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Building industry reform on the way

Building industry reform on the way

The government will legislate next year to tighten regulation of the building industry and extend the current review of the Building Act.

Commerce Minister Lianne Dalziel says the moves are necessary to restore confidence in the building industry and in the quality of New Zealand homes.

“Extending the review of the Building Act will allow the findings of the current Parliamentary Select Committee Inquiry into weathertightness of New Zealand homes to be taken into account,” Ms Dalziel said.

Internal Affairs Minister George Hawkins said a number of measures already agreed to by Cabinet would be incorporated into the review, with legislation likely to be before Parliament by mid-2003.

These included: amendment of the Building Act to ensure greater homeowner protection clarification of the Building Code to meet Building Act objectives greater weight to be given to approved building solutions and verification methods increased support for product accreditations rather than BRANZ appraisals more guidance on local authorities’ and building certifiers’ roles, including a definitive test for Building Code compliance, and accreditation of building certifiers and inspectors.

Mr Hawkins said the lack of overarching regulation of professionals and trades within the building industry was of concern.

“In particular, the government has directed the review to examine the Architects Act 1963, the licensing of draughts people and engineers, and the regulation of builders and related trades.”

Consumers, as well as the industry and administrators, required better information, he said.

The review would also consider compulsory homeowner protection insurance, the future of the Building Industry Authority and if the Weathertight Homes Resolution Service, set up in response to the leaky building issue, should be retained and its role broadened.

The government is pleased that the Building Industry Taskforce, established following last year’s building industry summit, is working closely with the Government and the BIA to improve the regulation framework.

The extended Building Act review will be led by the Ministry of Economic Development, which will take over responsibility for building policy and regulation on 1 January 2003.

MEDIA BACKGROUND MATERIAL

GOVERNMENT DECISIONS TO EXTEND THE BUILDING ACT REVIEW

The Government has taken the decisions necessary to restore the confidence of New Zealanders in their building industry and in the homes in which we live.

The Government has already established the Weathertight Homes Resolution Service, and has strengthened its monitoring of the Building Industry Authority (BIA).

The Government has considered the findings of the Overview Group on the Weathertightness of Buildings (the Hunn report) and, as a result, decided to extend the scope of its current review of the Building Act.

The extended review of the Building Act will incorporate the findings of the previous review and will also consider the findings and recommendations of the Parliamentary Inquiry into the Weathertightness of Buildings in New Zealand.

Details of Government Decisions

The Government has instructed officials from the Ministry of Economic Development to lead an extended review of the Building Act. They will do so in consultation with industry stakeholders including the Building Industry Authority and Local Government New Zealand. They will also consult other interested groups including consumers.

The Government intends to make decisions on the review in time to introduce and pass legislation to implement the review’s findings in 2003.

In order to provide focus for the review the Government has made a number of in-principle decisions to strengthen the elements of the building regulatory system.

Purposes and Objectives of the Building Act

The current purposes of the Building Act 1991 are to protect people (their health and safety) and the environment. The Government has decided that the Act does not place sufficient emphasis on the need for shelter and protection from the elements. The Government has agreed for the purposes of the review to amend the purposes of the Act to ensure greater protection for the owners of residential buildings by including a consumer protection purpose (potentially ‘fit for purpose’).

The Government has also directed officials to report on whether or not the proposed purpose should be extend to owners of non-residential buildings.

The Government has decided that insufficient emphasis is currently placed on minimising the whole of life capital costs of building. For the purpose of focusing the review it has agreed to the following objectives for the building regulatory system:

effectiveness – giving best effect to the proposed purpose for the Act; minimising whole of life capital costs – rather than a narrower focus on reducing just front-end compliance costs; innovation – facilitating innovation by allowing for flexibility in operation and the use of new technologies and practices; minimising compliance costs – but not at the expense of whole of life capital costs;

Elements of the building regulatory environment

Performance-based regulation often relies on prescriptive ‘how-to’ standards. These provide a backstop if industry participants, such as designers and builders, are unwilling or unable to develop their own approaches to meeting the performance criteria of the Act. The Government is concerned to ensure that the Act is supported by necessary standards, and that building professionals have the skills, training and guidance they need to carry out their duties competently.

The Government has made the following decisions to strengthen building regulation.

Administration and compliance

The Government has decided that:

The Building Code should be specified in a manner sufficient to provide guidance to achieve the proposed purposes and objectives of the Act; greater weight should be given to the use of acceptable solutions and verification methods for protecting the interests of consumers; greater weight should be given to building product accreditations, rather than BRANZ appraisals, as a basis for determining compliance with the Building Code; greater guidance should be provided to territorial authorities and building certifiers of the matters that they should take account of in discharging their administrative responsibilities including more definitive criteria for achieving the “satisfied on reasonable grounds” test for compliance with the Building Code; Standards New Zealand should have a greater role in the production of standards to support approved documents; and that all building certifiers and inspectors should be accredited, based on international best practice for the accreditation of inspection bodies.

