Building Bill — Second Reading 
Building Bill — Second Reading 
[Volume:619;Page:14532] 
Building Bill 
Second Reading 
Hon PAREKURA HOROMIA (Minister of Maori Affairs) 
 on behalf of the 
 Associate Minister of Commerce (Hon John Tamihere) 
: I move  
That the Building Bill be now read a second time 
. I acknowledge the thorough consideration given by the Government Administration Committee to the bill in light of the complex nature of the issues involved. I also thank those who took the time to make submissions to the committee. The bill is a culmination of an extensive review and a thorough consultation process and represents a complementary and an integrated package for the regulation of building work in New Zealand. While weathertightness issues acted as a catalyst for that work the Hunn report showed a much wider examination of building controls was needed in order to make sure that we had a regulatory framework that met the needs of both industry and consumers. The bill addresses issues raised in the select committee inquiry and establishes a balanced regulatory framework for the building industry which consumers and the industry have been seeking. I am greatly indebted to the former Minister Lianne Dalziel who introduced the bill to the House and to the Hon. Margaret Wilson. Lianne Dalziel previously outlined the initiatives contained in the bill. I highlight the fact that the bill does strengthen the regulatory framework and has a strong focus on consumer protection. 
The select committee has reported back the bill. It supports the key principles behind it and recommends a number of amendments to reflect better the underlying policy intent and ensure the workability of the proposals. The main changes from the committee include the following: promoting the efficient and sustainable use of materials in buildings establishing an advisory panel to the chief executive clarifying the chief executive’s role in the accreditation of building consent authorities new consultation processes on mandatory requirements mechanisms to enhance coordination with other legislation—including the Historic Places Act and the Resource Management Act—in the granting of building consents revised provisions for the licensing of building practitioners revised provisions to enhance the workability of the dam safety regime and revised provisions to clarify the status of code compliance certificates. Code compliance certificates will now be assessed against the relevant building consent rather than against the building code. That is aimed at preventing people from being caught out by changes to the building code since the relevant consent was issued. 
The select committee has also recommended including new provisions set out on Supplementary Order Paper 178 to increase protection for consumers when buying household units from developers. They include a requirement for property developers to obtain a code compliance certificate before completing the sale of a household unit or allowing the purchaser of a household unit to enter into possession of that unit and extending the scope of the consumer protection provisions currently in the bill to cover sales of household units by property developers. 
I note with interest that the National Party has indicated that it will not be supporting the bill. That is particularly disappointing when we have such immediate evidence of the distress that occurs when people’s homes are not built properly. I commend this bill as reported back from the Government Administration Committee to the House. 
LINDSAY TISCH (National—Piako) 
: 
 The Building Bill will introduce a very prescriptive regulatory regime. When we look at the size of this bill we can see that it is an overkill as a consequence of the issue of weathertightness in leaky buildings. The bill contains 358 pages. We could have had a tidying-up of the Building Act with a bit of twinking here and some changes there because there were some points in that legislation that needed to be corrected but this bill is an overkill. It will add significant costs to all construction work and further compliance costs for residential buildings in particular. Those areas will be hit the most. It will potentially affect economic growth due to significant increases in building application costs for applicants and in compliance costs for both applicants and local authorities in respect of accreditation. We will see widespread bypassing of the new do-it-yourself regime which goes against the Kiwi ethic and spirit of being able to get out there and do something for oneself. 
The construction industry in New Zealand is an $8 billion industry. In terms of economic activity the industry is huge throughout the whole country. In addition to housing it encompasses apartment buildings high-rise office blocks shopping malls hospitals factories wharves bridges warehouses mills and agricultural buildings. It is an enormously complex industry spanning the entire economy and society as a whole. The impacts of this bill will be adverse on many of those sectors. In fact the economic impact of this bill will lead to significant increases in labour costs. There is already a short supply of skilled trades people—especially bricklayers—and because there has been a short supply of those people they have been able to name their price. We have seen huge price increases in that particular trade. If we look at the comparative building costs between here and Australia we see that the cost of building an executive home in Auckland is $2300 per square metre but in Adelaide the cost is $1170 per square metre. There are huge differences in the costs of construction between Australia and Auckland. To construct a module home of 120 square metres on a flat section that would normally take say 4 months to build—that is the minimum construction time—under this legislation will require supervision of 5 hours per week with a total of 85 hours of construction time. The estimated cost of that supervision just to meet the new requirements of this bill will be between $6500 and $10 000. 
Will this legislation improve and enhance customer safety and satisfaction? Will customers be protected? In my view the answer is no. The bill will lead to delays fuel inflation and most probably to illegal construction work as people look to bypass this very heavy-handed regulatory regime. A very considerable shortage of skilled personnel will impact on the number of licensed building practitioners available from 1 July 2009 when that part of the bill becomes law. That will be noticeable in rural areas and will have an adverse economic and social effect on owner-builders and farming communities. The traditional Kiwi attitude towards building one’s own home farm building or backyard shed is compromised by the very prescriptive nature of this bill. Clause 173 states that licensed building practitioners must carry out or supervise building work. That is a huge change. In the past work has had to be inspected but this bill talks about “carry out” or “supervise” not inspect. It states that a licensed building inspector must carry out or supervise work. What does “supervise” mean? We could try this for a definition: the inspector has seen it with his or her own eyes. This is where the bill becomes so prescriptive that everything that happens will have to require a licensed building practitioner to supervise—not inspect but supervise—construction. 
