1 00:00:09,093 --> 00:00:12,693 Speaker 1: You're listening to a podcast from News Talks Be follow 2 00:00:12,773 --> 00:00:16,133 Speaker 1: this and our wide range of podcasts now on iHeartRadio. 3 00:00:16,692 --> 00:00:19,973 Speaker 2: The Building Can Sense regime is getting an overhaul. It's 4 00:00:20,012 --> 00:00:23,372 Speaker 2: been called the most significant change in a generation. To 5 00:00:23,453 --> 00:00:26,452 Speaker 2: discuss further, we are joined by Julian Lees. He's the 6 00:00:26,533 --> 00:00:30,613 Speaker 2: chief executive of the New Zealand Building Industry Federation and 7 00:00:30,653 --> 00:00:33,853 Speaker 2: he's on the line now, Julian, Very good afternoon. 8 00:00:34,813 --> 00:00:35,973 Speaker 3: H I'm Matt Hi Tayler. 9 00:00:36,813 --> 00:00:40,132 Speaker 4: Now, Julian, explain this proposal to me, like I am 10 00:00:40,173 --> 00:00:41,892 Speaker 4: an absolute idiot. 11 00:00:43,173 --> 00:00:46,613 Speaker 3: Well, look what it means is every time a builder 12 00:00:47,373 --> 00:00:50,132 Speaker 3: becomes insolvent, and we've seen a lot of that, partically 13 00:00:50,732 --> 00:00:54,612 Speaker 3: in hard times, and they're leaving the homeowner with an 14 00:00:54,653 --> 00:00:59,013 Speaker 3: incomplete building, there's now going to be not just a 15 00:00:59,133 --> 00:01:03,733 Speaker 3: council as the last man's standing, but potentially it'll be 16 00:01:03,773 --> 00:01:07,773 Speaker 3: a builder who's got some insurance. So ultimately it's going 17 00:01:07,813 --> 00:01:11,613 Speaker 3: to lead to faster sort of resolution of these sorts 18 00:01:11,653 --> 00:01:14,053 Speaker 3: of things. But also it's going to mean that our councils, 19 00:01:14,093 --> 00:01:17,813 Speaker 3: who are so risk averse will be much much more 20 00:01:17,853 --> 00:01:21,493 Speaker 3: open and less likely to say no to things, particularly 21 00:01:21,533 --> 00:01:23,693 Speaker 3: things like new building products which we're saying to see 22 00:01:23,733 --> 00:01:26,572 Speaker 3: as well. So it is a big change, but of 23 00:01:26,572 --> 00:01:28,373 Speaker 3: course the devil's always in the detail. 24 00:01:29,413 --> 00:01:34,573 Speaker 4: So as the cautiousness of councils, is that because of 25 00:01:34,613 --> 00:01:37,253 Speaker 4: the liability primarily because I just always put that down 26 00:01:37,333 --> 00:01:38,493 Speaker 4: to being officious. 27 00:01:39,773 --> 00:01:42,053 Speaker 3: Well yeah, look, possibly you say it's a bit of both, 28 00:01:42,413 --> 00:01:45,133 Speaker 3: but no, look it is. They are risk averse because 29 00:01:46,053 --> 00:01:49,972 Speaker 3: if they get something wrong or you know, something doesn't 30 00:01:50,013 --> 00:01:52,213 Speaker 3: go the way it should, they are the ones that 31 00:01:52,213 --> 00:01:53,813 Speaker 3: they get sue. The are the ones that have got 32 00:01:53,813 --> 00:01:57,013 Speaker 3: the deep pockets. Now, of course all that gets passed 33 00:01:57,013 --> 00:02:00,213 Speaker 3: on to rate players us. So what we want to 34 00:02:00,253 --> 00:02:02,733 Speaker 3: do is do something I get similar to what is 35 00:02:03,133 --> 00:02:06,253 Speaker 3: in New South Wales and Victoria, where you know you've 36 00:02:06,293 --> 00:02:10,933 Speaker 3: got you've got attary warrantees, you've got mandatary insurance if 37 00:02:10,933 --> 00:02:14,293 Speaker 3: you're building anything over twenty k of value in the 38 00:02:14,853 --> 00:02:19,053 Speaker 3: residential space, and it's just a better system for allowing 39 00:02:19,853 --> 00:02:25,093 Speaker 3: you know, homeowners some compensation and to get their buildings complete. 40 00:02:25,813 --> 00:02:30,613 Speaker 4: So people are already screaming leaky homes. Leaky homes. Is 41 00:02:30,613 --> 00:02:33,933 Speaker 4: that kind of massive cock up likely under a system. 42 00:02:33,653 --> 00:02:37,893 Speaker 3: Like this, none of it's done properly because I mean, look, 43 00:02:37,972 --> 00:02:41,053 Speaker 3: leaky homes and we've still you know, seen the tail 44 00:02:41,173 --> 00:02:43,572 Speaker 3: end of it. But that that was also about the 45 00:02:43,693 --> 00:02:47,252 Speaker 3: you know, poor design. It's got a whole bunch of issues. 