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The Licensed Building Practitioners Regime

Hon Clayton Cosgrove
MP for Waimakariri
Minister for Building Issues
Minister of Statistics
Associate Minister of Finance
Associate Minister of Justice
Associate Minister of Immigration


23 April, 2006

Speech

Transforming the Building and Construction Industry: the Licensed Building Practitioners Regime

Event: The Registered Master Builders Federation 54th Annual Conference
Venue: Millennium Hotel, cnr Stanley Rd and Frankton St, Queenstown
Time: 9:15am

Registered Master Builders Federation members, Federation President Michael Fox and incoming President, Ashley Hartley, Chief Executive Officer Pieter Burghout, distinguished guests, ladies and gentlemen.

It is a pleasure to be here with you today.

It has been a while since I was in Queenstown and I hardly recognised the place. Even on the short drive in from the airport to this hotel, you can see the changes in the new subdivisions, new apartments, and the cranes along the waterfront. Like the rest of New Zealand, this place is growing.

We are undergoing perhaps the most profound changes to New Zealand's building and construction industry in its history. And it is happening on all fronts, including the regulatory environment with the Building Code Review and the new Building Act.

Changes are afoot in the way we design and construct our buildings, in how we deal with complaints before the Weathertight Homes Resolution Service, and how territorial authorities gain Building Consent Authority accreditation. Announcements will be pending in these areas once the industry stakeholders, including yourselves, have been fully consulted and the research has been done.

Today, I want to announce the proposed regime for the licensing of building practitioners. To date, the few regulations around builders themselves have been health and safety related. And as we can see from the Department of Labour's swoop on some shoddy Auckland building sites earlier this month, checks are needed.

I appreciated your CEO Pieter Burghout's comments to the media last week about that, which show a mature industry taking ownership of its problems and working through the solutions.

Some in your industry have gained tertiary building qualifications or completed apprenticeships, and I applaud that. However in reality, there is nothing at present to stop anyone putting on a tool belt and calling themselves a builder, whether they are competent at their trade or not.

And we should all remember the result of a previous government's deregulation of the industry – no rules – anything goes. The cowboys in the sector have harmed the reputation of this industry, and it is time for your skills to be properly recognised, and for the public to have renewed confidence in that workmanship.

Before providing details on the licensing regime, I want to first put these changes in the context of the bigger picture, as there are many factors driving the transformation your industry is starting to experience.


New Zealand's population continues to grow – we are looking at around 4.3 million people by 2011. Within that population are many trends and shifts. As a country we will be older. We will be more diverse. Our lifestyles will change. Our communities will reflect that.

Look at the Queenstown Lakes District, one of the fastest-growing regions in New Zealand. Look at Auckland, the world’s largest city of Pacific cultures, looking to hold 2 million people by 2050.

We will have more people and new ways of living. The distinctively Kiwi dream of a quarter-acre section in the suburbs is evolving. Apartment living, for example, is an increasingly popular option for modern lifestyles. People of all ages are renting more. Homeownership is not the only option, and Kiwis will increasingly go for alternatives.

Social, economic and technological changes are altering the way we build. Consumer preferences continue to shift. More complex residential buildings are being constructed. New materials, products, and technologies continue to emerge. Our expectations of building performance are also changing. Homeowners of the future will increasingly demand houses that are energy efficient, for example.

We have seen rapid growth in all areas of the building and construction sector over recent years. In 2005 there was $9.8 billion of capital investment in residential building, and another $4.2 billion in non-residential. This construction underpins our economy, employing over 160,000 people, that's around 8 percent of the total number of people employed, and contributing around 5 percent of GDP.

The pace will likely slow, (depending on who you’re listening to), but the fundamental drivers are in place for long-term expansion.

Actually, there is a better word than expansion. New Zealand is transforming. Socially and economically, we are heading for the next level. And we all need to embrace these changes and prepare for the future.

So how do we reach the next level?

The Government clearly signalled at the beginning of this Parliamentary term, that the focus is on three key themes: economic transformation; families, both young and old; and our national identity.

We need many things to make the step up in these areas. We need higher productivity, more business investment, and investment in the infrastructure supporting world-class performance in our cities and economic progress in the regions.

We need to recognise that skills are vital. Skilled people are the engine of innovation and growth in a knowledge-based market economy.
We have rebuilt the apprenticeship system, after its deliberate destruction by a shortsighted former administration. At the end of last year, there were 1,266 modern apprentices and 7,861 industry trainees in the building and construction industry.

For this sector, we all want a country where people live in well-built, safe, healthy homes that they can afford. Where businesses have the facilities they need. Where New Zealand buildings fit the requirements for the evolving Kiwi way of life. The building industry must be geared up, to take us to the next level.

How do we, government and industry together, raise the bar for the building and construction industry? The first and most obvious answer is by working together. Many of you have been waiting for more clarity on the individual measures of the Building Act.