What will happen to buildings that are prefabricated—that is barns bridges glasshouses or hothouses? They will require building consents and building work will need to be carried out or supervised by a licensed building practitioner. The firms that specialise in prefabricated buildings can expect to see huge costs. My view is that additional costs of 10 to 15 percent could occur in those particular areas and we will probably also see of course that the viability of those businesses may well become suspect. We can look at the other costs that we will see with buildings and with houses in particular—because I mentioned that it would be small houses that would be most affected. A cost-benefit analysis was done and the report suggested that the cost of building a 150 square-metre home would increase by 2.9 percent. It is my view that that figure is well out of line. It is too low and it should probably be in the vicinity of 12 to 15 percent. These are the things that will have to be taken into account if one is to have a new home built. 
Any person assuming liability as a principal licensed building practitioner for the overall supervision of building works will need to have wide knowledge and competencies as well as substantial professional indemnity insurance if he or she is able to get it. The labour component of a typical dwelling is approximately 35 to 40 percent. The labour component will bear the brunt of the increases as it responds more readily to supply and demand. Industry registration will have an impact on the immediate availability of skilled trades people because many will simply not wish to formally upskill in order to meet the requirements to become licensed and will leave the industry. The training industry does not have the resources to meet the expected demand from those who may wish to upskill in order to meet the new registration requirements. Consumers will demand the employment of those who immediately meet the registration requirements placing undue demand and workload pressures on too few trades people unless the licensing registration process is to be stepped. 
We have other major concerns that I want to look at. The first relates to natural hazards as found in clause 159(3). In that particular clause a natural hazard has been defined as erosion falling debris slippage and a number of other matters that I will not go into. That is how a “natural hazard” is referred to in clause 159. In the Building Act subsidence is included but it is excluded in this bill. We believe that subsidence should be included. It is a natural hazard but under this bill local authorities will be unable to refuse to issue consents on the grounds that the land is subject to subsidence and more important will be unable to issue building consents with the protection of non-liability provisions such as those found in clause 344. 
The omission of subsidence from the definition potentially exposes ratepayers and developers to very high-risk damages to property. In my own electorate of Piako we have potential subsidence in housing areas around the Huntly area. In Waihi we have seen houses disappear down old gold shafts. In Taupo where there is geothermal activity there are also major concerns. At the present time councils are able to control construction on subsiding land. Many structures can accommodate subsidence provided they are designed and constructed properly. However under this bill councils will not have those controls available to them as subsidence is not included in the definition of a natural hazard. We believe that that is one of the major issues and is a huge compliance cost and risk that councils will face. 
The bill does nothing to give consumer protection and adds absolutely nothing. National is opposed to this bill. 
DAVID PARKER (Labour—Otago) 
: 
 I rise in support of the second reading of the Building Bill. The background as most of us know is the leaky homes problem that we had in Auckland. In its report last year the Government Administration Committee looked into and identified a number of problems that needed legislative changes to address them. The principal issue was the need to bring the regulation of building matters back within a Government ministry so that the Government could have some control and therefore take some responsibility for things when they go wrong. One of the issues we have seen in the last few years has been the withdrawal of councils from all but the most modest supervision of building projects perhaps because they feared legal liability if they did more than the minimum. As a consequence the risk for consumers of unlicensed building practitioners has grown. At the same time as we have seen a rise in unqualified builders there has been a decline in the level of supervision perhaps from councils. The Government has decided that it is wise to introduce a licensing regime for building practitioners to guard against those risks. 
We heard Mr Tisch say that we have a problem in New Zealand with a lack of skilled trades people. That is true. What he did not mention was that that was because of the abandonment of traditional apprenticeships in the 1990s. They have been re-established only in the last 4 to 5 years by the Labour-led Government and the introduction of Modern Apprenticeships will assist in resolving the problem of qualified staff. But in the meantime it is appropriate that we license building practitioners and bring the regulation of this area of work back within a ministry and then look at the building code to see whether some of the previously permitted forms of building ought to be more tightly regulated. 
I recommend the bill to the House. 
BRENT CATCHPOLE (NZ First) 
: 
 I have pleasure in rising on behalf of New Zealand First to speak on the Building Bill. We consider that the Building Act of 1991 was basically sound but just a little light-handed in its approach. However it was grossly under-resourced and grossly under-administered by the regulations of the building code. The fact that it was under-regulated meant that too many of the requirements under the building code were badly administered which led to the introduction of products such as untreated timber. Untreated timber on its own is not a bad thing; however when untreated timber is combined with products that it is not designed to be administered with we have a major problem. That is what happened with the building code—it allowed products to be combined in a manner that had not been intended. The Building Act basically left the administration up to the Building Industry Authority which refused or failed to administer it properly. The authority did not recognise the deficiencies within the code or the Act and therefore we ended up with what is known as the leaky homes debacle. 
The weathertight homes inquiry which was set up at the end of 2002 made quite a large number of recommendations many of which unfortunately have been ignored in the review of the Building Act. Contrary to David Parker’s suggestion that the inquiry report advocated doing away with the Building Industry Authority and bringing it back into the ministry it actually said that the best idea was to retain the Building Industry Authority but to give it the teeth and the powers to act proactively so that when there are problems the authority does not sit on its hands and do nothing. That is what had happened and the leaky homes debacle was a result. Unfortunately the authority will now be lost within the whole ministry and there will be some problems of people duck-shoving and blaming others for problems. I guess the Government wants to take the Building Industry Authority out of the equation because it is hanging in the wind facing many potential libel suits and I think the Government wants to liquidate those—just as many developers have had to liquidate their companies. 
