Risk-Aversion in Building Consenting: Causes and Solutions in New Zealand

Building Consent Authorities (BCAs) in New Zealand are often criticized for taking an extremely risk-averse approach to granting building consents. This cautious stance is driven by a combination of legal, regulatory and institutional factors – from the requirements of the Building Act 2004 and Building Code, to Ministry of Business, Innovation and Employment (MBIE) guidelines, court precedents on liability, and insurance settings. A common concern is that councils (who act as BCAs) fear being the “last man standing”, left “holding the can” for building defects if other responsible parties disappear. This report examines why BCAs are so risk-averse in consenting, evaluates whether the last-man-standing anxiety is justified, and proposes reforms at the policy, process, and industry levels to rebalance risk and improve efficiency. The focus is on authoritative sources – including New Zealand laws, MBIE reports, court cases, and expert analyses – with examples to illustrate key points.

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Drivers of Risk-Aversion in BCAs

Legal Obligations Under the Building Act and Code

New Zealand’s building control framework places primary responsibility on BCAs to ensure building work will comply with the Building Code. Under the Building Act 2004, a BCA must grant a building consent only if it is “satisfied on reasonable grounds” that the plans and specifications will meet the Building Code requirements . In practice, this means council officers (building consent officers, or BCOs) scrutinize applications in detail, often requesting additional information or changes until they are confident the design fully complies. The phrase “reasonable grounds” is not explicitly defined in the Act, leaving it open to interpretation . BCAs tend to interpret this cautiously – effectively setting a high bar for what evidence or detail is “enough” – because if they approve work that later fails to meet the Code, they can be held accountable. As one council officer put it, “our role is critical to making sure that building work is carried out properly”, since without rigorous checks “you are going to get people who will try and cut corners” . This legal duty to ensure compliance encourages a “better safe than sorry” mindset in consent processing.

The Building Code’s performance-based nature adds to the challenge. Designers can comply via prescriptive Acceptable Solutions or via custom Alternative Solutions. BCAs often view innovative or alternative designs as higher risk because the compliance is less clear-cut. MBIE’s own guidance acknowledges that the amount of evidence needed should vary with complexity – “for a relatively simple project designed to comply with Acceptable Solutions” a BCA can require less detail, whereas a complex project with alternatives needs more proof . In practice, however, many BCAs default to demanding extensive documentation for all projects. This is partly due to uncertainty: council staff note that “‘reasonable grounds’ is never defined… The Code is so flexible… anyone can literally do anything with it”, leading each BCA (and even each officer) to apply their own level of rigor . Absent clear national benchmarks, council staff err on the side of more information and more conditions to avoid the possibility of missing something.

Liability Exposure and Joint & Several Law

A major factor feeding BCA conservatism is New Zealand’s joint and several liability rule for building defects. Under joint and several liability, if multiple parties contributed to a building defect, each party can be held liable for the full cost of remedying it . In practice, this often means that if a developer, builder, architect, and council were all at fault to some degree, an injured homeowner can recover all their losses from the one party still solvent – usually the local council. Councils have relatively “deep pockets” (via rates funding and insurance) and cannot easily disappear, so they frequently become the “last person standing” to foot the bill when things go wrong . This has been starkly demonstrated in New Zealand’s recent history. Between 2008 and 2018, for example, BCAs nationwide issued building consents for roughly $75 billion of construction, but ended up paying about $1 billion to settle building defect disputes – and roughly one-third of that $1b was covering shares of liability that other responsible parties should have paid but were unable to . In other words, councils had to pick up the tab for absent builders or developers in many cases.

Such statistics underscore why councils are highly averse to risk in consenting. A 2019 MBIE summary noted widespread “concerns that joint and several liability leads to risk averse consenting”, as BCAs strive to avoid being left with disproportionate damages . The fear is not purely theoretical: many builders and construction firms have short lifespans, meaning they may not be around if defects emerge years later. MBIE found that only 22% of construction companies formed in 2008 were still operating a decade later (by 2018) . In one year alone (2017–18), over 7,000 construction firms went out of business, a churn rate of about 12% per year . With so many firms folding or changing, the odds are high that when a leaky roof or structural flaw comes to light, the original builder or designer is no longer around (or lacks the assets) to cover the repair – leaving the council as the “last man standing” by default . This liability structure creates a powerful incentive for BCAs to “cover themselves” by demanding stringent compliance upfront. If there is any doubt about an aspect of the design, the safe route is to refuse consent or ask for more engineering analysis, testing, or peer review, rather than risk approving something that could fail.

