harm by ensuring services are performed with reasonable care and skill. However, currently the occupational regulatory system doesn’t capture all of the risks in the building process. It’s not always clear that the people authorised to carry out restricted work are competent, and there are challenges to holding people to account for substandard work or poor conduct.
The three occupations where we see the most pressing need for change are licensed building practitioners, engineers, and plumbers, gasfitters and drainlayers.
The proposed changes include:
- changing the licensed building practitioners scheme to raise competence standards and broaden the definition of restricted building work.
- introducing a new licensing scheme for engineers and restricting who can carry out safety-critical engineering work
- removing exemptions that allow unlicensed people to carry out plumbing, gasfitting and drainlaying work.
Risk and liability
We know that building work doesn’t always go right, and that fairer outcomes are needed when things go wrong.
The proposed changes include:
- requiring a guarantee or insurance product for residential new builds and significant alterations, allowing homeowners to actively opt out of it.
- leaving the liability settings for building consent authorities unchanged.
Proposing not to change the liability settings for BCAs was based on a finely balanced assessment. A cap on liability would only support BCAs, it wouldn’t support others in the system. However, this assessment relies on other proposals in the package being successful to make sure risks in the building process are well managed.
Building levy
The building levy is payable by building owners or developers on successful building consent applications for projects that are worth more than a specified amount. The revenue from the levy is used to fund a range of Ministry of Business, Innovation and Employment (MBIE) functions and activities under the Building Act.
The current levy is higher than it needs to be, so it’s proposed to:
- reduce it from $2.01 to $1.50, to bring it in line with Treasury’s best practice guidelines
- standardise the threshold to which the levy applies, to $20,444 including GST
- allow MBIE to spend the funds raised by the building levy on broader stewardship of the building sector.
Offences, penalties and public notification
It’s important that enforcement agencies have enough time to investigate possible offences, the consequences are fair in proportion to the offence, and the penalties are different for individuals and organisations.
Proposals include:
- increasing the maximum financial penalties.
- setting different maximum penalties for individuals and organisations.
- extending the time enforcement agencies can lay a charge from six months to 12 months.
- modifying the definition of ‘publicly notify’ in section 7 of the Building Act to reflect the changes in the way people access information.
Next steps
The consultation process for the Reform Programme closed on 16 June.
There’s still a lot of work that needs to be done. MBIE officials will be analysing the submissions received and using that information to refine the proposals to ensure the best outcomes for all New Zealanders. I will then decide what changes to recommend to Cabinet.
At some point, a summary of the submissions will be available on the MBIE website.
To keep up to date with what’s happening in the Reform Programme, you can join the mailing list on the Building.govt website.