As a result of the review we have ended up with quite a large bill—358 pages and 386 clauses. It is a monster and it will take some time before the industry is able to come to grips with it particularly the licensing regime. But without it we would be heading towards another leaky homes crisis. That is the reason New Zealand First considers that the bill is worth supporting. We think it is a little overprescriptive but we would prefer to have it prescriptive rather than allow another crisis such as we saw with tens of thousands of people suffering from leaky homes. I believe that there are a lot of homes with the same problem that have not been reported or discovered as yet. 
New Zealand First agrees with the concept of licensed building practitioners. However we are concerned with the overprescriptiveness of the bill in this area. New Zealand First is mindful of the statistics that show that the average age of the workforce in the building and construction industry worldwide is recognised to be between 45 and 50 years. That is unbelievable. It means there are no younger people coming through to take the places of those who leave. We feel that if the licensing regime is not handled very carefully by the chief executive it may result in people who are getting towards the end of their working life—who are somewhere in the mid-50s—leaving rather than retraining. Many of them are concerned about the licensing regime and they do not want to be forced into a retraining programme or into sitting more exams. They are highly skilled and they are worthwhile retaining. Those people are nervous and we do not want to see them moving out of the industry early through either retirement or their moving to an alternative industry or even worse their moving across to Australia to help the Australian workforce—or even further afield. The building industry in New Zealand is desperately short of skilled workers not only to build but also to train and pass on that knowledge. Those people need to be considered and retained and the chief executive must be mindful of that difficulty and keep that skill base in the industry. 
 We also need to be careful of the need to support that wonderful New Zealand concept of DIY. In the bill originally there was a set figure of $10000 which if exceeded meant that the work had to be done by a licensed building practitioner. That concept has now been widened considerably to include the integrity of the outer skin of the building—the outer envelope—and any structural walls within it. Those must continue to be done by a licensed building practitioner. However the DIY’er is quite welcome to continue renovating a room—upgrading it or rebuilding it—provided that the work does not interfere with the integrity of the outer skin and the structural walls. 
Another issue that New Zealand First is concerned about is phoenix companies. We are very disappointed that this bill does not go anywhere near preventing—or even attempting to prevent—phoenix companies from forming under a specific development name or for a specific development project then liquidating at the end of the project in order to avoid any responsibilities. What is more there is a growing trend of companies being formed for a specific construction—companies that do not have any assets. The assets are owned by another company put together by the same directors which leases the equipment all the manpower and so on to the first company. Ultimately when the first company is liquidated all the assets remain hidden behind another company. That is a blatant attempt to avoid responsibilities. In many cases by using that scheme companies avoid the payment of subcontractors as the subcontractors do not have any access to the assets of the developers. So New Zealand First is very concerned that nothing was put into this bill to help that situation. We were assured by the chairman of the Government Administration Committee that that matter would be dealt with by another bill but we are disappointed that it is not dealt with in this one. We acknowledge that the  
Independent 
 which picked up on our report on the bill was also very keen to see that happen. 
New Zealand First will support this bill and its position. 
SUE KEDGLEY (Green) 
: 
 The Green Party will be supporting this bill and we are very pleased to do so. As other speakers have remarked this bill emerged as a result of the inquiry into leaky buildings which I participated in. The inquiry contained shocking revelations about the number of New Zealanders who had their lives destroyed by finding themselves in homes that had not been properly built. The leaky building crisis amply demonstrated that the building industry was not properly regulated. Basically this bill seeks to ensure that consumers have proper protection and that there is proper regulation in the building industry. 
The Green Party is very pleased that many of the amendments we proposed relating to health and energy efficiency were added to the bill. We are delighted that sustainable development and health have been added to the purpose clause and that amongst the principles that must be taken into account when administering the bill are issues of heritage energy conservation and efficiency the use of renewable energy water conservation and efficiency the efficient use of material and waste reduction. As we are all only too well aware energy shortages are fast becoming a way of life. We are looking at damming our rivers by building new hydro stations yet even basic things such as insulation are not being done. Half our houses are not even properly insulated despite the fact that research shows that people who live in well-insulated homes have much better health and that children who live in uninsulated homes are twice as likely to experience asthma and take days off school because of colds and flu. Research also shows that there are huge energy savings to be made from properly insulated homes. So why are we not addressing these very basic things and for example providing incentives to insulate New Zealand homes rather than wanting magic-bullet solutions such as building new dams? 
Buildings and houses use large amounts of resources—concrete steel wood and so forth. They have a large ecological footprint so any sustainable future must consider their impact. When we build our houses and buildings we supposedly build them to last for 50 to 100 years—apart from some of these terrible leaky buildings which may not last even 7 years. Basically if we are to build them to last for a very long period of time then anything we can do to make them more energy efficient will pay off over time in terms of reduced energy use. That will benefit the whole of New Zealand as well as individual homeowners. Huge energy savings could be made for the entire nation if we reduced energy use by doing just simple things such as installing proper insulation and solar heating. 
So although we are pleased that energy efficiency and the efficient use of materials are now principles that must be taken into account in administering the bill we do not believe that that goes nearly far enough in the context of New Zealand’s ongoing energy difficulties. The bill states that they must be taken into account but we believe that it should direct the chief executive to give higher priority and attention to issues of energy efficiency and conservation. We would like to see a system of energy ratings for all new homes so that anyone buying a home knows how energy efficient or inefficient it is. Only the other day I was told of someone who had bought a very smart fancy new home and was absolutely aghast when after 1 month a power bill came in amounting to $1200. The new owners had no idea they had bought such a grotesquely energy-inefficient home. Another problem we believe is that the bill applies only to new houses and buildings and not to existing ones. We believe that any significant alterations to existing homes should be required to match the energy-efficiency standards in the building code just as they match the fire safety and disability access standards. We will be moving amendments to that effect. 