Court Precedents Holding Councils Liable

Legal precedents have cemented the reality that BCAs will be held accountable for negligent consenting or inspections. New Zealand courts have long recognized that local authorities owe a duty of care to building owners (and subsequent owners) to ensure buildings comply with the Code and are free from defects. In the landmark “leaky building” cases of the 1990s and 2000s, courts ruled that councils could be sued in negligence for defective homes (e.g. Invercargill CC v Hamlin (PC, 1996)). This principle was later extended by the Supreme Court to larger buildings in Body Corporate No. 207624 v North Shore City Council (2012) – known as the Spencer on Byron case. In that case, a 23-storey apartment/hotel building had pervasive defects, and the Court affirmed that “local authorities owe duties to all owners, whether original or subsequent, regardless of the nature of the premises” when performing building control functions . The duty arises from the council’s position of control over building approvals and its statutory obligation to ensure buildings are constructed according to the code . In short, if a council (as BCA) approves construction that does not meet code, or signs off a Code Compliance Certificate (CCC) when work is defective, it can be found negligent and made to pay for resulting losses.

These legal precedents have had a chilling effect on councils. High-profile cases from the “leaky homes” crisis saw councils paying tens of millions in settlements and judgments. The memory of that crisis – which has been estimated to have cost the country upwards of $11 billion in repairs – still looms large. One recent commentary noted: “The pain of that era is still being felt which, understandably, has made councils even more conservative” in their consent approach . In practical terms, council inspectors and consenting staff know that if they miss a defect, their employer might be facing a lawsuit down the track. Therefore, they often adopt an ultra-cautious stance: rejecting any work that isn’t clearly code-compliant, requiring producers’ statements or expert reports for even minor deviations, and leaning on standardized (tried-and-true) solutions rather than allowing novel approaches. This risk-averse culture is reinforced by each legal case that pins liability on a council. It also feeds a cycle: the more councils tighten up to avoid liability, the more designers and builders complain about red tape – but if a loosened process results in failures, the cycle would start again.

MBIE Oversight and Institutional Factors

Regulatory oversight and guidance also contribute to BCA conservatism in consenting. MBIE (through its Building System Performance branch) oversees the Building Consent Authority regime – including setting standards for BCA performance and managing the accreditation of BCAs. All BCAs must be accredited (audited regularly against prescribed criteria) and registered. These criteria emphasize thorough documentation, checking and quality assurance in the consenting process. A council that rubber-stamps consents without sufficient evidence risks failing an accreditation audit or, worse, being found negligent after the fact. Thus, on an institutional level, councils have developed rigorous internal processes: extensive checklists, multiple layers of review, and a propensity to issue Requests for Information (RFIs) back to applicants whenever something is unclear. Sector professionals frequently observe that BCAs seem “unwilling or unauthorised to process consents decisively and confidently”, leading to excessive RFIs and delays . From the BCA perspective, this caution is a form of self-protection. One survey of building officials found they openly acknowledge being “risk liability averse” – they know they “hold specific responsibilities” as officials and need to “create sufficient certainties” that the work will be safe and compliant, to avoid negative outcomes for both building users and themselves . In plainer terms, council staff feel a personal and professional responsibility not to let anything slide, since “if anything happens [with a building],” the question will be asked: why did the council approve it? This institutional mindset is reinforced by local government’s accountability to ratepayers and the public – any major building failure becomes a news story and erodes trust in the council’s competence.

