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Making it easier to build – Chris Penk

Good morning, it’s great to be here.

First, I would like to acknowledge the New Zealand Institute of Building Surveyors and thank you for the opportunity to be here this morning.

I would like to use this opportunity to outline the Government’s ambitious plan and what we hope to achieve over the next three years in Building and Construction.

The Building and Construction sector accounts for around 6% of New Zealand’s GDP and employs over 300,000 people or 10.6% of the country’s workforce.

All New Zealanders are affected by this sector, and it is critical in the Government’s plan to fix the economy and get this country back on track.

Background

The bottom line is that it takes too long and is too expensive to build anything in New Zealand.

We have seen the cost to build dramatically increase over the last few decades and skyrocket in the past few years. Building costs have risen 41 per cent since 2019.

Analysis shows it is around 50 per cent more expensive to build a standalone house in New Zealand than in Australia – this must change.

High construction costs have exacerbated New Zealand’s housing crisis and made it more difficult than ever for New Zealanders to get into their first home.

It is no wonder that house prices in New Zealand have increased by more than any other OECD country over the past 30 years.

Building consents and code compliance certificates must be completed within 20 working days, however feedback on the ground is that they often take a lot longer causing frustrating and costly delays for builders.

These delays increase costs and make it harder for the sector to deliver the affordable homes that this country desperately needs.

This week, I announced that we are putting the spotlight on these delays and starting next month we will be publishing timeframes for building consents and code compliance for every council, every quarter.

This added scrutiny will provide greater certainty, encourage best practices and drive innovation that will help reduce delays and let Kiwi builders get on with the job.

Going for Housing Growth

One of the most important things we can do to rebuild New Zealand’s economy is to fix our housing crisis.

New Zealand’s housing crisis affects almost every aspect of society. It locks Kiwis out of home ownership, increases mortgage costs, and puts pressure on social housing.

My colleague Chris Bishop Minister of Housing, Infrastructure and RMA Reform is leading the charge on this work and going for housing growth.

This policy will flood the market with land for housing, fix infrastructure funding and financing, and introduce incentives to encourage cities and regions to go for growth.

My job is to ensure we have our settings right in building and construction to deliver this ambitious agenda.

Priorities for Building and Construction

As Minister for Building and Construction, I am laser-focused on supporting the Government in going for housing growth by making it easier to build.

To achieve this there are two key areas,

  • Firstly, we need to reform the building consent system and reduce red tape,
  • Secondly, we need to increase competition for building products and drive down costs.

Reforming the building consent system

It is too hard to build in New Zealand and there are too many unnecessary regulations that at best cause frustration, and at worst increase costs and exacerbate the housing crisis.

Nothing gets built without the tradies on the ground who get out of bed every day and get it done which is why we want to let them get on with the job.

I want it to be quicker and easier to build – especially when it’s low-risk and being carried out by trusted providers.

Simplifying consent requirements for lower-risk activities is a straightforward step that we can take to reduce delays but ensure there is no reduction in quality.

We are starting this work by removing the requirement for a building consent for structures less than 60 sqm like granny flats. We are also exploring options to opt out of a building consent if you have long-term insurance for the building work. Both of these are part of our coalition agreements, and both of these are innovative solutions to real world problems.

Over the next 12 months, you will be hearing a lot more from me on the Government’s plan to remove red tape in the consent process.

Building Consent Authorities

In my view, we also need to look at the structure of the consent system which isn’t working – and that includes building consent authorities. Here are four reasons why,

1- Consistency, the way consents are processed across different regions is fragmented and inconsistent. Currently, builders must take different approaches to consenting applications depending on whether the property in question is on one side of a line on a map (the jurisdiction of a Council) or the other side of the line.

2- Productivity, we have 67 building consent authorities in New Zealand for a country of only 5 million people – each one must interpret the building code, leading to duplications, inefficiencies and more cost.

3- Specialisation, we know that some smaller BCAs lack the economies of scale and the technical expertise when it comes to larger or more complicated builds. I have heard examples of larger BCAs supporting smaller and I think we need more of this.

4- Risk and liability, builders and councils tend to take a risk-averse approach to consenting, which is understandable given the “joint and several liability” that they bear on behalf of their ratepayers. They tend to rely therefore overwhelmingly on existing familiar products and compliance pathways, which stifles innovation and can prevent new products from being widely adopted.

Lowering building costs

We pay far too much for building products in New Zealand.

It is too hard, too bureaucratic, and too expensive for new products to be introduced into the market and compete.

This means we are missing out on some of the new, innovative building products and systems being used around the world.

Kiwis deserve to have more choices, and to get the best price for high-quality products when building and renovating their homes.

That’s why this Government is taking action. We will cut through barriers stopping high-quality overseas building products from being used in New Zealand while ensuring we do not compromise on quality.

This will support the country’s resilience in the face of supply chain disruptions, increase competition and most importantly lower prices.

Engaging with the sector

This Government values the construction sector and will work alongside you to achieve our shared goals.

We must make sure that the details of all these pending changes are well-tested with experts – like Building Surveyors in this room today – who understand the problems and how we can overcome them.

Closing

This Government has an ambitious programme of work in building and construction.

Very simply; we want to make it easier to build.

We have a lot of work ahead of us over the next three years and we are up for the challenge, and I am sure that you are up for the challenge too and I thank you for it.

Best wishes and once again I am grateful for the opportunity to speak with you today.

 

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