Building Amendment Bill — In Committee 
Building Amendment Bill — In Committee 
[Volume:645;Page:14676] 
Building Amendment Bill 
In Committee 
Debate resumed from 20 November 2007. 
Part 2 Validation and transitional provisions ( 
continued 
)  
JOHN CARTER (National—Northland) 
: 
 Madam Chair I take this opportunity to congratulate you on your election to your high office and I hope you continue to beaver away in that position. I am sure you will do well in giving us the leadership we require. 
Jill Pettis 
: Whether or not she remembers your name. 
JOHN CARTER 
: In regard to this legislation— 
Hon Trevor Mallard 
: He doesn’t remember his own name some of the time—eh Hone? 
JOHN CARTER 
: That is all right; I know when to punch and when not to. 
Hon Trevor Mallard 
: Did Nick Smith hurt you when he hit you? 
JOHN CARTER 
: I beg your pardon? 
Hon Trevor Mallard 
: Did Nick Smith hurt you when he hit you? 
JOHN CARTER 
: I raise a point of order Madam Chairperson. I heard the member make that statement in the Chamber earlier and I take strong exception to it. Never has the member Nick Smith struck me or made any action towards me at all that I would take offence at; nor has he made any gesture to me in anger at all. I take strong offence at that member misleading the Committee. Nick Smith is an honourable member and indeed should be treated as such. I ask the member to withdraw that statement because it is absolutely incorrect. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Would the member consider withdrawing the statement. 
Hon Trevor Mallard 
: He can’t do that on behalf of another member. 
The CHAIRPERSON (Hon Marian Hobbs) 
: No the member took exception to that statement being made. I ask the member to withdraw it. 
Hon Trevor Mallard 
: You are asking me to withdraw it? 
The CHAIRPERSON (Hon Marian Hobbs) 
: Yes. 
Hon Trevor Mallard 
: I withdraw. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Thank you. 
JOHN CARTER 
: The unfortunate thing with this bill and with the Minister who is in the chair the Hon Shane Jones is that we are on Part 2 where clause 92(1) states: “For the purpose of determining the calculation of any relevant levy on building work the principal Act must be read” and it goes on and on. Subclause (2) states: “In this section relevant levy means a levy—” etc. If that Minister were on this side of the Chamber he would be berating us because this bill is just more words more bureaucracy and more costs and more bureaucrats will be needed to deliver it. In his heart of hearts the Minister in the chair knows that this bill will put more costs on to local government more costs on to the building industry and more costs on to homeowners themselves. This bill will do nothing to reduce compliance it will do nothing to reduce regulation and it will do nothing to reduce costs. Indeed it will do the very reverse of all those things. 
The Minister knows that the department he administers the Department of Building and Housing is out of control. This is the department that in 1999 had 31½ equivalent people employed in it. Today it has in excess of 385. Since that member has become the Minister it has grown by about 20 staff and it grows daily. The Minister knows that all that the department is doing is to create rules and regulations to the extent that they are having a seriously important effect. The Minister is having a meeting—I am not sure whether it is this Friday or next Friday—and he will hear all the stuff he has heard before. The Minister my colleague from Northland knows that people are going to be exiting the building industry because of these rules and regulations. Good competent builders have got to the stage where the rules and regulations are beyond their ability to meet them. There are local government bodies across the country that cannot meet the demands—the rules and regulations—of the Department of Building and Housing. This Minister knows that and so does his Government. This Government has imposed so many rules and regulations like this on to the building industry on to the country and on to homeowners that local government bodies are not able to keep up. They are bogged down in compliance. They are bogged down in red tape. 
This Minister has come from a background where things are straightforward and simple. When we hear this Minister speak he says it straight he says it as it is yet this legislation in his name is so crooked that we cannot even follow it. It is all upside down and back to front with silly words in it and it is doing nothing to help the problem. This Minister knows that we have a leaky homes problem in this country. This Minister knows that his Government was meant to address the leaky homes problem. This Minister knows that although the Department of Building and Housing was meant to address the leaky homes syndrome we are building more leaky homes. 