MBIE has recognized the downsides of inconsistent and overly cautious consenting. An MBIE-commissioned evaluation in 2021 noted that many in the sector view BCAs’ approach as “excessively risk-averse”, with “nit-picky” information requests and duplication of work done by architects/engineers . Interestingly, BCOs interviewed in that study agreed that the uncertainty around what counts as “reasonable grounds” drives them to ask for perhaps overly “pedantic” RFIs just to cover all bases . Around three-quarters of industry respondents in the survey felt BCA over-conservatism was a major issue . MBIE has responded by issuing new guidance to try to standardize and clarify consenting expectations. In mid-2024, MBIE released a guidance document on being “Satisfied on Reasonable Grounds” (SORG) for BCAs, which explicitly encourages a proportionate approach – i.e. requiring “less evidence and detail” for simpler, standard-compliant projects, and tailoring the level of proof to the complexity and risks involved . The guidance aims to give councils confidence that they can approve straightforward designs with minimal fuss, and focus their scrutiny on truly high-risk aspects. It remains to be seen how much this will change day-to-day practices, but it is a step toward aligning all 67 BCAs to a common understanding of reasonable compliance. MBIE also provides a Determinations service (a legal ruling process) to resolve disputes between applicants and BCAs over code compliance. Determinations can overturn a BCA’s refusal or requirement if MBIE finds the building work will meet the code. In theory this mechanism should correct overzealous decisions, but in practice it’s a slow, case-by-case remedy. The very existence of the determinations process, however, underlines that BCAs can sometimes overstep or err on the side of caution, necessitating an external check.

Insurance and “Last Man Standing” Liability Structure

Finally, the structure of insurance and liability in the building sector perpetuates BCA risk-aversion. Most builders and designers carry limited (if any) professional indemnity insurance, and homeowners typically do not have insurance for building defects. There are implied warranties in the Building Act making builders responsible for defects for 10 years, but enforcing those means finding a solvent builder and often litigating – not much comfort if the builder is insolvent or has vanished. Some warranty products exist (e.g. Master Build or Certified Builders guarantees), but these cover only certain builders and were historically optional. As a result, when defects surface, councils and their insurers often shoulder the financial burden as a de facto insurer of last resort. Local councils in NZ jointly fund a liability mutual scheme (RiskPool) to insure against claims, but the leaky homes deluge severely strained this arrangement. In fact, “an initial surplus was wiped out by leaky building claims” in the 2000s, and reinsurers retreated from covering such risks . RiskPool and other insurers introduced exclusions for weathertightness claims, leaving some councils to cover those losses from their own balance sheets. This insurance market pressure means BCAs know that if they get it wrong, there may be limited external financial cover – ultimately, local ratepayers will bear the cost.

The policy settings have historically reinforced the status quo. Notably, New Zealand’s Law Commission in 2014 reviewed the liability rule and recommended keeping joint-and-several liability overall, but suggested introducing a statutory cap on council liability for building defects (for example, capping a BCA’s share at 20% if others were also at fault) . It also recommended establishing a comprehensive home warranty insurance scheme to protect homeowners . However, successive governments were slow to act on these ideas. MBIE’s 2019/2020 building law reform consultation did consider a 20% BCA liability cap, yet MBIE ultimately took a conservative stance and advised not implementing a cap . The reasoning was that other changes (like better risk management by builders and warranty products) could reduce BCA exposure, and that a cap might not fundamentally change BCA behavior or might even make builders less careful . As of the early 2020s, the official position remained that “the current joint and several rules [are] deemed appropriate” and “capping of local authority liability is not considered necessary”, with no government-backed defect insurance scheme forthcoming . Local government and industry groups (e.g. Local Government NZ and the Property Council) have strongly disagreed, arguing that councils’ liability is “extremely disproportionate” to their actual fault and that NZ’s settings lack the “maturity” seen in other countries . Indeed, in many overseas jurisdictions (for example, parts of Australia) liability is proportionate to fault, and mandatory builder’s warranties or insurance funds protect homeowners so that the council isn’t the only safety net. The absence of such measures in New Zealand leaves councils feeling justifiably exposed – and thus they double-down on front-end caution to avoid any chance of being sued later.

Is the ‘Last Man Standing’ Attitude Valid?

