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Government Promises 3 Major Construction ‘Shakeup’ To Reduce Building Costs
The government has announced an incoming major ‘shakeup’ to New Zealand’s construction rules to reduce building costs.
In a press statement, Construction Minister Chris Penk said that new legislation will be implemented to facilitate the use of overseas building products in the Kiwi market.
"Our government has a plan to rebuild the economy to help Kiwis get ahead, and part of that plan includes cutting red tape and building more housing and infrastructure," Penk said.
"This red tape entrenches the use of well-known products, which lowers competition, increases the risk of supply chain disruptions like in the recent GIB shortage, and ultimately makes it more expensive to build anything."
What legislative changes await Kiwi builders?
Kiwi builders can possibly look forward to 3 significant changes to the building materials approval and certification process:
- Recognition of building product standards from trusted overseas jurisdictions. Currently, these standards can only be verified by Kiwi designers and builders.
- For the Building Consent Authorities to “accept the use of products that comply with specific overseas standards that are equivalent to or higher than those in New Zealand."
- Certification of building products through “reputable schemes overseas” to be approved for national use.
According to Penk, these new rules will be introduced in the Building (Product Certification) Amendment Bill later this year. The government aims to pass the new laws by the end of 2024.
Cutting off ‘red tape’ for building homes
The construction industry has long battled red tape for building approvals and materials, skyrocketing the market price. The cost of building a home has increased by 41% since 2019, and it’s now 50% more expensive to build a house here than in Australia.
The red tape also significantly impacts building approvals. Statistics show that the number of homes consented fell by 25% from February 2023 to February 2024.
"Part of what drives up costs is the amount of red tape … For example, it is almost impossible to use new building products in New Zealand without facing huge delays, with some approval pathways taking up to two years before a new product is recognised for use.”
Because of the difficulties in importing these products, builders are limited in their choices, making it hard to keep costs affordable. These products can be anything from cladding systems to roofing.
In 2022, the market faced a significant shortage of GIB plasterboards, causing major delays in the industry as builders struggled to access plasterboards.
A promising path forward
Chris Penk says introducing these new laws will increase the availability of high-quality building products, improve market competition, and lower building costs.
"This is a major shakeup that will drive down the cost of building without compromising on quality, to make it easier and more affordable for people to build or renovate a home.
"It will also help improve the country's resilience to supply chain disruptions and reduce barriers for Kiwi businesses trying to find alternative approval pathways in New Zealand and export their product overseas," Penk said.
The government previously hinted at this new legislation in its 36-point action plan. In a statement, it stated that easing restrictions on building materials from overseas was number 8 on the list of priorities.
Penk said they will be part of the government’s plan to strengthen the nation's economy.
"Cutting red tape and building infrastructure are part of the Government's wider plan to rebuild the economy, which also includes stopping wasteful spending, delivering tax relief, growing skills and strengthening international connections.
"It is only through a strong economy that we can lower the cost of living, lift incomes, and invest in the public services New Zealanders rely on," he said.
Key takeaway
These changes are forecasted to be implemented within the next 2 years, as the new laws pass the legislative process. In the meantime, Kiwi builders should consider securing their business against risks to manage the high building costs.
Bonded NZ helps builders and contractors find the best insurance, warranties, and surety bonds that keep their best interests in mind. Whether it's a big or small project, our cost-effective options help them secure their projects at every angle.
For more information about our services, contact our team today.