Hon CLAYTON COSGROVE (Minister for Building Issues) Link to this
I move, That the Weathertight Homes Resolution Services Amendment Bill be now read a first time. At the appropriate time I intend to move that the Weathertight Homes Resolution Services Amendment Bill be considered by the Social Services Committee, that the committee report finally to the House on or before 4 December 2006, and that the committee have the authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 192 and 195(1)(b) and (c). This time frame is necessary because the legislation needs to be enacted as soon as possible so that the enhancements to the Weathertight Homes Resolution Service can commence in early 2007, as has been publicly signalled.
With this amending legislation the Government is improving the effectiveness and efficiency of the Weathertight Homes Resolution Service. The amendments follow a substantial review of the service. That review sought the views of industry representatives, consumer groups, and territorial authorities, and included analysis of the needs—[Interruption]
The ASSISTANT SPEAKER (H V Ross Robertson) Link to this
Would members leaving the Chamber please show some courtesy to the member trying to address it. It is a longstanding convention that members should not conduct conversations in the House unless it is strictly necessary to do so, and then only so as not to disturb proceedings.
Hon CLAYTON COSGROVE Link to this
—of all the involved parties. The bill is central to the Government’s commitment to actively help resolve the so-called leaky homes situation. The Weathertight Homes Resolution Service was set up in 2002 as a call to arms to deal with a major problem. Although people have gained successful settlements so far, the service is too slow and is being drawn out by lawyers and other so-called experts. The review identified the need to strengthen and streamline the Weathertight Homes Resolution Service by improving the efficiency and effectiveness of each stage within the Weathertight Homes Resolution Service process by allowing homeowners to claim for a similar range of damages as that they would be able to claim in a court process, and by helping owners of units within multi-unit apartment complexes to register claims and resolve disputes.
The bill sets out to achieve all these outcomes. It will also contribute towards the Government’s strategic goal of supporting families, young and old, by helping to ensure that homes are healthy and dry. Since buying a home is often the biggest single investment that Kiwis make, the bill also contributes to this country’s economic transformation, because it is critical that people have the confidence to invest. The reforms in this bill build on the Government’s commitment to homeowners to provide a speedier, lower-cost alternative to the court system for resolving leaky building claims. In essence, the provisions of the bill will help owners of leaky homes resolve their disputes quicker, get compensation from the liable parties, and get their homes repaired. This is another way the Government is ensuring New Zealanders have access to quality homes and buildings that meet their needs.
The main components of the proposed legislation are as follows. The bill introduces a new, streamlined dispute resolution process, with compulsory pre-hearing conferencing for standard claims before claims move to time-limited mediation. Claims that do not achieve a mediated solution move to adjudication. The bill also encourages informal dispute resolution and puts in place several mechanisms to speed up and streamline the claims processes, such as establishing a new process for low-value claims. Faster resolution of disputes will also be aided by the provision of a comprehensive assistance package and guidance for claimants and respondents. This includes more comprehensive Weathertight Homes Resolution Service assessment reports, which can become expert evidence, potentially saving the parties thousands of dollars by not having to get their own specialist reports done. Importantly, the amendments allow claimants to claim for potential, as well as actual, non-weathertight damage.
The bill sets out objectives for a less adversarial, more investigative, and swifter adjudication process. Collectively, these measures move the service towards an investigative approach to dispute resolution so that the process is not only faster and less costly for parties, but also less litigious. Adjudicators can currently award costs against a party that they consider to have caused unnecessary costs either by acting in bad faith or through making allegations or objections without substantial merit. These powers will remain in the Act. However, the bill also introduces new offence provisions, with fines attached for other negative behaviours such as failure to comply with an adjudicator’s order or summons. This will help adjudicators to get on with their jobs. The Government has also decided to make the adjudication function independent of the Department of Building and Housing.
The Ministry of Justice will be responsible for establishing and administering the new Weathertight Homes Tribunal. This will enhance consumer and respondent confidence in the adjudication service, improve acceptance of the authority of the adjudicators, and provide more institutional support for adjudicators. It will also strengthen the role of Weathertight Homes Resolution Service advisers by removing any perceived conflict of interest in the provision of both an advisory and an adjudication role by the department.
The bill removes obstacles to bodies corporate bringing claims for multi-unit apartment complexes by setting voting thresholds that are not unanimous, so that “hold-out” situations are less likely to occur. This is especially important given that around 70 percent of claimants with the Weathertight Homes Resolution Service are unit title apartment owners. Collectively, the measures in the amendment bill will reduce the average time for claims to be resolved; result in homeowners and respondents incurring lower legal and evidential costs than they do at present when using the Weathertight Homes Resolution Service; increase the proportion of disputes resolved through early negotiation; ensure that homeowners receive an accurate and comprehensive assessment of the damage to their houses, including what repair work is needed; result in homeowners being better prepared for the dispute resolution process; improve the independence of the adjudication process; and remove existing barriers to the registration of claims and the resolution of disputes by owners of units within multi-unit apartment complexes.
The bill will also improve the weathertightness information available to prospective homebuyers by requiring Weathertight Homes Resolution Service notices to be placed on local authority land information memorandum reports. The new requirement means that potential buyers should know whether a house has been fixed, as a Weathertight Homes Resolution Service notice will be listed along with any related consent repair work and code compliance certification. An accompanying consumer education campaign will also encourage prospective homebuyers to seek these reports before buying, in order to make informed purchase decisions.
The Government is also developing a financial assistance pilot for the worst-affected owners of leaky homes. We put aside $7.1 million in the last Budget for lending assistance under the 2-year pilot programme. The Housing New Zealand Corporation, along with the Department of Building and Housing, is currently developing eligibility criteria and lending conditions for the pilot financial assistance scheme. Work is progressing well, and announcements will be made when final decisions have been made, which is likely to be well within the next couple of months.
It is also important to note that the Weathertight Homes Resolution Service was established as a specific solution to deal with a specific issue. Changes in the Building Act 2004 are now addressing the systemic failures across the building and construction sector that led to the leaky home problems. These changes include the licensing of those who design and build, whilst at the same time specifically protecting the do-it-yourself, or DIY, tradition in New Zealand; a review of the building code; an auditing and accreditation scheme for building consent authorities; sector and community education; the investigation of a home warranty insurance scheme; and building product certification. These measures are part of a package of reforms to help ensure that homes are built right the first time and that homeowners have confidence in them.
