Hon MAURICE WILLIAMSON (Minister for Building and Construction) Link to this
I move, That the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill be now read a first time. At the appropriate time I intend to move that the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill be considered by the Local Government and Environment Committee, that the committee present its final report on or before 28 April 2011, 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, on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 187, 189(a), and 190(1)(b) and (c).
This bill brings to the House the legislation that will underpin a package the Government has negotiated with a number of parties. We have negotiated with local government and with the banks and we now have a package to bring to the House.
I will be very brief and say in summary that the package will allow homeowners to voluntarily choose whether to take it. The most important point I can make to anybody is that no one will be forced to take this package. If they take it, 25 percent of the repairs will be paid by the Government; 25 percent of the repairs will be paid by the local authority, if the local authority was the consenting authority—sadly, for some people, if the consenting authority was an independent certifier, they will not get that 25 percent—and the remaining money, be it 50 percent or 75 percent, will be given as a guaranteed loan from the bank to pay for it.
It is most important to point out here that some protection will be put in place so that local authorities cannot be sued for any more than that commitment, and they cannot be sued by being joined in a roundabout, circuitous route. The homeowner will still be allowed to sue the builder or the developer, but the local authorities were concerned that the developer might then try to bring the local authority into the litigation and it would be back for some more liability. This package will exclude that possibility. It will give a cap to local authorities that their maximum liability will be 25 percent of the repair.
It gives the Crown some safety. The Crown did not need to buy into this package. Twice the Crown has been joined into the litigation and the courts have said that, no, the Crown has no standing in this. So we could have said that we were not going to do it. This package will give homeowners the right, if they choose, to pick a 25:25:50 arrangement.
I am sorry that there will be some limits. There is a 10-year limit, and people who are just outside that will be upset, but every time we try to look at the magnitude of the sum of money involved our eyes begin to water. Our PricewaterhouseCoopers report showed that the damage is estimated to be $11.5 billion, but possibly as much as twice that amount. They are huge numbers, and a Government with a deficit on the books every month of about $1 billion struggles with them. I apologise to anyone who is excluded from the package, but we cannot leave it open-ended for everybody.
I have been out and about and I have seen people in tears in their house. They are stuck. They cannot get it fixed and they cannot get the bank to lend anything. They have pleaded with me to please just do something. They say they did what they thought was right. They invested all their life savings in a property. They thought it was the right thing to do but now they are sitting in a piece of rotting junk.
I commend this bill to the House. As I said before, I hope that when it comes back from the select committee we can bang it through its remaining stages and begin to start offering those settlements. The money will be paid only on receipt of work done, so it will guarantee that the actual fix to the house is done and money is not just paid to someone who may then onsell it so we have the problem once again. Thank you.
PHIL TWYFORD (Labour) Link to this
I am happy to take a call in the first reading debate on the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill.
I acknowledge the work of the Minister in this area, the Hon Maurice Williamson. Our country has been grappling with this huge problem for a number of years now. In saying that Labour will support this bill’s referral to a select committee we recognise that the Minister has worked hard and that this bill represents a genuine effort over a number of months to try to come up with a package that will seriously address the scale and complexity of the problem and attempt to provide relief for homeowners who have been afflicted by the leaky homes problem.
We support this bill being referred to a select committee. We look forward to teasing out some of the questions and the issues on this bill, because there are many. I will use the time we have today to raise just some of those questions about the structure of this package.
The key thing about this bill is that it provides an indemnity to the Crown in the case of homes or buildings that will benefit from this financial assistance package. That is the first thing. The second thing is that it gives the Minister the power to provide a guarantee for commercial loans that are obtained to cover the 50 percent of the cost of repairs that are left over once the Crown and the council have both made their 25 percent contributions.
That is the first thing I will query. We see in the regulatory impact statement that the Department of Building and Housing advised quite strongly against the Crown being indemnified. It said there was no reason why Department of Building and Housing assessors who scope a repair job should not be required to stand behind their work. I know that quite a few people in the industry feel the same way. The Department of Building and Housing said that the Crown’s liability would be very limited—there would not be a huge liability—and there was no reason the Crown should be indemnified. I am interested to hear from Government members in this debate why Cabinet and the Minister have gone against that advice and insisted on indemnifying the Crown.
The next question is one that the Minister raised. It is the provision in the bill that seeks to prevent so-called double-dipping. People who benefit from this package may then sue other third parties like builders, designers, and architects. The provision seeks to prevent those people from trying to enjoin the council in that legal action. This bill specifically takes away that right. The regulatory impact statement says that it may be a breach of the New Zealand Bill of Rights Act to take away the longstanding legal right of joint or concurrent tortfeasors to seek a contribution. I wonder whether that is something else the select committee should consider—that this provision is unjustified and unnecessary.
