Retentions trust for subbies

The Government is promising better protection for sub-contractors’ retention payments through a Supplementary Order Paper (SOP) to be introduced to the Construction Contracts Amendment Bill when Parliament reconvenes after the election.

The SOP will:

  • impose an obligation on the retention-holder to treat the retentions as if they were held in trust, with penalties imposed if they are used for other purposes
  • clarify that the ‘pay when paid’ ban in the Construction Contracts Act also applies to retentions, and
  • provide for a default rate of interest to be set by regulation and applied to late payment of retentions.

The Government decided against requiring that the retention funds be put into a separate bank account, as sought by some in the industry, because the compliance costs would be too high. But, without this segregation, it is hard to see how the retention monies can be identified and protected in the event of insolvency.

Link: Chapman Tripp commentary

Rules Reduction Taskforce

A taskforce comprising central and local government and industry representatives will be established as part of the Government’s response to the Productivity Commission’s Toward Better Local Regulation report, issued in May last year.

The taskforce will look at locally administered regulations which adversely and unnecessarily affect property owners. An example  used by the Prime Minister in his speech to the Local Government Conference was the requirement for windows to be installed in a room that already lets in light through a ranch slider door.

Link: Ministerial announcement

Stronger regulation of engineers

Stronger regulation of professional engineers will be part of the legacy of the Christchurch earthquakes. The Ministry of Business, Innovation and Employment (MBIE) is seeking feedback on proposals, including:

  • mandatory registration
  • a tighter disciplinary regime with heavier penalties
  • reviewing the professional qualification requirements for structural, geotechnical and fire engineers, and
  • the creation of a new construction industry body to oversee the Registration Authority Board.

Submissions close on 31 October 2014

Link: MBIE consultation document



National is offering three policy changes to help first home buyers:

  • replacing the KiwiSaver First Home Deposit Subsidy with a KiwiSaver HomeStart Grant, doubling the support for buying a new home (from $1000 per year of saving to $2000) and increasing  the house price limits (to $550,000 in Auckland, $450,000 in Wellington, Christchurch and other similarly priced housing markets, and $350,000 for the rest of the country)
  • enabling larger KiwiSaver First Home Withdrawals by including the member’s tax credit (meaning that people will be able to withdraw everything except the $1000 kick-start)
  • expanding eligibility for Welcome Home Loans by aligning the house price caps with the new KiwiSaver HomeStart Grant.

National says the package will double the number of people receiving a government grant and will encourage property developers to build homes in a price range affordable for first home buyers. Opponents say it will simply push up prices.

Link: policy announcement

New consumer protections for residential building work

From 1 January, residential builders will be required to have written contracts, provide information on their relevant skills, experience and qualifications, and disclose their insurance and warranty cover for jobs valued over $30,000.

Link: Minister’s statement

Local Government

Local Government reforms passed

The Local Government Amendment Act 2014 reforms the development contributions regime and provides developers with a right of objection. Other measures encourage councils to share services and joint service delivery arrangements and require that they incorporate a 30 year infrastructure strategy within their long-term plans.

The Act came into effect on 8 August 2014. The Prime Minister had indicated that the legislation may have to be parked until after the elections but Labour, which had supported the Bill through the first and second readings, offered to support its passage because of the effect it might have in reducing housing costs.

Development Contributions Commissioners

Twenty-six Commissioners have been appointed to the Register of Development Contributions. They will be responsible for ensuring that councils only charge developers for infrastructure related directly to their developments and for managing the new objections process.

Link: Minister’s announcement

Housing Accords for Wellington, Queenstown, Bay of Plenty

Housing accords have been agreed or are in progress for Wellington, Queenstown and the Bay of Plenty. A fourth Special Housing Area has been announced for Auckland.

Minister’s statements: Wellington: Queenstown: Bay of Plenty:Auckland

Resource management

The rest of the agenda

The National Party’s environment and conservation agenda for a  third term was laid out on 7 August in a speech to the Environmental Defence Society. Key objectives are to:

  • pass the Environmental Reporting Bill
  • improve the framework around creating marine protected areas to bring New Zealand back to world’s best practice
  • complete the Phase 2 Resource Management Act reforms
  • review the status of stewardship land under the Department of Conservation (Smith cited the creation of the new Aotea Conservation Park on Great Barrier Island)
  • legislate to allow rivers running through national and conservation parks to be included within the protection designation (to resolve an anomaly identified by the Parliamentary Commissioner for the Environment)
  • create a national park in Northland kauri forests at Waipoua (currently being consulted on with Te Roroa).

Link: speech

Fresh water NPS

The National Policy Statement for Freshwater Management 2014 came into effect on 1 August. It provides a National Objectives Framework for councils to maintain or improve the water quality within their region.

The NPS includes nationally-set minimum standards or bottom lines for ‘eco-system health’ and ‘human health for recreation’ which must be provided for everywhere. Under only two circumstances may quality objectives be set below the national bottom line – when the cause is natural (e.g. when a native bird colony nesting in a river bird creates high E. coli levels downstream) or when it is due to the presence of significant infrastructure, such as a hydro power station.

Link: NPS