The Government has identified several issues with the current building consent system and commenced a substantive review of the building consent regime, including the regulatory institutions, regulatory practice, and system management.

The Ministry of Business Innovation & Employment (MBIE) has released a number of documents outlining the issues it has identified and is consulting with the public as a first step in the review of the building consent system. Submissions close at 5 pm on 4 September 2022. MBIE’s documents can be found here: Review of the building consent system | Ministry of Business, Innovation & Employment (mbie.govt.nz).

We think those making submissions are likely to focus on

• MBIE’s views on current constraints in the building consent system and its proposed fixes; and

• MBIE’s desire to maintain joint and several liability for any construction issues that occur. A reluctance to move to proportional system may mean owners are not left out of pocket, but it also means that those involved in construction may have to pay more than they otherwise would if one party is in liquidation by the time the claim is made.

If you wish to make a submission, our team of experts are available to help.

What are the key issues identified in the current building consent system?

MBIE has identified five issues that it says collectively constrain the ability of the building consent system to produce well-made, healthy, durable and safe buildings:

1. Roles, responsibilities and accountability: roles and responsibilities across the consenting system are not always well understood, accepted, applied or consistently enforced. There is sometimes over-reliance on building consent authorities to provide assurance of compliance with the Building Code.

2. Capacity and capability: building consent authorities face capacity and capability constraints in dealing with an increased volume and complexity of building work. Sector workforce capacity and capability constraints can also undermine the performance of the system.

3. System agility: all consents go through the same basic process, which is not always responsive to the level of risk, complexity of the building work, or type of project. The current system does not always deal well with new or innovative practices or products or the design-and-build approach. It is also not sufficiently responsive to the building needs and aspirations of Māori.

4. Performance monitoring and system oversight: the performance of the system is insufficiently monitored, and information flows are poor. MBIE is not yet the strong central regulator that was contemplated in the original system design.

5. Fragmented implementation: the processing of building consent applications is devolved to territorial authorities who are building consent authorities, which has led to variability and unpredictability in the consent process and its outcomes. This fragmentation adds to the overall costs of the system due to duplication and variable processes, tools and functions being implemented across building consent authorities, and difficulties maintaining a professional workforce.

Risk, liability and insurance

As part of its consultation, MBIE has released a policy position paper outlining the Government’s position on risk, liability and insurance settings building sector and whether there is scope to introduce a building warranty insurance market.

MBIE’s position is that existing rules of joint and several liability should be maintained because the parties (including the building consent authorities) who have actually caused the harm should bear the risk compensating for damage, and owners should not be left out of pocket if one or more liable parties cannot pay its share. MBIE also considers that there is currently a weak case for establishing a public building warranty insurance scheme, however, that may change depending on the findings of its evaluation of the consumer protection measures in the Building Act 2004.

MBIE acknowledges that its position on these issues does not address any existing issues in civil disputes involving co-liable parties. However, its review of the building consent system is intended to lead to a reformed system which has a clear allocation of responsibilities and risk and constructs better buildings overall, leading to fewer defective buildings and civil liability disputes.

What does MBIE want to achieve?

MBIE’s discussion document identifies four critical outcomes a properly functioning building consent regime should aim to achieve:

1. Efficiency: a risk-based system that has proportionate compliance costs, allows for innovation, and provides efficient assurance to the building owners and users.

2. Roles and responsibilities: a system that sets out clear roles and responsibilities of all building sector participants and the extent they can rely on others for assurance based on their respective ability to identify and manage risks.

3. Continuous improvement: a responsive, flexible and agile system that seeks to continually improve through performance and system monitoring, good information flows and feedback loops.

4. Regulatory requirements and decisions: a system that ensures all building sector participants clearly understand the regulatory requirements, and the robust, predictable and transparent decisions made by the building consent authorities.

Making a submission

MBIE wants to hear submissions from people and entities who work within the building consent system or have used it to get approval for building work in the past on any or all of the building consent issues MBIE has identified by 5 pm, 4 September 2022.

The issues identified by MBIE are complex and its review will have ramifications for local authorities, industry professionals, builders and contractors, insurers and building owners. If you wish to know more about the consultation process and ensure your particular interests are communicated to MBIE, please get in touch with one of our experts to assist you.

Special thanks to Jennifer Liu for her assistance in writing this article.