The third question I raise is about the 25 percent council contribution. Much of the language we have heard in the discussion of this package by the Minister suggests that if one signs up to the package one gets the 25 percent contribution from the council. That is what has been conveyed. But in the wording, as I understand it, the bill gives the council the right to opt in and make that contribution. The council is not required to opt in; it will simply allow the council to consider, as it does now, on a case by case basis what it wants to contribute. If it chooses to opt in to the Government scheme, the bill clearly says 25 percent. But councils will not be required under the bill to pony up with that 25 percent. I think that is a very significant difference from the way it has been presented publicly. It will give councils the opportunity to consider each case on a case by case basis, but a council will hold the whip hand when it comes to negotiations. It would be good to hear a response to that question from the Minister or from his colleagues.
We think that clarity is needed in situations where a repair job goes pear-shaped. Given that the bill indemnifies Department of Building and Housing assessors, what will happen if a homeowner goes into a repair project, borrows half the money, and gets half from the council and the Government, but then finds halfway through the job that the assessor has got it wrong and a significant value in extra repairs is needed? What happens if they get halfway into a job and they find that some more structural work needs to be done? I have not heard anything from the Minister yet and nothing in the bill or the commentary gives any reassurance in that area.
Sure. Another concern is that the bill does not require remediation work to restore homes to the performance or durability requirements of the building code. It is quite possible, in the framework we see in the bill, that councils will insist, for example, on targeted repairs, which may be unsatisfactory in terms of compliance with the building code. I would like to see the select committee take up that concern.
It is not clear to me how this bill will affect multi-dwelling buildings, which are, particularly in Auckland, a very big chunk of the leaky buildings problem. It seems to me that if an apartment complex was going to benefit from this package, the body corporate would basically have to get 100 percent of the—
Hon Maurice Williamson Link to this
No, because the Unit Titles Act kicks in next year, and it allows 75 percent.
OK. I appreciate the Minister’s explanation, but it still leaves the question of whether a significant number of multi-dwelling units will not be able to be helped by the bill, because they will not be able to reach the requisite 75 percent. Particularly with multi-dwelling units at the bottom end of the market, people there will have very little equity in their buildings. They may not be able to afford the 50 percent. That is another question about this package. I do not mean to be pernickety, because we genuinely acknowledge the effort and the ambition that has gone into the bill, but a lot of people will not benefit from this bill. Many, many people will simply not be able to afford to take on the 50 percent loan to meet the rest of the costs.
Another concern is that the bill does not differentiate between genuine owners of leaky homes and greedy speculators who may be going around now snapping up buildings that are not weathertight, buying them at knock-down prices. They are eligible under the bill for what would be a massive taxpayer subsidy to repair the buildings, which they could then flick on at market value. I question whether the limited taxpayer resources available to solve this incredibly important problem should be delivered in that kind of way to speculators, who could make a killing under this bill. I hope we will get the chance to discuss that concern as well.
Doubt remains about the role of the banks in all this. I know the Minister has made reassuring noises, but we saw in the New Zealand Herald this morning the Bankers’ Association saying that the banks had not yet agreed to participate. I would like to hear from the Government members now, and not wait to hear in the select committee, precisely what kind of guarantee the Minister proposes for those loans. If people find themselves in a default situation, will that contract be allowed to fall over? Will they be allowed to default? Will the banks step in? What kind of premium is the Government intending to pay on behalf of the taxpayer to support commercial banks with those guarantees?
TODD McCLAY (National—Rotorua) Link to this
It gives me pleasure to rise so close to the dinner break to support the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill. I start by congratulating the Minister for Building and Construction on his hard work over 2 years. There was a lot of doom and gloom in the speech of the previous speaker, Phil Twyford, although I know that he wants to be positive about the solution. I think he focused far too much on the negative aspects of “what if”, “how”, and so on and so forth.
I say that this Government has reacted in a very short period of time, and has delivered a very good package for New Zealanders who for some period have not been sure what would happen to them and their homes. It gives me please to support the bill. I commend it to the House. Thank you.
MOANA MACKEY (Labour) Link to this
I intend to move that all the words after “Committee” be deleted. Labour will be supporting the first reading of the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill. I commend the Minister in charge of this bill, the Minister for Building and Construction, for the work that he has put in to come up with a resolution for what is undoubtedly one of the more difficult issues that this Parliament has had to deal with. It certainly goes right to the heart of the livelihoods of thousands and thousands of families, and we cannot underestimate the difficulty of navigating a path that attempts to protect the Crown’s position, the householders’ position, and local government’s position. I congratulate Maurice Williamson on that.