The Government has directed that the review of the Building Act consider:

the circumstances and risks under which greater weight should be placed on the use of acceptable solutions, verification methods and building product accreditations as a basis for determining compliance with the Building Code; how greater guidance should be provided to territorial authorities and building certifiers of the matters that should be taken into account in discharging their administrative responsibilities including more definitive criteria for achieving the “satisfied on reasonable grounds” test for compliance with the Code; whether the standard setting process is adequately funded including consideration of appropriate mechanisms and sources of funding; and the value of disallowing occupation of a house until a code compliance certificate has been obtained.

Enforcement procedures

Clear accountabilities for roles and functions are essential to the integrity of the building regulatory system. Legal enforcement provides a means of establishing these accountabilities (and associated liabilities), and also the means by which consumers who suffer damage can seek redress.

As part of its extended review of the Building Act the Government has directed officials to consider:

the role and placement of the Weathertight Homes Resolution Service beyond June 2003, and whether or not its role should be broadened to include a specialist resolution service for all homeowner building disputes; whether or not the regulator should have a role in prosecuting disputes on behalf of some consumers, and the circumstances under which such a role might be appropriate; and whether or not a compulsory homeowner protection insurance scheme should be an element of the proposed regulatory system, and the costs and benefits of such a scheme.

Information and education

Information, to consumers, industry and administrators is critical to the operation of an efficient and effective building construction market.

The Government has agreed in principle:

to strengthen the role of the building regulator in providing information and education; and that the information role of the regulator extend to the provision of information to: consumers on how to achieve value for money in their purchase and how to maintain their investment; and the education of building practitioners, territorial authorities and private certifiers on the requirements of the Code and how to achieve compliance with it, including the weight that should be given to Approved Documents and alternative solutions;

The Government has also directed that the review should consider:

whether the information available in Land Information Memoranda (LIMs) should be extended including the compliance costs of doing so; what provisions should be included in the Building Act to guide the information and education roles of the regulator, including to consumers, building practitioners, territorial authorities and private certifiers; and the financial implications of extending the regulators information and education role.

Regulation of building professionals

The Government is concerned that there is no overarching regulation of the professionals and trades involved in the building industry. While there is profession-specific regulation for architects (Architects Act 1963), engineers (Engineers Registration Act 1924 and Chartered Professional Engineers Act 2002), building certifiers (Building Act 1991), and electricians (Electricity Act 1992), there is no regulation for draughtspeople and builders.

The Government has agreed in principle that:

draughtspersons and engineers, as well as architects, should be subject to occupational regulation in developing dwelling design documents; and builders should be subject to occupational regulation in their construction of dwellings.

The Government has also directed officials in undertaking the review to:

review the Architects Act 1963; consider the findings of a review of the Architects Act 1963 and what occupational licensing provisions should also apply to draughtspersons and engineers in developing dwelling design documents; advise on the details of an occupational regulation regime for builders and related trades including the implications for owner builders and whether or not these classes of builders should be exempt from the regime and under what circumstances; advise on whether the regulations for builders of dwellings should be extended to builders generally; and advise on the transitional arrangements that would be necessary for implementation of any changes to occupational regulation including the implications for current unregistered building professionals and trades people, education and training providers and consumers.

Institutional arrangements and monitoring

The Overview Group expressed concern that the BIA has adopted a relatively low-key administrative approach to its functions. The Government has considered the findings of the Overview Group including its recommendations to: (a) a review of the role, structure and resourcing of the BIA with a view to enabling it to provide a more comprehensive service to the public and industry; and (b) a reassessment of the scope and implementation of the functions of the BIA in relation to how the BIA is to achieve the purposes of the Act.

The Government has taken decisions to immediately increase its monitoring of the BIA. It has decided to move responsibility for monitoring the Crown’s ownership and purchase interests in the BIA from the Department of Internal Affairs to the Ministry of Economic Development (MED) from the January 1 2003, under the auspices of Minister Lianne Dalziel. It has also directed officials from MED to discuss with the Chairperson of the BIA how: (a) the Government decisions to extend its review of the Building Act and (b) the BIA’s response to the Hunn report, can be appropriately reflected in the BIA Statement of Intent currently being finalised.

The Government has also directed officials, in reviewing the Building Act to consider:

the future roles and functions of the BIA; whether or not the BIA should continue as a Crown Entity; the monitoring regime that should apply to the BIA; the current allocation of administrative responsibilities to territorial authorities and private certifiers and whether some responsibilities should be shifted to the regulator; and the nature of the review, monitoring and sanctions regime necessary to ensure accountability of territorial authorities and private certifiers for their proposed administrative roles and functions.


Hon George Hawkins
MINISTER OF INTERNAL AFFAIRS

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