The phrase “last man standing” encapsulates the view that the BCA (usually the council) will end up holding responsibility – and financial liability – when a building is found defective, because every other party might be gone or insolvent. This attitude has considerable basis in reality, as evidenced by the track record of claims. The Government itself has acknowledged the phenomenon: “Joint and several liability means councils can be the ‘last person standing’ available to foot the bill when things go wrong. This creates a highly conservative and risk-averse approach…” . In other words, the policy makers link the councils’ cautious behavior directly to the fear of being left holding the can. Court cases and settlement data also back this up – councils have paid out hundreds of millions for leaky home claims, often covering shares of liability that would normally belong to builders or developers who have since vanished . The earlier statistic (2008–2018) that roughly 2.5% of all residential consents led to disputes or defects serious enough to require settlement or court action might suggest that most building projects are fine. But from a council’s perspective, 1 out of 40 consents turning sour is not trivial when the costs of failures are so high. If a single apartment block goes wrong, one case alone can cost a council tens of millions. The severity of worst-case outcomes drives an aversion far out of proportion to the 2.5% probability. In economic terms, councils are minimizing maximum regret: they would rather over-invest time and scrutiny in every consent (a diffuse cost passed on in delays/fees to all projects) than risk a catastrophic payout on the few that would otherwise slip through with defects.

It is worth noting that some commentators argue the last-man-standing fear is overstated. They point out that joint and several liability also incentivizes councils to pursue other liable parties (via contribution claims) and that in many cases councils’ actual negligence did contribute to the defect (e.g. inadequate inspections) – so it’s not purely an innocent party being saddled with others’ faults. Additionally, the law provides a 10-year long-stop limitation (claims can’t be brought after a decade), which limits councils’ exposure in time. MBIE’s policy view in 2023 was that there was a “weak case” for a liability cap because they doubted it would markedly change BCA decision-making or speed up consents . In MBIE’s assessment, other factors – like a culture of compliance, or occupational regulation of builders and designers – might influence BCA practices as much as fear of liability . In other words, some of the conservatism may persist due to habit, training, or general risk-aversion even if liability settings changed. This view suggests the attitude may be partially self-reinforcing beyond what pure risk analysis would dictate.

However, given the structural realities (frequent contractor insolvency, legal duties, and historical precedents), the “last man standing” concern is largely valid. Councils’ caution is a rational response to a system that indeed leaves them uniquely exposed. The public policy challenge is balancing this reality with the need for an efficient, innovation-friendly building consent process. The next sections propose ways to recalibrate the system so that liability and risk are more fairly shared – thereby empowering BCAs to take a more pragmatic approach without jeopardizing consumer protection.

Proposed Reforms and Improvements

Addressing BCA risk-aversion and its knock-on effects requires action on multiple fronts. Below are proposals in three categories: (1) broad policy and legislative reforms, (2) specific process improvements for BCAs, and (3) industry-wide initiatives for better risk distribution and pragmatic consenting. These suggestions aim to reduce unnecessary conservatism while still safeguarding building quality and public safety.