I was also very pleased to see that during the speech given by my colleague Phil Twyford the Minister was very open to the questions that the Opposition has been raising about how this bill could be improved and whether some aspects of it opened up other areas of risk or other areas of unfairness. I was very pleased to see the Minister indicate that he was open to any solutions and that we would not get the usual thing with National members at select committee, where they use their voting power to block changes regardless of whether those changes make sense and would actually be in the interests of the New Zealand public. I certainly hope that that openness translates itself to the Local Government and Environment Committee and that we can make some changes that undoubtedly will make this legislation better.
This is an incredibly complex issue and its reach is enormous. For example, I have been contacted by people in the Auckland region who have rented a property that they did not know was a leaky property. We have had some homeowners who own leaky buildings trying to get some kind of financial recompense from the situation by renting the buildings out to people without telling them that they are leaky. Clearly that is unacceptable, but it just shows how far this issue reaches into other areas of legislation. Again, we do not underestimate the task of trying to find a solution that, as much as possible, is acceptable to all parties.
During this debate we definitely need to keep in mind why we are here in the first place. The deregulation that came with the Building Act in 1991 had an enormous impact on the building sector, and we have never really caught up in terms of the professionalisation of that sector and the protection of consumers who purchase products assuming that those protections are in place, but then find out, once they have invested their entire livelihood in a property, that in fact those protections were not there to begin with.
I found another example recently, having toured around boarding houses in Wellington. I wondered how it is possible in New Zealand for properties like that to be rented out to people—and to the most vulnerable people in New Zealand. I was told by the Wellington City Council that prior to the 1991 Building Act changes councils actually had responsibility for boarding houses. Boarding house owners were required to tell the councils where they were and the councils were able to go in and ensure public health standards were being met. The council said that when the 1991 Building Act changes came in it lost that ability. Now if it knows where a boarding house is, it will go in and use whatever public health powers it has to look after the tenants. For example, one boarding house did not even have running water or connected sewerage. Once the council knows about a problem it will do something about it, but it said these tenants would not tell them, because they were vulnerable and they were terrified that they would be evicted. That was another thing that came out of those 1991 Building Act changes.
It is a salient lesson to all members of this House when people go on about red tape, red tape, red tape. None of us wants to see people having to jump through legislative and regulatory hoops that they do not need to, but we have these protections in place for a reason.
Apparently, according to the Government junior whip, the deregulation of the 1991 Building Act and the leaky homes that came out of it is a good thing. That probably sums up the one-eyed view of some of the National members. If she had actually listened to what I was saying she would have heard that I was agreeing with what the Minister is doing. Instead, she is just chipping away negatively like she always does, not listening to what anyone else has to say, and just assuming that because I am from Labour I am not interested in having a constructive debate on this issue. That, of course, is not at all true. As I said, we are supporting this legislation.
One of the major parts of this bill is the Crown indemnifying itself. The select committee needs to do some serious looking into this part, because it is quite a major step. We agree that if people want to go down the path of accepting this package, which involves 25 percent from the Government and 25 percent from local government—although my colleague Phil Twyford has raised some concerns about whether there is actually certainty around that 25 percent from local government—then they should not also be able to sue at the same time. One either goes down the path of accepting the solution in this legislation, or one can go down one’s own path. We think that is absolutely fair enough.
But when it comes to the indemnification for future grievances that people might have against the Crown, we question whether that is a fair thing to do. For example, if during the course of repairs it is found that the Department of Building and Housing assessors have not done a proper job in assessing the damage, the homeowner is no longer allowed to have any recourse against the Crown for that mistake. We think the select committee will need to look at that issue.
We also have to appreciate that the people we are talking about trusted building officials in the first place and this is the position that it got them into. To say to them that they have to trust a whole raft of officials again, despite what happened the first time around when councils signed off on building plans and products, is asking an awful lot. Some people have lost a lot of trust when it comes to this area of Government regulation. If the officials are wrong again, even though it may be completely different officials, those people will have no ability to come back against the Crown. We will certainly want to look at that at select committee.
A lot of risk is also built in for builders with this indemnity. They are the one group that is not covered by it fully. The Crown does not carry that risk. If a homeowner wants to prosecute a builder for the work they did that resulted in a leaky building, the builder may say that it was not their fault, it was the council. But they are not allowed to do that under this legislation—they are not allowed to engage a third party in those proceedings. That means that the only person left sitting out there like a lightning rod for complaints and for being sued is the builder, the architect, or the developer. Even though it may not have been the builder’s fault, everyone else has been protected, while they have not. As we know, there will probably be people out there who will go after every avenue they can to get back some of the value of their property. Having one person sitting out there all on their own is a problem. We think we should indemnify all or none, and we may want to look at that at select committee.