We also believe that territorial authorities should have been given the power if they wish to set standards that are higher than those in the building code for reasons of resource conservation. Territorial authorities in different parts of the country may wish to set higher standards for energy efficiency or water conservation than the standards found in the code but unfortunately the provisions of this bill prevent that. Again that is something we shall seek to rectify through amendments to this bill. 
We are particularly pleased that for the first time the chief executive of the new building department will be required by this bill to take into account the health effects of building materials and products as a result of amendments proposed by the Green Party. It is nothing short of astonishing that at present there is no requirement for the thousands of building products used in constructing our homes and buildings to be registered let alone assessed for their health effects. I actually had to write questions for written answer and ask for a briefing on this. Unfortunately the answer came back that basically no building materials used in New Zealand are assessed for their health effects although nine building products out of the thousands on the market are accredited and apparently in that accreditation process some health issues are looked at. That is literally nine out of thousands on the market. 
We know that buildings are built with large amounts of highly toxic substances. The treatment used in preserving timber is the most well-known example but there are large numbers of others such as resins glues flame retardants particle board which gives off gas and formaldehyde which was recently classified as a carcinogen not to mention other health concerns such as moulds fungi and staphylococcus. If we look at flame retardants for example we find there are about 173 types of fire retardants on the market. Some of them are carcinogenic. Fire retardants migrate from the material they are used in and are released into the environment yet the Building Industry Authority could not even provide answers as to which ones are used in New Zealand let alone what it thought the health effects might be. The building code says things like “gas emitted from building materials should not give rise to harmful concentrations” but there is nothing that we are aware of to enforce that. The fact is that indoor air can be more polluted than outdoor air. We spend about 80 percent of our time indoors so we are exposed to indoor pollutants for long periods of time. We have a whole new proposed national environmental standard for air quality but it is silent on indoor air quality. A number of submitters pointed out to us that they believe that this is an extremely serious issue which will become a major health concern that we will be forced to address in time. 
It is interesting that many people spend a lot of effort trying to keep their homes clean and so forth and they are not aware of the risk being posed to their health by building materials that are not healthy. Really what we are saying is we have to create indoor environments that are healthy for occupants and that use as many natural products as possible—that use sunlight renewable energy new technologies and so forth. 
Construction and demolition waste is a major contributor to the large amount of waste that is sent every year to our landfills. Some estimate it contributes about 17 percent. So we are extremely pleased that the need for waste conservation has been added to the bill. Heritage is another issue. The whole bill was silent on heritage. We heard submissions that suggested that the bill could be used to destroy literally hundreds of heritage buildings around New Zealand. So once again the Green Party initiated amendments that seek to protect our heritage buildings in New Zealand while at the same time requiring them to be earthquake strengthened. 
We strongly support the registration of builders. We believe that it will do much to address the leaky building crisis. We do have concerns which have been expressed by others about the effect of the new regulations on owner-builders. We believe that they are probably excessive and that in a way owner-builders are being penalised by the provisions of this bill when they are not the ones who created the leaky building crisis that this bill intends to resolve—it was the developers. We also have concerns about the continuance of private building inspectors. We believe that they do not offer the consumer protection provided by local authority building inspectors. 
Overall despite those reservations we believe that the bill offers much greater protection for consumers and homeowners and for that reason we are happy to support the bill. 
STEPHEN FRANKS (ACT) 
: 
 I rise for the ACT party to speak on the second reading of the Building Bill. We were not on the Government Administration Committee that considered the bill. As I look at the huge report produced by that committee and the pathetic analytical quality of it I am rather proud to have been able to avoid being associated with such a parody of process. 
I look at the dissenting reports and I have to say that in 5 years’ time when its impact is at its greatest probably no one will remember those warnings. People will take it as just another one of those mysteries as to why it costs so much more to get a house in New Zealand why people emigrate why they feel poorer in New Zealand. No one will remember those warnings. I have to say that I believe that New Zealand First has made the most sensible comments; the National comments while they are good comments would have been helped if they had been a little more expansive—and it does surprise me. 
Shane Ardern 
: More are coming. 
STEPHEN FRANKS 
: I am glad to hear that more are coming from the National Party. I have to say that the United Future contribution is also extensive. I wonder whether the committee allowed it to be indulgently long because in it that party betrays itself. It is such economic nonsense. 
A Government body went out and got a professional cost-benefit report which says this bill will add—and I would imagine it would be conservative because it would not want to be scaremongering—an average of 2.9 percent to building costs across the board. Then we look at the benefits: 0.3 percent. It is almost elementary. 
Common sense tells us that although this bill is the response to the leaky building syndrome its biggest impact is probably on New Zealand’s culture; on the assumption that used to underpin this country that we could do anything that was not expressly prohibited that we did not have to ask anyone if we could do the normal things in life. I suggest that probably many members of this House have had the satisfaction that I have had over the last couple of years of building a substantial building. There is very little that can be more satisfying than going to bed exhausted having puzzled one’s way through construction problems then getting up the next morning and undoing some of what was done the previous day because one had got it wrong then calling in the neighbour who is a builder or calling in someone else who has expertise and asking how to do it. That is at the very essence of being a New Zealand man. I think it is hilarious that this bill is sponsored by that red-blooded man Tamihere who believes that men need support groups and Government agencies to help them be men. He thinks that only official authorised licensed builders should be allowed to build. 