1. Broad Policy Reforms for Balance and Streamlining

Rebalance Liability Settings: Reforming the liability framework could directly alleviate the last-man-standing problem. One option is to introduce a cap on BCA liability for building defects – for example, capping council liability at 20% of the loss where multiple parties are at fault. This approach was recommended by the Law Commission in 2014 and would better align councils’ liability with their role . It would prevent situations where a council ends up paying, say, 80–100% of repair costs for a defect largely caused by others. Another approach is to shift to proportionate liability, as used in Australia, where each defendant is only liable for their proportion of fault . Proportionate liability encourages all parties (builders, designers, etc.) to carry their share of responsibility and insurance. However, to avoid leaving homeowners high and dry if a liable party is insolvent, this reform should be paired with a guarantee or insurance scheme. A mandatory home warranty insurance (backed by private insurers or a government fund) for all residential construction would ensure that if a builder cannot meet their obligations, an insurance policy will cover the repairs . Such schemes are common in other jurisdictions and could be funded via a small levy on building work. Broadly, adjusting joint and several liability (or capping it) together with implementing a defects insurance scheme would shift some risk off councils and give homeowners direct protection without needing to litigate. This enables a more balanced approach: homeowners remain protected from shoddy work, but councils are not unfairly stuck with the bill for others’ failings.
Consolidate and Strengthen BCA Structures: The fragmentation of 67 separate BCAs leads to inconsistent interpretations of the Building Code and duplicated effort. A bold reform would be to centralize or regionalize the consenting system. The Government is already considering options such as consolidating BCAs into a few regional hubs or even a single national service . A unified or pooled system would develop deeper specialist expertise (e.g. dedicated experts for complex fire or structural designs) and apply consistent standards nationwide . This consistency could reduce over-the-top demands seen in only some jurisdictions. It would also spread risk: rather than each small council fearing one big claim could cripple them, a larger entity or collective risk-pool could absorb liabilities better. Even if full centralization is politically difficult, encouraging voluntary clustering of BCA services or sharing of technical resources can help. For example, councils could share expert reviewers for unusual designs instead of each hiring their own or delaying decisions. A centralized digital consenting platform (as discussed below) could support this integration. Overall, structural reform of the BCA system promises not just efficiency but a culture change – from 67 different risk postures to one calibrated approach that balances caution with practical efficiency.
Clarify “Reasonable Grounds” and Accountability in Law: To address the ambiguity that fuels risk-aversion, clearer legal definitions or guidelines could be embedded in the regulatory framework. MBIE’s recent SORG guidance is a step in the right direction , but it may need stronger force – possibly through an amendment to the Building Act or regulations that define what evidence is sufficient for different categories of work. For instance, the law could codify a tiered consenting approach: routine low-risk work (using Acceptable Solutions or standard designs) should presumptively require only minimal documentation and quick processing, whereas high-risk or innovative work justifies deeper scrutiny. Similarly, the Act could explicitly acknowledge that primary responsibility lies with builders and designers, not councils. (The Act already lists owners’ and builders’ responsibilities in general, but making this more prominent could guide courts and practitioners alike.) Another legal tweak could be introducing a liability shield for BCAs when they have relied on certified plans or producer statements in good faith. If a licensed engineer certifies that a design complies, the BCA’s role could be seen as reasonably satisfied by accepting that certification, unless it was plainly deficient. This would push accountability back onto the professionals who design and construct, rather than the authority that signs the paperwork. By clarifying roles and expectations in law, BCAs would feel less need to double-check everyone’s work and could focus on their core checks.
Government-Backed Risk Mitigation: Where the private market won’t provide solutions (e.g. affordable professional indemnity insurance for builders, or warranty cover for homeowners), the government might consider stepping in. One idea floated by industry is a national building insurance fund or surety scheme. For example, a fund financed by levies on building consents could pay out for defects in cases of insolvency, effectively acting as an insurer of last resort instead of councils. This is analogous to schemes in some countries where governments underwrite certain risks (similar to how ACC underwrites injury risks). If councils knew such a safety net existed, they might not feel compelled to police every nut and bolt ex ante. Another policy could be to strengthen director liability or phoenix company laws in construction – to deter developers from dissolving entities to escape liability. Holding individuals to account (through the Companies Act or new provisions) might reduce the “vanishing defendant” syndrome that leaves councils holding the can. These broader policy measures go beyond the Building Act itself but could significantly shift the risk calculus in the industry.
Foster Innovation and Expertise: Finally, policy settings should encourage BCAs to develop greater expertise and embrace innovation, rather than defaulting to the most conservative stance. MBIE and professional bodies could create national “centres of excellence” or expert panels for complex building types (for instance, a high-rise or facade engineering panel) that BCAs can consult. This way, a small council isn’t overzealous simply because it lacks experience with a certain design – it can draw on national experts who can provide confidence that a solution will work. Likewise, expanding the use of product certification (CodeMark) for new building products means BCAs can approve those products without fear, since the certification guarantees Code compliance. The overall policy goal should be to get it right the first time (as MBIE often says) by improving quality across the board, which in turn reduces the need for councils to compensate by over-regulating. Reforms that invest in skills, guidance, and support for both BCAs and industry professionals will ultimately allow for a more proportionate approach to risk in consents.