I turn to clause 92 and clauses 93 to 95 the transitional clauses. I want the Minister to tell me one thing that is going to stop the building of a leaky home in this country. There can be over 600 components in any home and the Minister’s department was meant to certify materials. The Minister and his “perma-colleagues” have been in charge of this department since 1999—nearly 10 years now. There can be 600 materials in a home. Does anybody want to guess how many materials the department has certified? Does the Minister know how many materials his department has certified? Who wants to have a guess? Of the 600 how many has it certified? Who wants to have a guess? 
Hon Member 
: Three? 
JOHN CARTER 
: It is four. The department has certified four. 
Hon Member 
: Three! 
JOHN CARTER 
: Well it has gone up one. Four materials is an absolute disgrace. 
I had someone come to my office the other day and say: “Here are three copper pipes.” [ 
Interruption 
] I am talking about transitional copper pipes Mr Chair! The point is that this gentleman came to me and said: “Tell me which of these pipes can be used in New Zealand homes.” We could use the whole three. He said “You tell me which one will fail.” I said: “I don’t know.” He said: “I’ll give you $50000 if you can guess.” so I tried but I could not tell him. He said “This pipe is from Australia and it’s certified for a life of 50 years minimum. This pipe is from England and it’s certified for a life of 60 years. This pipe is from Asia. It’s got no certification at all. We’ve tested it and it’s likely to last 7 years.” Those copper pipes are being put in homes in New Zealand right now. If this Minister thinks that he and his Government have presided over the end of leaky homes they should just wait for the future. We are going to reach the stage in another 10 years where someone will have bought a “spec” home the husband will flush the toilet and the wife will get a shower in the kitchen. The copper pipes are going to burst. It is this sort of thing that I would have expected this Minister to start addressing. Unfortunately and sadly it is not addressed in this bill at all. All we talk about is things like transitional provisions for the content of project information memorandum. 
I ask members what that is going to do to help us solve the leaky homes problem. What is that going to do to stop the rules and regulations that are pouring cost after cost ratepayer dollar after ratepayer dollar and taxpayer dollar after taxpayer dollar into the leaky homes problem that we have in this country? This Government put a bill before the House not so long ago entitled Affordable Housing: Enabling Territorial Authorities Bill. Well that is an absolute joke; not one local authority has given its support. 
The point is that the Government is trying to suggest that it is doing something about the whole issue of compliance regulation and the building industry and then this Minister comes along with this bill. It is probably the first bill in his name; I am not sure but I suspect it is. It is going to go through because the Government will support it. [ 
Interruption 
] Oh no it is actually in the name of Clayton Cosgrove. I wonder whether that will change. I do not know. 
Colin King 
: A hospital pass. 
JOHN CARTER 
: That is right. It is just as well he plays rugby. He knows how to take those. 
Chris Tremain 
: I never gave him a hospital pass. 
JOHN CARTER 
: No but he gave us plenty and he is sure giving the country a hospital pass on this one. The sad thing is that this bill is going to go through under his guidance. It will be the first bill that he puts through this House. All that people will remember and say is that he was the Minister who employed more bureaucrats in the Department of Building and Housing added more costs more regulation and more compliance and did nothing to address the building problem that we have. This Minister knows in his heart of hearts that this bill is not going to do anything to address the serious problem that we have in this country in regard to the whole issue of the failure in the building industry. 
I want to talk about the transitional provisions in this bill. The other day I had to apply for certification. I had to get a building certified. 
Chris Tremain 
: A building consent. 
JOHN CARTER 
: No not a building consent. I had to get my home signed off. 
Sandra Goudie 
: A compliance certificate. 