I know there has been some uncertainty, and I know you want answers – but doing a rush job will not help anyone. If there is one thing we must learn from history, it is that doing things right the first time is crucial. And that applies equally to policy and to construction.

We needed to talk, rethink, talk again, and be sure to keep listening. Decisions have to be made in partnership with the people at the coalface, holding the hammers. Believe it or not, but politicians and Wellington bureaucrats do not have a monopoly on all knowledge and do not have all the answers.

Buildings have to meet the needs of our people. Along with being well constructed they have to be healthy and suited to the local climate. They have to balance upfront costs with long-term benefits – in energy efficiency, for example, where a higher upfront cost of insulation leads to years of healthier living and cheaper power bills.

A recent report released by the Ministry for the Environment shows so-called "green buildings" are worth 40 percent more than conventional buildings, are much cheaper to maintain and are more efficient.

Yet how many people when specifying what they want in their new home or refurbishing their existing home take account of energy usage, water usage and waste disposal? And how many of you in this industry bring it to their attention? We all know the answer, very few do, and I intend to change that.

So we are working on a fundamental rethink of how buildings perform. We are looking at every aspect of what we should expect from modern buildings, backed up by detailed work on practical, user-friendly standards.

We have started this with new Compliance Documents around weathertightness – new methods of putting buildings together. We are following it up with a full review of the Building Code. You will hear more about sustainable and energy efficient buildings from a range of speakers tomorrow.

The checks and balances around the building process have to be smooth and robust. This means efficient consents processing, better inspection procedures, and councils with efficient management systems in place, while giving the kind of assurance consumers have the right to expect.

We know there are still issues around consents – particularly around the time it takes to process them. This issue is being looked at, as part of the Building Consent Authority accreditation system we are moving towards. A second discussion document was issued earlier this month on BCA accreditation.

It is all part of the ongoing two-way dialogue with stakeholders to ensure the government produces what the industry, local government and New Zealanders need.

I am very pleased to announce that the government has approved the introduction of a licensing regime for building practitioners. Licensing is going ahead. It will be fully in place by 2011, with voluntary uptake beginning late next year. It is anticipated that 28,000 builders, designers and trades people will seek licenses.

It is time to remove the cowboys from the building and construction industry. Licensing will set benchmark standards of competence, and give the public renewed confidence in the many professional builders who are out there. This is something your industry has needed, wanted and in fact, demanded.

And it is our work with the Registered Master Builders Federation, the Certified Builders Association and the other trade associations and worker groups that has resulted in the licensing system I am outlining today.

From November 2007, 13 license classes will be progressively introduced for people working in certain areas of design and building work. Let me explain what these licenses will cover.

There will be three licenses for designers, depending on the complexity of buildings being worked upon. Buildings will be classified into three categories.

For example, designers of a Category 1 basic brick or weatherboard house will require a Class 1 design license. Those designing a more complex Category 2 building with monolithic cladding for example, will require a Class 2 license, and those who design highly complex Category 3 buildings, such as high rises and hospitals, will require a Class 3 design license.

Registered architects and engineers will automatically hold a Class 3 design license and can therefore design all three building categories.

People who oversee the construction of a building, will also need to be licensed. As with the designers, there will be three classes of site license, relating to the category of the building being worked on.

There will be seven licenses for specialist construction trades. These cover concrete structures, steel structures, carpentry, external plastering, roofing, brick & blocklaying and building services, such as fire protection or air conditioning systems.

These license holders will certify their work, and one person with the appropriate site licence will have overarching responsibility for certifying the whole site. The license standards and assessment criteria will be approved by the Building Practitioners Board, which is made up of building industry specialists from across the sector.

So why have we done it this way? Why is the industry so heavily involved? Because this Government knows the sector needs to rid itself of cowboy operators, and to succeed it needs to be done the right way with the buy-in of the industry.

We have not yet determined how licenses will be assessed. This work will be carried out in partnership with the industry over the coming year. But I can assure you that good builders will not be sent back to school, because experience and a good track record will count.

The Department of Building and Housing will be responsible for issuing licenses. And to ensure the system is transparent and fair, the independent Building Practitioners Board will hear appeals against licensing decisions and complaints against building practitioners.

Annual license costs are likely to be up to $200, and the initial assessment cost is likely to be between $250 and $650, depending on the ease with which an applicant can demonstrate their competence, skills and experience.

As I mentioned, the licenses will be progressively introduced over the next five years, starting with the design, site and carpentry licenses on a voluntary basis from November 2007. Design and site licenses will become mandatory from November 2009 for any work that is classified as significant.

People who don't have a license will still be able to undertake a wide range of building work. But the difference is that significant work must be supervised, or done by licensed people.

The regime introduces restrictions around particular types of building work – most notably work that is structural or involves the integrity of the building envelope. For example, the construction of, or significant alterations to buildings intended to be used as residences, workplaces or for public use. It also applies to the work required when you change the use of a building, for example, from offices to apartments.