2. Process Improvements for BCAs

Even without law changes, BCAs themselves can adopt better practices to temper undue conservatism while still performing their duty. Some actionable process improvements include:

Risk-Based Consenting Processes: Implement an internal policy to tailor the level of scrutiny to the risk profile of the project. For example, a simple single-story house built to a standard design could go through a fast-track review checklist, whereas a complex commercial development gets a full in-depth review. Several councils have already moved toward risk-based processing, but it should become standard. By allocating more effort to high-risk areas and less to low-risk ones, BCAs can improve efficiency and reduce unnecessary RFIs on straightforward matters. MBIE’s guidance explicitly supports this approach (less evidence for simpler projects) , giving BCAs a green light to confidently streamline low-risk consents.
Standardized Checklists and Templates: Consistency in what is required can prevent overkill. BCAs should collaborate (perhaps through the Society of Local Government Managers or MBIE) to develop uniform checklists for consent applications and inspections. As one consent officer observed, “Having the same checklists and systems across the country might help… but if the liability still sits with individual council then each one will continue to look at things differently.” . While liability settings are a larger issue, having a common framework would at least remove some of the guesswork. A designer in Wellington and one in Canterbury should face similar information requests if they submit comparable plans. Shared templates for, say, how to demonstrate compliance with certain clauses of the Code would simplify the process and curb individual officers’ tendency to ask for extraneous details. Standardization also aids training – new BCOs across NZ can be taught a uniform method rather than each council reinventing the wheel (or erring on the side of extreme caution due to local precedent).
Professional Partnership Programs: Councils can expand the use of partnership or accreditation schemes for reputable industry participants. A great example is Selwyn District Council’s Professional Partnership Programme (PPP), which allows experienced builders, architects and developers to become “accredited partners” of the council . If they meet certain competency and quality criteria, their consent applications are fast-tracked and face fewer hurdles, as long as they maintain the agreed standards . This creates an incentive for builders/designers to lift their game, and it allows the BCA to place greater trust in proven professionals, focusing attention on applications from less-proven parties. Many councils have variations of this idea (e.g. Auckland’s Producer Statement author registration, or Wellington’s partnership with volume builders). By formalizing and expanding these, BCAs can safely reduce duplication of checks – for instance, not re-checking every calculation from a chartered engineer they trust, except for spot audits. An industry-wide, consistent framework for accrediting skilled practitioners (perhaps a tiered licensing beyond the basic Licensed Building Practitioner system) could amplify this across all BCAs .
Enhanced Training and Decision Support: Often, risk-averse behavior comes from uncertainty or lack of confidence by individual officers. Investing in training programs, peer review and mentorship within BCAs can empower officers to make sound decisions without feeling they must “cover every angle.” For instance, training on the intent of each Building Code clause (not just the letter) can help BCOs distinguish critical issues from minor ones. Establishing an internal technical review panel for borderline cases can prevent defaulting to “no” when unsure – staff can bring a tricky issue to a panel of senior colleagues for a balanced view. MBIE could assist by providing a helpdesk for BCOs on Code interpretation so that a lone officer doesn’t over-compensate for a lack of clarity. The goal is a culture where officers strive for reasonable pragmatism – ensuring safety and compliance but also enabling builders to progress without undue delay. Celebrating positive outcomes (e.g. consents issued quickly for quality applications) rather than only focusing on avoiding failures might shift mindsets over time.
Better Communication with Applicants: Miscommunication often breeds extra caution. BCAs should improve how they engage with designers and builders during the consent process. Offering pre-application meetings or advisory services can catch compliance issues early, so that applications come in high-quality and complete – reducing the need for multiple RFIs. When RFIs are necessary, training staff to write clear, precise questions (focused on actual code compliance gaps) can avoid the perception of nit-picking. Likewise, if a council is not willing to accept an alternative solution, they should clearly reference the specific Building Code clause or accepted solution that is driving their concern. This transparency helps applicants understand the rationale and perhaps propose an acceptable mitigation, rather than feeling the council is simply being obstinate. Some councils have also started using online portals where applicants can track progress and see comments in real time, adding to transparency. Overall, a more collaborative approach – “we’re all trying to get this building compliant together” – can replace the adversarial tone that often pushes BCAs to take a hard line.
Leverage Technology and Shared Systems: Adopting modern IT solutions can streamline consents and reduce the administrative load that often masquerades as risk management. A unified digital consenting platform for all BCAs (as has been discussed at the national level ) would allow for real-time processing, sharing of information, and even automated compliance checks for straightforward aspects. If every council is using the same system, improvements or updates to code requirements can be rolled out universally, avoiding uneven practices. Also, data analytics could be used: for instance, if the system shows that a particular type of request or check has never yielded any significant issue in thousands of consents, that check might be pruned back in the guidelines. Digital tools like Building Information Modelling (BIM) integration could let BCOs visualize designs better and catch issues faster, reducing uncertainty. Additionally, inter-council communication tools can allow a BCO in one region to quickly consult peers elsewhere who have consented a similar design, rather than defaulting to saying “no experience with this, so no.” By sharing knowledge and using automation for rote tasks, BCOs can focus their expertise where it truly matters, rather than applying blanket caution across the board.

