Dr Bryce Edwards: The Govt’s self-certification proposal is a risky bet on house builders

The housing property development industry wants the “red tape” of building consents cut, giving builders the chance to “self-certify” instead of relying on local government housing inspectors. And the Government says they’ve been listening, and now propose some major alterations to the Building Act 2004, which will deregulate the consents process.

The self-certification scheme, introduced by Building and Construction Minister Chris Penk, is framed as an effort to speed up building processes, and therefore lower housing costs. Many in the industry are, however, expressing concerns about the potential risks of deregulation, drawing comparisons to the leaky homes crisis and questioning the robustness of proposed safeguards.

The Government’s case for self-certification

Chris Penk has argued that New Zealand’s current consent process is overly cumbersome, contributing to high costs and long wait times that exacerbate the housing crisis. The government’s self-certification plan would allow qualified plumbers, builders, and drainlayers to “sign off” on their own work for low-risk builds, bypassing council inspections. This brings them in line with electricians and gasfitters, who can already self-certify under specific conditions.

To bolster public confidence, Penk emphasised that the scheme would be restricted to trusted professionals with proven track records and robust indemnity insurance, while high-risk projects would still require full inspection. His view is that allowing reputable builders to self-certify their work will lead to higher productivity, as council involvement would no longer bottleneck construction timelines.

Penk also underscored that the government’s goal is not to reduce standards but to allocate regulatory resources more efficiently, reserving strict oversight for complex projects.

Support for reform from industry

Large property developers and their association bodies have been lobbying for this change for years. And in fact, the last National Government tried to implement something similar in 2015. Such deregulation is an answer to property developers who say that the current consenting process, controlled by local authorities, is time consuming, restrictive, and costly.

The Master Builders and Master Plumbers associations have therefore advocated reform for many years, arguing that their members should be trusted to carry out professional work, essentially being self-regulating, but backed up with serious consequences for poor performance.

Individual construction companies like Jennian Homes, Signature Homes, and GJ Gardner’s argue that they are big enough to be trusted to do the certification of their own work. For example, Aiden Jury, Chief Operating Officer of Jennian Homes, recently told RNZ that “the current building consenting system was ancient and needed to change.” He said: “We believe that it's time for change, the industry's been calling for change for a long time now and we need to speed up the process.”

Jury says the Government’s proposal would be a “quantum leap” for the industry, believing it could allow builders to complete projects more efficiently and save consumers money. However, Jury stresses that only builders with solid track records and financial stability should be allowed to self-certify, as this would mitigate the risk of “cowboy” operators taking shortcuts.

Similarly, Greg Wallace, CEO of Master Plumbers, argues that plumbers are already trusted to certify certain tasks without inspection, and extending this to other areas could reduce delays. He believes that trusted professionals should shoulder more responsibility, but he agrees that detailed consumer protection measures are essential. Wallace has stated that his association has been lobbying the government for more than four years to introduce self-certification for its members.

Somewhat surprisingly, there could be significant support for the reform from local government authorities. Although local council currently have a monopoly on building consents, some in local government believe this function is something of an albatross that has been imposed on it by central government.

Political editor of The Post, Luke Malpass, reports that the chief executive of Hastings District Council, To’osavili Nigel Bickle believes that “for new large-scale builders, there is no reason why the council should have to consent their building work at all.”

Bickle is a former public servant of the Department of Building and Housing (now MBIE), and he recently commissioned one of his former colleagues from MBIE, David Kelly – who is also a former CEO of Master Builders – to produce a report, “Building Consent System Report”. This, according to Malpass, independently came to the same basic conclusions as the new government.

Will the new reforms lead to a new “leaky homes” disaster?

The last time that housing red-tape was cut so significantly – via the 1992 Building Code – the result was the leaky building crisis of the 1990s and early 2000s. Drawing parallels with this disaster, Ben Kepes explained in The Post on Wednesday what happened: “Poor materials — think untreated timber, monolithic cladding, and no eaves — alongside lax industry oversight created ticking time bombs disguised as homes.”