JOHN CARTER 
: It was a compliance certificate; that is the phrase I was looking for. I had to get a compliance certificate for the extension of my deck. The building inspector came along and said it all looked great. The rails were right the floor was right everything was tidy and the foundations were where the retaining wall is. The Minister knows the house I am talking about. But it did not get a compliance certificate. Do members know why this outside deck did not get a compliance certificate? [ 
Interruption 
] No no; because it did not have a fire alarm. 
Hon SHANE JONES (Minister for Building and Construction) 
: 
 It is necessary for me to follow my colleague from Northland. Unlike the previous speaker the content of my speech will be inversely related to the length of the delivery. It will be very short and it will remind our friends on the Opposition benches that Part 2 is a very modest part. It contains a slender number of clauses. I would encourage you Mr Chairman to dedicate your not inconsiderable powers of attention in the direction of those members to ensure that they stick to the script. It is important that their commentary is related to levies project information memoranda and also certificates of compliance. 
Part 2 is a simple set of transitional provisions. It is not necessary to have the wild florid flights of fancy that we are hearing from Mr Carter aided by two formerly friendly members of the rugby team. I would encourage those members and I would encourage you Mr Chairman—not that I would ever say or do anything for fear of offending the longstanding Tarara relationship between us—to dedicate in those members’ direction a bit of supervision in order to ensure that they stick to the technical nature of the provisions. Opposition members should not try to relitigate the purpose of the reforms. That is a fair debating point but not at this very wearisome hour in the evening when there is no real reason as to why this legislation should not shoot forward like water going out of the well-constructed pipe referred to by the man from Ninety Mile Beach. Thank you very much. 
SANDRA GOUDIE (National—Coromandel) 
: 
 I am delighted to be able to speak to Part 2 of the Building Amendment Bill. I was very disappointed to not hear anything from the Minister in the chair the Hon Shane Jones on Part 2 other than the fact that he was exhorting everybody else to stick to Part 2 in his speech but then he did not provide any content as to what is in Part 2. But here I am talking all about Part 2 and the omission on the part of the Minister to say anything about it. 
If members look at Part 2 they will see that it is about validation and transitional provisions including clause 92 “Validation in respect of levies on estimated value of building work”. We can relate Part 2 to the commentary at the beginning of the bill which I will now do because these two are interactive. Hopefully the Minister might like to take a bit of instruction from this. He could have taken some time to elucidate on what his understanding of Part 2 is. One would have to question whether he understood anything about Part 2 when he did not share any of that information with us but just exhorted us to talk about Part 2. I wonder whether I could say that for another 4 minutes in different ways. But I shall now connect Part 2 to the commentary. The commentary states: “The bill makes minor adjustments to the Building Act 2004 to improve its clarity”. We would have to ask ourselves whether anything would improve the clarity of the Building Act—certainly anything that is being introduced by the current Government. If members look at clause 92 in Part 2 “Validation and transitional provisions” we see that “relevant levy means a levy …” which I find really interesting. 
Colin King 
: A heavy levy. 
SANDRA GOUDIE 
: Well it is rather a heavy levy with the way in which it is written—a relevant levy means a levy and it is imposed under section 53 of the principal Act. I am at a bit of a loss to understand how that definition improves the clarity of the Act. So the Minister might like to take a call to share that with members and to give them a bit more of an outline of his understanding of it. I would have to agree with my most excellent colleague John Carter about the cost impositions and the further onus placed on ratepayers as a consequence of the impact on councils. 
Hon Shane Jones 
: Part 2? 
SANDRA GOUDIE 
: If I could instruct the Minister to look at Part 2 “Validation and transitional provisions” he would see the definition of levy in clause 92 and provisions about territorial authorities. In clause 93 there is a cost imposition on a territorial authority as a consequence of the provisions of this bill and the Act itself. If the Minister cares to look at clause 93 then he would see that transitional provision for the content of project information memoranda. I have to say that the Minister did make some reference to project information memoranda so there was a very brief referral to the content of Part 2 from the Minister. He might like to recall that. 