We have a bill that on the very face of the report is tripe in terms of its analysis. I believe that Mr Roy Hanns is a very reliable and experienced man in this area. I look at his submission and see that he thinks approximately 0.1 percent maybe 1 percent in the worst areas of new buildings have been affected by leaky building syndrome. Let us assume that they are all total write-offs. Let us assume that the people ought to be fully compensated irrespective of whether they went to shonky builders in the first place or did not take any precautions. Let us assume that the owners should bear no responsibility whatsoever. Let us assume also that this experience has no demonstration effect—in other words that out of this people have not changed their attitude towards building. Let us assume that the new Building Act requirement will save all those kinds of problems in the future and fully compensate those who have suffered. On the numbers the benefit will be one-tenth of the cost. We could provide to every owner of a leaky building 10 entirely new houses for the cost of this Building Act. 
United Future’s laughable analysis says that it is going to look after all these people that it would have made sure they had good buildings that we should never have deregulated and that the fact that building inspectors cannot get insurance is a reason to put the whole responsibility on local authorities. Well I say to United Future that the reason they cannot get insurance is that the insurers know that these kinds of risks happen that there will be bad builders unless we totally gold plate the industry that there will be unanticipated effects and that there will be losses. To insure them is simply too expensive for any commercial person to take the risk. 
So where is the Father Christmas going to come from? Well United Future knows all about that. It comes from rates. Rates of course in United Future’s world are the answer to all problems. Rates are the answer to United Future’s image problem at the moment. United Future wants the Government to take GST off rates; it thinks that will appeal to people who do not realise that their rates will go up by three or four times the rate of inflation. Taking off GST is simply a way of forcing everyone else to subsidise the inefficiencies of local authorities. United Future would rather add the entire inspection role under this new Building Act to local authorities and pretend that the cost had just disappeared because it meant that one did not have to get insurance. It does not seem to have crossed those members’ minds that the entire cost would then fall on ratepayers many of whom would have no intention of building or would have taken all the precautions necessary to have a safe building and most of whom would be wondering why their rates were so much higher than they ever used to be in the past. 
This Buildings Bill will be the end of do-it-yourself building. This legislation requires that councils when they are administering it go through the Greens’ wish list. They will have to take into account heritage energy conservation and efficiency use of renewable energy water conservation and efficiency efficient use of materials and waste reduction. So from now on when the guy or the woman—many women have enjoyed building too—builds the deck or puts up the kitset farm building or extends the house that work will have to be done by a building practitioner. We know what will actually happen inside houses: whether or not alterations are structural people will stop going for consents. As long as the work cannot be observed in a satellite photo New Zealanders will deal with this law in the way that they have always done—by hiding the work completely from the authorities. But let us assume that it is work that cannot be hidden from the authorities and will be obvious in a satellite photo. That work will have to be done by a member of this new profession of registered building practitioners. 
The word “builder” I take it was just too simple for words; did the select committee consider it? I have a young builder friend who is really looking forward to being a building practitioner. He is quite aware of the monopoly rents that will accrue to those in this rare category as they take a much easier life and swan around looking at other people’s work. He is quite confident that over time as disasters continue to occur—United Future the Labour Party and the Mr Parkers of this world having increased the rules and having promised people that these sorts of things will never happen again—as a building practitioner he will get himself into the sort of privileged position that until now has been held by people like surveyors lawyers and others who do not need to dirty their hands but make a living out of interfering in those who do. 
That is what this bill is about; it is about a bunch of probably mostly well-intentioned but politically ambitious people being Father Christmas to homeowners—that is offering them the myth of the costless solution. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Just before I call the next member I remind members that cellphones are to be switched off in the Chamber. I heard cellphones ring in two instances. 
MURRAY SMITH (United Future) 
: 
 The ACT member said he was glad he was not part of the select committee. Unfortunately ACT’s contribution shows ignorance of the issues because of its absence from the select committee. For the first time in my life I have to state that Mr Franks simply does not know what he is talking about. While this bill has emerged from the weathertight homes crisis it was clear that that was not the sole problem that needed to be addressed; the problems were more systematic and went further than leaking homes. The Building Act 1991 particularly in conjunction with changes to the Local Government Act in 1989 meant that the prescriptive regime of the pre-1991 days became a very laissez-faire regime. In the absence of adequate supervision we got ourselves into a situation where anything went and we found that the old maxim “safe as houses” was effectively an irony. 
This required a rebalancing and I believe that this bill is a responsible answer that is largely welcomed by all facets of the building industry. It is a beginning however and I am sure that given the comprehensive nature of the bill gaps in the framework will appear and amendments will be necessary. 
In the absence of the Minister I would like to acknowledge the hard work that the Ministry of Economic Development and Suzanne Townsend in particular put into this bill. She has lived the bill for more than 2 years and if anybody’s name were to be put on the top of it it would have to be hers. It is a complicated bill that she has spent hours—and no doubt sleepless hours—in getting through. 
There is one area that I want to address and that is the area of private building certifiers. United Future is not opposed to private building certifiers per se. In fact I was one of the first lawyers in New Zealand to have private property inspection reports as standard conditions in sale and purchase agreements rather than simply relying on council records. I also strongly advocated private clerks of works rather than relying on building inspectors. So I have always been supportive of the private industry in this area. However here United Future is the messenger. We are not putting down private building certifiers; we are simply the guy waving his arms on the highway to tell the truck to stop because there is a washed-out bridge around the corner. For private building certifiers territorial authorities and homeowners the bridge of private building consent authority registration has been washed out but the Government is bent on having people fall into the chasm rather than directing them to the bypass. 