46 00:02:48,453 --> 00:02:51,293 Speaker 3: I think I think this means we've got to have 47 00:02:51,613 --> 00:02:55,852 Speaker 3: criteria around eligibility. So in other words, you know, we've 48 00:02:55,853 --> 00:03:00,093 Speaker 3: got to have builders that have got the qualifications, the experience, 49 00:03:00,133 --> 00:03:05,333 Speaker 3: and the financial standing plus the insurance. So we've got 50 00:03:05,333 --> 00:03:07,613 Speaker 3: to have those things in place if we If we do, 51 00:03:08,373 --> 00:03:10,053 Speaker 3: then then it means that we've got you know, the 52 00:03:10,333 --> 00:03:12,773 Speaker 3: homeowner has got a recourse, you know, they've got some 53 00:03:13,333 --> 00:03:17,653 Speaker 3: guarantee that that thing things will get done if the 54 00:03:18,053 --> 00:03:21,333 Speaker 3: fall falls over. So I don't think we're I don't 55 00:03:21,333 --> 00:03:24,253 Speaker 3: think we're there yet, but there are other risks. The 56 00:03:24,293 --> 00:03:26,773 Speaker 3: other risks being that if we move from that join 57 00:03:26,933 --> 00:03:30,533 Speaker 3: several ability that we currently have to proportion it, it 58 00:03:30,573 --> 00:03:33,933 Speaker 3: could be that we simply just don't have enough builders 59 00:03:33,972 --> 00:03:36,973 Speaker 3: who you know, meet the alibility criteria or have the 60 00:03:37,093 --> 00:03:39,173 Speaker 3: financial backing be ensured. 61 00:03:39,413 --> 00:03:42,493 Speaker 4: Because that's what I was wondering. Kind of smaller business 62 00:03:42,533 --> 00:03:45,813 Speaker 4: like a you know, just a small crew running a 63 00:03:45,813 --> 00:03:49,013 Speaker 4: couple of people, businessmen or solo builder. Will they be 64 00:03:49,013 --> 00:03:50,293 Speaker 4: able to cover the insurance levies. 65 00:03:53,453 --> 00:03:57,133 Speaker 3: Possibly not, because you know, most of our builders are 66 00:03:57,453 --> 00:04:03,173 Speaker 3: three to five you know, crew small companies. They operate 67 00:04:03,253 --> 00:04:07,733 Speaker 3: on very slim margins, they operate on quickly. Now in 68 00:04:07,813 --> 00:04:11,133 Speaker 3: these times amount of times on you know, hand to 69 00:04:11,213 --> 00:04:15,773 Speaker 3: mouth basically, so cash flows tight to you know, insurers 70 00:04:15,813 --> 00:04:18,373 Speaker 3: will will come to them and say, well, we won't 71 00:04:18,413 --> 00:04:20,093 Speaker 3: look at your books, we won't see what your cash 72 00:04:20,133 --> 00:04:24,453 Speaker 3: flows like. They don't ensure people if they think the 73 00:04:24,533 --> 00:04:27,933 Speaker 3: risk is too great. So that's the issue. And I 74 00:04:27,933 --> 00:04:31,933 Speaker 3: guess this is also why Australia has some state backing 75 00:04:32,013 --> 00:04:35,173 Speaker 3: of their insurance schemes in all our sales. 76 00:04:35,573 --> 00:04:39,973 Speaker 4: Yeah, because our economy couldn't handle all those little operations 77 00:04:39,973 --> 00:04:41,053 Speaker 4: going into business, could they. 78 00:04:42,213 --> 00:04:45,013 Speaker 3: No, and no, no, look and the other thing. No 79 00:04:45,053 --> 00:04:47,933 Speaker 3: one's talked about this yet, but New Zealand doesn't have 80 00:04:48,053 --> 00:04:51,933 Speaker 3: any functioning building warranty insurance market. You know, we we 81 00:04:51,933 --> 00:04:54,413 Speaker 3: we had a I think it was called Stanford Insurance 82 00:04:54,453 --> 00:04:56,653 Speaker 3: back in between nineteen that did do that, but they 83 00:04:56,733 --> 00:05:01,173 Speaker 3: pulled out because there just wasn't simply the market for it. 84 00:05:01,293 --> 00:05:03,653 Speaker 3: So we need to get you know, we need to 85 00:05:03,653 --> 00:05:05,573 Speaker 3: realize that if this is going to work, we need 86 00:05:05,613 --> 00:05:09,413 Speaker 3: to get that building warranty insurance get up and running again. 