The Government recently announced that it will introduce the Building (Product Certification) Amendment Bill^[1] later this year. The bill intends to make changes to the Building Act  to ‘reduce red tape’ and increase the availability of building products with a view to lowering the cost of building in New Zealand.

In this update we discuss what you need to know about the new bill, and what we believe needs to be carefully examined when it comes to passing the legislation.

Background

Following the shortage of building materials (most notably Gib plasterboard) that began in the midst of Covid in 2020, the Commerce Commission published its Residential building supplies market study in December 2022. The report concluded that competition for supply and acquisition of key building supplies would be improved if it was easier for building products to be introduced into NZ and for competing suppliers to expand their business (see our previous comments here). 

The Commerce Commission’s study highlighted that although the regulatory system does not prevent new or innovative products from being used, it is a costly and uncertain process to obtain approval for use. It recommended that "competition should take a more prominent position in the regulatory system … to ensure the effective operation of markets for key building supplies and delivery of safe, durable, quality housing for New Zealanders." ^[2]

Since the Commerce Commission’s study, the construction industry in NZ has continued to face high inflation, material supply disruption and skilled worker shortages. When announcing these proposed amendments, Building and Construction Minister Chris Penk, was quoted as saying that it was about "50 percent more expensive to build a stand-alone house here than in Australia."^[3]

What we know so far

In accordance with its 36-point action plan, under the objective to "rebuild the economy and ease the cost of living", the Government stated that it aimed to release a "draft plan to ease restrictions on building materials from overseas for public consultation." ^[4]   

Last week the Prime Minister and Building and Construction Minister announced that the Building (Product Certification) Amendment Bill would be introduced later in 2024. The proposed bill will:[5]

• Recognise building product standards from trusted overseas jurisdictions, removing the need for designers or builders to verify standards.
• Require Building Consent Authorities to accept the use of products that comply with specific overseas standards that are equivalent to or higher than those in New Zealand.
• Approve the use of building products certified through reputable certification schemes overseas, such as Australia's WaterMark scheme.

At this stage, the Government has not released its draft plan for consultation, and we await the release of such a document or the draft bill. In our view, the following will need to be examined closely:

• Which overseas jurisdictions are deemed to be ‘trusted’. This will be important for two reasons: 
  1. There are several factors that will impact how a building product will perform in situ in New Zealand. For instance, untreated timber may be suitable for use in buildings in warmer and dryer climates but not so suitable in the Auckland climate.
  2. Adopting building material regulations from overseas could mean that NZ inherits problems with building materials that were not properly regulated (and subject to appropriate testing) in the first place. A recent example is the use of combustible cladding that led to the Grenfell Tower fire in London and The Torch in Dubai, amongst others.  
• Which overseas standards will be deemed to be "equivalent or higher" than those in NZ. It may take some time for the Building Consent Authorities to compare such regulations and determine which standards are the same as - or higher - than NZ. 

Implications for the Building Sector  

Given the sector has been significantly impacted by material shortages and increasing prices, this broad announcement will generally be welcomed by principals, contractors, and designers alike. As highlighted by the Commerce Commission, it is hoped that the proposed bill will pave the way for new and innovative materials that enable innovation in the construction process, including materials with ‘greener’ credentials.

However, as with any proposed legislative change, the devil will be in the detail. We look forward to examining how the bill will be drafted to deliver on the stated aims, while also ensuring that the Building Act is not diluted to the extent that unsuitable or unsafe products are permitted to be used. 

It will also be interesting to see whether the recently enacted Building (Building Product Information Requirements) Regulations 2022 (see our comments here) will remain without amendment or whether those regulations will be amended in the Government’s drive to reduce red tape. 

We will provide an update on further developments as more information, or a draft bill, is released. 

Get in touch

If you would like to discuss anything in this article or the bill’s potential impact on your business, please get in touch with one of our experts.

Thanks to Jodie Atkin, Solicitor, for her assistance with preparing this article.