17 Apr 2019

Building law overhaul proposes tougher certification and builder guarantees

10:10 am on 17 April 2019

Major changes to engineering certifications and builder guarantees are on the cards if the government's reform of the construction laws goes ahead.

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Photo: 123RF

The government has announced a raft of changes to the Building Act 2004 - calling it the most significant reform to the sector's main legislation in over a decade.

The industry has long faced challenges with low productivity, building product regulation, and labour shortages.

Some in the sector are quick to point the finger at the legislation, which Building and Construction Minister Jenny Salesa agreed needed to change.

"It is absolutely not fit for purpose. The Building Act 2004 hasn't really been amended in any big way over the last 15 years," she said.

After almost a year consulting with the construction industry the minister this week outlined what changes the government hoped to make.

Changes are focused on five areas; building products, occupational regulation, risk and liability, a reduction in the building levy and harsher penalties for those who don't obey the rules.

"I expect this reform to create a building sector where people understand their responsibilities and increase the number of skilled workers, where better quality means building it right first time and people are better protected if that doesn't happen, and where people are accountable when things go wrong" Ms Salesa said.

The changes are open for public consultation until 16 June.

The overhaul was announced two days afterthe government reached an agreement with the industry to improve the sector.

Grant Florence, chief executive of the industry group Certified Builders, said changes were overdue.

"There's definitely a number of areas in there that have required attention for some time now."

Building products definitions would be added to the Act, and manufacturers and suppliers would be responsible for ensuring their products are fit for purpose.

"It's just around gaining clarity," Mr Florence said.

"[Building products] have been an area that there's been plenty of discussion on and hasn't had that clarity. The propensity for imported products to turn up on our shores is only going to get greater and so having some clarity round how we manage those and ensure they're fit for purpose will be key."

Insurance and guarantee schemes

The government also proposes making builders offer a guarantee and insurance product before starting a new home or major alteration.

People would pay the premium directly through their builder or the builder would incorporate the premium into the overall cost. The homeowner would be the 'policy holder' of the guarantee and insurance product allowing them to make claim directly with the guarantee and insurance provider.

Homeowners could choose to opt out, which Mr Florence said was disappointing.

MBIE noted the success of the proposal was dependent on being able to grow the insurance market to meet the increase in demand.

Similar schemes are already in place, with Master Builders offering a 10-year guarantee, and New Zealand Certified Builders (NZCB) offering the Halo 10-year guarantee which Mr Florence said had reached $5 billion worth of product.

The government considered capping liability of councils, as building consent authorities, at 20 percent but decided against it.

Mr Florence said it was important the government was "bold" and didn't let their proposals get watered down through the parliamentary process.

Raising standards

Other changes include raising standards for the licensed building practitioners scheme as well as introducing a new licensing scheme for engineers.

MBIE said the current voluntary Chartered Professional Engineers (CPEng) scheme didn't "serve its purpose" and many building consent authorities did not consider it a reliable mark of competence.

The reform would establish a voluntary certification overseen by the Ministry for Building and Construction with stronger sanctions for engineers acting unethically or doing substandard work.

Industry body Engineering New Zealand chief executive Susan Freeman-Greene said the problem stemmed from a lack of mandatory regulation of engineers carrying out complex safety-critical work.

"People are trying to make CPEng fulfill a function it wasn't designed for. CPEng is a voluntary quality mark that conveys general competence rather than a proven ability to perform specific work. It doesn't stop engineers operating outside their area of competence and it doesn't provide enough assurance that engineers can do specific safety-critical work."

Ms Freeman-Greene had concerns about how a new government certification would work in with the profession's own regulatory role.

"We think that role fits with the professional body as it does in other professions, that it is our responsibility to make sure that we can hold our engineers to account for professionalism and for their competence. We do so against internationally benchmarked standards."

Engineers also face another licensing scheme, with new restrictions on engineering work in line with recommendations from the likes of the Canterbury Earthquakes Royal Commission.

The proposal document said there were are currently no restrictions on who could carry out or supervise engineering work on buildings other than what is restricted under the Licensed Building Practitioner scheme. Safety-critical structural, geotechnical and fire safety engineering work would be restricted to those with a special licence, it said.

"We have for some time now been advocating for licensing for safety-critical engineering work," Ms Freeman-Greene said, "So we are really pleased to see that proposal reflected so strongly in the discussion document.