National MP Chris Penk, Minister for Building and Construction, has certainly hit the ground running – with a series of important decisions made in the first full year of the new Government. He’s unashamedly pushing an agenda of simplifying building consent processes, cutting red tape, and seeking consensus as to what regulations make sense and those that simply get in the way.
Already he’s made announcements on the consenting of small buildings/granny flats, recognition of overseas standards (product substitution), the decision not to continue with the introduction of higher environmental standards, and now the decision to allow builders to self-certify their own work in order to speed up and simplify the building process.
So, Industry Insider (I.I.) took the opportunity to speak with the minister to find out what is driving these decisions and what happens next.
The Beehive – Wellington house of Parliament.
I.I. So you’ve come in and really hit the ground running – a lot achieved in your first year. But our subscribers are interested to learn: what drove these decisions? Were they informed by input from the industry or from anecdotal information from industry groups? How did you know what you wanted to achieve?
C.P. “I’ve been really fortunate to have industry telling me all the things that are broken, but also how to fix them. None of these ideas are original to me. It’s literally that I’ve had enough conversations with people who are out there wanting to build things more affordably, more easily, and I’ve just responded to that.
“I should acknowledge that previous National Party spokespeople for building construction before the election had been engaged with the sector pretty closely. So that was Andrew Bayly, and before him, Tim van de Molen. And they made a few commitments, so it was pretty straightforward from a political point of view for me to be able to come in and say, “Well, we’ve promised this; we’ve been voted in, so I need to crack on and do those things.”
I.I. Was there anything contradictory in the input that you were receiving? Was it consistent, or did you have to split the difference on some issues?
C.P. “There’s mostly a shared view about problems. There’s not always a shared view about solutions.
“I think there’s been a very high degree of alignment within the sector and also a real commitment to work together to resolve them. So, when people do disagree, I don’t get the sense that people are holding views because there’s an ideological basis or any kind of political motivation.
“It seems to me everyone does genuinely want the right things, and reasonable minds can differ about what we do to achieve that.
“The main disconnect within the industry is in relation to mandatory reporting of energy efficiency and the energy efficiency rules that are in clause H1 of the Building Code. Advocacy groups and key players within the sector tell me that everyone is in favour of a certain model and that we need to make it mandatory, but others point out the additional costs in a way that is sometimes quite different – just on the straight numbers before you even get to weigh up the benefits. And then you get into philosophical discussions about whether we should be mandating things that are positive for people or whether we allow choice.
“So that’s probably the main example where there is a difference and that I’m going to be trying to work through that. But otherwise, people are generally pretty aligned.”
I.I. Tell us about those costs and how these changes will negate them.
C.P. “The statistic that I always cite is that building costs have increased by 40% since 2019 and that it’s 50% more expensive to build a stand-alone home in New Zealand than Australia. But depending on how far back you want to go in historical terms. It’s been a long-standing issue that construction costs have risen beyond general inflation, and even that’s been quite high in recent years.
“So, it seems to me there’s an issue. But also, if you think about productivity levels, according to the report that economist Shamubeel Eaqub compiled, we’re no better now in 2024 than we were in 1985, which was before the internet and some of those technological innovations that should enable much more productivity.
“And I think sometimes it’s government’s policy settings that don’t enable that or don’t recognise that in the real world we’re printing parts of buildings offsite, and so forth. So, it seems to me the need is obvious, even though people can differ on the ways that we think it should be achieved.”
I.I. You pressed pause on the move to improved environmental standards? That was going to be a cost imposition ultimately on the home buyer?
C.P. “Of course it was. And obviously there are very laudable aims to improve building practices from an environmental perspective, and there’s very good arguments around energy efficiency and savings, health benefits, and so on.
“So, I’m really keen that we do make progress in that space. But when there’s a disproportionate additional cost, which means that people won’t be able to afford a home – the reality is that if you impose additional costs beyond a certain point, then you have to work that much harder to justify the outcome in terms of the environment and energy efficiency. I’m basically talking about residential here, but the same applies actually in terms of commercial buildings, be it office, retail, industrial, whatever.
“And of course, people might want to proceed with the additional measures that make sense to that particular building, and of course we’re not stopping them from doing that either. So, there’s a pretty respectable argument along the lines of choice and individual preference that actually challenges the notion that government regulation needs to say that everyone has to comply with a certain standard and disclosure.”
I.I. All of these changes have raised questions about how the legislation will work in practicality and, in some cases, seem to cut across council remits. Is it your intention to reduce the involvement of council in the building process?
