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Cosgrove: Engineering the future of our nation

Hon Clayton Cosgrove
Minister for Building Issues

Embargoed until 8.15am 11 Aug 2006 Speech

Engineering the future of our nation: Opening speech at the Association of Consulting Engineers New Zealand Conference

Venue: Dunedin Centre, 1 Harrop Street, Dunedin
Time: 8.15am Friday, 11 August 2006


Members of the Association of Consulting Engineers New Zealand; Association president Stephen Jenkins and chief executive Kieran Shaw; Deputy Mayor of Dunedin, Councillor Syd Brown; Ingenium president Richard Kirby; the Institution of Professional Engineers New Zealand's director of engineering Charles Willmot; special guests, ladies and gentlemen.

It is a pleasure to be here with you today at your annual conference.

The theme you have chosen for this gathering is Tomorrow, Today. These simple words are positive and forward-looking. They are about embracing change and accepting challenges – and as engineers, that is very much what you are about.

Your theme is also, I might add, what this Government is about and reflects its approach to the building and construction industry. Today we are in the middle of a suite of sector reforms that will ultimately change and improve the buildings that we will have tomorrow, while also protecting the Kiwi Do-It-Yourself (DIY) tradition. In fact, it is no exaggeration to say the New Zealand building and construction sector is undergoing the greatest transformation in its history.

As engineers, you play a key role in this changing environment. The modern world is increasingly reliant on engineering – indeed it affects every aspect of our daily lives – from the water we drink, to the roads we drive on, the bridges we cross, the computers we use and the electricity that powers them.

The fact that you are members of the Association of Consulting Engineers New Zealand makes your role even more pivotal. You are the principals and decision-makers of your organisations. You think strategically. You make things happen in a practical sense. And I am pleased to see that leadership extending beyond your own firms into the wider sector.

Your Association has contributed significantly to the government's development of the Building Act 2004, and subsequently to consultation programmes on everything from the licensing of building practitioners to product certification. Your major contribution has not gone unnoticed, and on behalf of the Government I would like to express my appreciation to you all.

Contrary to some peoples' perceptions, politicians do not have a monopoly on all knowledge. I believe 80 percent of my job is listening and 20 percent is talking, so that the policies we create actually work and add value in the real world. I have instructed my officials to ensure that our dialogue continues, because your input, your views and aspirations for this industry and our country, are extremely valuable.

Your skills in the day-to-day workplace are also essential in raising the bar in your sector's future. For instance, the Building Act widened the definition of earthquake-prone buildings, and consulting engineers have a crucial role in assisting the sensible implementation of this legislation and the policies adopted by territorial authorities.

Many of you will also be aware of the establishment of Advisory Panels to guide the Department of Building and Housing on structural, fire, envelope and access issues. Members of your Association are closely involved in the Structural and Fire Advisory Panels, and I would like to take this opportunity to thank you for highlighting important issues for the Department to address.

It is your skills, your vision and your spirit of innovation that is helping to shape New Zealand's building future.

As I said, we are part way through the transformation, and some would say the reconstruction, of the building sector. The new Building Act is aimed at restoring the balance that was absent under the 1991 Act. And in doing so, it lays the foundations of long-term strength in the building sector and, therefore, the New Zealand economy. These are exciting times.

Let me outline the key reforms I have introduced since taking up the Building Issues portfolio last October.

In April, I announced a watershed change with the introduction of licensing for those who design and build. Occupational licensing is obviously of huge interest to you as a group, since your skills encompass both these fields. And I am pleased to note this is another area where your Association made a significant contribution throughout the consultation process – this input continues today, as we develop the criteria for licenses and the assessment regime.

This successful collaboration between the Government as the policy-maker, and industry as the implementer, is also seen by the positive response to licensing by this Association and other organisations, such as the Institution of Professional Engineers New Zealand, the Registered Master Builders Federation, Architectural Designers New Zealand, the Construction Industry Council and the Building and Construction Industry Training Organisation, who have all publicly backed these reforms.

The reason for this support is simple. The policy makes sense, and it is needed. At present there is nothing to stop anyone strapping on a tool belt and calling themselves a builder, whether they are competent at their trade or not. This has contributed to problems such as non-weathertight homes, and lowered public confidence in the sector.

Licensing recognises the many excellent building industry professionals who are out there by clearly identifying those who meet national standards, it will renew public confidence, and will ultimately push 'the cowboys' out.

As engineers, you know that top quality design is the critical first step in ensuring that buildings are built right the first time. Indeed, there is plenty of research out there that shows that good quality design and documentation can significantly decrease construction costs. And when we talk costs in building and construction, we are talking big money in a very big industry. This is why buildings must be built right the first time.

In 2005 there was $9.8 billion of capital investment in residential building, and a further $4.2 billion in non-residential. This construction underpins our economy, employing more than 160,000 people – which is around 8 percent of the total number of people employed - and contributing around 5 percent of Gross Domestic Product.

Within an industry of that size and importance to the nation, licensing of those who design and build gives recognition where it is due, and an assurance of quality to New Zealanders.

So yes, licensing will change things for the building and construction sector. No doubt the question in your minds is what it will mean for you, as engineers. And to that I have three words to say: business as usual.

Chartered professional engineers will automatically be deemed to hold level three design licences. That is the top design level and it clearly reflects the acknowledged standing and competence of your profession. Your qualification may also provide strong evidence of competency to gain a site lead or other license, although of course, the criteria is still being worked through.

The Association of Consulting Engineers prides itself on best practice. The firms from which you hail have good systems, competent people, a strong peer review ethic, and value education and training. The licensing system has been designed to normalise the very same culture that you already have. It is about ensuring professional standards in construction and design. It is also about ensuring the protection of the Kiwi Do-It-Yourself (DIY) tradition – and from the response I have had, I think we have got the balance right.