The facts are simple. The bill provides for a continuation of private building certifiers with enhanced responsibilities. The territorial authorities will not be involved at all once private building certifiers take on the work because the private certifiers will carry out all the work. Therefore territorial authorities will not have liability where private building certifiers have handled the work from building certificates and building consents through to code compliance certificates. That is a misleading and falsely optimistic view given to private building certifiers because clause 41(1) states: “Before entering a person’s name in the appropriate register”—as a building consent authority—“the chief executive must be satisfied that— . . . (c) in the case of a person who wishes to be registered as a building consent authority but who is not a territorial authority the person has adequate means to cover any civil liabilities that may arise in the performance of the functions of a building consent authority.” 
It is with those words “adequate means to cover any civil liabilities” that the whole thing falls down because in order to do that the private building certifier would need to have assets available to be sued upon of at least $1 million or professional indemnity insurance. The requirement for professional indemnity insurance I think is a sound one. As a regulatory body the certifier is the independent auditor that ensures that everyone has done his or her job. Contrary to Mr Franks I believe that where a regulatory body takes on that responsibility it is absolutely imperative that it has adequate back-up for the public interest so that houses are built soundly to protect future purchasers and the community good. 
In the case of the public body that is a regulatory body the taxpayer backs it through rates or through a national tax system. In the case of private bodies there must be insurance or other financial back-up. 
In Australia the select committee in Canberra had the opportunity to talk to the Australian Building Codes Board which is the foremost authority in this area in Australia and carries considerable weight. The executive director of that board Ivan Donaldson is a guru in the area of building work and he said to us: “You wouldn’t have private certification if you didn’t have recourse to insurance. If you can’t get professional indemnity cover you can’t have private building certifiers.” 
That is where we should be sitting as a nation. The minimum criterion for private indemnity cover is that it must be adequate. After all $1 million is likely to cover only five houses. It must provide cover for at least 10 years because that is the extent of liability in New Zealand. In fact some say that liability should extend to the life of the house which in structural terms is 60 years. But we in New Zealand have narrowed that to 10 years which I would say is an absolute minimum. 
There also needs to be run-off cover so that if a building consent authority goes out of business the cover will run for the balance of the 10 years from the last building without further premium payments. It is this third area that is the most important. Private building consent authorities that have defective work will quickly go into liquidation leaving a whole lot of homeowners high and dry with regard to any remedy unless the authorities have run-off cover. 
However there are real problems with the Australian situation. Already professional indemnity cover is not currently available in New Zealand in an adequate fashion and has not been for some time. 
 The private building certifiers’ submission to the current consultation review on insurance states: “To be effective in reviewing insurance specifications the Government needs to grasp the rationale behind the withdrawal of many insurers from the New Zealand market and appreciate the reasons why the insurance industry will not”—emphasised—“provide the type of cover the BIA are currently requiring of certifiers in New Zealand. In addition the review needs to investigate fully the reasons why the BIA has resurrected this unattainable insurance specification of old and why this specification is only available in other commercially competitive countries such as Australia and Canada amongst others.” 
The reason Australia has some very limited professional indemnity cover is very clear. In Australia there is professional indemnity cover only because joint and several liability has been abolished. In New Zealand joint and several liability remains and the Government has made it clear it will not abolish that. 
Again in that submission to the insurance review private building certifiers state: “Insurance policy underwriting for full unrestrictive joint and several liability is not generally available to the New Zealand building industry or wider commercial and industry sectors.” 
So it is not available. In Australia professional indemnity cover is limited in size is limited to 6 years—not anything even near the 10 years that we have as a minimum—and no run-off cover is available. It is used only as a last resort cover. Until a company goes into liquidation or the person is bankrupt or dead it is not available. For New Zealand this means that all private building consent authorities will have certification expiring in January 2005. To be registered as a building consent authority a company will have to have professional indemnity cover with minimum terms and conditions. If the terms and conditions require the three cornerstones the cover will not be available and even if they do not a company will not be able to get it with joint and several liability. 
So no private building consent authorities in January 2005 will be able to be registered. Suddenly they will cease to be able to operate and territorial authorities will have to pick up any new work. Currently authorities have 25000 projects among them with over $4 billion of building work. Territorial authorities will suddenly find in January 2005 that private building certifiers are out of business. They will be left under-resourced or under-staffed. If they wait and see until January even then they cannot be sure of the situation. In fact they will not be able to take on staff now who will be needed at that time because they do not know what situation they will face. 
United Future proposed a better way: to accept that private building certifiers will not be able to get the professional indemnity cover that is a prerequisite to their operating as a public protecting regulatory authority instead of having the false hope that this bill gives; and by increasing the scope of the transition period to phase out private building consent authorities in an orderly manner; and over 3 years—which would be the transition time we would recommend—give territorial authorities the time to gain recognition themselves and private building certifiers time to adjust to the new environment. 
The Government in fact entirely agrees with United Future’s view on this. So why will it not do something about it? It does not want to be seen to be axing private building certifiers and scratching them from the race. Rather it wants to set up hurdles that are impossible for them to jump over so that they fall flat on their face. United Future will support the bill but it will not support private building certifiers. 
JILL PETTIS (Labour—Whanganui) 
: 
 This will be just a very brief call because speakers have contributed constructively to the debate this afternoon. This bill is about meeting the needs of industry and consumers. So many people were so negatively affected by the leaky building syndrome that has given rise to this full investigation and review. I am very pleased that as a consequence of that investigation the bill will have a much stronger focus on the protection of consumers. After all for most of us our home is the biggest asset we are ever likely to own in our lifetime. The bill will help to ensure that the concept of buildings being fit for the people who use them is a priority. I look forward to this bill passing through its various stages and also look forward to the subsequent extra protections the public will have with regard to buildings both commercial and privately owned. 