I will finish off by talking about the Housing New Zealand Corporation, its role in some of this, and whether it is considered to be the Crown under this legislation. I am thinking of a particular property up in Auckland called Pepperwood Mews, where the Housing New Zealand Corporation and a developer came together and marketed properties to consumers. They said that if they purchased this property the Housing New Zealand Corporation would tenant it and become the tenancy manager. This was a very good deal for people so they invested in these properties. Then it turned out that the properties were leaky buildings. Housing New Zealand Corporation pulled its support, and said it had nothing to do with it and was only going to be the tenancy manager.
As time has gone on and documents have been revealed, we have found out that the Housing New Zealand Corporation played a much bigger role than it had originally admitted. It originally purchased these properties and then shifted to a leasing arrangement, which means that it went through a process where it looked at these properties and said they were structurally sound, otherwise it would not have purchased them. That gave the tenants some hope that it must have been a really good option. Also, there were problems with those buildings before the unit titles were signed off that the tenants were never told about.
There is some ongoing action around this issue, but I want to know whether indemnifying the Crown under this legislation means that those people are no longer able to pursue the Housing New Zealand Corporation for any culpability it may have had in the leaky building saga. If that is the case then I think it needs to be made clear. There needs to be a definitive decision for the corporation to be either included or taken out.
In the case of Pepperwood Mews those residents certainly believe that there is a case to be made that the Housing New Zealand Corporation has some culpability. Housing New Zealand Corporation was involved in assisting the developer during the resource consent process and the building consent process at council. The corporation put the process out under its name. It originally bought the properties, thereby leading people to believe that the properties were safe. Does indemnifying the Crown mean that the Housing New Zealand Corporation is also exempt from any kind of action being taken against it?
KEVIN HAGUE (Green) Link to this
Housing is not my portfolio but I rise to take a brief call on behalf of my colleague Gareth Hughes. I begin by supporting the comments that Moana Mackey has just made in congratulating the Hon Maurice Williamson on bringing the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill to the House. It is good to see legislation come before the House to make some advance on this issue. The Green Party will be voting for the bill to at least go to a select committee. We do so in the belief, none the less, that the bill does not go far enough, and we hope that some of its faults may be remedied at the Local Government and Environment Committee. But having something to debate and consider is better than having nothing to debate and consider.
I also praise the Hon Maurice Williamson for already having distributed to members some explanatory material that could be useful for us when working with constituents. I think that is a very helpful and unusual development in relation to this kind of complex legislation.
As Moana Mackey and other speakers have said, this mess was created by the National Government of the 1990s with its failure to regulate the building industry and, indeed, the broader network of industries surrounding building—or, rather, the Government’s deregulating those industries. So it is only fair that National is the one to take the steps to put that right. That said, the Government’s providing 25 percent of the cost while asking homeowners to front up with 50 percent is grossly unfair, given that it was the previous National Government’s own failure to regulate that created the problem in the first place.
We know that this issue affects the lives of a very large number of New Zealanders, and we know too that homes built in those laissez-faire years of the 1990s are the worst affected, as they coincided with that deregulation of the building industry. The Hunn report in 2002 called what happened at that time 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. In the Greens’ view, the limitation of 5 years in the bill is too short and we hope it can be remedied in the select committee process. We think it is too short because often issues come to light only when houses are sold. Any home identified as a leaky home should be eligible to use the service, so we think it is completely unfair to limit support for leaky home owners in that way.
The issue of leaky homes and the failure of that deregulation approach bring to front of mind a bigger issue, which is how we get the best outcomes. It is one of those fundamental political divides between political parties in the House, and I have spoken about it several times. The Green Party can accept that in some situations a free market could deliver the best mix of price and quality for consumer goods or services. We think that probably would apply only in the conditions that Adam Smith himself identified as being necessary for the correct operation of the free market that he described. Where those conditions do not apply, and they do not apply in most economic situations—in the situation of most goods and services—then that free-market approach will fail to deliver the best mix of price and quality. That provides a basis for the intervention of the State.
The State also needs to intervene where vulnerable people need to be protected. The State also needs to intervene where it is necessary for public good to be generated, because free markets are poorly suited to those purposes. The Green Party can accept that sometimes certain market mechanisms—
Yes, it was Roger Douglas’ fault. The Minister has correctly put his finger on the problem, and it is sad that subsequent Governments were slow to realise that fault and to remedy the problem. But I thank him for pointing that out.
