Building law reform comes in waves in New Zealand, and it appears that a set is forming.
In April 2019, MBIE released a comprehensive discussion paper that proposed radical reforms to the building industry. This came in response to a growing sentiment that the Building Act 2004 has become increasingly outdated. One such initiative is focussed upon updating the Licenced Building Practitioner (“LBP”) scheme. It is twofold.
The definition of Restrictive Building Work (RBW) is to be broadened
The updated version will include more complex, non-residential building work. This will mean an increase in the type of building work that requires an LBP to carry it out or to supervise it.
The current definition of RBW:
All work that involves design and building work on the primary structure or weather tightness of houses and small to medium apartment buildings. Also the design of fire safety systems for small to medium-sized apartment buildings (this type of work will continue to be defined as RBW).
The proposed expansion of the definition:
All work that is done on buildings deemed to be high risk.
What is high risk?
High-risk buildings will include all residential building work. Also, all complex structures upon which members of the public depend. For example, multi-story apartments, offices, hotels, schools, stadiums and other public utility buildings.
The idea behind this proposal is to better manage risks posed to the public. Just as importantly, to protect vulnerable building occupants. Overall it will likely have the benefit of increasing confidence in the sector as a whole. However, it is recognised that over the short term this may well result in a skills shortage to carry out RBW. This will result from a greater volume of building work requiring an LBP to carry it out.
The competence standard for builders to become LBPs is to be raised
MBIE has proposed an overhaul of the current licencing regime. This will reduce the categories of licences and simplify them. By the same measure, it will also ensure that they are more substantive in terms of the competence level required. In addition, it has been proposed that a behavioural competence or ‘fit and proper person’ standard be introduced.
What are some of the practical implications of this proposal?
- Each and every current LBP is going to need to be reassessed to ensure that they are able to meet the new criteria;
- An LBP will only be able to “carry out” rather than “supervise” RBW. This is unless the LBP holds an extra certification allowing for the supervision to take place. It means that if a building company employs labourers or apprentices to assist with carrying out RBW, it will require someone on-site that holds this extra licence to supervise the work at all times; and
- To become licenced, an LBP will need to show that they are a fit and proper person.
If carried out, these changes will likely have the intended consequence of raising building standards across the board. But of course, there are drawbacks. This is a large scale shake-up of an industry which already has an acute skills shortage. Increased licencing and compliance costs will hurt small construction companies in particular. Questions remain; what does a fit and proper test entail? There are thousands of LBP’s in New Zealand and so the costs for all of them to re-license will be huge. One risk is that it might simply lead to builders skirting the rules and getting on with the work regardless. Lack of effective monitoring and enforcement is already an issue; how is this regime to be policed?
Despite the added costs and risks of non-compliance, the vast majority of submissions (as summarised by MBIE in August 2019) concur that these proposals are a step in the right direction for New Zealand. With consultation only wrapping up recently, actual legislative reform can only be expected to take place two to five years from now. Up until then, we can only speculate on what the impact of these reforms might be, but it will be a safe bet that the impact will be significant.