Hon Dr Nick Smith

Minister for Building and Construction
4 September 2014 Speech
Speech to BECA and IPENZ engineers event

My thanks to BECA and IPENZ for the organising of this event, and the opportunity as Minister for Building and Construction to update progress on the implementation of the Royal Commission’s recommendations, and to announce significant proposed changes to the regulation of professional engineering in New Zealand.

The timing is appropriate as it is the fourth anniversary today of the first of the series of earthquakes to hit this city.

The location is appropriate as this city’s university has long been a lead institution globally in improving the seismic design of structures.

And the sponsorship by BECA of this event is entirely appropriate given the pivotal role former chairman Sir Ron Carter had in serving on the Royal Commission of Inquiry, a role that was appropriately recognised with Sir Ron becoming the first engineer to receive our top honour in January – the Order of New Zealand.

My reaction four years ago today was one of relief – relief that we had been hit by a 7.1 earthquake event without the loss of life. This was to turn into despair when the smaller, but shallower 22 February 2011 earthquake took 185 lives.

I have come to this portfolio late in the piece but I am determined to do as thorough a job as possible in learning every possible lesson from these earthquakes to improve the safety and professionalism of engineering in New Zealand.

I have two perspectives of the standard of engineering in New Zealand arising from the Christchurch earthquakes.

The first is to recognise the progress we have made in improving the safety of buildings in response to seismic risk.

Napier’s 1931 earthquake was not dissimilar in strength or proximity to city but killed a devastating 256 people, or one in 100 of the then city’s population.

The 185 fatalities in Christchurch equates to one in 2000. We need to recognise that improvements in seismic science, engineering design and building standards have roughly reduced the risk of death by 95 per cent. That is a substantial achievement.

But the second perspective is one of dismay that a relatively modern building like the CTV could fail, bringing about such a tragic loss of life. It did not meet the standards of the day. The engineering design fell below that which this profession stands for. The principal design engineer was not sufficiently experienced or competent in multi-storey reinforced concrete seismic design to be doing the task.

These conclusions will stand as a black mark in New Zealand’s engineering history for decades to come.

There has been widespread and understandable frustration at the lack of accountability to date for the design flaws in the CTV building.

My job as Minister is not be involved in any decision on these processes, but to review the law and ensure we have a robust system of professional accountability for the future.

There are four major changes I am proposing today in respect of the regulation of engineering.

The first is the introduction of a legal requirement that significant buildings be designed and certified by a Chartered Professional Engineer, registered in an appropriate practice field.

This is a significant change. The existing law protects the title of Chartered Professional Engineer, but does not explicitly require that a person has to be chartered to design complex structures.

The current law is rather odd. To design a relatively simple, single-storey residential home, one has to be a licensed building practitioner. This law arose out of the leaky homes saga. But to design a 20-storey commercial building, there is no legal requirement for any qualification or experience. That has to change.

The second change is about having a robust system to hold engineers to account when their work is substandard.

It is not acceptable that a person can simply resign from their professional body to avoid any scrutiny for poor practice.

We need to shift the responsibility for hearing serious cases of incompetence or bad practice to a new independent authority.

We need the authority to be able to immediately suspend a person’s ability to practice when a complaint raises serious competency questions.

We are proposing to increase the fines for poor practice to more realistic levels.

We also need a staircase of disciplinary penalties for less serious breaches of standards.

We also need to ensure public safety is a paramount consideration in professional engineering practice.

I found one of the concerning elements of the tragic CTV story was the assessment in 1990 identifying significant faults during a pre-purchase assessment for the Canterbury Regional Council.

Our new law proposes to introduce a legal requirement that overrides any contract for service where the professional engineer would have to notify the local building authority of any such serious deficiencies.

The third area of change is in respect of the Chartered Professional Engineer title and standard.

We want to ensure a better consistency of assessment, greater degree of rigour and improved connectedness with equivalent overseas titles and qualifications.

We also want to introduce a tiered qualification system that better identifies the type of design and supervision work that an engineer is sufficiently qualified and experience to do.

The fourth area of reform is putting more effective checks and balances into the regulatory system.

It is entirely appropriate that the profession of engineers have a significant role in the standard setting and regulatory system, but there are also broader public interests.

It is proposed that the registration authority be 50 per cent nominated by the profession, and 50 per cent by the responsible Minister.

It is also proposed that there be a new construction industry occupational body to approve the standards, make disciplinary decisions on serious breaches and be responsible for appeals.

These proposals are being released today in a discussion paper for consultation. We welcome wide input from the profession and the public by the end of October.

Today too is an opportunity to update you on progress in dealing with the issue of buildings with non-ductile columns. My Ministry has been systematically working with councils on the identification of these buildings that could pose a serious seismic risk to the public.

The nationwide review initially identified 348 buildings that could pose a problem. Sixty-two were found to be out of scope and did not need further assessment. The remaining 286 were recommended an engineering assessment.

Two hundred and thirty-eight of those have been assessed, and two of these – one in New Plymouth and another in Wellington – had sufficient issues that they were found to be earthquake-prone buildings, and have since been vacated. Of the remaining 48, assessments are scheduled for 46. There are two building owners nationwide who have not responded to councils’ request for an assessment. I have taken the unusual step of directly writing to those building owners to request that they take this action and have their buildings assessed.