The Green Party can accept that market mechanisms and consumer choice are sometimes the best way of achieving the outcomes that we all want, but in many cases they will not be. In many cases some level of regulation or rule-setting by the State will be necessary to achieve the kinds of outcomes we want. This issue of leaky homes is one that clearly illustrates one of those areas. I am not sure that this Government has entirely learnt that lesson, because again and again we see an approach to issues that falls back on an ideological belief that free markets will somehow deliver the best outcomes for everyone. That kind of magical thinking consistently fails. We have seen that in the term of this Parliament—for example, with biofuels. We see it frequently on issues like country-of-origin labelling. A personal obsession of mine is that we see it in the failure to act to remedy another one of these pieces of ideological wreckage, and that is the free market in electricity generation and supply. That is another example of a failure to deliver many of the outcomes that as New Zealanders we expect.
I make that point because the next bill we will be debating is a Government bill to adjust the building codes, with, again, the aim of reducing regulation. The Green Party warns that the Government needs to be very careful that in that bill it does not, through the cutting back of regulation, create another saga equivalent to the leaky homes one that we are addressing now. Although we say that the system is far from perfect, we applaud the Minister for bringing this bill before the House. We think there is enough in it of merit and value to support it being referred to the select committee. We look forward to engaging positively in that process to try to cooperatively bring about an Act that can best address these problems. Thank you.
Hon Sir ROGER DOUGLAS (ACT) Link to this
ACT is very pleased to support the first reading of the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill and will support its referral to the Local Government and Environment Committee. I listened to the honourable member Kevin Hague from the Green Party. He started by saying he was going to make a short speech; fortunately, we were saved by the bell! I make one comment in reference to his speech, and that is that generally the best judge of what a person needs is that individual, not the Green Party.
RAHUI KATENE (Māori Party—Te Tai Tonga) Link to this
I rise to express the support of the Māori Party for the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill. In doing so I am acting in a way that is consistent with our previous voting stance, particularly our support of the Weathertight Homes Resolution Services Bill into law some 4 years ago, which, incidentally, was in December of 2006. I wonder what it is about Christmas time that makes Governments want to ensure that homes are indeed weathertight. It is not like December here will be cold and horrible.
I thought it must be, or maybe it is like what my grandchildren tell me. It is all about Hana Koko, and they want to get the chimney nice and ready for him to drop their presents into it. But all jokes aside, I am pleased to see—
Oh no, we cannot get rid of them. This is just in Christchurch, and I will talk about Christchurch a bit later too. I am pleased to support this bill, as it will bring into place the financial assistance measures that will be provided by the Minister on behalf of the Crown to lenders in the form of a credit support facility. The bill provides for the setting of monetary limits for the guarantees or indemnities, the form and content of the guarantees or indemnities, and the maximum contingent liability of the Crown under the guarantees or indemnities. This sounds particularly impressive, and as if no stone has been left unturned. However, the bill does not establish a limit on how much can be lent by the Crown to lenders. The Minister of Finance will determine the length of time the lender has to pay back the loan, so I am particularly interested in hearing the public’s views, through the select committee process, about whether the Minister of Finance should be the one who has the ultimate authority to determine time frames and parameters around them. Arguably, the Government will act as a guarantor to financial institutions, so that the pressure of lending for the purposes of repairing leaky homes by these institutions can be eased and, therefore, money to fix leaky homes is more readily accessible.
In its simplest form, then, this bill aims to provide owners of leaky homes with access to cost-effective procedures for assessment and resolution of claims. The bill will establish financial assistance measures in order to facilitate the repairs of leaky homes.
I cannot leave this bill without making the inevitable comparison with a region central to my electorate of Te Tai Tonga. I am of course referring to the drastic impact of the September earthquake on some 100,000 homes in Christchurch, with some 2,000 homes being uninhabitable. I am very aware that last Saturday was the last day, the deadline, for Earthquake Commission claims relating to damage from September’s earthquake. I certainly hope that everybody managed to get their claims in on time. I was one of those who procrastinated a little, but I did manage to get my claim in within the last couple of weeks, so I am feeling relieved about that. I now await the result of the inspection. But my big question does remain about how we support and sustain those residents who did not have the protection of insurance, and how we can provide a positive future for them, much as we are doing today with this Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill.
CHESTER BORROWS (National—Whanganui) Link to this
I appreciate the opportunity to speak on the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill. The Government has stepped up with a financial assistance package to help people get their leaky homes fixed more quickly. Our priority is getting homes fixed, and we must move beyond the current state of endless disputes and litigation. This package is about spreading the costs as evenly and as fairly as possible, to get action. We need to help affected homeowners to move on with their lives. I commend this bill to the House.
