Extra funding to help local authorities
12 October 2006
Extra funding to help local authorities lift their game on building consents and inspection services
Building Issues Minister Clayton Cosgrove has today announced a $3 million, three year programme to help local authorities process building consents faster, more efficiently and to a higher standard.
Under the Building Act 2004, territorial and regional authorities must be audited and registered to become accredited Building Consent Authorities (BCAs) by 30 November 2007, if they wish to continue offering building consent and inspection services.
Mr Cosgrove said the new regime will bring widespread benefits for New Zealanders.
"We are not just talking
about leaky buildings. Inadequate checks in the past have
also allowed poorly constructed homes and buildings to be
built. This coupled with delays in some building consent
work has been frustrating and expensive for consumers," he
says. "A home is often the biggest investment that Kiwis
make, so it's crucial people
know the house they buy has
been properly checked and built right the first time."
Mr Cosgrove said Government recognises that raising standards may bring extra costs.
"Government has listened to local authorities' concerns over the cost of preparing for accreditation. The $3 million will go a long way toward helping them gear up to meet the new requirements by upgrading their systems, capabilities and procedures."
Mr Cosgrove said the Government will be seeking feedback from councils on how the $3 million can be best spent, through the release of the consultation document, "Proposals to set Building Consent Authority Accreditation Fees and for Assistance with Accreditation."
The document outlines Government assistance options that include the development of resources to help local authorities meet accreditation standards and criteria, as well as workshops, training and other support services. It also outlines the proposed fee structure for the accreditation process, which will be run by International Accreditation New Zealand (IANZ), an internationally recognised, independent accreditation specialist.
It is estimated that IANZ will incur costs of $2.3 million from conducting accreditation assessments on all 85 territorial and regional authorities. This money will be recovered from the fees charged to the local authorities. Fees will range from $16,000 to nearly $63,500 depending on the value of the building work consented the previous year.
Mr Cosgrove said the fees are tiered so local authorities that process relatively low numbers of building consents pay considerably less to IANZ. He said the Building Act also allows local authorities to share resources and reduce costs by working together in clusters, or to transfer the function to another authority.
However Mr Cosgrove said it is important to remember local authorities can fully recover these accreditation costs through the fees they charge building consent applicants.
"We are talking about user pays, not an increased burden on the ratepayer," he said. "For the vast majority of councils, any increase in building consent fees would be less than $100 dollars per consent, and for many consumers, I am sure that is money well spent for peace of mind and security over their greatest asset."
Mr Cosgrove said more than two thirds of the $3 million programme would be available in 2006/07 to help cover off the higher upfront costs of preparing for accreditation. The programme will be funded from the existing Building Levy.
Submissions on the consultation document close on 20 November 2006. It is available on the Department of Building and Housing's website – www.dbh.govt.nz - or by calling 0800 242 243. Once the consultation process is completed, the Government will confirm the BCA accreditation fees and the structure of the $3 million programme.
The accreditation programme is part of the Government's suite of changes to transform the building and housing sector, so that homes and buildings are built right the first time.
Other reforms to raise standards and improve services include the review of the Building Code, the licensing of building practitioners while protecting the Do-It-Yourself (DIY) tradition, a major shake up of the Weathertight Homes Resolution Service, the introduction of a financial assistance pilot for the worst affected owners of leaky homes, product certification, proposals to improve the energy efficiency in homes and workplaces, and investigating a home warranty insurance scheme.
Background Information
Why is accreditation
necessary?
There have been issues in the past with the
quality of building inspection and consenting services that
have contributed to problems such as leaky buildings and
substandard building and construction work. There has also
been criticism of delays in processing consent
applications.
What will the introduction of accredited
Building Consent Authorities achieve?
These reforms aim
to speed up the issuing of building consents, and ensure
that authorities are offering top quality, efficient
inspection and consent services. Authorities must meet the
required standards in order to gain accreditation, in terms
of their on-site inspection services and their internal
consent processing systems.
Authorities will be better
supported in their role by the Government's moves to also
raise the standard of construction and design work, through
the introduction of licensing for those who design and
build.