This bill, therefore, puts in a time limit so that homes built or altered after 31 December 2011 will no longer be eligible to use the Weathertight Homes Resolution Service. In essence, this means that the Weathertight Homes Resolution Service will cease around 2021.
Finally, I thank those groups who have provided huge assistance in the community, including the Leaky Homes Action Group, which has endorsed this package of measures. It has provided invaluable assistance, along with territorial local authorities and others.
This is a serious issue. I will not politicise this issue, nor have I engaged in political banter on it. This is about people’s lives. This is about changing a regime that was enacted over a decade ago, when the industry was completely deregulated so that there were virtually no rules and all sorts of people could strap on a tool belt and call themselves builders, and, therefore, the cowboys were let into the system. That was aided and abetted by the deliberate destruction of the apprenticeship system by the then Government. In essence, if there are no rules and minimum standards, and if young people are not trained to become master tradespeople of the future, then that is a recipe for disaster.
I look forward to the passage of this bill. This bill is about helping our communities out of the problem created by many stakeholders.
Hon Dr NICK SMITH (National—Nelson) Link to this
The Weathertight Homes Resolution Services Amendment Bill is another sad chapter in the Government’s inept handling of the leaky home crisis. It comes as no surprise to me that Clayton Cosgrove’s previous occupation was that of a spin doctor. Today he has tried to paper over huge gaps in his Government’s policies and his Government’s neglect of the whole problem that affects thousands and thousands of New Zealanders.
Let us go back to when this issue first arose. In 2001 building experts wrote to George Hawkins and said there was a very serious problem with leaky homes. And what did George Hawkins do? Well, after receiving that letter from the building industry he wrote back, but then denied he had ever received it—and he did absolutely nothing. And then there was Helen Clark. In November 2002 Helen Clark had this to say about the leaky homes issue. She said she was sick of the New Zealand Herald banging on about issues that had no substance. That was what the Prime Minister said about the plight of thousands of decent New Zealanders who were living in rotting, substandard homes—and the Government did nothing.
But when it became a public relations problem for the Government, in a mad rush it created the Weathertight Homes Resolution Service. Did the Government send the Weathertight Homes Resolution Services Bill to a select committee? No, it did not. We had the fastest legislation in the West, with a Supplementary Order Paper tabled in this Parliament and passed only a few weeks later. Are any of us now surprised that it has been an absolute flop and a disaster? No, we are not. The service was never about helping homeowners; it was all about damage control for the Prime Minister and the Government.
Let us listen to what the Government said in 2002 when the legislation was passed and the Weathertight Homes Resolution Service was set up. Clayton, your ministerial colleague said—
Hon Dr NICK SMITH Link to this
I say to the Minister that the Government then said it would take only 2 years to fix the problem. That was in 2002, 4 years ago. But the Minister said in the House today that it will now take until 2021 to fix the problem. What an indictment that is on the Government.
We can look at the record of Labour’s Weathertight Homes Resolution Service. This Government has spent $52 million on the bureaucracy of that service, but do members know what proportion of claims has been resolved after 4 years and $52 million? It is just 10 percent—just 10 percent of those poor homeowners have had a solution. Labour’s Weathertight Homes Resolution Service is a sick, horrible joke on those homeowners caught up in that nightmare. Let us have a look at the rate of settlement. Far from taking 2 years to settle claims, as the Minister said it would when the service was established, do members know how long it will take at the current rate of settlement? It will take 75 years. There will not be a member of this House alive then, if the agency continues at its current rate.
Let us look at the cost. Each leaky home case that is being resolved is costing $92,000. But that $92,000 is not being spent on a single dwang or a single hour of a builder’s time; that $92,000 is being spent, per home, on bureaucracy—on reports, lawyers, and arguments. Do members know what the average settlement is? The average settlement is only $70,000. It would have been better to send the cheques directly to homeowners than to have wasted $52 million on Labour’s failed Weathertight Homes Resolution Service.
Let us find out how some of that money was spent. Last year I drew attention to the fact that the Weathertight Homes Resolution Service had got into party mode. What was it celebrating? It had a Sound of Music theme party. It had an aeroplanes party. It even had—can we believe it—a “Cowboys and Indians” party.
Hon Dr NICK SMITH Link to this
Well, my colleague “Bob the Builder” says they are, in fact, cowboys. It is disgraceful that poor New Zealanders are living in rotting homes and going broke, and the people in the Government agency are spending tens of thousands of dollars on parties rather than on helping them.
Then, to really get a feel for how sick the culture of this Government is, I tell members that the Weathertight Homes Resolution Service went to the flashest hotel in Auckland—the Stamford Plaza—and had a Pacific Islands awareness training day. That is right; it flew all its staff up from Wellington for a day of drinking kava and having dancing girls, rather than fix people’s leaky homes. Have we ever heard of anything so ridiculous? Is there any proof that our Weathertight Homes Resolution Service staff need politically correct training on Pacific Island culture, for goodness’ sake? Is there any evidence, I ask Winnie Laban, that more leaky homes are amongst the Pacific Island community than amongst others? Of course, there is not. It was just mad Government political correctness.
Let us look at the portfolio. Mr Clayton Cosgrove is the seventh Minister for Building Issues. The portfolio has been handed around within the Government like a hot potato. We have had Mark Burton, George Hawkins, Lianne Dalziel, Margaret Wilson, John Tamihere, Chris Carter, and now we have Clayton Cosgrove. I ask that member opposite what his track record is since he has held the portfolio. When asked, Clayton Cosgrove says we will get some real action. Well, let us look at the record. Since Mr Clayton Cosgrove has been Minister for Building Issues, 200 claims have been resolved, but 584 new claims have been lodged. Mr Cosgrove is going backwards.
Then we come to the solutions in this bill.
Hon Dr NICK SMITH Link to this
This is good. We are going to help the leaky home owners because no longer will we have the Weathertight Homes Resolution Service. We will change its name. We will have the Weathertight Homes Tribunal. That will help those thousands of leaky home owners, will it not? They will be delighted to know there is a name change!
This bill is effectively too little, too late. We will change the Government department that is responsible for the Weathertight Homes Resolution Service. It started off with the Department of Internal Affairs, but the department passed it on like a hot potato to the Department of Building and Housing. Now it will be passed on to another Government department, the Ministry of Justice. I am left wondering how that will help leaky home owners. Then I look at the disgrace of the Government’s spending $5 million on lawyers fighting leaky home owners rather than helping them.