In looking at what territorial authorities are required to do under the Act and also under this bill we can see that there is a very definite onus of added regulation and added cost. It is all transferred to the applicant and the ratepayers. I would say that there is also a component shared by the ratepayers but the burden of responsibility on local authorities to meet the provisions of both this bill and the Act is quite considerable. Local authorities face an incredible amount of stress and cost and I just wonder what this Government is thinking when it puts this stuff together. Does it even consider the process of implementation of any of this legislation? I do not think it does. I do not think it actually goes through the practical steps and it should. It should understand what these parts mean. Members should look at the transitional provision for refusal of application for a code of compliance certificate. This current Government really has no idea of the practical application of anything in my view. It does not do any proper fiscal analysis of some of its projects. It does not look at what its regulations will actually mean or at the cost the red tape will put on to the territorial authorities. Of course as members know if information is on a project information memorandum then it is deemed to be accurate information. It will be very interesting to see how that pans out in the future. 
Hon Shane Jones 
: What about the mangroves? 
SANDRA GOUDIE 
: I note that the Minister is making some call on mangroves. 
RUSSELL FAIRBROTHER (Labour) 
: 
 Having listened to the speeches on the Building Amendment Bill since we started tonight I was delighted when the Minister Shane Jones rose to his feet and exhorted those of us in the Chamber to pause from our florid rhetoric and take a moment to dwell albeit briefly on Part 2 of this major construction the bill. The Minister demonstrated such a sound grasp of the issues involved in Part 2 and I noted that as he dealt with Part 2 he left clause 92 for me to deal with because of the finely tuned legal terms and astute wording of that clause. 
As I move to clause 92 I note that all of the speakers on the other side of the Chamber have studiously avoided it. I wonder why? Perhaps it could be that the clause seems to be circular. I think clause 92 might mean something like this: it “provides for the validation at all times of the current practice of calculating the relevant levy as defined in clause 92 on building work as if the definition of estimated value were as amended by clause 6.” 
Chris Tremain 
: Of course! 
RUSSELL FAIRBROTHER 
: You see Mr Tremain understands that because that is where one makes one’s money. The levy had previously been required to be calculated on the basis of an estimated aggregate of values other than—as is the current practice and the intended definition of “estimated values” as stated in clause 6—the estimated aggregate of the consideration. Where value is determined in accordance with section 10 of the Goods and Services Tax Act 1985 “consideration” has the meaning given to that term in section 21 of that Act. Do members understand that? This is quite an important change. We are moving from “values” to “consideration”. 
Just so we can follow this train of thought I will take the Committee to clause 6 of the bill—which of course is in Part 1 but we have to go there because Part 2 requires us to in subclause 92(2) which defines “values” as in clause 6. Clause 6 states: “the definition of estimated value in section 7 is amended by omitting “values” and substituting “consideration”.” What does that really mean? To put it briefly it means one pays GST. It means that when one calculates the amount of the levy one calculates it including GST. This is a novel thought to the people on the other side of the Chamber. They who claim to have invented GST and to have administered our financial system and our collection of monies had a Governor of the Reserve Bank temporarily parading around the bedrooms of New Zealand and the leadership of the party. They who do not understand the GST will not understand clause 92. Quite simply the clause directs the members opposite to appreciate that when one calculates the costs they are GST inclusive. 
This is not a new idea. This is not a new idea at all. But there has been some uncertainty in this House and there have been those who have tried to avoid their moral obligation to the public good and to lessen the taxation burden by trying to interpret the word “values” as excluding GST. Since 1991 it has been intended to be GST inclusive. The purpose of clause 92 in Part 2 is to make it crystal clear to all of us even those who have trouble reading the bill and legislation that the costs include GST. That is why there is the important movement away from “values” to “consideration”. Why is that? Value of course can be argued successfully as being what someone actually paid for something. So if one swapped something one could say that was the value of it. But of course consideration is the actual fee that was paid and if one pays an actual fee an actual quantum in that nature GST is inherently part of it. 