Accreditation and registration of Building
Consent Authorities (BCAs) is one of the reforms introduced
by the Building Act 2004, whose overall aim is to ensure New
Zealand homes are built right first time. Territorial and
regional authorities must be accredited and registered as
BCAs by November 2007.
How significant are the proposed
fees in the overall context of building and building consent
costs?
The fees are minimal in comparison to the value of
overall building work. For example, more than $11 billion
worth of building work was consented last year, and
territorial authorities received $110 million revenue
from building consent fees. The initial accreditation fees
($2.3 million) would be just 0.02 percent of the value of
buildings and two percent of territorial authority building
consent revenue.
What is the value of
accreditation?
Inspection and consenting of building work
is done for the protection of consumers, so it is crucial
that this service is performed competently. Buying a house
is often the biggest investment that New Zealanders make.
Accreditation will enhance consumer confidence by ensuring
that BCAs have the necessary skills, competence, systems and
resources to fulfil their obligations.
Why is the
government assisting councils in preparing for
accreditation?
The government acknowledges that there is
a cost to territorial and regional authorities in meeting
the required standards through upgrading their systems,
procedures and publications. The assistance will be in the
form of a $3 million package over three years, with up to
$2.3 million being available in 2006/07.
Will the $3
million programme subsidise local authorities' preparation
costs?
Not directly. Grants will not be made to
individual councils. However the money will be used to pay
for those services, products and training that councils
would otherwise have to fund in order to become accredited.
The Government has outlined suggested options in the
consultation document, but it wants councils to come back
with advice on how this money can be best spent.
Why are
fees required?
The independent body International
Accreditation New Zealand (IANZ) has been appointed to
undertake the accreditation work. IANZ must fully recover,
through fees, the estimated $2.3 million (GST exclusive) of
costs it will incur in conducting accreditation assessments
on all 85 territorial and regional authorities. Fees will
be lower for the subsequent BCA reassessments carried out by
IANZ.
Why does Government not pay the fees on behalf of
local government?
The government has worked to establish
a fair and user-pays fee structure. BCAs can fully recover
the cost of the fees paid to IANZ from those who directly
benefit from the enhanced inspection and consenting services
(i.e. building consent applicants). Increases in building
consent fees would be less than $100 dollars for most
authorities, and need not be passed onto ratepayers. It is a
user-pays model.
Will the fees lead to increased
rates?
There is no reason why the BCA regime should lead
to councils raising their local rates. The Building Act
allows territorial and regional authorities to recover such
costs from building consent applicants through building
consent fees. Not all authorities currently set consent
fees on full cost recovery. Some choose to subsidise the
fees through rate revenue, some by up to 50%.
Why can’t
the building levy be used to pay BCA fees?
Under the
Building Act 2004, the levy cannot be used to fund
accreditation fees. However the levy can be used to support
and assist accreditation preparations, as is the case with
the $3 million programme.
Will this new regime mean
faster turnaround for building consent processing?
Accreditation is about ensuring authorities are offering
efficient, consistent and high quality building inspection
and consenting services. Authorities will have to have the
necessary resources, competencies and systems in order to
gain accreditation. These factors ultimately mean a better,
more efficient and faster service for customers.
Do
all authorities have to become accredited?
No. To carry
out consents and inspections work, territorial and regional
authorities must be accredited and registered as Building
Consent Authorities by November 2007. If they choose not to
continue this work, authorities can transfer their building
consent authority functions to another authority (and pay no
accreditation fees).
Can authorities that choose to be
accredited, reduce costs?
Yes. Local authorities can
reduce costs by participating in cluster groups with other
territorial authorities. This allows them to share resources
and make savings.
Why isn't the Government going down the path of requiring councils to offer free building consents if they fail to meet the 20 working day processing time limit?
The Government does not favour this approach. Local authorities would be pressured into putting speed ahead of quality when processing consents, and any penalties would ultimately be passed onto ratepayers.
There is no such thing as a free consent. The cost of processing the consents still has to be paid for. This approach would also push "mum and dad" residential building applicants down the queue, as councils would be pressured to sign off costly building projects first. And this approach also ignores the fact that New Zealand's building boom is partly responsible for the delays.
The Government will not sacrifice quality, so has chosen a user-pays regime that will facilitate faster consent turn-around while maintaining high standards of service.
ENDS