The Transport and Infrastructure Committee has examined the Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Bill and recommends that it be passed. We recommend all amendments unanimously.

This bill would amend the Building Act 2004 to remove barriers to overseas building products being used in New Zealand’s building product market. It would do so by:

• allowing the Minister for Building and Construction, by notice, to recognise overseas product standards and certification schemes

• introducing a building product specifications instrument to streamline the citing of international standards that can be used with an acceptable solution or verification method (issued under section 22 of the principal Act) to establish compliance with the building code

• requiring building consent authorities to accept building products and methods certified under an overseas product certification scheme and recognised by the chief executive of the Ministry of Business, Innovation and Employment by notice.

We note that this new regime would not replace local certification schemes but would instead create a new option for builders and consumers. Regardless of whether people are using recognised overseas product certifications, they would still be subject to the building code and the Building Act.

As part of our consideration of the bill, we have examined its consistency with principles of legislative quality. We have no issues regarding the legislation’s design to bring to the attention of the House.

This commentary covers the main amendments we recommend to the bill as introduced. We do not discuss minor or technical amendments.

Clause 4 of the bill as introduced would insert definitions into section 7(1) of the principal Act, to guide its interpretation. We recommend amending the proposed definitions by:

• clarifying that “overseas standards organisation” means an international, national, or regional organisation with functions similar to the NZ Standards Organisation

• adding the term “NZ Standards Organisation”, as defined in section 4(1) of the Standards and Accreditation Act 2015

• replacing the term “standards organisation” with “NZ Standards Organisation”

• clarifying that “standards certification organisation” means an organisation that administers or operates under a standards certification scheme.

Section 402 of the principal Act is a general regulation-making power provision. Clause 16 of the bill as introduced would amend section 402 to provide that the Governor-General may, by Order in Council on the recommendation of the Minister, make regulations prescribing criteria for recognition of building products or methods that have been certified overseas.

This recognition is provided for under proposed new sections 272HA(2) and 272HB(2). Section 272HA provides for the recognition of building products or building methods certified under overseas product certification schemes. Section 272HB provides for the recognition of overseas standards and domestic and overseas standards certification schemes.

We discuss below our proposed changes to these provisions.

Section 171(1) of the principal Act allows for the ministry’s chief executive to seek advice on matters specified in secondary legislation from a building advisory panel, established under section 172. Clause 10 of the bill as introduced would amend section 171 to include building product specifications as one of these matters.

We understand that the building advisory panel is a statutory board with public appointments. The panel is made up of building industry representatives from local government, offsite manufacturing, design, and engineering, among others.

We consider that the building advisory panel would be a useful authority to consult on issues relating to recognition of building products or methods certified under overseas product certification schemes, as set out in sections 272HA and 272HB. We therefore recommend inserting new section 171(1)(aa) and (ab) to explicitly allow the chief executive to seek advice from the panel about decisions and recognitions made under sections 272HA or 272HB.

During our consideration of the bill, we raised concerns about who would be liable if something were to go wrong due to the use of products certified overseas. We were particularly mindful of the leaky buildings crisis of the 1990s and early 2000s, which was caused by major regulatory shortcomings.

The settings that applied during the leaky buildings crisis were set out in the Building Act 1991. These settings have since been superseded by the Building Act 2004 and subsequent amendments, which adapted regulatory settings in several ways, including:

• introducing a licensing and registration regime to ensure competence and appropriate disciplinary settings

• adding extra controls and feedback mechanisms to ensure code compliant building work

• creating stronger consumer protection mechanisms for residential work, including implied warranties, defect repair periods, pre-contract disclosure requirements, and mandatory written contracts for residential building work over $30,000

• requiring accreditation for building consent authorities, which sets out the minimum policies, procedures, and systems that an authority must have

• requiring building consent authorities to register with the ministry

• establishing the ministry as a central regulator, rather than having this role sit with the much smaller Building Industry Authority

• strengthening product assurance, such as through CodeMark, and introducing building product information requirements.

Advisers told us that the changes to the Building Act, as well as regulations and other legislation, have added controls in the building and construction regulatory system to prevent failures like the leaky buildings from happening again. We hope that this will be sufficient to prevent faulty materials being used as a result of overseas certifications.

We note that the bill provides good-faith liability protection for local governments (as building consent authorities) for products certified overseas and recognised by the ministry. Those products must be accepted by building consent authorities. These authorities will continue to be responsible for checking to ensure applications for building consents comply with the Building Code, and that building work has been carried out in accordance with the consent.

We are very conscious of the huge financial cost to local government of leaky buildings and other product failures through joint and several liability, so we welcome this good-faith liability protection.

However, we hope that any issues caused by products allowed through this certification scheme do not leave the end consumer unsupported in finding recourse. We do note that mechanisms currently exist for consumer recourse, and these are not being changed.

We understand that the Government is conducting a wider review of the building consent system, which we understand will have the scope to include a review of liability settings across the whole building system. We consider this work extremely important and look forward to seeing what comes out of this review. We hope to see some sort of regime established to provide greater certainty to consumers and building consent authorities. This could include requirements around contractual arrangements and mediation processes to avoid litigation in the first instance.

Another area raised during our consideration of the bill was the building sector’s ability to implement the changes at an appropriate speed.

We heard from several submitters who recommended that the ministry engage with sector experts and professional bodies to develop the criteria for recognising standards and standard certification schemes. We note that the ministry intends to consult with the public (including industry) on draft criteria for the recognition of standards, standard certification schemes, and products. We hope to see comprehensive consultation with industry experts, to ensure that schemes are understood and able to be implemented by the industry.