The change from values to consideration may at first blush confuse many people. I trust this speech tonight has eased that confusion somewhat because the whole point of clause 92 is to make it crystal clear. I do not want to bore members with repetition. I am sure that my earlier explanation of this as provided in the commentary to the bill is crystal clear—that value no longer means value but means consideration. 
Hon Shane Jones 
: Totally lucid. 
RUSSELL FAIRBROTHER 
: I thank the Minister very much. So the purpose of clause 92 I think we can briefly say is to include GST. 
KATRINA SHANKS (National) 
: 
 It is my pleasure to talk to the Building Amendment Bill tonight. Firstly I thank the officials who are sitting here tonight at 10 to 10. They have been very dedicated officials to the Social Services Committee. They have done an absolutely great job once again of informing the committee of the views on and concerns about this bill. They articulated them in such a way that we could sit there and understand very easily the issues of the submitters and how they impact on the bill for us. So I thank the officials and I thank them for coming in tonight because we do appreciate the effort that officials put into our select committees in the making of law. 
While I am standing here I would like to congratulate Shane Jones on being the Minister for Building and Construction. We all know that when one becomes the Minister for Building and Construction it is the gateway to Cabinet. Since 1999 10 Ministers have gone through the gateway into Cabinet by being the Minister for Building and Construction. In fact Mr Jones has some pretty impressive shoes to fill including those of George Hawkins Rick Barker Lianne Dalziel John Tamihere Margaret Wilson Chris Carter Clayton Cosgrove and Mark Burton. Now Shane Jones is the Minister so I welcome him. Let us hope Mr Jones can make more of an impact on the building industry than his predecessors have made because this portfolio is obviously the gateway to greater things and greater portfolios. I congratulate Mr Jones because he has made the first step into Cabinet and he may be in transition. 
We are speaking to Part 2 of the bill tonight but the thing about this bill is that it has come about through the Building Act 2004. That came in then the Building Amendment Bill came in to make the 2004 Act more workable—so people could understand it. That is actually a shame because we would like to think that legislation is not out of date within 2 years of its enactment. Part 2 of this bill talks about “Validation in respect of levies on estimated value of building work” “Transitional provision for content of project information memorandum” “Transitional provision for refusal of application for code compliance certificate” and “Transitional provision for refusal of application for certificate of acceptance”. Obviously it is a very very narrow part of the bill but it is one that has had to be reworked since 2004. The need for that came out in the Weathertight Homes Resolution Service and this is the fifth bill relating to the building industry since 2002. That is a fair bit of legislation to change for an industry in such a short period of time—it is really 5 years since this is a 2007 bill. Let us hope that we are making the legislation a bit better for the industry because we are here to make good legislation for it and to give it a good framework to work within. 
The leaky homes issue has impacted severely on the building industry and it has caused a lot of litigation in this country—and not good litigation. Many many thousands of homeowners out there are very very unhappy with the homes they have had built. That issue goes back to many things such as the legislation we have put in place how we have tried to protect the homeowner previously the consents and a lot of other things such as materials. The sad thing is that we continue to make homes that are not at par and we will continue to have leaky homes. This legislation is not meant to address that problem and it does not address it. It is an outstanding problem in our community. I could talk about copper pipes and the new ones coming in that are guaranteed only to go for 7 years before they burst as opposed to ones certified to last for 50 years. But that is not what this bill is about; it does not address that issue. That is addressed in the weathertight homes resolution services legislation which has been revised three times. 
It was interesting for me to sit on the select committee because we had many submitters come in to talk to us about this bill. 
Hon Dr NICK SMITH (National—Nelson) 
: 
 I am dumbfounded. The Prime Minister came into the Parliament at the beginning of the year and said that this Government was going to deal with the problem that it had created of huge compliance costs in the building industry. Now we have the Minister introducing to the House and advancing before the Committee the Building Amendment Bill which does exactly the opposite of that. 
I want to firstly deal with clause 92 which the Minister referred to. 
Progress reported. 
Report adopted.