Smith Murray: Building Bill — In Committee Procedure 
Smith Murray: Building Bill — In Committee Procedure 
[Volume:619;Page:14833] 
MURRAY SMITH (United Future) 
: 
 Part 2 outlines the roles and responsibilities of the chief executive and the local authorities. It puts us again in the situation of addressing the whole idea of private building certifiers. In terms of the bill as it stands we will see a situation whereby four categories of people will certify buildings. We will have the territorial authorities if they take the responsibility; we will have other territorial authorities that adopt or are passed the responsibility for their neighbouring authorities; and we will have council-controlled organisations—in my discussions with the Tauranga City Council the council made it clear that effectively that is the way it will go. 
That council is a very good case study because at the moment in Tauranga as some members will know all certification work is done by private building certifiers. I went to Tauranga to talk to the council in terms of where that work was going to go and what was happening in the whole area of private building certification. They made it clear that they were very well aware that come January 2005 there would be no private building certifiers. The council is already starting to gear up to the idea of having a council-controlled organisation—separate from the Tauranga City Council but that will involve other councils—as a separate company that will do all the certification work for the Bay of Plenty area. That is how that council will address the issue. They reckon they can gear up with about a month’s notice which belies what National members said earlier today when they suggested that that situation would be quite chaotic. 
So we will have territorial authorities and neighbouring authorities doing the work for those authorities we will have council-controlled organisations and then there will be this thing called a “private building certifier” which effectively will not exist. Under the terms of this bill private building certifiers will be required to show they have sufficient financial backing in order to meet all civil liabilities. The only way they can do that will be either to inject into their companies millions of dollars of assets that are available as liquid assets to any claim which is simply unrealistic or to take out professional indemnity cover. But they cannot get professional indemnity cover. 
The Government has assured me that it will stand firm on the requirement for financial backing so therefore come January when all the building certifiers’ licences come up for renewal none of them will get renewed. The Tauranga City Council is expecting that but other councils will be taken unawares and will find all of a sudden that there are a whole lot of building consents for which they have no building certifiers to action. That situation will suddenly be dumped on them. I have said continually—my second reading speech outlined this in depth—that the more responsible attitude would be to recognise the fact that there will be no building certifiers in January and to provide in this legislation a phase-out period that would phase out private building certifiers within a certain time because they cannot provide public back-up— 
Dr Wayne Mapp 
: Is that good or bad? 
MURRAY SMITH 
: Well if the certifiers could get back-up cover to provide consumer protection for the work they did I would be very happy with them. The thing is that they cannot. Our trip to Australia made it abundantly clear that while we have joint and several liability in New Zealand we will not be able to get professional indemnity insurance. The only reason the Australians have any cover is that they do not have joint and several liability. Even then the coverage is restricted. They can get it for only 6 years. They cannot get any run-off cover and limitations are placed on building firms by their insurance companies that state for example that the firms are not allowed to do more than $1 million worth of work in a year. So the insurance companies are constricting the amount of work those consent authorities can do in 1 year and therefore are inhibiting their productivity and financial viability. We will get that situation. 
I have put forward a Supplementary Order Paper that would effectively provide for a 3-year period of transition to phase out private building certifiers. Effectively I have provided that the only private building certifiers that can get certified under this bill are those that are council-controlled organisations. I have no problem with council-controlled organisations. They will still have to meet the requirements but because councils can get sufficient cover through their rating base and through the provision of guarantees—[ 
Interruption 
] Well I have no problems with the rating base being used because a regulatory authority is providing an assurance to the consumers of our society—homeowners—that those homes will be to a good standard for the benefit of future purchasers.