This bill is too little, too late. The whole episode of leaky homes under this Government has been a disgrace. Those leaky home owners deserve far better.
LYNNE PILLAY (Labour—Waitakere) Link to this
I listened to the opening statement from Nick Smith’s address and it was a sad chapter. What a rich thing coming from that sad man, who is part of that sad party over there. I look at the sad, forlorn faces of that group of members who have had to sit and listen to that waffle—to someone grizzling and whining—with not one solution in sight.
I am really proud that this Government, with support from good, visionary parties such as New Zealand First, United Future, and the Green Party, is intent on making sure it fixes things. We are sick of hearing this “Bob the Builder” approach to politics and building, which is what comes out of the mouths of those people over there. The misconception is that it is a new bureaucracy. This is not a new bureaucracy. By transferring adjudication to the Ministry of Justice, it increases its status and ensures that it does what the ministry does best—its core business, which is settling business disputes. So that is a step forward. We can look at that step forward and realise what a major step forward we have made.
We know that a National Government was the one that actually started all the problems by deregulating the building sector in the 1990s and by dismantling and repealing the Apprenticeship Act so that we now see a major deficiency in skills and knowledge in that industry. We know why. It is because National brought in the slash-and-burn approach during the 1990s and wrecked it all. Since then, Labour has reintroduced apprenticeships and upped skills training, and we are now starting to see some real credibility back in that industry. I am really proud of that. We have included the licensing of those who design and build their homes, whilst at the same time protecting the do-it-yourself tradition; the review of the building code; an auditing and accreditation scheme for building consent authorities; sector and consumer education; the investigation of a home warranty insurance scheme; and building product certification.
This will be part of a package of reforms to help ensure that homes are built right in the first place, which is something we did not see under a National Government. So I feel really proud to stand in support of this bill. I heard from the previous speaker the number of Ministers who have had this portfolio. All I can say is that it has been continuous improvement. They have been Ministers who have grabbed this role and really addressed it with passion. It has culminated in the really good progressive legislation we see before this House today. I am proud to speak in support of it. Thank you.
PHIL HEATLEY (National—Whangarei) Link to this
We have heard from Nick Smith that the Weathertight Homes Resolution Service has been a failure and that the Weathertight Homes Resolution Services Amendment Bill is too little, too late. He bases that on the fact that, to date, only 10 percent of all claims have been resolved. Ministers at a Cabinet meeting sit round the table discussing Taito Phillip Field’s backhanders for 2 hours and all those other issues, and when they have a spare few minutes at the end of the meeting, they talk about the Weathertight Homes Resolution Service. They say—and their own Cabinet papers before them state—that 15,000 people, many of them young families with their first homes, are directly affected by weathertightness problems, and that it will take 75 years to resolve these issues through the Weathertight Homes Resolution Service. They are hopeful it will happen some time before 2021—some 15 years from now—but we know that their papers tell them there are 15,000 outstanding claims. Fifteen thousand young families and older families are affected, and at the current rate it will take 75 years to resolve. That is absolutely appalling.
The Minister is into the blame game. Can I give him just one solution that would be useful for him to put on the table. The Construction Industry Council came before the select committee a few months ago. One would expect the Construction Industry Council, which is in touch with all construction engineers, builders, and so forth throughout this country, to have something to offer over this problem. The council told us that as many as half of the building standards in New Zealand are more than a decade old, and some are hopelessly out of date and in need of review.
In fact, the council said it knows that today there are 60 building standards that are out of date, and it could list them. If the Minister rang the council and asked which of the 60 building standards at the moment are hopelessly out of date and in need of review, it could list them, just like that. The council could just email the list to the Minister, and say: “These building standards are hopelessly out of date and in need of review.” The council has said that of the 600 building standards currently in use in New Zealand, at least half are more than a decade old and need to be looked at. Of the 600 building standards, half need to be looked at and the council knows of 60 that are desperately in need of review.
The council was so determined about the need to review these building standards, that do members know what it said? That its members—construction companies and builders right throughout the country—are prepared to pay an extra levy. The council said that its members are so enthusiastic about getting these standards reviewed—such as how to put in a window properly, what timbers to use in what situations, all that type of thing—that they themselves would pay an extra levy to get the work done. “We’ll pay for it.”, they said. “It’s that essential to construction in this country, and we’re doing the building, so we’ll pay for it, through an extra levy. Bill us, we’ll hand over the cheque, in order to get this work done.” Yet still nothing has happened. Whether it is the range of materials used in building, the way that technology in building has changed, whether there are appropriate fire and earthquake safety provisions—all those things are in need of review. They told us at the select committee: “We’re happy to pay for it. Increase our levy, let’s get the work done, and it will make a real difference.”
But what are the departments that cover building and housing doing? What is the Minister doing? Well, they are turning a blind eye. The builders and the construction engineers are saying: “Listen, we’ll pay for it. Send us the bill.” But they still will not do it. Minister Cullen does not even have to increase taxes across the country to get this work done, and they still will not do it. A responsible Minister would want to be reassured that new technology, new techniques, and new designs in building are being covered adequately by current standards. That is what one would think. But, no, that is not the case.
Members might want to know—and I know the Assistant Speaker is keen to know this fact—that Australia reviews its building standards every 7 years. That is right. Every 7 years Australia reviews its building standards. The Assistant Speaker wants to know that, “Sam the Eagle” is interested in that fact, and the Minister should be as well. In Australia, building standards are reviewed every 7 years as a matter of course. In this country we have discovered that of 600 building standards, over half of them are over a decade old and have not been reviewed, and 60 are hopelessly out of date.
This is just one opportunity for this Minister to do something that would make an obvious difference. He should investigate the standards that are hopelessly out of date, and there are 60 of them—the construction industry will email them to the Minister—bring them up to date, and do a review of 300 standards, because half of the 600 are hopelessly out of date, we understand, or have not been reviewed for over a decade. He should have a look through them, as well. He should trawl through them, see what updated technology has come to pass in the last decade, what new materials have become available in the last decade, and what builders and construction engineers are saying about those standards. I say to the Minister that to do that one thing will make a difference.