SHANE ARDERN (National—Taranaki-King Country) 
: 
 That was another fine contribution from the member for Whanganui. She is right partly. Despite the fact that National will oppose the Building Bill she is partly right in this area because she said one’s home is the biggest asset most people will ever own. Apart from that nothing in her contribution had any relevance to what we are debating today. The reality is that this bill came about as a result of the leaky homes inquiry—that is true. It is also true that the regulatory requirement that was in place prior to that inquiry clearly had some deficits and that something needed to be done. National acknowledges that. But the Government has come up with a piece of fine academic work—358 pages of it! That is what happens when we get the socialist academics—along with the lawyers Messrs Franks and Smith I hasten to add—involved in trying to design something to take care of a very practical problem. We have ended up with this “sledgehammer to crack a nut” approach. That is what we have here and that is why National opposes the bill. 
The National Party looked at all the submissions that came before the Government Administration Committee. There was a large number—150 submitters. We went through all the issues raised by submitters and decided that the proposed changes in this bill would add a huge layer of cost to the building industry and by and large would not achieve the outcome that is intended. I will give a couple of examples of that. One of the problems identified in the inquiry as leading to the leaky homes syndrome was the fact that the wrong materials or products were being used together with one other. Nothing in this bill will stop that from happening. Further another thing identified by that process was that a large number of contractors and developers—particularly in the Auckland area—would not be caught by this process. So we will add this huge cost—submitters said that as much as $6300 could be added to the cost of an average home—to the cost of buildings and the legislation will not address the problem. 
Much has been made of the role that private certifiers may have played in the leaky homes problem. Private certifiers cannot be found to have been liable in any one of those cases. I challenge the Opposition member to give me an example of a case where a private certifier was found to be the core reason for the problem that occurred with regard to the leaky homes syndrome. We will not find an example—at least National has not found one anywhere. At the end of the day this heavy-handed legislation will crack down on a group of people that is doing nothing that could be identified as wrong—in fact those people are providing a service. The Government’s way of getting rid of that group—this was correctly identified by the United Future speaker—is to make the regulatory requirement around it so tough that it cannot survive. Those people will not be able to continue. 
It was also submitted to the committee that the average cost of building a medium-quality home in Auckland is around $2300 per square metre. Currently the average cost of building an equivalent home in Australia is about A$1100 per square metre. That is under the current regime. What will happen when we add a further $6300 to the cost of the average home? It was interesting to listen to the Green member Sue Kedgley’s contribution in which she said it has been identified—and this is true; I agree with her—that poor housing low insulation levels and those kinds of things contribute to our health problems. There is absolutely no doubt about that being true. How will the addition of $6300 worth of compliance costs to the cost of an average home help people in the low socio-economic group to get a better standard of house? How will it do that? It is absolutely true that insulation and proper building standards play a major role in the quality of our housing stock. 
 But would it not have been a much more sensible idea to have empowered the Building Industry Authority to have a self-policing role and not to lay all that cost on the industry and on every house that is built? 
I want to cover a number of other things and one of them is the whole issue of treated timber which is not addressed in this bill. Most old builders will tell us the notion of using untreated  
Pinus radiata  
in the framework of a house is about as nuts as we can get. Most of them will tell us that. Sue Kedgley said that I want to put a regime in place whereby all chemicals—and particular mention was made of the use of tanalised timber where the treatment is arsenic-based—are banned in the preservation of timber. We cannot have it both ways. If we are to have houses that are sound watertight healthy and do not fall down then we have to start asking those questions. This bill does not address that issue. On the other hand the Green Party also says we cannot use native timber in the construction of our houses because its milling is not sustainable. Well one can build a house in a sustainable long-term reliably constructed manner from untreated native timbers but we are not allowed to use those timbers because it is not sustainable to mill them. So there is the conundrum that the Greens face and it is some of the conundrum that the committee faced during the process of considering this bill. 
Further the idea that we can put in place some kind of superior person who will go around and supervise the construction of houses particularly in outlying rural areas where there is a large number of semi-retired builders who will now find it very difficult to keep themselves up to speed with the regulation that is being applied in this bill will mean that we will end up with a poorer or a lower standard of construction rather than an improvement. 
Janet Mackey 
: Oh that’s stupid! 
SHANE ARDERN 
: I see the member who represents a large rural area is saying that is not so. She should go out and look at who builds houses and does some of the work in the small towns in her electorate. 
Opposition Member 
: She should take a call. 
SHANE ARDERN 
: That is right. She will most likely have come across the kind of people whom I am talking about and we need those people. There is a huge shortage of skilled builders in the industry. So there is a large number of people out there who are qualified and do quality work but who will be excluded from doing it in future as a result of this bill. Now where will the replacements for those people come from? Where are the people who will carry out the training for quality people whom we need so desperately in the building industry? Where will the volunteers who do work to the local hall or school and carry out those kinds of renovations come from once this legislation is passed? 
This bill is 358 pages of socialist bureaucratic overkill in terms of what will happen in rural New Zealand and we oppose it. 
JANET MACKEY (Labour—East Coast) 
: 
 In standing to support this bill there are one or two issues that I would quite seriously like to canvass. I have discussed it with my colleague the Minister and he assures me these matters will be resolved. One of the issues is that of steel-capped boots. In its wisdom the Government Administration Committee has recommended that protective clothing and safety gear be provided by the employer or by the builder who is doing the employing. Of course all builders being responsible employers have no problem with that. They agree with it and they make it their business to ensure that their workers are adequately equipped to go out on to a dangerous building site. 
