Auckland Registered Master Builders Association

Thank you for inviting me. It's a pleasure to be here. Some of you may have attended your annual meeting in Blenheim a few weeks ago - an event I had great pleasure speaking at.

I value every opportunity I get to meet Federation members because it's a chance to get to know first-hand the issues confronting you and your businesses as you attempt to tough-out the current economic climate.

Kiwi builders are resilient by nature and I know you will get through these difficult times as you have during previous downturns.

• The building and construction sector is a key part of the economy

The building and construction sector is important to the New Zealand economy. It contributes more than 5 per cent of GDP, and employs 7.5% of our workforce. The total capital spend in the building and construction sector is more than $20 billion per annum.  It can play a pivotal part in lifting us out of the recession.

We need to continue to invest in skills and capability and we need to lift productivity. It's important the sector retain critical mass and skills to be able to respond quickly and efficiently to the upswing in demand when it comes.

As you know the housing market has corrected, and is likely to continue to do so for a while yet. The commercial sector is adjusting now.  But demand will return to the market. We need to be ready for when it does.

• Boosting the economy with investment in infrastructure

The Government has fast tracked $500 million worth of publicly-funded building projects in the latest in a series of initiatives under the Government's Jobs and Growth Plan.

About $100 million worth of fast-tracked projects will start before June 30 this year.

The $483.7 million spending brought forward include:

• Education - $216.7 million of spending, including five new schools, school refurbishments and maintenance and ICT infrastructure improvements.


• Transport - $142.5 million of spending, spanning five large state highway projects and a programme of smaller, regional roading improvement projects.


• Housing - $124.5 million of spending, allowing Housing New Zealand to upgrade and renovate 10,000 more state houses, and build 69 new state houses over the next six months.

The Government economic stimulus package also includes:

• a $480 million helping hand of tax and regulatory assistance for small and medium businesses;


• sweeping reforms of the RMA; and


• income tax cuts

I mentioned that significant investment has been earmarked for housing.  

The Department of Building and Housing has collaborated on its own housing project - the Starter Home Design Competition.

• Starter Home Design Competition

This competition aimed to encourage architects, designers, and those in the building industry, to come up with innovative, affordable designs for a simple starter home.

The results were stunning. They showed just what could be achieved with limited resources.

I and my colleague Phil Heatley announced the winners during a ceremony at the Beehive last month.

It was also announced that the outright winner's design would be built right here in Auckland - in Mangere to be precise and showcased to the public.

New Zealanders rightly demand quality homes when they set about building their dream.

The designs showed that a range of functional and practical living spaces can be incorporated into an innovative design that meets people's needs and provide a quality living environment.

They promote simplification, standardisation and appropriate choice of house sizes which basically means that sound building practice and affordability doesn't always have to mean boring or unappealing.

Modest homes can be exciting and can capture our imagination. First-time home buyers really can build new rather than buy an existing home if they want to. In this case, less can really mean more.

The ideas generated by the competition will feed in to the Compliance Document for Simple Homes and we are actively looking at ways to promote the scheme so watch this space!

This is one way we are helping industry.

But the government is working on a range of others - such as removing regulatory barriers that can hinder growth.

• The way ahead

Right now, recovery looks a long way away.  But we must start looking further ahead if we are to take advantage of new opportunities that will return when the recovery begins.

We can achieve this by taking the necessary action now.

• Building Act

As Minister for Building and Construction, I am simplifying and streamlining building regulations wherever I can.

This will require changes to the Building Act and work has already begun identifying where improvements can be made without compromising building quality.

One of my priorities is of course licensing.

• Licensing

My focus is to lift performance and skill levels across the sector. 

A relatively low skill level in the sector has been holding the industry back and will continue to do so unless action is taken.

There is a risk that this situation will be made worse by the down-turn. That is why licensing is so important. It will give a boost to skilled practitioners and introduce accountability.

I am working hard to achieve the certainty you need around restricted building so that you can be confident about the work you do in future.

I don't need convincing about its benefits.

It will promote consumer confidence by allowing the public the chance to hire a competent practitioner.

It will lift the performance of the sector, set standards and introduce accountability.

I recognise its importance and I am actively working with colleagues to give you that certainty.

• What other areas of the Building Act is the Government looking at?

The government is:

looking at what really needs to be consented and whether there are opportunities to exempt low risk work from the need for consent.  Looking ahead, I would like to recognise licensed building practitioners, by allowing them to do some work without consent.

we will be providing better information and education on the building code and how to achieve or meet performance standards without "regulating everything that moves"

we will remove unnecessary building control regulation and increase  focus on information and education

support councils to work smarter using technology to do so

leveraging the same technology to reduce design and building costs - investigate the potential for an on-line national consenting system to reduce costs, and get consistency across the country.

helping consumers take better informed decisions about building their homes and choosing the products they need

Reform is already underway in the shape of the Building Amendment Bill (2) and the Resource Management Amendment Bill both of which are currently before Parliament.

The Building Amendment Bill

This bill will:

streamline the consent process for house designs to be replicated on a substantial scale and streamlines the process for making minor alterations to work already consented.

• make obtaining a Project Information Memorandum (PIM) voluntary which will save time and lower building costs.

The Bill has some useful initiatives, but it is only a start and doesn't go far enough to address compliance issues facing homeowners, developers and builders.   There's more to be done.

Resource Management (simplifying and streamlining) Amendment Bill

This bill will cut through suffocating red tape for Kiwi homeowners, businesses and farmers while safeguarding the environment.

These reforms address the costs, delays and uncertainties of the current Act. They will remove slow and overly bureaucratic processes that do little for growth or the environment.

Other key priorities:

• Getting more leaky homes fixed.

The Government is looking at an alternative approach to weathertightness with greater emphasis on getting homes fixed - less on process and more on outcomes.

I have directed the Department of Building and Housing to undertake a comprehensive review of the approach currently taken on weathertight issues as early indications are that improvements are needed.

• Re-assessing risk and liability

Councils have taken a lot of the blame for the leaky homes crisis. 

It's time to look at the issue of the allocation of risk in relation to who carries what risk and how this is managed

The current joint and several liability regimes drives risk-adverse behaviour by councils because too often they are the last man standing

Developers and builders need to stand behind their work and put things right where needed.

I have asked my officials to prepare advice on:

• whether various parties are currently bearing an appropriate level of risk?


• whether territorial authorities are bearing too much risk, and whether some developers and builders are bearing too little given their ability to use shelf company structures?


• there is a question around what is a reasonable level of risk for consumers to bear. How can we improve consumers' access to good information and advice so they can make good decisions when buying or building a property?


• whether consumers would benefit from access to a greater range of options and products for managing risk such as home warranty insurance products?

We face an uncertain economic future but recovery will come eventually and I am confident that the building industry, especially Master Builders,  are well-placed to take advantage of the new era of economic opportunity when it comes.