87 00:05:10,653 --> 00:05:12,893 Speaker 3: And we need to have, you know, something sufficient so 88 00:05:13,013 --> 00:05:15,973 Speaker 3: builders can can't get that level of cover if we're 89 00:05:15,973 --> 00:05:19,573 Speaker 3: talking about you know, not making counsels the last man's standing. 90 00:05:20,733 --> 00:05:24,773 Speaker 4: So just speaking of warranties, you said before statutory warranties 91 00:05:24,933 --> 00:05:28,973 Speaker 4: are used in Australia. What does what's a statutory warranty? 92 00:05:29,853 --> 00:05:31,693 Speaker 3: So what that means is a New Zealand we have 93 00:05:32,013 --> 00:05:34,693 Speaker 3: the Building Acts in Australia, the Act. But thinking so well, 94 00:05:34,813 --> 00:05:36,733 Speaker 3: it's got the Home Building Act and it's got the 95 00:05:36,973 --> 00:05:40,453 Speaker 3: Domestic Building Act something like that, whether what that means 96 00:05:40,493 --> 00:05:42,813 Speaker 3: for our Building Act? We would then have an implied 97 00:05:42,853 --> 00:05:46,413 Speaker 3: warranty builds into that Act. So that means, so what 98 00:05:46,493 --> 00:05:49,973 Speaker 3: that means is any work undertaken by any builder in 99 00:05:50,053 --> 00:05:53,533 Speaker 3: New Zealand would have to it would impliedly be saying 100 00:05:53,973 --> 00:05:56,213 Speaker 3: this work will be done to a certain standard and 101 00:05:56,573 --> 00:06:01,613 Speaker 3: you know, using certain materials, and there's an implied warranty 102 00:06:01,813 --> 00:06:06,493 Speaker 3: to back that up, so you know, and again this 103 00:06:06,573 --> 00:06:08,813 Speaker 3: is what Australia has done. And again that's the last 104 00:06:08,813 --> 00:06:13,853 Speaker 3: sort of insurance backstop if you like, in case we've 105 00:06:13,893 --> 00:06:16,533 Speaker 3: got home owners that actually are dealing with the builder 106 00:06:16,573 --> 00:06:18,493 Speaker 3: that doesn't have insurance. 107 00:06:18,773 --> 00:06:22,413 Speaker 2: Great, we're chadding to Building Industry Federation Chief executive Julian 108 00:06:22,493 --> 00:06:26,573 Speaker 2: Lee's Julian the sixty seven building consent authorities. So you've 109 00:06:26,613 --> 00:06:30,452 Speaker 2: talked about the consolidation of those authorities, hopefully into one 110 00:06:30,733 --> 00:06:33,293 Speaker 2: unit to get some consistency. But what does that look like. 111 00:06:33,333 --> 00:06:36,693 Speaker 2: Does that mean that gets absorbed into central government or 112 00:06:36,773 --> 00:06:40,013 Speaker 2: how does that operate if it's just one authority dealing 113 00:06:40,013 --> 00:06:42,013 Speaker 2: with those sides of the consents. 114 00:06:43,133 --> 00:06:46,053 Speaker 3: Yeah, well look at the moment, so you're quite right. 115 00:06:46,093 --> 00:06:51,133 Speaker 3: We've got sixty seven BCA's councils Auckland Council for all 116 00:06:51,133 --> 00:06:53,373 Speaker 3: of New Zealand is about forty six percent of world 117 00:06:53,373 --> 00:06:56,413 Speaker 3: building consents. I mean, we know, which's no surprise because 118 00:06:56,413 --> 00:07:00,733 Speaker 3: we're the biggest city in the country and this is 119 00:07:00,773 --> 00:07:05,093 Speaker 3: where most of the building work happens. So it kind 120 00:07:05,093 --> 00:07:08,493 Speaker 3: of makes sense if there's some sort of consolidation where 121 00:07:08,893 --> 00:07:11,053 Speaker 3: some of those smaller councils that may only do a 122 00:07:11,053 --> 00:07:14,973 Speaker 3: few hundred or you know, a couple of consents, they 123 00:07:15,053 --> 00:07:18,053 Speaker 3: probably don't need to be doing that. It'll make it 124 00:07:18,213 --> 00:07:21,373 Speaker 3: be much more efficient if there's one organization which could 125 00:07:21,453 --> 00:07:26,293 Speaker 3: be a new organization that's formed or simply open council 126 00:07:26,493 --> 00:07:29,733 Speaker 3: decignis to take that on, or a private organization that's 127 00:07:29,733 --> 00:07:33,533 Speaker 3: set up to do all of that. And they're already 128 00:07:33,533 --> 00:07:36,373 Speaker 3: talking now about I think, I think, I think Minster 129 00:07:36,413 --> 00:07:40,173 Speaker 