3. Industry-Wide Initiatives for Better Liability Distribution and Pragmatic Consenting

Risk aversion in BCAs is not only a council issue – it’s a symptom of how the broader industry allocates risk and accountability. Several wider initiatives could support a more pragmatic consenting environment:

Mandatory Building Guarantees or Insurance: As noted in policy reforms, implementing a compulsory warranty insurance scheme for new buildings would be a game-changer. If every new home or building had a 10-year guarantee (backed by insurance) covering major defects , homeowners would have direct recourse to that insurance for repairs. This reduces the need to pursue litigation against any party, including councils. It also changes behavior: insurers would vet builders and demand certain standards, lifting overall quality. Such a scheme spreads risk across the industry (through premiums) instead of concentrating it on councils. Industry associations like Registered Master Builders already offer guarantees; the initiative would be to broaden this to all builds, possibly making it a condition of getting a consent or code compliance certificate. With an effective warranty in place, councils could feel less pressure to act as the fail-safe – knowing that even if something slips through, the owner is protected and the insurer (which has priced the risk) will handle it.
Strengthen Professional Accountability: The industry should continue to improve the competence and accountability of builders and designers. The Licensed Building Practitioners (LBP) regime, introduced after the leaky home saga, was meant to ensure only qualified people do critical work. Continued strengthening of that system – regular skills assessments, mandatory continuing education, and a robust disciplinary process – will weed out poor performers. If a builder knows they can lose their license for serious defects, they have a stronger incentive to “get it right,” which in turn means councils don’t have to compensate with over-inspection. Additionally, requiring professional indemnity insurance for certain practitioners (as architects must carry by their registration rules) could be expanded. For example, engineers or builders working on high-risk projects might be required to show evidence of insurance cover. This means if they are at fault, there’s a financial resource to draw on, instead of it all bouncing to the council. The government and industry bodies can collaborate on making insurance more accessible – perhaps group schemes or subsidies for small firms – so that carrying insurance becomes standard practice. Over time, if other parties are adequately insured, the council’s role as the “last resort” diminishes, allowing a corresponding relaxation in council risk posture.
Improved Contracting and Project Delivery Methods: The traditional approach to building procurement often leaves each party siloed and prone to finger-pointing. Embracing collaborative delivery models can distribute risk more fairly. For instance, using alliancing or joint ventures on large projects can mean the council (if it’s a partner in say a public facility build) is directly involved and risks are shared from the start, rather than the council solely policing an external developer. For typical private developments, promoting better contracts between owners, builders, and designers that include clear defect rectification obligations, retentions, or bonds can ensure there’s something to fall back on if issues arise (e.g. a bond that can be used to fix defects if the builder won’t). Developers might be required to retain a portion of sale proceeds for a few years as security for defect repair. These measures lie somewhat outside the consenting process, but they impact it: when BCAs know that owners and builders have robust agreements and financial security for defects, the BCA might not feel it must “guarantee” the building quality alone.
Education and Culture Change in the Sector: An industry-wide shift in mindset is needed to support pragmatic consenting. This includes educating homeowners and developers that speed and cost-saving in consents should not come at the expense of quality – everyone benefits from doing things right the first time. Likewise, educating council decision-makers (mayors, councillors) about the importance of balancing risk so that they empower their BCAs to innovate and not just take the safest route every time. Industry groups (Engineers NZ, Architects, Builders associations) can work with BCAs on guidance documents or acceptable solution details for new technologies, so that when someone wants to use a novel product, the information the BCA needs is readily available. A good example was how the sector developed detailed cladding installation methods post-leaky homes – now those are standard, and councils don’t have to fear those issues if those methods are followed. Continuing that proactive development of best-practice guidelines for emerging building methods (prefab construction, sustainable materials, etc.) will allow consents to be issued more confidently for innovative solutions. Essentially, cooperation and information-sharing across the industry can replace the current adversarial dynamic. When all players trust that others will fulfill their responsibilities, the council doesn’t have to be the sole backstop.
Legislative Review and Continuous Improvement: Finally, the entire system benefits from ongoing review. The government’s current initiative to review the building consent system and liability settings in 2024–25 is an opportunity to implement many of the above ideas . Stakeholders across the board – local councils (via LGNZ), industry bodies, consumer advocates – should continue to provide input on making the system more efficient and fair. This might include revisiting joint and several liability if other measures (like insurance schemes) are put in place, or providing government support for council insurance in the interim (for example, a Crown backstop for catastrophic liabilities, similar to how EQC supports insurance for natural disasters). By treating building consenting and liability as a “whole-of-system” issue (as MBIE has framed it ), New Zealand can move towards a model where quality is ensured without stifling progress. The end-state vision is a building control system that delivers safe, durable buildings without inordinate delay or cost – a system in which BCAs can act as fair regulators and partners, rather than being cast as the overzealous gatekeepers they often feel forced to be under current settings.