This is an exciting time for your industry. For many builders and tradespeople, this will be the first time your skill will be recognized through national standards.

On a recent visit to a building site in Auckland, I had a long chat with the site foreman. He told me he could not wait for the licenses to come in, because he was sick of the cowboys in the building sector who give skilled builders a bad name.

Licensing gives recognition where it is due, and gives an assurance of quality to New Zealanders. It is absolutely not about sending an entire profession back to the drawing board or back to school. If you are a builder who knows your trade and takes pride in your work you should not have any trouble getting a licence.

A builder I know well in my electorate, for instance, is a third-generation chippie who has been working his whole adult life. He doesn’t have his ticket, but he builds a good house, and is always in demand. There is no way we are chasing someone like him out of the industry. We need him, and plenty more like him.

He, and those like him, will have no trouble. He, and those like him, will not have to go back to school. The only ones who will have trouble getting a licence are the cowboys; those who turn out second rate work and run a mile when things go wrong. Because that is the whole point. Why should the shonky builders make good builders look bad and bring the reputation of the whole industry down?

When I came into this job, I was worried that licensing would end up being heavy-handed and overregulated – that the proposals being put forward would go too far. I am pleased to see that we have worked with industry every step of the way to find the right approach.

And I would like to personally thank Registered Master Builders Federation members, the Certified Builders Association, and all the other trade and building industry groups, for your dedication and commitment to ensuring the job has been done well.

The right approach is also being taken in relation to DIY. The government has been very careful about intervening in something that is so much a part of the Kiwi way of life. In fact, I know some of you will think we should have gone further – that we should be licensing everyone, and restricting the vast majority of DIY work. However it is important that we look at the whole picture and see that there is a lot of low-risk DIY activity that isn’t a problem.

New Zealanders will still be able to do work that doesn't need a building consent. For example painting and decorating, maintenance and repair, and building low fences, garden sheds and low decks, and installing new kitchen or bathroom joinery or other internal joinery. And also some work that requires a consent, like
removing or installing a new internal structural wall or building a garage not intended for human residence.

The farmer will be able to build a hay shed or a tractor shed. The kids will be able to build the tree-hut. In fact, most DIY work in this country will still be able to be done by home handyperson. For the rest, there will be supervision and certification in place to ensure the necessary expertise can be called on when needed.

New Zealand is a can-do country, and these reforms are not about getting in the way of New Zealanders' cherished DIY activities. It is about striking a commonsense balance so major structural works are built solidly to ensure public safety and confidence in the building sector, and that home-handy men and women continue to improve their homes and properties.

There will be times when licensed building practitioners will be required by DIY-ers to sign-off their work. But this will not be a licence for them to print money. There will be rules, and the Board and the Department will be encouraged to come down hard on any rip-off merchants trying to game the scheme and dupe good people.

So, what are the next steps? What does this new regime mean for you?

We are not going to rush licensing because it has to be done properly. We know there is a skills shortage and we are not going to make it worse. Licensing will come in over time, and by working with the industry, all stakeholders will know what is happening and when. You will not have to run down to the Department of Building and Housing offices next week.

Over the next few months you will hear more about how the scheme will work, whether you will need a licence, and how to eventually qualify for one. I will be keeping a close eye on this, and I assure you now that you will have all the information you need well in advance of needing it.

Licensing means that an important piece of the picture will be in place. For the future, licensing will provide clear pathways into the industry. It will be a foundation for increased training levels and capability of those who design and build. And consumers will know they are getting the high-quality workmanship they deserve.

Which also means recognition.

Good buildings matter. Being a good builder matters. And that recognition is crucial, because New Zealanders are sleeping under the roofs you put over their heads.

Sometimes, with all the talk about the things that went wrong in the industry, about leaky buildings and cowboy operators, a basic fact gets forgotten. There are a hell of a lot of good builders out there. And we need a way to tell people that.

Because let's not kid ourselves. Why be a builder, a designer, or an inspector? Why work your guts out on a site? The first thing people might say is that there is a pay cheque at the end of it. Sure, everyone has to make a living.

But from what I have seen as Minister for Building Issues, and I think you will agree with me, there is much more to it. When I have gone out to the building sites, when I come to conferences like this, I am always struck by the pride good builders take in their work. How much basic satisfaction there is with a job well done?

Building is not just about earning a living. Not at its best. The Registered Master Builders Federation, as a professional organisation committed to a high-quality product that people can have faith in, exemplifies that way of thinking.

The licensing regime I have outlined today is designed to help ensure buildings are built right the first time. It will improve professionalism and accountability, and build consumer confidence, while maintaining a common sense approach to protecting the Kiwi DIY tradition.

Professionalism and accountability are the best way to position the industry to meet the challenges of a changing future. Thank you for your commitment to this future.

I am honoured to now declare this Registered Master Builders Federation conference officially open.


ENDS

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