Building a better building regulatory system

Chris Kane Manager Sector Trends and Innovation

Acting Manager Building System Control

24 September 2015

This Presentation

• Operating Context

• Sector measures

• Construction sector growth

• Quality concerns

• Government priorities

• Smart regulation

• Regulatory systems review

• Roles and responsibilities

• Smarter regulator

Why is construction important?

• 90% of NZ household wealth is held in housing

• 50% of building work (> $50,000) results in disagreements or disputes (DBH Research, 2010)

• Leaky building syndrome has damaged the reputation of the sector

• PwC estimate ≈ $11.3 billion cost to repair

• The collapse of 50 finance companies since 2006 ≈ $6 billion

• Remedial earthquake strengthening of national building stock

• Cabinet estimate ≈ $1.7 billion cost to strengthen

• Christchurch rebuild

• Current estimates between $32 billion and $40 billion

Construction sector productivity is low

compared with other sectors… …….and with Australia

900

1000

1100

1200

1300

1400

1500

1600

1978 1983 1988 1993 1998 2003 2008 2013

New Zealand

Australia

A 10% increase in construction sector productivity would increase GDP by 1%.

Construction Sector Growth

• Combined growth 2.5% first quarter this year

• $15 Billion total

• 9 Billion residential

• 5 billion non residential

• Residential plateauing in Christchurch as move to commercial

• Auckland and Christchurch continue to dominate but regions strong too.

Extracts from National Pipeline 3

Residential Spread

Bare numbers

Quality concerns • Typically quality goes down during a boom

• Design

• Too much design work results in RFIs. It can’t all be just pedantic councils

• Some large building companies have incentivised their designed team to get rather than submit consents – the result 2-3 day turn around.

• Construction

• Too much building work results in failed inspection. A large percentage because the builder wasn’t ready.

• Lack of understanding of quality systems and lack of supervision seem to be the key issues

• Products

• Concerns about compliance and conformity of some products

Minister’s Priorities

• Occupational Regulation Review

• Six different schemes

• Joint and Several Liability

• Progressing Law Commission recommendations

• Earthquake prone buildings

• Final stages of select committee

• Professionalising building control officials

• Better access to authoritative building information (Code, core Standards, and appraisals) online

Wider Priorities

• Creating incentives to ensure buildings are high quality, safe and affordable

• Ensuring quality is maintained as workload increases.

• Balancing compliance costs while providing assurance that work is up to standard.

• Ensure that risk and accountability sit with those best able to manage it.

Affordability

Safety and quality

Skills and innovation

Smoothing the cycle

Capability

Pri

ces

4 key challenges

Regulatory systems review findings

MBIE needs to:

•clarify roles and responsibilities

•become a ‘smart regulator’

•establish a long term strategy for the system

•establish feedback loops and other mechanisms

•develop and implement a workforce capability strategy

•where possible, bring stability to the sector by being more proactive and minimising reactive policy change.

Roles in the Building Regulatory System

• Largely designed as a system since 1991, with some gaps (i.e. occupational regulation)

• Has evolved over time, and is highly reactive to events

• System is devolved and complex with a large number of players (66 BCAs, 6 occupational boards, plus other players)

• Roles have evolved over time and have got a bit out of sync, especially at the margins of the system

• To succeed we need work collaboratively to build and operate it together as a system!

Role of MBIE

The other players

• NZ Fire Service – provide advice on firefighting requirements during the consenting process and post construction on evacuation schemes

• Occupational regulatory boards (x6) - regulation of practitioners (entry, development, exit)

• BRANZ – undertakes research and assesses products

• Standards NZ – develops standards to support the Building Code

• JASANZ – overseas the CodeMark scheme

• IANZ – accredits BCAs and reviews accreditation

Smart regulator: Key characteristics

• Outcome driven – focus on the desired end result (measurable outcomes)

• Identify important problems and solve them – focus on important issues rather than every issue

• Use business intelligence – understand the nature of systems thinking and analysis of harmful behaviours

• Manage risk – can identify problem areas, and design interventions

• Use portfolios of regulatory tools – possess tools and skills to reduce harmful behaviours

Territorial Authorities

Boards

Building Regulatory System Compliance Pyramid

MBIE

Don’t want to change

Try but don’t always

succeed

Willing to do the right

thing

Au

tho

rity

SMART regulatory approach

Regulatory objectives

•Professional workforce •Consistent , reliable consenting system •Simplified and clarified regulatory system •Risks are identified and managed appropriately •Regulatory system is adaptive •Roles and responsibilities in the regulatory system are clear •Informed consumers

Risks

•Managed in the regulatory system • Individual people, companies, buildings

(and their failure) • Institutions (and their failures)

• Arising from the regulatory system • Complexity • Ability to adapt • Unintended consequences • Systemic failure

• Reputation risks

MBIE Building and Housing Outcomes

•Safety and quality •Affordability •Skills and innovation •Smoothing the cycle

Buildings are fit for purpose and

Building Code compliant

10 Year End Point

SMART

Regulatory System

Of MBIE, 66 councils, 6 occupational boards and others

Buildings protect lives at acceptable

level of risk and cost

Sector Trends and Innovation

• Reconfiguring the team that succeeded the Productivity Partnership

• Have oversight of the performance of the regulatory system

• Establish key data streams to create intel

• BCA performance

• Determinations

• Enquiries / call centre

• Construction Pipelines

• Will have staff in Auckland and Christchurch

• Key function is to ensure that regulatory system can deal with innovation

Example: Consenting Quality Assurance • MBIE is working with the Stakeholder Reference Group to

advance three priorities for the group

Consenting Quality Assurance 2

• Project involves helping SRG members make progress where they can, without taking over

• BCA Clustering (Central/Lower NI, Waikato/BoP, Southland)

• Shared services & systems

• Common templates & documents

• Quality systems in consenting

• Auckland Council Initiative

• Open For Business

• Councils themselves understand role of simple BC & RC in attracting investment to their regions

Conclusion

• We are collaborating with the sector to shape a better building regulatory system for that delivers a better built environment for New Zealand.

Questions