I want to tell members what happens in my electorate office in Whangarei when a young family comes to me in tears because they have a rotting home. They say to me: “We’ve heard of the Weathertight Homes Resolution Service. We’re thinking of going along there because we understand it’s cheap to get into that system, and that our rotting home, our building issues, will be resolved.” I shake my head and say “No.” I pull out my bottom drawer—and I can tell members that that bottom drawer has been open more and more, recently—and I give them the examples. The first is the waiting time to get something resolved. It takes 2, 3, or 4 years. Second is the cost of lawyers, mediation, consultants’ reports, more consultants’ reports to confirm what the previous consultants have said, and more consultants’ reports to confirm what the lawyers have said about the consultants’ reports. I tell those people about the headache of paying for lawyers, consultants, and the mediation service.
Do members know what I say to them? I say “Don’t do it.” There is no certainty in it, it will cost them a fortune, and, because there is no resolution in the end, they will pay for those consultants’ reports and lawyers, and they cannot recover costs. My advice to them is to go to court. I tell them to forget the resolution service and to go to court. At least through the court process they will get certainty and they will have a decision within 6 months—and if they go to the court, they can claim back damages, legal costs, and the cost of consultants. With this Minister’s Weathertight Homes Resolution Service, people do not get any of the things they would get in a court. They do not get certainty, they do not receive costs, and they certainly cannot claim back the expenses of lawyers and consultants.
PITA PARAONE (NZ First) Link to this
Tēnā koe, Mr Assistant Speaker. There have been roughly 40 minutes in this debate, including the Minister’s time taken to introduce this bill. Twenty minutes of that time has been spent on an indication and an explanation of this bill. Unfortunately, for the other 20 minutes all we have heard is criticism of the bill—no solutions, other than that of the member for Whangarei, who told us what he does and the advice that he gives to people who come to his office to see him about this issue, when they are considering utilising the Weathertight Homes Resolution Service. Well, I can understand what happens when one stays on the Opposition benches for so long that one’s positive sense of thinking is lost. For the last 10 minutes we have had an example of that. It is sad that, in spite of all those members’ criticism, no positive alternative has been presented to this House.
I raise a point of order, Mr Speaker. Perhaps you could give me some guidance. I spent 5 or 6 minutes of my speech talking about Standards New Zealand and how we could improve that. The member said that I gave no solutions. Could you give me some guidance as to—
The ASSISTANT SPEAKER (H V Ross Robertson) Link to this
No, the member will be seated—I am on my feet. That is a debatable issue.
Obviously, that is confirmation of what I said earlier on.
As has been mentioned, this bill amends the Weathertight Homes Resolution Services Act and, given the need to address the issues that have been identified since the passing of the original Act, I say on behalf of New Zealand First that this amendment bill is timely. It aims to improve the efficiency of the Weathertight Homes Resolution Service—the same service that a number of speakers have criticised—by speeding up and streamlining the processing of the claims before the service. It will also hold those responsible for building leaky homes to account and enforce their contributions to the cost of remedial work.
It is estimated that up to 15,000 homes may be leaky, with repairs likely to cost up to $1 billion. New Zealand First supports this legislation, as we believe the building industry needs a shake-up, although we fear that this bill may be too little, too late for many owners of leaky homes. The package seeks to address many of the problems encountered by claimants, which have been daunting enough in many cases for them to withdraw their claims and walk away from the process. We consider that to be unfair, when people build or buy houses in good faith and are then faced with the nightmare of leaky building syndrome.
Under the proposed new system the time taken to process applications will be slashed by almost half, to an average of 8 months. There will be less scope for lawyers and experts to draw the processes out, and there is the suggestion that it will cut the time frame by even more than half. The definition of damage has been extended to include future damage as well as damage that has already occurred, allowing for a more accurate assessment of the final costs required to fix a house. However, there is a concern that financial assistance is limited to those who are unable to borrow from private lending institutions, which disadvantages those who have to rely on private loans.
The bill requires territorial authorities to record claim and building consent information on the land information memorandum report. Such transparency is important in order to ensure that future homebuyers are aware of the history of their potential purchase. It is also important that the owners of leaky homes can record completed remedial work. Basically, the land information memorandum report will tell a story of the history of that particular home.
Also included in the bill is a change to the voting thresholds, to enable class action claims to be taken more easily by apartment owners. That is crucial, given that around 70 percent of claimants fall within that category.
The public has a right to expect that professionals in the building and construction industry are just that—professional. The building practitioner licensing scheme needs to be robust and to ensure that work is carried out to acceptable standards and is approved by qualified and licensed inspectors. It is imperative that the quality of buildings, payment of subcontractors, and completion of work be guaranteed, and that the regulatory system, including the building consents process, does what it is supposed to do, which is to protect people from such disasters. Architects and building suppliers also need to accept their culpability in recommending designs and products that are obviously unsuitable for homes. This whole episode of leaky homes is a reminder of what can go wrong when there is insufficient protection for unsuspecting homeowners from unscrupulous building industry players.
This fiasco is also an example of the end result of rampant free-market ideology, with its focus on deregulation and laissez-faire theories. Unfortunately, there are winners and losers in that situation. On such an uneven playing field, it is often the opportunistic cowboys who laugh all the way to the bank, while the mums and dads are left with the headaches and, of course, the repairs bill.
The deregulation of the industry also saw the decline of the apprenticeship scheme, the repercussions of which are still being felt today in the shortage of skilled and qualified trades people. That also closed career options for a whole cohort of young people, not the least of them being young Māori men who saw the building industry as a career option.
However, the important thing now is to settle the claims in a timely fashion. If it is good enough for this Government and this House to support the timely settlements of claims made under the Treaty of Waitangi, then this situation should be no exception to that. Of course the claims should be addressed in a timely fashion, so that people can get on with their lives and hold those responsible to account. This initiative, along with the new building practitioner licensing scheme, will go some way towards providing a speedier claim resolution for those affected by leaky homes, and it will, hopefully, prevent this disaster from befalling future homebuyers.
The consumer education campaign will play a central role in providing information to affected homeowners and prospective homebuyers, so that they can make sound purchasing decisions. It is therefore vital that the campaign be effective and wide reaching. New Zealand First, of course, will be monitoring that.