DAVID SHEARER (Labour—Mt Albert) Link to this
It is good to be able to speak on the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill. But I have to make the observation that the calls from members on the other side have been short.
Two weeks ago the Leader of the House told us that the legislative programme was in place and we would not need to take urgency in the last couple of sitting weeks. Members on the other side of the Chamber were probably as surprised as we were to find out that we will probably be here until Saturday. That is not a problem for us, but it means that National members do not enter into the debate any more.
The New Zealand Security Intelligence Service Amendment Bill, which was debated earlier today, is one of the most fundamental pieces of legislation that will be put through the House. It balances national security against our human rights, the protection of our human rights, the protection of our privacy, what can be done against it. National members did not speak on that part of the bill at all. They did not even take a call as long as Chester Borrows’ previous call. The cost of the disorganisation we are facing in the legislation right now is the absence of debate. We have National members just standing up and saying that they support this legislation.
This bill is different from the New Zealand Security Intelligence Service Amendment Bill, obviously, but it is different in another way in terms of the process.
I tell Mr Williamson to wait for this. Unlike the SIS legislation, I think there has been very wide consultation with the stakeholders involved. We will not have the opportunity to do that with the SIS legislation, as it seems like the committee stage will be handled in secret, unless Mr Key changes his mind again.
I congratulate the Minister on bringing this legislation to the House. This bill will never satisfy absolutely everybody. People will be annoyed and not happy, but it strikes a balance and I think the Minister has done a good job in bringing the legislation to the House. If we look back at the issues, we see the problems that caused this debacle. The cost of it is eye-watering. We are looking at $11 billion, and PricewaterhouseCoopers thinks it could be up to $23 billion. That is equivalent to the education and health budgets for 1 year. In fact, the North Shore City Council came up with some interesting figures when it looked at the cost in 2008 dollars of the Napier earthquake. It was only $608 million, versus possibly $11 billion here.
There has been a systemic series of failures right through the last 20 years. We have talked about the deregulation of the building industry, and I think that was definitely one aspect of the problems. There were the problems of poor, shoddy workmanship as a result of a lot of the builders not having the right qualifications, and the demise of the apprenticeship scheme. We have had a change in the style of housing. They have no eaves, they have flat roofs, and there is little in the way of control from the councils, which should have exercised much greater control over the building process, but did not.
Also, a lot of the houses were built with untreated timber, and they were much more prone to rot. Interestingly, I live in a house that is 130 years old. It has no rot at all, except in the parts that have been renovated more recently in Pinus radiata. Although I have some constituents who come into my office to talk about leaky homes, most of my constituents live in older style houses that do not have this problem. Their homes have been standing for 100-plus years in some cases, and they are solidly built, with eaves, and have the right types of measures built in that are suited to the New Zealand environment and to the Auckland environment. The houses that were built much more recently certainly were not set up to have those features.
Obviously 25 percent is an improvement on the 10 percent that the Government was going to pay originally. The Government is now looking at the council paying 25 percent and the owner paying 50 percent, and that strikes a reasonable deal.
Some issues with the details have been raised by my colleagues Phil Twyford and Moana Mackey. I expect those issues to be ironed out in the select committee. It was good to hear earlier in the evening the Minister say that that would be the case.
We thank the Minister for the extra material he sent through, because I think quite a few questions will be coming to electorate offices over the next few weeks about what this legislation is and what it might look to do.
I will touch on some of those issues. We need some clarification around repairs. If, for example, the repairs are costed out at around $100,000, and they look like they might be heading towards $150,000, we have an issue about how an owner bridges that gap. If the repairs are not done to a satisfactory level, what sort of come-back does the owner have against the council? The council is, essentially, not able to be taken to task. I think there needs to be the possibility of some sort of appeal mechanism. We cannot simply say that these assessors will be able to get it right every single time. There are a couple of issues around that.
Obviously there is the big issue of people who are simply not able to afford to pay the 50 percent. We are all told that the best thing we can do is to buy our own home and have it mortgage-free by the time we get a bit older. Many of the people who have been affected by leaky homes are older, with a limited ability to earn an income, yet they are facing massive costs. I am not sure how we deal with that issue. I am sure submitters to the select committee will want to talk about that a bit further.
The other issue is the situation where an owner decides to take on this particular package—to take the 25 percent from the council and the 25 percent from the Government—and then sue the builder. What recompense does the builder have at that point? In a sense, we are moving the blame down the line. A builder could quite legitimately turn round and say that actually they built it to council specifications, and it was all above board. But builders have no ability to go back to the council and seek recompense from the council as a result of buying into the scheme.
