Building policy reform – Summary of proposed changes by MBIE – Part 2

This month’s article is a continuation of last month’s article on MBIE’s proposed amendments to the Building Act 2004. There are five main areas in which amendments have been proposed by MBIE, namely building products and methods, risk and liability, occupational regulation, the building levy, and offences penalties and public notification. Last month’s article focused on the first two areas identified, and this month’s article will focus on the last three.

Occupational regulation.
The key proposals within this area include:

  • Ensuring that occupational regulation within the building sector is proportionate to public safety risks;

  • Ensuring that there is confidence that practitioners have the right skills and will act professionally. Current licencing classes will be changed to address supervision and site management issues;

  • Ensuring that those responsible for substandard work will be held accountable. The regulations will define ‘restricted engineering work’ and create restrictions as to who may complete the work;

  • Broadening the definition of ‘restricted building work’ to include all residential building work and some commercial and communal buildings. The definition will restrict who can carry out safety-critical engineering work;

  • Repeal exemptions allowing unqualified people to carry out sanitary plumbing, gas-fitting, and drain-laying in some cases;

  • Providing for a new tiered system to provide a progression pathway for LBP’s. Additionally, a new voluntary certification scheme for engineers, will provide assurance of professionalism and general competence of the practitioner, will have a clearer purpose, a streamlined assessment process and stronger sanctions for practitioners acting unethically or doing substandard work.

Currently, the building system does not capture all work within the building process that poses significant harm to building users in the event the building fails. Additionally, the person carrying out the building work does not always have the expertise to carry out the building work, therefore posing potential risk to building users. The above changes seek to protect building users from unsafe building works.

The building levy.
The three key proposals of MBIE as regards the building levy are:

  1. To reduce the levy for consented building works from $2.01 to $1.50 per $1,000.00 of building work;

  2. Standardise the levy threshold whereby no levy is payable unless the value of $20,444.00 inclusive of GST is met;

  3. Amending the Building Act 2004 such that the Chief Executive of MBIE can spend the levy on a broader stewardship of the building sector.

As regards item 3, currently the levy raised can only be used for specific operational functions under the Building Act 2004. The Act does not specifically allow MBIE to use levy funds on overall stewardship of the building sector, which the Government considers is central to the development of integrated, high quality regulation. The funds would be used monitoring, reviewing and reporting on regulatory systems, analysis and implementation support for changes to regulatory systems, and good regulator practice. These expectations require MBIE to analyse the building environment, understand the future of building work and assess whether the building regulatory system is equipped to cope with the future.

Offences penalties and public notification
MBIE proposes to set higher penalties so that the consequences of offences align with other legislation and is adequate for the future. The proposed categories of offences would be:

  • Very high – offences causing serious risk or death to person;

  • High – offences relating to dishonesty or fraud in relation to risk and performance assessment;

  • Medium – offences relating to notification and information issues;

  • Low – offences relating to record keeping.

It also proposes to set the maximums differently for individuals and organisations so that there is proper incentive for compliance. For example, failure to comply with a notice when issued where a Territorial Authority is satisfied that a building is dangerous, affected or unsanitary under section 128A, the proposed penalty for an individual would be $350,000.00 and the proposed penalty for an organisation could be as high as $1.5m.

The third proposal is to extend the period by which MBIE is to bring prosecution from 6 months to 12 months. Construction issues are complicated/multi-faceted, so extending the prosecution period to 12 months provides more time for MBIE to complete its investigations and lay charges. The proposed penalties and prosecution period are aligned with other building legislation, for example the Health and Safety at Work Act 2015.

The fourth proposal is for changes to be made to the requirements of MBIE Chief Executive and LBP Board to “publicly notify”. Public notification would be on the internet and the Gazette, and the requirement for publication in the local newspaper would be abolished.

NOTE: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by TM Bates & Co. Barristers / Solicitors to anyone who relies on the information contained in this article. All copyright in this article is retained by TM Bates & Co.