The bill is certainly a step in the right direction. Should there be any “devil in the detail” or concerns about the effectiveness of the Weathertight Homes Resolution Service, then we would expect that to be picked up during the select committee process. Early eligibility reports need to be linked to an early upfront loan in order to get the necessary repairs completed. A question may also be asked with regard to limiting the term of availability as to when claims need to be addressed. Many affected homes are already reaching the 10-year limitation, and many in that position have not yet been discovered or reported. When a home is sold in the middle of the processing of a claim, the claim should automatically transfer to the new owner, to facilitate the required repairs. We support the proposal regarding invasive testing, which will be essential in order to ascertain the true extent of the problem.
New Zealand First will be watching closely to make sure that the leaky buildings disaster does not recur in New Zealand. Because of the seriousness and importance of this issue, New Zealand First will also support the call from the Minister to have this bill put through the process in a timely manner. Kia ora.
SUE BRADFORD (Green) Link to this
Kia ora. I am pleased to report to the House that the Green Party is right behind the Weathertight Homes Resolution Services Amendment Bill. We know that this issue affects the lives of a large number of New Zealanders. By one count, around 15,000 households have problems costing close to $1 billion to repair. We know, too, that the homes built in the laissez-faire years of the 1990s are the worst affected—coinciding with the deregulation of the building industry under the then National Government. The Hunn report in 2002 called what happened then a “major systemic breakdown across the entire building industry”. No one escapes blame—product designers and manufacturers, developers, builders, architects, central government, the Building Industry Authority, local authorities, real estate agents, and even some private owners.
The explosive growth in building and development in the 1990s represented a great lost opportunity to upskill the industry and to prepare its workforce to build the future-proof homes we now need in the face of climate change and peak oil—well-insulated, healthy, energy-efficient homes. As just one example of this, right now we need plenty of plumbers who are qualified and capable of installing tens of thousands of solar water heating units in homes and buildings around the country. But instead we have a huge shortage of anyone trained or qualified to carry out a job that will become more and more critical to our energy future and housing future over the next few years.
Even worse, as far as I know, even now there is no national industry training plan in place to get the people we need skilled up and capable of carrying out not only solar water heating installation but a whole range of other tasks geared to maximising energy efficiency and reducing our dependence on oil and other unsustainable energy resources. Because of the lack of regulation and planning during the 1990s, we are now 10 to 15 years behind the rest of the world. This leaky building problem is icing on the cake.
The second problem we have, beyond the simple fact the leaky building crisis happened, is that the resolution services that were set up in 2002 to provide a so-called speedy, flexible, and cost-effective assessment and claims resolution procedure has not delivered. Right from the start significant problems began to emerge, even with the first case in West Auckland, where the Waitakere City Council was left to carry the can and pay more than $40,000 damages to the owners of a Glendene home, because the builders said they had no money. This pattern was repeated over and over again. The council, obviously, was not particularly happy with the result, nor were the homeowners, who were left with legal bills of $16,000 and not enough money to fix their house. Further legal action dragged the case on even longer.
Right from this unfortunate start, things went from bad to worse. By June 2005 the New Zealand Herald reported a litany of delays, the endless dodging of responsibility by both Government and local government bodies, failed mediation, some claimants settling for less than the cost of repairs, and others ending up falling outside the 10-year time limit on claims. Of course, while all that has been happening, the people literally living with the problem have had to endure the personal and financial consequences of the original debacle.
The Green Party is therefore pleased that the Government has seen fit to carry out a review of the resolution services, and that it is now acting with reasonable speed, in terms of parliamentary process, to try to hasten solutions to the problems identified. We are pleased that the bill enlarges the definition of damage to include probable future damage resulting from the original problem, rather than just what already exists. We welcome the fact that the bill gives an option for a more comprehensive assessor’s report, thereby reducing the need to involve expensive expert witnesses, and that it creates a new weathertight homes tribunal within the Ministry of Justice, to enhance the independence and authority of the adjudication services. The Greens also appreciate the provision of a fast-track process for low-value claims, the class action approach for multi-unit complexes, and the promotion of a more investigative approach by the adjudicators, which enhances their powers to be proactive during hearings.
We do, however, have just a couple of initial concerns with the legislation. In 2002 my colleague Sue Kedgley was recommending the scrapping of the 10-year liability period for claims. This continues to be our position. Any home identified as a leaky home should be eligible to use the service. Liability should cover houses and apartments built between 1991 and 2004. We also hold some concerns that claimants will be disadvantaged by the operation of confidentiality clauses during mediation. I imagine that the select committee will receive submissions reflecting these and, I am sure, other concerns. I look forward to being part of the committee process in terms of refining and improving this bill before it comes back to the House later this year.
Just before I finish, I would like to raise one other issue that I think a colleague from the Māori Party might also raise in a moment. I note with interest the speed with which the Government has picked up and taken action on this problem—a problem that mainly affects reasonably well-off people in cities like Auckland and Wellington. I am very conscious of the realities of housing for other people who live in places like Tai Rāwhiti and Northland—where people live in papakāinga housing, in old Māori Affairs housing, and in other places—where there is not the same sense of urgency. People are living in houses where the floors have rotted through under the kitchen and bathroom, in garages and milking sheds, or under dinghies. Some people are just sleeping out or living in overcrowded or hopelessly substandard accommodation of all sorts with no hope of any substantial or real help from the Government to fix their housing crisis.
Their housing crisis has been there for sometimes over 100 years, or longer. Their housing crisis continues for them every day, and I think that in this Parliament not enough of us are speaking for those people. I would beg the Government to consider taking more action more rapidly and putting more priority on to the needs of all people in those districts and in other places, such as South Auckland, as well, where people continue to live in accommodation that is beyond the imagination of most people in this House.
However, in conclusion I say that we are happy that this bill is going forward, and what I have just said should not detract from the worth of this particular legislation. We have no hesitation in supporting this bill through rapid processes in the House.
TARIANA TURIA (Co-Leader—Māori Party) Link to this
Tēnā koe te Kaikōrero o te Whare. In the mid-1980s a Te Awamutu lad, Neil Finn, created a band that produced one of the all-time favourite New Zealand songs. That band, appropriately called Crowded House, released the hit “Don’t Dream it’s Over”. The No. 1 hit song described a hole in the roof, and trying to catch a deluge in a paper cup, and ended:
While you’re travelling with me.