Conclusion

New Zealand’s BCAs have become highly risk-averse in consenting due to well-founded legal and institutional pressures – notably the broad liability they carry under joint and several liability and the painful legacy of past building failures. The “last man standing” mindset among councils is understandable given that, too often, they have indeed been left carrying disproportionate costs for construction defects . This defensiveness, however, has side-effects: it slows down building projects, adds cost, and can discourage innovation. To break out of this pattern, changes are needed at multiple levels. Legal reforms (like adjusting liability rules and introducing mandatory insurance) can more fairly spread the risk and reassure BCAs that they won’t be alone if something goes wrong. Improvements in BCA processes and culture – from risk-based consenting to stronger partnerships with trusted professionals – can make the consent process more efficient and targeted, without sacrificing quality. And industry-wide initiatives to lift the game of all building practitioners, backed by appropriate safety nets, will reduce the likelihood of defects and the heavy reliance on councils as a backstop.

In evaluating the “last-man-standing” concern, we find it is valid in many respects – yet not insurmountable. Other countries manage to protect consumers and avoid paralyzing their regulators with fear, through clearer allocation of responsibility and insurance mechanisms. New Zealand is now actively grappling with these issues. As the Building and Construction Minister signaled, major reform is on the table to ensure the consenting system is fit for purpose and not excessively conservative . By pursuing a balanced set of reforms – policy, process, and industry practice – New Zealand can move toward a consenting environment where BCAs feel confident to make the right decisions efficiently, homeowners are secure, and builders are accountable. The result would be a more resilient and dynamic building sector that delivers safe buildings without unnecessary red tape. Achieving this balance will require continued collaboration between government, councils, and industry, but the payoff in terms of housing affordability, innovation, and public safety will be well worth the effort.

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Sources:

Building Act 2004 and Building Code (NZ Legislation)
MBIE Building System Legislative Reform consultation documents (2019) – risk and liability proposals
MBIE Evaluation of the Building Consent System Final Report (2021) – findings on BCA behavior
MBIE guidance “Satisfied on Reasonable Grounds” for BCAs (2024)
New Zealand Supreme Court decision in Body Corporate 207624 v North Shore City Council (Spencer on Byron, 2012) – duty of care of councils
Law Commission Report 132 (2014) – Liability of Multiple Defendants (recommending BCA liability cap and warranty scheme)
NZ Government/MBIE Policy Position Statement: Risk, Liability and Insurance in the Building Sector (2023)
Statement of Hon. Chris Penk, Minister for Building and Construction (2024) – on joint & several liability causing risk-averse councils
Industry commentary by Grant Thornton NZ (2022) – “Councils shouldn’t be the last man standing” (noting council liability exposure and calling for change)
Property Council New Zealand advocacy (various) – supporting liability cap and better insurance
Selwyn District Council Professional Partnership Programme – example of process innovation .