Overall, I think the estimate that about 70 percent of people will take up this offer is good. It was never going to fix everybody’s problems; this problem affects New Zealand at large. When somebody turns round and says that the council should pay for something, I say that the council is funded by ratepayers, which is ultimately our problem. So the whole issue goes round in a circle, and we, as New Zealanders, will have to shoulder the burden collectively for this complex system of errors.
I do not think we have many other options than to look at a solution such as the one that has been put before us. I think that with the right amount of discussion, the right amount of communication to people out there about what is going to happen, and the right amount of listening to whatever suggestions that they bring up this could be a useful solution to an enormous problem that is facing New Zealand. Thank you.
TIM MACINDOE (National—Hamilton West) Link to this
I would say to the member for Mt Albert, who has criticised Government members for making short speeches, that his party in Government talked for 9 years about this issue, and that is what it is still doing now, whereas our Government is determined to act, and that is why we are getting on with the job.
Along with most electorate members of Parliament, I imagine, I have had the sobering experience of meeting constituents who face the sobering, terrible ordeal of owning leaky homes, and it is very hard not to be moved by their distress. Fortunately, the problem is not as extensive in my city of Hamilton as it is in some other parts of the country, but for every single homeowner who is caught up in this tragedy it is an absolutely shocking state of affairs.
There is much that I would like to say on this bill, but because of the circumstances, I will confine my remarks to an acknowledgment of the Minister, local authorities, and officials who have put together this admirable package. It is an honourable and just response to a serious problem. I am very proud to be a member of the governing party that has responded to such a difficult and longstanding challenge. I join other members in commending this bill to the House, and I sincerely hope that it will make a huge difference for the thousands of homeowners who are in this ghastly position.
Hon SHANE JONES (Labour) Link to this
Tēnā koe, Mr Deputy Speaker. Such is the gravity of this subject that it requires a full 10-minute speech. Labour members are supporting the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill. It is important to bear in mind that the bill remedies a situation that, although it began while Maurice Williamson was a Minister in the early 1990s, in actual fact has worsened over the last decade or two. I will isolate a few important things that have happened.
Local government found the difficulty so severe that it could not even secure reinsurance in the international reinsurance market, and its exposure has grown as the problem has increased. I would be the first to admit that during the period of time when I was the Minister for Building and Construction it was a difficulty that bedevilled—
Mr DEPUTY SPEAKER Link to this
I just ask Government members to quieten down, please. I am trying to listen to the speaker.
Tēnā koe, Mr Deputy Speaker. The point I was making was that although we support this bill, the reality is that during the last 10 to 20 years local government has become lumbered with this problem. I give full marks to the Minister of Housing for finding a way for the Crown to contribute. I look forward to hearing the submissions to the Local Government and Environment Committee, because at the end of the day the submitters will focus on how in practice the Crown will assure them, as they go into debt, that they can actually gain access to the Crown percentage of the money. Similarly, how will local government also offer a bankable level of assurance? Most important, how will we ever convince the trading banks domiciled in New Zealand—otherwise known as the Aussie banks—or, should I say, the Crown, to step up to the plate?
A key weakness, which is reflected in the policy at the moment, I venture to say, will be the unwillingness of the banks to provide homeowners with additional capital to address the problems. They are already overexposed in relation to property in New Zealand. Thousands of New Zealanders already have what are called aquarium mortgages—that is, the value of the property has receded below the level of the mortgage. I suggest that during the select committee process, when the Bankers’ Association makes its submission, members on the committee focus on what the banks might be expecting from the Crown in terms of underwriting, perhaps, in order for them to extend dough to these individual homeowners.
I have met a number of these homeowners, and the lesson to be taken is that if anyone seeks advice about buying property in areas around Auckland, the advice should be to buy nothing unless it has eaves of at least 600 millimetres or 800 millimetres. If it is a 1950s or 1960s bungalow, it should be bought 1,000 percent more quickly than anything that looks like a Mediterranean construction, because I fear that those buildings are permanent aquariums, and that those building designs will never, ever cope with the New Zealand climate. The people who have escaped scot-free for having blighted our local urban landscape with these buildings will never be fully held to account.