It is a theme song that may well sum up the Weathertight Homes Resolution Services Amendment Bill. The expression of hope amidst the battles of a vast, alienated world reflects also the faith of tangata whenua that despite the persistent Māori housing crisis they will see the end of the road. It is an expression of faith that we will carry into this latest scheme to provide homeowners with a more effective alternative to the courts for the resolution of leaking buildings claims.
It is an expression of faith that has endured through the decades. And it has literally been decades in which Māori have endured leaky homes, houses that are far from weathertight, substandard houses, and poor housing conditions. In the 1920s Māori housing was restricted to urban, pepper-potted situations. Tangata whenua were forbidden from building on their own land. Instead, they had either to sell or swap their land in order to obtain a deposit to live somewhere else. In the 1930s funding was used to replace dilapidated housing with housing that was both smaller and on a much simpler scale than State-sponsored Pākehā housing. Indeed, until the late 1940s Māori families were outcasts, excluded from mainstream State housing on the grounds that their presence would allegedly “lower the tone” of State housing communities. It is what we call “privilege”.
National. We remember our people’s homes at Bastion Point being burnt down because the Queen was coming. Finally, in 1948 Māori were concentrated into communities characterised by high Māori deprivation; areas such as Porirua and South Auckland—interestingly, the same areas that the New Zealand Police is targeting with its Taser gun trial. The scheme, administered by State Advances and the Department of Māori Affairs, in effect created ghettos of Māori housing.
Yet, through it all, Māori communities had faith that their housing aspirations would be realised, that their battles would be won, that the lack of insulation, floor coverings, floor space, quality paint, wall coverings, concreting, fencing, sewerage, and community facilities would one day be part of a nightmare that they had survived through.
So, although we support the goal of addressing the leaky building crisis, in many ways we have a certain amount of irony in doing so, for, as the homes of tangata whenua would reveal, concerns around the weathertightness of buildings in New Zealand existed long before 2002, when the Building Industry Authority raised concerns regarding leaky houses. To misquote another Finn hit, the housing experience of Māori has been far more than “six months in a leaky home”. The homes of tangata whenua, for decades, have shown signs of damage from water leaking into the house from the outside. They have suffered from the use of untreated timber. They have borne the impact of monolithic cladding systems that retain moisture. The houses of tangata whenua have been built with inadequate or poorly constructed flashings around doors and windows. And tangata whenua have had to put up with musty smells, with wet or rotting carpet, with paint blistering, wallpaper peeling or cracking, and visible water damage embellishing their family homes. So although for some sectors these so-called leaky homes are a relatively recent phenomenon, for Māori communities it has been with us for ever, ake ake, tonu ake.
Almost 50 years ago, in 1959, the Young Maori Leaders Conference unanimously endorsed Māori housing as the most crucial issue of the hui. In rural areas particularly, the housing stock owned or occupied by tangata whenua is often of poor quality and often poorly provided with the usual facilities. These problems are made even more complex by difficulties of remoteness and access, which serve to increase the costs of construction. If this House were seriously to review the situation of generations of deprivation as reflected in the Māori housing crisis, we would all be seriously embarrassed at the priority given to the Weathertight Homes Resolution Service.
If members of this House were to travel to the Bay of Plenty, up to Northland, and up the East Coast, they would be appalled. The Cooperative Housing Association of Aotearoa New Zealand has identified at least 5,000 substandard houses in Northland alone. About 4 year ago, when I was the Associate Minister of Housing, we reviewed the housing situation in the Northland, East Coast, and Bay of Plenty areas. There was a lot of caution about exposing the issues surrounding the quality of the building materials, the workmanship, the assessment of the work authorised at local body level, and public health—sewage disposal. Walls were rotting from the internal panels; they were like polyurethaned Weetbix. Many of the people were fastidiously clean, but their floors still rotted.
I recall the statement of an official about the situation in a small Māori community in the Bay of Plenty: “If this were to happen to white middle-class people there would be hell to pay.” In Rukumoana the situation was so extreme that sewerage was seeping over the lawns and coming up into the sinks of houses through the piping. People could not get the council even to pick up their rubbish, as the council did not want to offend—and I quote—“their redneck ratepayers”. Funnily enough, none of these Northland, East Coast, and Bay of Plenty areas benefited from a change in compensation or in legislation.
While the provisions for assessment reports, negotiation, processes for resolutions, and strengthened adjudication services are all very helpful, the Māori Party must draw the attention of this House to the deteriorating conditions, which cannot be overstated. The Social Report 2006 has highlighted that the proportion of low-income households spending more than 30 percent of their income on housing is over twice as high as it was in 1988. Among these, Māori are highly overrepresented.
It was precisely because of the severity of this crisis that a group of eight agencies—including the North Hokianga Housing Trust, the Cooperative Housing Association of Aotearoa New Zealand, and the Child Poverty Action Group—got together in 2003 and made a submission for the New Zealand report to the Committee on Economic, Social and Cultural Rights. That submission reported: “There continue to be real problems of social exclusion and poverty in New Zealand, manifested in an affordable housing crisis. We contend the situation is far worse than the Government accepts. Figures show that rising overcrowding impacts on Pacific families, in South Auckland, in particular. Overcrowding is associated with poor health status and respiratory diseases, infectious disease and psychological stress.” The conclusion from this group of social service providers was that “remediation of sub-standard housing has not, on the whole, delivered sustainable outcomes that take into account the realities of impoverished, under-developed regional communities.”
The Māori Party is not in the practice of comparing one oppression with another, of contrasting one case of deprivation with others. But when will the very real difficulties in the housing experiences of Māori, of Pasifika, of low-income communities in Aotearoa emerge as a worthy, serious consideration? Housing is essential to survival, to dignity, to individual and whānau well-being. Our homes are key to our sense of security; they are our havens to nurture and bring up families.
We have many proverbs that speak to the central role that stable housing plays in the lives of Māori. One recorded by White in 1887 gives particular insight: “Ko ngā tama whakatamatama a Tāne, motu te nganahau.”—the bold and daring sons of Tāne, defiant of the storm. It literally reinforces the value of strong houses built of bark and wood of trees from the forest of Tāne. It reminds us of consumer protection, of the need to address the persistent deprivation. The Māori Party stands today to inform the House that we will indeed stand tall if the Government honours its obligations to respect, protect, and fulfil economic, social, and cultural rights by ensuring that the basic entitlement to housing remains intact.