The best account of this catastrophe can be found in the 2019 book by Peter Dyer, titled “Rottenomics: The Story of New Zealand’s Leaky Buildings Disaster”. In this, Dyer calculates that at least 174,000 were impacted, costing at least $47 billion.

As a result, the Building Act 2004 re-regulated the building industry. This was a necessary state correction to a massive market failure. And there’s still disagreement about whether it has sufficiently fixed the problem or not, or indeed whether the 2004 Act went too far.

Many on the political right say the Act swung too far into over-regulation. Hence the new government wants to swing the pendulum back. In this regard, Ben Kepes worries the de-regulation will go too far: “loosening these standards too much could flood the market with hastily built homes and cut corners in quality. It’s a familiar pattern: to address one problem, we sometimes create the conditions for the next. Without carefully balancing quality standards with efficiency, we risk inviting a new era of poorly constructed buildings, setting the stage for the next leaky building crisis. The challenge is to find a middle ground — regulations that ensure safety without choking off the building process.”

The Post’s Luke Malpass emphasises that the leaky houses scandal “has cast a long shadow on building regulations”, but suggests we move on. He says: “Leaky buildings was then, this is now.”

Many other commentators say that we still need to learn the lessons of leaky homes. Writing in The Post yesterday, Max Rashbrooke argues that while streamlining might sound appealing, New Zealand’s experience with past deregulation efforts in construction has shown how poor oversight can lead to significant and costly structural failures. He warns that self-certification could bring about similar issues, especially if the scope of “low-risk” projects gradually expands under industry pressure.

Even more scathing is John Gray, president of the Home Owners and Buyers Association, who told RNZ Checkpoint this week that the proposals were a “grave cause for concern”.

Gray was also interviewed in August by Angela Yeoman, saying that much of the housing reform of the moment is led by property lobbyists, and that consumers aren’t listened to: “Ministers up to and including the current Minister of Building and Construction [Chris Penk] seem to be more interested in serving the needs of industry rather than providing greater consumer protection. We’ve offered an opportunity to Minister Penk to come and see some of these disasters and talk with us and he’s failed to follow through on promises to do so.”

On LinkedIn, Gray has also been forthright, arguing that the risk of defective building methods is not fully appreciated by politicians: “Successive governments have chosen to ignore it and the current government recycling the same policy the National party peddled in 2015 is madness, but a sure sign that they are yielding to industry lobbyists from an industry that, in general, cannot be trusted to get it right!”

Is the car manufacturing comparison valid?

A comparison frequently made by supporters of consenting deregulation, including Penk, is that of car manufacturing. He points to the automotive industry’s reliance on rigorous quality controls, where manufacturers are trusted to meet safety standards without government inspecting each vehicle.

AUT’s Professor John Tookey endorses this analogy to some extent, arguing that quality assurance processes within large, reputable companies could make self-certification viable for certain building projects.

However, Max Rashbrooke and others question this comparison. Rashbrooke points out that building defects, unlike car issues, often take years to manifest and are difficult to trace back to specific faults, making them less immediately detectable and more challenging for consumers to address. He argues that while manufacturers face direct consumer pressure to uphold quality, the building industry lacks equivalent accountability mechanisms.

Industry skepticism and concerns about long-term quality

Skeptics within the construction industry worry that self-certification could encourage a race to the bottom in terms of quality. David Clifton, president of the Institute of Building Surveyors, emphasizes the risk that smaller, less reputable builders might prioritise speed over quality, especially if they are motivated to save on regulatory costs. Clifton suggests that self-certification could inadvertently incentivize cut corners, with builders self-certifying work to avoid oversight.

Construction expert Mike Blackburn expresses similar reservations, warning that self-certification could lead to an uptick in subpar work that is difficult to detect until significant damage has occurred. He cites issues with insurance availability, noting that most indemnity insurance policies exclude coverage for substandard work, making it difficult for consumers to seek recourse.

Blackburn argues that the current system, despite its flaws, at least ensures consistent oversight through council inspections, a level of scrutiny that self-certification may not replicate.