It is important to stress that just because a building has non-ductile columns it does not mean it is unsafe. If such buildings are balanced out by other design features, they pose no greater risk than other buildings. The fact so many buildings have been cleared by the review supports this. The CTV building failed catastrophically due to many more issues than just non-ductile columns, including a flawed design.

I am satisfied at the progress we are making on this specific class of building but we need to maintain this progress to see off this potential risk.

The next major phase of work will be in finalising the Government’s approach to earthquake-prone buildings. This is a fraught task that requires a delicate balancing of the interests of public safety, significant economic costs and the desire to retain heritage buildings.

This issue is causing significant angst for some local councils that are worried, particularly in many of our smaller provincial towns, of the huge impact of this law on their communities.

The Government has formed a joint working party with Local Government New Zealand to work through these issues and we are making good progress.

We have taken a decision to exclude farm buildings. It did seem contradictory to exclude residential buildings including farmhouses from the law, but to require detailed assessments of hay barns, implement garages, shearing and milking sheds. There may be other classes of low-risk buildings that we might also exclude.

There are two issues on which it is important to signal that the Government does not believe we should revisit.

The first is that we need a nationally consistent approach. This was a strong recommendation of the Royal Commission, and we see no advantages in every one of New Zealand’s 69 local authorities grappling with this complex issue. Few realise that the New Building Standard already takes into account the differing earthquake risk around New Zealand, just as it does for wind and snow loadings, and that this is not a sound reason for dropping a national approach.

The second is that the Government sees no justification to shift from the 34 per cent New Building Standard threshold for defining earthquake-prone buildings. We believe a lesser standard would put insufficient weight on safety, and a greater level would be putting too large a cost burden on building upgrades.

The areas where we are exploring alternative solutions are in focusing upgrades on those building components that pose greatest risk, on how best to deal with buildings with low occupancy, and what range of age of buildings should be required to have an assessment.

This is a complex job in which we need to accept as a country that there will be significant costs, that we will not be able to eliminate all risks, and in which it will not be possible to retain all of our heritage buildings. The way forward will be an important balance of these competing public interests.

Improved technologies in strengthening older buildings will help us find these solutions. We have wisely invested a great deal into seismic science and how to design and construct new buildings that are incredibly resilient to a major quake. I want more invested in practical and effective ways to strengthen older buildings.

That will be part of the new Science Challenge that I announced with the Minister of Science and Innovation yesterday in Auckland at the Building a Better New Zealand conference. This new science challenge is aimed not just at buildings but building smarter towns and cities.

It is about driving innovation in materials design, construction methods, productivity and how we can better plan for demographic changes and modern consumer preferences while always being focused on affordability.

I want to conclude by reflecting on the state of engineering in this centennial year of our professional body IPENZ.

There is much engineers can be proud of in their contribution to our country. The development of New Zealand’s rail, then roading, then electricity, then telephone and now UFB networks. The success of many of our exporting sectors like dairying and meat has come from world-leading process engineering.

Pride in these positive contributions should not allow us to overlook serious failings like the CTV building and Stadium Southland.

We need to appreciate and actually welcome the recent heightened interest in engineering. New Zealand’s recent history of the Christchurch earthquakes and the Pike River disaster have raised awareness of just how critical a role engineers play in the management of the risks of living in a geologically active and rugged country.

The Government has recognised this in the biggest ever investment in training more engineers, and there is a huge increase in interest by young people in contributing through a career in the engineering sciences.

This is also an opportunity to shape the values our profession will champion in the century ahead.

There are three areas in which the engineering profession needs to lift its game.

The first is in straight technical competence. We must be uncompromising in our requirement that engineers understand the science, and the good practice in the areas they are working.

The second is in how engineers communicate with the public. We have been a profession that does rather than talks. We have engineers in this city daily making difficult technical decisions in areas like liquefaction, rockfall and building repairability that has profound effects on the likes of not just individual families but on whole neighbourhoods. We need to do better in how we communicate and explain these decisions to individual clients as well as through the media to the general public.

The third area in which I believe the profession needs to lift its game is how we deal with mistakes. There were times during the Royal Commission of Inquiry when engineers appeared when I was proud to be a member. These were when engineers were open, gracious, remorseful and accepted responsibility for their error. At other times I cringed at the lack of empathy and the attempts to avoid any professional responsibility. To rebuild confidence in the engineering profession, we need a culture of disclosing and accepting responsibility. The public accepts every profession makes mistakes. I want engineers to be known as a profession that takes responsibility where we err, shows genuine compassion and which is relentless in the learning from mistakes to save future lives.

Thank you again for this opportunity to update you on the Government’s programme around regulation of engineers, upgrading buildings and some personal reflections on the way forward for our profession.

Politics is an uncertain business and I do not know role I might have in the next Parliament. Regardless, I will retain a strong interest in seeing these reforms progress. We owe to those who lost their lives, we owe it to the profession, we owe it to New Zealand’s future.

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