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Shane Jones: Speech To Property Council

28 August 2008 Speech

To: Property Council of New Zealand

National Conference for Property Council New Zealand

Te Papa Wellington


Maintaining the right conditions in which business can prosper is one of this government’s top priorities and the commercial property business is no exception.

As Minister for Building and Construction, I want to ensure we build high-quality homes and buildings that meet the needs of all New Zealanders wherever they live and work.

And we need to ensure buildings stand the test of time so that they can be used and enjoyed for generations to come.

The commercial property market, like all sectors of the economy, can be affected by the vagaries of the market.

But bricks and mortar will be with us for generations. That’s why building right, first time, is so important.

What we build today should be regarded as a legacy to our children. So what happens in the short-term, though commercially important, should be seen in the context of what that legacy is and how we manage its growth and development.

That’s why organisations like the Property Council of New Zealand are so important. You understand the market and you help nurture its growth and prosperity.

The property market is entering a period of change. That change is being driven by many forces – some are home-grown but others are international.

There’s a lot happening at a local, national and international level that will affect the building industry.

The need for a greater cross-sector strategic direction was brought into sharp focus at the Building and Construction Sector Leaders Forum held in Auckland earlier this month.

I brought together 60 leaders, (including Connal Townsend Chief Executive of PCNZ) and decision makers from the construction sector as well as representatives from local and central government to take part in a summit on the future of the industry.

It was the first time that so many major figures in the building industry had come together to discuss the issues facing the sector and I was encouraged by the feedback.

It looked at a range of global issues including: population growth, climate change, oil prices, growing consumer demand for sustainable products, land shortage and economic volatility.

Obviously, there are no quick fixes to any of these issues.

However, it was the beginning of a process to build a shared understanding of the big picture context and implications for the sector and to agree how we can best work together over time to address the big issues.

Sustainable Urban Development

Sustainable urban development is a key strategic issue for the housing sector. A range of factors are likely to contribute to an increase in demand for sustainable urban development including:

- land becoming scarcer and more expensive, especially in our urban centres
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- Changing demographics – i.e. smaller family sizes
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- housing becoming less affordable
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- rising energy costs resulting in people wanting to live closer to where they work and play
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- a shift in consumer preferences for environmentally friendly living.
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Quality urban developments can make housing more affordable by reducing the cost for each house. They are generally less costly to maintain and are better for the environment.

Challenges and opportunities for better urban developments include:

- co-ordinating national, regional and local planning and implementation for large scale development
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- overcoming the length and nature of planning and development control processes
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- overcoming difficulties assembling land where there is multiple and fragmented ownership
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- developing a housing product – in terms of high density houses - that are affordable and suitable for families with children
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- ensuring the construction of medium to high density housing is to a high standard
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- ensuring integration between land use and transport planning, utilities and other service providers
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- addressing the lack of certainty and return on capital for private developers especially where wider public objectives are desired
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- overcoming community resistance to higher densities (especially from established communities experiencing infill housing and new high density developments
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- Developing the tools and powers to do large scale urban development.
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In response to these issues, local government, central government and developers will need to work collaboratively in support of quality urban development. That is, development characterised by good infrastructure, green spaces and other services valued by communities such as access to schools, shopping, recreational and health facilities.

Hand in hand with good urban development is increasing awareness and demand for more sustainable buildings that will perform well into the future. I'm pleased to say there are positive industry responses underway to consumer preferences for greener and more efficient building products that maintain and enhance wellbeing.

We have been supporting market based mechanisms such as rating tools as a way of fostering progress. The Green Building Council of New Zealand is working with the sector to create a sensible approach to facilitating market-driven change in the commercial space. We support this type of approach to change with and alongside industry and its representative agencies.

Regulation

Since I have been Minister for Building and Construction, I have endeavoured to make a range of changes to the regulatory framework. These changes have been based on engagement with the actual industry professional’s including investors.

I have sought to drive an important programme of policy aimed at allowing New Zealanders to live and work in better buildings.

LBP and Product Certification

The government is beginning to make good progress on both licensed building practitioners and product certification. Builders and other building professionals are getting behind the licensed building practitioners scheme.

More than 10,000 have now applied for application packs and hundreds of builders and designers can now proudly call themselves a licensed building practitioner after gaining a license. The scheme will help raise skills and boost consumer confidence in the building industry.

Product certification is another important policy area, as you know. Allowing manufacturers to show their products are effective when applied correctly will speed up the consent process as well as the added benefit of strengthening consumer confidence.

With the passing of the Building Amendment Act earlier this year the Department has been able to prepare the final stages of a voluntary scheme due to be launched later this year. The next stage is drafting the regulations that cover the scheme and how it will run.

Streamlining

An important reform is aimed at helping builders by simplifying the design and approval of simple starter homes by introducing a single compliance document for modest simple homes.

The document is intended to bring together in a way which has not been done before all the compliance information needed to build a simple starter home.

I hope it will send a signal to the market to build more affordable homes and will demonstrate that they can be of high-quality and appealing.

We are coming to the end of a consultation on the document and the Department will soon set about going through all the submissions to see what if any improvements can be made.

Details of a competition for builders and designers to build a simple home using the new document will be announced soon.

I believe the compliance document will help allow simple starter homes built with quality materials and in a certain way to gain quicker consent approval.

Work continues on:

Introducing national multi-use approvals – a new system of pre-approval for designs and plans for work that will be replicated on a large scale. Councils will still need to assess site specific requirements.

Making the requirement for a Project Information Memoranda (PIM) voluntary.

Improving the process for managing variations to consented building work.

And, extending the list of low-risk work that can be carried out without needing a building consent.

This is likely to include work such as:

- removal/alteration of a wall that is non load-bearing and not a bracing element
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- installation or replacement of windows, or exterior doors or roof windows, provided structural elements are not modified
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- alterations of dwellings for access purposes, including doorway modifications and access ramps, but excluding wet area accessible shower.
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I expect that such a move will take around 10% of building consent activity out of the system. This will include most internal shop or office fit-outs.

These initiatives, which will also benefit builders, form the cornerstone of the streamlining the consent process.

I hope to be able to announce the next steps in this important area in the coming weeks.

Work is also being done on other initiatives which will also benefit the industry, reducing delays and bringing down costs.

We are continuing to look at better use of technology to support the building consent process, including investigating online consenting systems.

We are working with local government to explore the idea of regional consent processing units or shared service arrangements which will pool expertise and manage more complex consents.

And we are looking at ways to improve collection and sharing of information on building products and product performance.

Unit Titles Bill

The Government has responded in other ways to meet the demands of a rapidly changing property market.

A bill has been introduced that will clarify the rights and responsibilities of unit owners, bodies corporate, developers and commercial tenants.

The Unit Titles Bill will modernise existing legislation and applies to commercial and residential property. Importantly, it will make joint decision-making easier by promoting participation and by removing requirements for unanimous resolution.

It also provides intensive developments including mixed-use development, such as industrial parks and shopping centres not well-served by the current Act.

And it will encourage sound property management practices that will protect the long-term value of investments by introducing requirements for long-term maintenance plans.

This work programme is, and will continue to be, a top priority for this Government and will benefit the property sector. Your group is an important part of this works development and it is important that this work meets the needs of all property developments.

ends

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