JUDY TURNER (Deputy Leader—United Future) Link to this
Tēnā koe, Mr Assistant Speaker. I rise on behalf of United Future to speak in support of the first reading of the Weathertight Homes Resolution Services Amendment Bill. I will be brief; I have a touch of laryngitis.
We consider the intentions of this bill worthy of support to be referred to the select committee for consideration. In particular, we are pleased to read of the intention to streamline processes so that claims can be dealt with in a more timely manner. We are pleased that the legislation appears to be a genuine desire to tidy up many of the mechanisms that have been in obvious need of parliamentary legal tweaking.
In particular, we welcome the inclusion of information on land information memorandum reports regarding the fact that a property has been subject to a claim. There have been some very real concerns about the fact that the current provisions mean that successful claimants receive compensation, not restitution. That places claimants under no obligation to use any money received to fix the damage. The leaky home problem is exacerbated when compensation is pocketed rather than used for repairs. We will indeed, as has been highlighted by other people, still be debating this issue in 15 to 20 years’ time if our New Zealand housing stock, both privately and publicly owned, is blighted with unhealthy flaws.
United Future is happy to support the first reading of this bill.
BOB CLARKSON (National—Tauranga) Link to this
Honourable is the correct word! I feel a bit nude today—there are no TV cameras around, and that is something I am used to and you guys are not.
The ASSISTANT SPEAKER (H V Ross Robertson) Link to this
When the member uses the word “you” he brings the Speaker into the debate. He must refer to “the members”.
I apologise.
I am pleased to talk on the Weathertight Homes Resolution Services Amendment Bill. This is too little, too late and it is in the wrong direction. Mr Cosgrove set up a bad management system to deal with leaky homes in the first instance. The Government has wasted millions of dollars and achieved very few results. That is a fact. At this moment approximately 400 leaky home problems have been solved. This is a very slow process. The first 400 homes reported as “sorted out” have cost taxpayers approximately $80,000 each for the regulatory board, yet the average repair bill is only $72,000. That is crazy.
The system set up to deal with the problem of leaky homes is a mess. For example, an order by the leaky homes committee can be given to a contractor to pay the homeowner a certain amount of dollars. This money is paid to the owner before the work is done. That is ridiculous. The owner can paint over the wet spots and sell the house with no repairs done. There are at least 45 cases in the last 400 resolutions. That is ridiculous. Those houses are now in for a second claim. Mr Cosgrove has a lot to answer for. What a stupid law that does not say that the money should be paid out when the repairs are completed! That is a normal business practice. I do not know who fouled that one up.
I have travelled around New Zealand to see many leaky homes. As a builder myself, they bring tears to my eyes. Why did this happen? We have a Minister who has made faulty laws, and must have received bad advice for this to have been allowed to happen. If he made the decisions himself, I ask why we have a public relations person who knows nothing about buildings and construction making up rules with no good advice. Why do we not have Ministers who are experienced in their roles making decisions? I suppose it is a common problem in the Labour Government. It lacks real people. For example, we have a history teacher who is the finance Minister. We have a vet who is the health Minister.
This Government needs to wake up. We have briefcase developers with shelf companies in the construction field, building shoddy houses and not paying for any mishaps. I say to Mr Cosgrove that he should wake up and fix the situation. When National is the Government I will show you how to do it. I suggest you talk to real builders in the field and get some facts. Unfortunately, as a public relations man you might not be able to understand the facts as they are laid on the table. You do not fix a problem—
The ASSISTANT SPEAKER (H V Ross Robertson) Link to this
I have already said to the member that every time he uses the expression “you” he is referring to the Chair. The member must refer to the Minister or another member as “the Minister” or “the member”—that is, in the third person. I refer the member to Standing Order 103. He cannot bring the Speaker into the debate.
Righto, we will try again. I talk from the heart, you see; that is the problem.
Unfortunately, as a public relations man Mr Cosgrove might not be able to understand the facts if they were laid on the table. Mr Cosgrove cannot fix the problem by charging $250 for the standards information book dealing with NZS 3640. The book used to cost $20 and every builder or tradesman had one. Mr Cosgrove cannot fix the problem by wrapping everything in bureaucratic tape. Builders should be given guidelines and be allowed to make some decisions within those guidelines. If Mr Cosgrove wraps everything up in red tape and charges $250 for an instruction book, the builder loses interest and does not have to think. Let them think, let them be accountable, and they will decide their own destiny and pay for the mistakes they make.
We need a bill to show and mean business. Briefcase builders should pay; they should not hide from shoddy work. In my travels around the country I have seen some large complexes that are leaking because of bad workmanship. These complexes are not being fixed by the original briefcase builder. He has made his money and is hiding behind the company’s name. The sad situation is that I stood on the roof of one of these complexes—at the Mount, actually—that is leaking badly, and one of the owners pointed to a construction building site approximately 300 metres down the road where the same builder was building another building, even though he had not repaired the original complex. The law is an ass.
I say to Mr Cosgrove that he should please fix this bill for the sake of all New Zealanders. Homeowners are frustrated, and some have had severe medical problems caused by the pressure of getting their houses, their dreams, and their finances sorted out. National will support this bill to the select committee, and then we will fire some big guns to make sure it is done right.
I make a few little suggestions to the uninformed. There is a camera available at the moment that can X-ray walls. I do not know whether members know this, but if one points the camera at the wall, the screen will show studs, nails, and water inside that wall. It is as simple as that. I have used this camera myself on a trial. It costs approximately $850 to do a full house inspection. They check the whole house for $850. This means we could test 4,000 houses under claim at the moment for the small amount of $3.4 million—way under what it is costing at the moment. This final test could be completed on the houses, which could save many second claims. There is no need to do invasive testing. That just wrecks the house and does not get to the truth. A camera can test the lot inside the walls. The camera can test all the work done and give a final pass if this work is completed properly. We need a better, faster process. I consider that this camera is the answer.
This bill will not speed things up because every claim will not be a final claim. I estimate we will still be dealing with these claims in more than 25 years’ time. Let us get the bill right. I want all claims to be final, and this final report to be put on the land information memorandum.
Darren Hughes
Hon Mark BurtonI raise a point of order, Mr Speaker. I know this may not be the most gripping speech, but it is a bit much for the member’s own caucus to be holding a caucus meeting right next to him when he is speaking. I mean, give the man a chance.