However in saying that there has been a decision by the bureaucrats that boots will be included in the definition of protective clothing and safety gear. That provision effectively means that every builder in the country every time he or she employs somebody will have to go to the quite expensive cost of purchasing that employee a new pair of boots. Now anyone who has employed someone on a building site will know that one employs quite a few labourers and skilled people. One employs them one day they turn up for work one gives them a new pair of boots and there is a very high chance that one will never see them or their boots again. So my contribution to the bill and I am supporting the intent of this bill is that I would appreciate it if the Minister could resolve that matter either through the officials—because I believe it is an interpretative matter—or if necessary by amendment. 
Hon DAVID CARTER (National) 
: 
 The Building Bill will in time prove to be the most stupid legislation the Labour Government has passed. I predict that within a very short time of the commencement of the new National Government members will be back in this House tidying up this very messy costly legislation. 
Darren Hughes 
: Of course! This bill will be 20 years old by then. 
Hon DAVID CARTER 
: I assure the member that the job will have to be done far earlier than that. 
This is very cynical legislation that was rushed into the House in a desperate attempt to take the leaky homes issue off the front page of the  
New Zealand Herald  
and other newspapers up and down the country. When we analyse this legislation carefully we find that it will do nothing to stop the further construction of leaky homes and absolutely nothing to cure the problems of those poor unfortunate people who own leaky homes. 
One has only to look at the commentary that has been presented to Parliament by the Government Administration Committee. Every party represented on the committee apart from the Labour Party has presented a minority report on the legislation expressing some degree of concern about various aspects of it. The amazing contribution from members of New Zealand First was a 10-minute speech criticising every aspect of the Building Bill—quite rightly so I might add—but those members then proceeding to vote for it. 
So this legislation ultimately will be passed because the Government and its mates United Future and New Zealand First support the legislation without actually having analysed what effect it will have on the building industry. 
Brent Catchpole 
: Tell us what you would do. 
Hon DAVID CARTER 
: The member now asks what it does. Well Mr Catchpole was on the select committee so he should know what the legislation will do but I will tell him. I am happy to tell him exactly what the legislation will do. To a small family home it will add a cost of $6300. On average it will add that sort of cost to construction. That is what it will do and that in my mind is just stupidity. 
A huge section of the legislation is devoted to a new occupational group called the licensed building practitioner. I have just completed a significant home renovation and I used builders. But now there will not be many builders in this country; there will be licensed building practitioners. The interesting thing about my personal experience with the construction of my property was that we used a builder who has been in the industry for years and years but who has never got himself qualified. That guy can no longer control my building project because he will not be a licensed building practitioner as he does not have the qualifications. Yet he has done a pretty good job—the house certainly does not leak and I am just pleased I got in and got the job done— 
Lindsay Tisch 
: Is it level? 
Hon DAVID CARTER 
: It is absolutely level. Lindsay Tisch wants to know whether the builder did a good job in that regard and he did. I am just thrilled that I got in and got my job completed before the passing of this stupid legislation. 
I spoke to members of my own caucus who were on the select committee and I asked them to clarify for me the issue around the do-it-yourself industry. New Zealanders have a huge industry now—in retail etc.—associated with people doing the odd renovation on their own home in a most cost-effective and satisfactory manner. There now appears to be doubt as to the continuation of the DIY industry because many of the jobs that are tackled by the homeowner on Saturdays and Sundays will now have to be inspected by a licensed building practitioner. Those jobs have been done quite satisfactorily— 
Brian Connell 
: What’s that going to cost? 
Hon DAVID CARTER 
: Who knows what it will cost. The members of the select committee should have asked that question and should have been supplied with the information. A person who has a rotting window frame and who has some capability with a hammer a nail and a saw will not be able to go down to Carters buy the timber required replace the window frame and re-glaze it him or herself. That person will not be allowed to do it because the Labour Government says that he or she was the cause of the problem of the leaky homes syndrome. I say to Labour members that nothing could be further from the truth. 
The reasons we have trouble with leaky homes are fourfold. In many cases the design was inadequate. That will not be fixed by the Building Bill. In many cases as referred to by my colleague Shane Ardern untreated timber was used which was a stupid notion brought on by the “greenies” of the world who demanded the option of using untreated timber and then expressed surprise when the untreated timber rotted when it got wet. How dopey can the “greenies” be? The third reason for leaky homes was the huge number of products that simply were inadequate for the job they were destined to do. There were not enough procedures there. And of course the fourth reason in some cases was bad workmanship. Here we have 350 pages of costly legislation to tackle the fourth reason which is the bad workmanship aspect of the leaky homes syndrome. 
So I say that this is probably the most cynical legislation this Government has presented so far. It has been brought into the House as an instant response to the headlines around the leaky homes syndrome which caused the Government huge embarrassment. At the end of the day after sitting in the select committee for 9 months the bill has come back before the House not hugely improved at all. It puts huge costs and regulation on to the construction sector and will not provide the answers required for the leaky homes mess whatsoever. 
Brent Catchpole 
: How many submissions? 
Hon DAVID CARTER 
: Three hundred and fifty. 
A party vote was called for on the question  
That the amendments recommended by the Government Administration Committee by majority be agreed to. 
Ayes 83 
New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2. 
Noes 36 
New Zealand National 27; ACT New Zealand 8; Independent: Awatere Huata. 
Question agreed to. 
A party vote was called for on the question  
That the Building Bill be now read a second time. 
Ayes 83 
New Zealand Labour 51; New Zealand First 13; Green Party 9; United Future 8; Progressive 2. 
Noes 36 
New Zealand National 27; ACT New Zealand 8; Independent: Awatere Huata. 
Bill read a second time.