Building Act 2004 Amendment Bill: Legislative reform to the building regulatory system

This article provides an overview of the features of the Building (Building Products and Methods, Modular Components, and Other Matters) Amendment Bill (Bill), which is currently with the Select Committee. The Bill amends the Building Act 2004 (Act), and forms part of a wider programme of reforms to the building regulatory system intended to boost the quality and efficiency of building work and to provide fairer outcomes. It comes after the launch of the Construction Sector Transformation Plan, by Government and industry leaders in January 2020, comprising of 22 programmes to be implemented over three years.

The objective of the Bill is to enable and support:

  • a high-performing building sector to provide durable and safe buildings; and
  • to address key challenges that the building sector is facing such as low productivity, inefficient practices and processes, skills and labour shortages, financial vulnerability, and poor health and safety practices.

The key amendments to the Act are summarised below.

Minimum requirements for information on building products

The Bill seeks to improve the quality and availability of product information to enable:

  • more informed decision making by assisting designers and builders to choose the right products and install them in the way intended;
  • faster consenting; and
  • clarity.

The Bill introduces minimum requirements for information about building products, by introducing new Part 4B of the Act, such as:

  • what information must be disclosed;
  • who must disclose the information and to whom; and
  • when the information must be disclosed.

The Bill seeks to clarify the existing terms ‘building product’ and ‘building method’ by introducing separate definitions for these terms in the Act (new ss 9A and 9B). The new requirements also seek to clarify responsibilities so that importers, manufacturers, suppliers, designers and builders can be better held accountable for any breaches of their responsibilities in relation to building products and building methods and their use.

The Bill also expands the purpose of the Act “to support an efficient regulatory system and a high-performing building sector”.

Creation of specialist framework for modular components

The aim of this particular amendment to the Bill is to speed up the consenting process for work done using components manufactured by a modular component manufacturer (MCM) registered with the Ministry of Business, Innovation and Employment (MBIE). It seeks to do this by establishing a voluntary certification scheme (new subpart 7A) that creates a framework for a registered MCM to be certified to produce a modular building component (new s 272U) and to issue a certificate relating to its compliance with the building code (new s 272ZF), which a Building Consent Authority (BCA) can then accept and rely on (amendment to s 19).

What this amendment means is that a BCA, is given assurance of build quality and code compliance, and will only need to inspect the building work not covered by the certification scheme. In other words, a BCA reviewing a building consent application with a modular component from a certified and registered MCM, will only need to check the design of the building and proposed site works without needing to review the modular components beyond how they interact with the design’s other elements. If an MCM does not adopt the voluntary certification scheme, the existing regime under the Act would apply.

Liability will also be apportioned differently under the new scheme. Certified and registered MCMs will be liable for the performance of the modular components they produce. BCA liability will be limited to the aspects of a building that they are required to inspect (i.e. the aspects that are not covered by the MCM certification scheme). This will reduce costs for the council and ratepayers because the costs associated with remediation of building defects, will sit with the certified and registered MCM.

Strengthening product certification scheme

This amendment is aimed at strengthening the existing product certification scheme and enhancing confidence that new and innovative building products and methods will comply with the building code and be accepted by BCAs. As such, the following new registration requirements have been proposed:

  • product certification body (PCB)[1] is required to be registered before it can issue a product certificate; and
  • product certificates will need to meet the prescribed product certificate registration criteria and standards before they can become registered.[2]

The Bill gives MBIE the power to administer registers of PCBs and product certificates, and make rules in relation to the product certification scheme to bring it into line with regulatory best practice and give clarity to PCBs and certificate holders.

PCBs will be subject to audit by MBIE who can then suspend or revoke registrations where appropriate if they no longer meet the product certification criteria (new ss 270 and 272D). MBIE will also be able to investigate complaints against a PCB and take disciplinary action / active steps to manage poor performing PCBs and improve the quality and consistency of product evaluations and certificates (new ss 263, 264 and 267A to 267E).

Use of building levy

The building levy contributes to funding for MBIE (under the Act and other Acts within the building sector). The Bill seeks to widen the scope for which MBIE may use the building levy to include the purposes of the performance of functions and activities relating to monitoring, overseeing, and improving the performance of the building sector, or regulatory systems under other relevant Acts that relate to the building industry.

Relevance of Regulations?

The Bill seeks to address a gap in the current Act by empowering MBIE to create new regulations under which it can require information or documents to be provided when necessary for the purpose of determining whether to issue a warning or ban in relation to building products or building methods.

In addition, MBIE has been authorised by Cabinet to use its regulation-making powers to support the implementation of the MCM scheme.

Offences and penalties

The Bill creates new offences to support compliance with the MCM and product certification schemes. To improve compliance and deter poor or illegal behaviour, it amends the maximum penalties on conviction for offences generally under the Act (from the current maximum fine of $200,000) to a level that reflects the seriousness of the offences. The amendments also provide different penalty levels of $300,000 for individuals and $1,500,000 for body corporates.

The Bill also extends the timeframe to investigate a potential offence against the Act from 6-months to 12-months to allow more time to gather evidence, properly investigate breaches, and where appropriate pursue multiple enforcement avenues to encourage greater compliance before prosecuting.

Public notification requirements

The Bill amends the definition of ‘publicly notify' in section 7. Publication is now only required in the Gazette and on the Internet (i.e. MBIE’s internet site). There is no longer a requirement on MBIE or the Building Practitioner’s Board to publish notices relating to the exercise of certain powers in daily newspapers.

Footnotes

[1] PCBs issue a product certificate as evidence / assurance to a BCA that a building method or product complies with the building code.

[2] BCAs can only rely on registered product certificates as complying with the building code.

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