In May, I announced a major shake-up of the Weathertight Homes Resolution Service (WHRS). The service was set up as a 'call to arms' to deal with a major problem caused primarily by the deregulation of the building sector and the deliberate destruction of apprenticeship trade training in the 1990s.

Although the WHRS was achieving successful settlements, it was often too slow and unnecessarily drawn out by lawyers and experts. As a result, the government allocated $30.5 million in this year’s Budget to put in place reforms that will stop gaming of the system, hold those who are liable to account and get leaky homes fixed faster. These reforms are hugely important. It is about giving New Zealanders confidence in their homes.

Money has also been set aside to provide advice and consumer education to owners of leaky homes and to prospective homebuyers generally - a move that will lift consumer confidence in the housing market.

Indeed, we went even further at the end of last month with a series of moves to further enhance consumer protection, and to speed up mediation and adjudication processes. As a result, there will be a new specialist Weathertight Homes Tribunal administered by the Ministry of Justice, greater use of investigative powers by adjudicators and a requirement for local authorities to place WHRS notices on Land Information Memorandum (LIM) reports on affected properties.
Of course, consent and code compliance certificates will also be placed on the LIM once the problem has been fixed to show the home is in a solid state.

Also in May I launched the Building Code review – a fundamental rethink of how we build and what we build, and bringing it all into line with the requirements of the Building Act 2004. In a nutshell, the review is to make sure our buildings are top quality and meet our communities' needs and expectations.

The review of the Building Code is one of the most important activities under the Building Act. Many of the other reforms involve raising performance, but the Building Code defines the overall performance standards that buildings must meet.

The Government’s objectives are clear. We want a Code that sets clear performance standards. We want a Code that enables innovation without compromising confidence in the standards achieved. We want building standards that allow for different levels of performance in different environments, based on risks and consequences.

As engineers you need to know this, and it is in your interests and the country’s that you help shape the Code. These are engineering and design issues and the Government wants your contribution.

This discussion document, Building for the 21st Century: Review of the Building Code, brings together many different kinds of expectation. It asks questions about what we want. What we need. What we can afford. What we should plan for. How we can best respond to our changing physical and social realities.

Buildings need to meet the needs of New Zealanders. That seems straightforward. They need to be safe. They need to be warm. They need to be durable. They need to be healthy and in particular, they need to be energy efficient. But how safe? How warm? How energy efficient? Strong enough to withstand a 6.5 earthquake? An 8.5? Durable enough to last fifty years? A hundred?

Auckland has a different climate and living patterns than Invercargill – how should an Auckland apartment reflect that versus an Invercargill house? How do we plan for climate change over time?

Buildings have economic costs attached to them. Anyone with a mortgage or a power bill knows that. How do you balance upfront costs with long-term benefits – in energy efficiency, for example, where you can get years of healthier living and cheaper power bills by doing things smarter at the start, even if it might cost a bit more in the beginning?

How do you balance economic, environmental and social costs for a sustainable future?

These are big questions. Words like sustainability and resource use boil down to little decisions on how you deal with construction waste and what kind of hot water cylinder you use. As engineers, you can provide leadership by ensuring you take factors such as energy usage, water usage and waste disposal into account during the design phase of a project.

A country looking towards the changes I have been talking about – a country with evolving living habits, a transformed economy, new technologies, and potentially a changing climate – needs to put time into those decisions.

This is a debate that needs the very best thinking and knowledge New Zealand has to offer. On that basis I note that submissions to the Department of Building and Housing on the submission document close in just under three weeks, on August 31. So, for those of you who haven’t made submissions yet and want to make a contribution, I strongly encourage you to do so.

The changes I have outlined for you today are just some of the reforms this Government is introducing. Work is also underway into reviewing legislation around unit titles and improving dam safety, accrediting Building Consent Authorities and improving the efficiency of building consent processes, as well as product certification and other reforms.

As I said, these are exciting times. The proposed licensing regime will especially bring much needed changes, while also safeguarding the great Kiwi DIY tradition. Licensing will also bring questions, such as liability.

In terms of liability issues, we are largely talking business as usual. Your current exposure to the risk of financial liability is managed through commercial contracts and professional indemnity insurance - which I note is a condition of membership with your Association. You can expect this level of risk management to remain the case.

Under the Licensed Building Practitioners regime the liability environment is unlikely to change in relation to design. However licensing will make individual accountability more transparent especially on the building site, and this could have an effect on how individual practitioners' liability risk is assessed.

Taking a big picture view of the situation, I can tell you that the Government is looking at liability issues from two perspectives - consumer redress, particularly in the residential market including the role of home warranty insurance, and whether insurance would help Licensed Building Practitioners manage their risks.

Changes around liability are more likely to be noticed among those practitioners who typically have not carried professional indemnity insurance, and who have not worked under a professional registration and disciplinary system such as yours.

The Department of Building and Housing is working on these issues, and yes, they are challenging. You can expect to be invited into the consultation process with the Department and I hope to have some advice on preliminary decisions by the end of the year.

If I could leave you with one simple message, it is this: I know that as a profession you work co-operatively, you know how to work together, and I would like you to continue to provide leadership in raising the bar for this industry.

There is a lot of change going on today - very positive change - but you can’t do it alone, the Government can’t do it alone, and neither can the Department of Building and Housing or any other participant in this sector.

We all need to contribute, and I recognise the Association of Consulting Engineers and its members as having a huge capacity to lead in this respect.

We need your skills, your thinking and your innovation if we are to have a world class building industry. Your future is very much in your hands.

You are a key part of this industry and I look forward to continuing to work closely with you to the betterment of the building and construction sector, and New Zealand as a whole.

I wish you the best for a very productive conference.


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