Concerns over insurance and accountability

Insurance is a significant sticking point in the self-certification debate. Miriam Bell from The Post highlights a critical gap in the government’s proposal: currently, no New Zealand insurers offer comprehensive coverage for defective work, and the availability of affordable indemnity insurance for individual builders is limited. This lack of insurance availability undermines Penk’s assurance that self-certifying builders will carry adequate liability protections. Without council oversight, insurers would likely require their own inspections, adding costs back into the system that could offset any savings self-certification might offer.

Bell also points out that existing guarantees offered by trade associations, such as those from Master Builders, often include numerous caveats, with consumers frequently facing difficulties when trying to claim compensation.

Industry insiders like Ben Rickard of Builtin Insurance Brokers argue that unless reliable insurance options become available, the self-certification plan could increase risks for homeowners rather than reducing them. Rickard is unimpressed by the proposal, according to reporting by Miriam Bell in The Post: “He was not convinced the scheme would work in a market like New Zealand’s, which was largely made up of thousands of small businesses that did not have quality assurance programmes.”

Arguably, the inspections are likely to continue, but just be shifted to insurers, according to Rickard: “They will want underwriting of the risks, and surety that builds will be up to standards, and if the council is not doing it, who will? They will want some form of inspecting, so the cost shifts to the insurer.”

For this reason, the Otago Daily Times advocates caution on the proposed reforms. Here’s the conclusion of their Thursday editorial: “Whether any system to ensure adequate auditing and monitoring of self-certification might end up involving more red tape, albeit in a different form from existing arrangements, is unclear. Detailed policy decisions will be made next year, following what the government says will be thorough consultation. Thoroughness, which has not been a hallmark of much of what the coalition government has done to date, will be essential to ensure new homeowners can be confident any changes which result in short-term savings will not turn out to be expensive in the years ahead.”

Political response

Not surprisingly, there’s been an incredibly positive response from the housing industry. The Act party has also offered strong support.

But politically there hasn’t been much criticism voiced. Anneke Smith from RNZ reports that the Labour Party has taken a “cautiously supportive” stance, with acting building and construction spokesperson Kieran McAnulty stressing the importance of safeguards to prevent a repeat of the leaky homes crisis. Labour leader Chris Hipkins echoed this, stating that while the proposal could reduce costs, the “devil will be in the details,” and the industry must be held accountable to protect consumers.

Politically, the self-certification scheme represents a broader ideological shift within New Zealand’s regulatory landscape, with the government advocating for a lighter regulatory touch as a way to tackle the housing crisis.

Ultimately, the self-certification scheme illustrates the perennial tension in New Zealand’s housing policy: how to address the urgent need for affordable housing without compromising quality. The government’s proposal, if implemented, could indeed reduce costs and speed up construction, but it carries significant risks.

The question remains whether the safeguards proposed by Penk will be enough to prevent the types of crises that have historically followed deregulation in the construction industry. For the moment, the government will need to convince a wary public that the lessons of the past will not be ignored in this latest push for housing reform. They might also might need to convince housing buyers that this new policy isn’t just the result of the lobbying and political donations of property developers.

Key Sources
Miriam Bell (Post): Insurance could torpedo self-certifying build plans (paywalled)
Miriam Bell (Post): Self-certified builds: game changer or risky business? (paywalled)
Luke Malpass (Post): Why building consent changes are a big deal (paywalled)
ODT: Editorial – Proceeding carefully on self-certification (paywalled)
Max Rashbrooke (The Post): The disaster scenarios arising from building consent deregulation (paywalled)
Anneke Smith (RNZ): Labour 'cautiously' supports tradies signing off their own work
Greg Wallace (Post): Self-certification a significant step towards solving housing crisis (paywalled)
Kerre Woodham (Newstalk ZB): Would self-certification build a better quality of workman?
Angela Yeoman (Herald): Leaky logic: Will loosening building & lending rules lead to new wave of disasters? (paywalled)

Dr Bryce Edwards is a politics lecturer at Victoria University and director of Critical Politics, a project focused on researching New Zealand politics and society. This article was first published HERE