Chris AuchinvoleI know my presence on various committees has been missed. I might actually improve the intellectual quotient on the other side of the House by from time to time arriving there. I cannot improve the intellectual quotient offered by my colleagues here; all I can do is make up for the defects on the other side. However, I do not want to be too uncharitable tonight. I have not had the chance to acknowledge my distant Ngāti Porou kinswoman, Hekia Parata. I want it known that this woman worked in the general area of housing in her time, so what I am to say is relevant to the broad ambit of the bill. Craig Foss, despite his pugnacity, did not make it. Amy Adams, despite her knowledge of being Parliament’s most knowledgable lawyer and accountant, could not mix it. Hekia, however—a figure of elegance, style, and humility, a woman of few words, retiring, shy—has now replaced Pansy Wong. Ngāti Porou say that Hikurangi mountain is the first to see the sun, and we can expect more of that rhetoric from Hekia in the future. Anyhow, I do not want the year to pass and grind to a halt without my acknowledging Hekia Parata. We came into the Civil Service at a similar time—but that is another story.
Part of the difficulty with what this bill is addressing is that unless the builders of the future and the designers and the architects can improve their general level of skill, there is no guarantee that if we continue with very complicated building designs that are not suitable for Aotearoa, this problem will not recur. I encourage Minister Williamson—and we have another bill on the way—to actually expedite the process of improving the pace at which builders and other experts in the sector can become qualified so as to reduce the construction-related problems with this package.
As I said earlier, a number of us have met the families who are struggling, who are stranded, who are condemned to live in these shoddily constructed apartments and buildings. In some respects, as harsh as it may seem, often the best thing for some of them—and a number of them have done it—is to just cut their losses and move on. This issue has mental health implications, it has destroyed marriages, and it has ruined families.
Although this legislation represents a remedy, it is only a partial remedy, because at the end of the day if the owners want to remain in those dwellings, they will have to go further into debt. They will not have the opportunity to have another crack at the Crown or local government, etc., and in a sense I do think that is unfair. But having said that, I believe we will hear through the submissions that the ratepayers and the taxpayers—unless they want to turn this issue into some sort of multi-century Treaty of Waitangi settlement process—want to see an end to it, to the point at which property owners are no longer able to come back. Because who are they tapping? They are tapping ratepayers and they are tapping taxpayers. Although we think it is quite unfair—the time restrictions and the absence of the ability to ram home a liability case in the future—there are two sides to the story. That is why Labour members are happy for the bill to go to the select committee, and we will listen with a considerable degree of interest to what the submissions might be.
This has been predominantly an Auckland problem, with some cases in Wellington and a few in the South Island. But it has largely been an Auckland-based experience. I think the lesson here is that if we continue to deregulate in the future, and if we do not have a workforce that is capable of taking the elegant plans on the architect’s computer screen and turning them into an actual construction, then this problem will revisit us time and time again.
We support this bill being referred to the select committee, but I offer a warning: we supported the Ngāti Apa debacle being referred to the select committee as well, and as a consequence of the wide divisiveness and very angry reactions that that bill has caused, we reserve our position with regard to what we will do then. We will hear very courteously—unlike certain Ministers on that side of the House—what the public has to say. Kia ora tātou katoa.
JO GOODHEW (National—Rangitata) Link to this
I will take a brief call on the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill, and I do so, actually, with quite a heavy heart. This bill has come to this House, not before time, after the good work of the Minister, Maurice Williamson. But it is too late for some. It is too late for my family members who were challenged by a leaky home, and who went through tremendous pain, anguish, and suffering over what was a couple of years. I must say that that probably contributed to a now terminal illness on the part of my mother-in-law. This legislation is too late for them. It has taken a National Government with the guts, determination, and ability to get on and do something after 9 long years of waiting for Labour to stop the rhetoric, get on, and take some action. It did not happen; thank goodness it has now. Therefore, we can congratulate this National Government once again. I commend the bill to the House.
Hon ANNE TOLLEY (Minister of Education) Link to this
I move, That the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill be considered by the Local Government and Environment Committee , that the committee report finally to the House on or before 28 April 2011, and that the committee have authority to meet at any time while the House is sitting (except during oral questions), and 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, and outside the Wellington area, despite Standing Orders 187, 189(a), and 190(1)(b) and (c).
Mr DEPUTY SPEAKER Link to this
Before I put the motion, I have an amendment in the name of Moana Mackey to delete all the words after “Committee”.
A party vote was called for on the question,
That the words after “Committee” be omitted.
Ayes 51
Noes 68
Amendment not agreed to.
A party vote was called for on the question,
That the Weathertight Homes Resolution Services (Financial Assistance Package) Amendment Bill be considered by the Local Government and Environment Committee, that the committee report finally to the House on or before 28 April 2011, and that the committee have authority to meet at any time while the House is sitting (except during oral questions), and 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, and outside the Wellington area, despite Standing Orders 187, 189(a), and 190(1)(b) and (c).
Ayes 68
Noes 51
Motion agreed to.