My colleagues have come down to the House because this is an important debate. Our member Bob Clarkson has some expertise in this area, and you can see that they have come in to support him. That is what they are here for. The Minister said that this is a caucus. Our caucus is a very big caucus, if I can remind the Minister, and when they all get down here he will see how big it is.
The ASSISTANT SPEAKER (H V Ross Robertson) Link to this
Can I just say to members that it is a longstanding convention in this House that members should not conduct conversations in the House unless it is necessary to do so, and then only so as not to disturb the proceedings of the House.
Thank you for your wise counsel, Mr Speaker. I will just repeat that I want all claims to be final, and the final report to be put on the land information memorandum. I do not want to be dealing with this bill in 2 years’ time when I am a Minister in the Government. [ Interruption] If members will just keep quiet, they will hear the good bit. National supports this bill to select committee.
LINDSAY TISCH (National—Piako) Link to this
Members have heard contributions from experts in the field on the Opposition side of the House. We had the Hon Dr Nick Smith, who has an interest in the Weathertight Homes Resolution Service. He was able to crystallise and articulate arguments about the shortcomings of this bill—a bill that is too late and too short—and articulate where National would be looking to make changes to it in the select committee.
We heard from Phil Heatley, who is our spokesman on housing and has taken an immense interest in the issues surrounding housing within New Zealand. He talked about how we should be looking at standards, and how standards, which are not in this bill, should be incorporated in it. If there were to be any measure of success, and any measure of progress that needs to be achieved by this amendment legislation, then we should look at incorporating standards.
My colleague Bob Clarkson probably knows more about the building industry than anybody in this House. He has probably built more buildings than we could ever count, and has been associated with major developments. So he has an understanding of the core elements and core values that are necessary to build a building that will stand the test of time, will last for a long, long time, and will not have the problems that homeowners and those in residential properties are having to contend with.
As I said before, this bill is too late and does not go far enough. If we look at some of the statistics, we will see that the cost of going to mediation is $80,000 per house. Yet what is the average cost of carrying out the repairs? It is $72,000. Why does it cost more to get an answer than to do the work?
Well, there we are. All the compliance costs that go into this are absolutely outrageous. The issues for the victims—those who have the problems with housing and leaky homes—should be addressed and the money should be put into those resources. Victims should not be handicapped and shackled because of the bureaucracy that it takes to deal with the problem.
There are 15,000 claims outstanding. Do members know that on the basis of the rate of claims lodged at the moment and those that are settled, it will take 75 years to clear those claims? Where is the Government’s priority for those people who are affected by leaky homes? This bill is, as I said, too short and too late. It does not go anywhere. The Minister is building up a bureaucracy that will not solve the issues we have identified. In fact, over the last year 200 claims were settled, but how many claims were lodged at the same time? I ask members to guess how many claims were lodged. I tell members that 584 claims were lodged, more than double the number that were actually resolved.
Brian ConnellThe problem is getting worse, as I said and as my colleague identifies very correctly. There are 15,000 outstanding claims.
We have looked at what this bill does, and as my colleague Bob Clarkson said, we will be supporting its referral to the select committee. But I can tell members that very close scrutiny will be given to how it will work and how it will impact on those people who have put their money at risk. This issue concerns their pension, this concerns their superannuation, and they should expect something better than this. In the last 7 years the Government has done absolutely nothing to help those people.
Let us see what the Government is going to do under this legislation. Well, it is to change the name of the Weathertight Homes Resolution Service that is operating now. It is to create another organisation that will be called the Weathertight Homes Tribunal. How will a tribunal fix the problem that these homeowners have? We already have the Weathertight Homes Resolution Service, so why do we need—and this is a key change in the bill—“a new Weathertight Homes Tribunal to provide strengthened adjudication services:”? How will that help those people out there with leaky homes? This Government is stuffing around and is not being serious about the issue, and those people are bleeding. They do not have money, and they are living in homes that are leaking. That leads to adverse health effects—people are getting sick because they are living in those environments—yet the Government is mucking around.
Let us look at the other key changes in the bill. “A wider scope of claims …” will be included. Well, that is great, but how does it actually help the 15,000 people who now have claims waiting to be assessed?
I have the bill—I am quoting from it. Let us look at the provision for “a low-value claims process”. That is all right; I have no problem with that. The change to “a class action approach to claims” is OK. But “improved processes and case management.”—what does that actually mean?
Although we support this bill going to the select committee stage—with reservations, I might add—we give notice that we want very robust and transparent legislation that will help all the people who are affected by this problem. The degree of frustration amongst homeowners is growing; it is becoming quite extreme. We are not prepared to accept that. This bill tinkers at the edges only, and in the select committee we will make sure we get the robustness and transparency that we believe is important.
Buying a home is probably the biggest investment one ever makes. It takes years to get a home. We know how difficult it is to become a homeowner, so when somebody finds fault with his or her place because it has not been built right—
Craig FossIt could be cheap tiling. Those things could lead to those deficiencies. Homeowners do not have expertise regarding building. A homeowner does not necessarily have the expertise required to know whether a house is being built correctly. Homeowners rely on the reliability and professionalism of those tradespeople whose job it is to build it—that is what tradespeople are employed to do. We put our faith in them. It is only someone like Bob Clarkson, who has an understanding of the industry and can see where the rorts are, who actually knows how to build correctly. He has been a practitioner—he is a practitioner—and he knows exactly how buildings should be built.
This is important legislation. We do not believe that just tinkering at the edges of the process will improve the lot of the 15,000 claimants who are affected today. We do not believe that this bill goes far enough to be able to expedite their claims. There is money at risk. Those people are concerned about their livelihoods and their investments. A house is probably the biggest investment they will ever make, and it is important we get this legislation right. As Mr Clarkson said, we do not want to come back here in a couple of years’ time to sort out more problems. At that stage National will be in Government, and I can tell members that we will sort it out then. But let us sort it out now. We have an opportunity to do so. We have the expertise, and we know what has to be done. Let us make sure, during the select committee process, that we make this legislation work.
Hon CLAYTON COSGROVE (Minister for Building Issues) Link to this
I move, That the Weathertight Homes Resolution Services Amendment Bill be considered by the Social Services Committee referred to Social Services Committee
A party vote was called for on the question,
That the motion be agreed to.
Ayes 71
Noes 48
Motion agreed to.