3: Penk has said the expectation is that councils should be 130 00:07:40,253 --> 00:07:43,333 Speaker 3: doing eighty percent of consents within three days, which is 131 00:07:43,733 --> 00:07:46,813 Speaker 3: significantly faster than the currents that have ten to twenty days. 132 00:07:47,653 --> 00:07:50,173 Speaker 4: So how much cheaper will building be under a set 133 00:07:50,253 --> 00:07:50,653 Speaker 4: up like this? 134 00:07:52,333 --> 00:07:56,813 Speaker 3: Potentially thousands of dollars will come off the cost of 135 00:07:56,853 --> 00:07:59,533 Speaker 3: a new build. And so that's a really good question 136 00:07:59,613 --> 00:08:02,853 Speaker 3: because the whole focus has been for these reforms and 137 00:08:02,893 --> 00:08:05,933 Speaker 3: by this government to make housing more affordable. You know, 138 00:08:06,053 --> 00:08:09,373 Speaker 3: Kiwis do pay a lot for their home and more 139 00:08:09,413 --> 00:08:13,533 Speaker 3: than we do our cousins to over the ditch. So 140 00:08:13,933 --> 00:08:18,133 Speaker 3: you know, we can we can knock thousands off through 141 00:08:18,173 --> 00:08:21,053 Speaker 3: this process and through speedier consenting and in addition to 142 00:08:21,693 --> 00:08:24,053 Speaker 3: bringing down the cost of building materials, and then we're 143 00:08:24,093 --> 00:08:27,173 Speaker 3: on our way to you know, getting better, more affordable housing. 144 00:08:28,333 --> 00:08:32,933 Speaker 4: Would a government insurance system worker would be for the 145 00:08:32,933 --> 00:08:35,853 Speaker 4: insurance to actually come in to the market, would it 146 00:08:35,933 --> 00:08:38,933 Speaker 4: need some kind of government back up. 147 00:08:40,653 --> 00:08:44,333 Speaker 3: Yeah. Look, I think because we don't currently have that, 148 00:08:44,413 --> 00:08:47,652 Speaker 3: as I said earlier, that functioning building warranty insurance market, 149 00:08:48,333 --> 00:08:50,653 Speaker 3: the government probably is going to have to do something 150 00:08:50,973 --> 00:08:56,453 Speaker 3: to incentivize or to create a market initially where builders 151 00:08:56,533 --> 00:09:01,453 Speaker 3: can be covered and where homeowners have that sort of surety. Yeah. 152 00:09:01,892 --> 00:09:04,173 Speaker 3: And because you know, that's just the size of our market, 153 00:09:05,053 --> 00:09:07,293 Speaker 3: you know the fact that we're also just in a 154 00:09:07,533 --> 00:09:11,172 Speaker 3: tough I'm you know, insurers are looking at New hilland 155 00:09:11,252 --> 00:09:14,333 Speaker 3: overall in general and going, h you know, do we 156 00:09:14,372 --> 00:09:17,533 Speaker 3: want to really be ensuring anything at the moment. 157 00:09:17,852 --> 00:09:22,213 Speaker 2: Yeah, absolutely, concern certainly is Yeah, Julian, thank you very 158 00:09:22,293 --> 00:09:24,293 Speaker 2: much for having a chat with us. Really interesting. So 159 00:09:24,453 --> 00:09:27,173 Speaker 2: last one, So out of ten, what do you think 160 00:09:27,213 --> 00:09:28,693 Speaker 2: about this policy? How's it going to work? 161 00:09:30,453 --> 00:09:34,173 Speaker 3: Look, I would say in terms of the intent, it's 162 00:09:34,173 --> 00:09:37,053 Speaker 3: it's it's an eight, but it's always a case of 163 00:09:37,053 --> 00:09:41,492 Speaker 3: waiting and seeing. But I hope it's backed up by 164 00:09:41,333 --> 00:09:44,093 Speaker 3: buy some good thought around the insurance side of things. 165 00:09:44,293 --> 00:09:46,132 Speaker 2: Yep, really good to chat with you. Thank you very 166 00:09:46,213 --> 00:09:46,893 Speaker 2: much for your time. 167 00:09:47,693 --> 00:09:48,613 Speaker 3: Thanks Madam Tyler. 168 00:09:48,693 --> 00:09:50,933 Speaker 2: That is Julian Lee's chief executive of the New Zealand 169 00:09:50,933 --> 00:09:52,252 Speaker 2: Building Industry Federation. 170 00:09:52,813 --> 00:09:55,733 Speaker 1: For more from News Talks b listen live on air 171 00:09:55,933 --> 00:09:58,653 Speaker 1: or online, and keep our shows with you wherever you 172 00:09:58,732 --> 00:10:01,133 Speaker 1: go with our podcast on iHeartRadio