C.P. “In short, yes. And the interesting thing about my proposal is that councils themselves welcome that – because they’re focused, quite rightly, on the question of liability.
“So, everyone ends up in violent agreement when they say, “Council’s slowing me down; I wish they weren’t so risk averse,” and “isn’t there a way we could do things without having to get them to come and conduct all these inspections” and so forth?
“And then the councils say, “This is a major cost to our council bottom line, and we’ve got all the risk associated with joint civil liability. If only there was a way we could have less of that.”
“So, even though they’re approaching the question from a different angle, I think they’ll be very happy if we get to the same answer, but for different reasons.”
I.I. Your latest announcement about self-certification obviously has been met with enthusiasm that it’ll speed up the process, but also consternation about its impact on liability and insurance. How confident are you that these issues will be able to be resolved without creating another ‘leaky buildings’ crisis?
C.P. “I’m very confident – because we will have the detail of the policy responding to the genuine and very reasonable concerns around quality. We’re determined to draw the line in a sensible place.
“We’ve said a relatively simple low-risk residential building that’s completed hundreds of times in a single year by a building business should be available to be self-certified. And the devil in the detail is, ‘What’s a simple building?’ It might be using a standard NZS3604 as a starting point and could maybe have some nuance about single versus double stories, detached versus non-detached.
“So there’s places we can go where we decide how much of the types of risk we’ve got, but it seems to me if we make any movements in the right direction in terms of ease of doing business, then we’re going to get some wins, and we don’t need to go too far the other way – too far in that direction, that would start risking quality. So I think we’ve got the opportunity to draw the line in a sensible place.”
I.I. The majority of builders in New Zealand are two men in a couple of utes, and they’re going to feel they’re shut out of that opportunity by larger builders better able to systemise their operations and get the benefit of that legislation change?
“Well, I can understand that fear, but actually I don’t think it’s based in reality. Because we’re not talking about making life harder for anyone who is doing a good job and who is smaller in size. By making life easier for others, we are actually also making life easier for them, because they will have the benefit of council resources in terms of faster consent applications, quicker inspections, and so on. Because the resources of the council aren’t being used to certify stuff elsewhere that we’ve decided it’s not needed. So, I think everyone will win overall.”
I.I. Coming back to consenting, will there be any improvement there, such as amalgamation of BCAs or standardisation of consent processes, such as allowing a single point of contact to expedite consenting, for example?
C.P. I’m very hopeful and because, again, a thing that people say whether they’re on the council side of the application desk or they’re the tradie or the architect trying to get something across the line at the start of the process is that it’s frustrating to deal with the inconsistency and the uncertainty of 67 different building consent authorities throughout the land.
“From the council’s point of view, they don’t have any option but to resource an entire department that appropriately mitigates the risk, even though down the road another council is having to replicate the same functions. And from the builder’s point of view, obviously it’s frustrating to have to think about who you’re dealing with and not be able to necessarily have standard designs and approaches.
“So for both reasons, we think that some sort of consolidation will be helpful. And as you’ve quite rightly noted, there are a few different options on the table, which we are genuinely consulting on, and we’ll go with the one that makes the most sense based on what we hear back.
I.I. Finally, is there a timeline on restarting the government’s own schedule of building work? It seems like everything’s stopped – schools, hospitals, Kāinga Ora projects. Is there a schedule for restarting some of this work? What does that programme look like?
C.P. “Different government agencies are making decisions on their own procurement programs. I’m very hopeful, and I’ve expressed my hope that we have certainty about those pipelines sooner rather than later. And certainly discussing with those relevant colleagues, I’m very confident that we’re going to have some clarity about the classrooms, the hospitals, and the social housing very soon.”
I.I. Before the next election?
C.P. Definitely in the coming months.
Project Whakatuputupu, the New Dunedin Hospital proposed plan.
I.I. Those announcements will be well received, given that we’re probably at the low point of where we can operate as an industry.
C.P. “No, I totally understand that, and I acknowledge it’s been a really tough couple of years now for a lot of people who’ve been scratching around for work and desperately want the government work and also the private work.
“I should actually say – at the risk of giving myself a free pass on the government procurement side – a different hat that I wear is Associate Defence Minister, and that includes base infrastructure. And there’s a whole lot of housing that we need in our defence bases that we’re trying to get up and running. And to be fair, there is some stuff in the pipeline for that.
“But again, I acknowledge people would always like us to move more quickly and be counter-cyclical, even though we would point out that the government’s living in constrained fiscal times no less than the various businesses and households that we’re also trying to get some relief to.
So it’s been a difficult time to manage through all that.”