MBIE determinations: the system is broken

In August 2021 we asked whether the MBIE determination process was still fit for purpose.  The article, which I’d encourage you to read on Rice Speir’s website before continuing, generated a lot of phone calls and emails from astute building control officers around the country.

A couple of years on, a follow-up piece was in order, and I requested some key data from MBIE to try and get a gauge on the regulator’s performance.

The information received was surprising and, in our view, justifies an urgent review into a system that is broken.

There are some great people in the determinations team at MBIE, who are trying their best in challenging circumstances.  However, the 7 case managers and 4 other people who are writing determinations stand little chance of keeping up with the demand and increasing complexity of determinations.

This article highlights the problem in black and white terms but more importantly seeks to prompt change.  The conversation needs to move towards solutions and some of the ‘suggested tweaks’ to the system that we outlined in August 2021, and are summarised again below, might be a good place to start.

I am grateful to MBIE for being so transparent with their answers and for providing further context, which readers can weigh up for themselves here: 1 June 2023 correspondence and 13 July 2023 correspondence.

Significant non-compliance with statutory timeframes

The Building Act requires MBIE to make determinations within 60 working days.  Of the 83 determinations that were before MBIE in May 2023 when we asked, on average, each determination had been sitting in the queue for a jaw-dropping 515 days.

It would be bad enough if determinations were taking 515 days to be issued, but with no end in sight for many of these applications, the actual number is likely a lot worse.

Even more concerning is the number of determinations that were made within the statutory timeframe in the last 5 years.  In 2021, of the 56 applications that MBIE accepted, not one determination was issued on time.  Not one.

Council officers reading this no doubt see the irony in these numbers, noting as we do that council consenting timeframes are heavily scrutinised.  Something has to change.

What’s MBIE doing about it?

MBIE’s response to my OIA request on 1 June 2023 suggests that they are alive to the issues that the numbers make plain and have some ideas for how to right the ship:

“…the Determinations team has undergone a significant programme of change over the last 2 years.  There were significant changes in the operational structure, significant recruitment, induction and training and the introduction of an online case management system, this focus on improvement continues.  MBIE is devoting more resources to the Determinations team and making operational improvements to ensure that determinations can continue to meet the changing needs of the building sector.  This increase in resourcing includes those who prepare determinations (case managers) and decision makers.

MBIE continues to prioritise determinations cases taking into account factors such as safety issues, complexity and whether a case has the potential to have broad sector impacts.  To keep customers appropriately informed, customers involved in newly accepted applications are being told MBIE is exceeding the 60-day timeframe.

For the last 5 months we have piloted a different way of working for cases which have been identified as being at the lower end of complexity and have a discrete issue for consideration.  The pilot is due for completion at the end of June.

The positive impact of all of the change is demonstrated by a downward trend in open cases numbers from approximately the end of the third quarter 2022.  This trend continues to gather momentum.  Determinations entered 2023 with 98 open cases, as at the end of May this has reduced to 79 cases.  We expect for this trend to continue through 2023, based on current data.”

I question though whether MBIE’s pilot scheme is the answer and whether the momentum MBIE talks about really exists.  Only six determinations were issued under the pilot scheme up to and including 21 June 2023 and none of those determinations were issued within the statutory timeframe.  If applications “at the lower end of complexity” that have “a discrete issue for consideration” can’t be issued on time, what chance is there for the more challenging applications?

Of the 82 determinations that were on MBIE’s books when we asked, at least 62 related to a power of decision by a council.  These aren’t simple or discrete matters by any stretch of the imagination but can have broad sector impacts.  We can expect determinations to get more complex and litigious as construction methods progress.  It isn’t getting any easier unfortunately and it now seems clear that the current framework isn’t fit for purpose.

Justice delayed is justice denied

The reason these numbers are so concerning is that determinations play an important role in the building regulatory landscape.  The mechanism was set up to resolve disputes and provide guidance for councils, and the public, who might be confronting similar issues.  They are the closest thing to guidance in difficult areas like dangerousness, modular construction, or natural hazards that currently exists.

As the saying goes, justice delayed is justice denied, and unfortunately that’s where things sit right now.

The number of new applications for determination has steadily declined since 2018, which might suggest that the public has lost faith in the process.  As the graph below confirms, it doesn’t appear that MBIE has refused or declined significantly more applications in the last 5 years, so the barrier to entry isn’t deterring applicants.

We know that councils are frustrated with the delays and some councils, with the consent of the applicant, are now resorting to having matters determined privately using independent experts – at significant and unnecessary cost.  Other councils have decided to withdraw determinations after several years of waiting in the queue.

So what needs to change?

We believe an urgent, independent review into MBIE’s determination function is an essential first step to achieving real change.  That review must be carried out at arm’s length and should recommend a solution for clearing the backlog, as well as establishing a more sustainable process.

Councils should in our view be given an opportunity to give feedback on what has worked in the last 5 years, and what hasn’t.  Ongoing, more direct, dialogue between councils and their regulator would go a long way to solving many of the issues that the sector currently faces.

Some of the ideas that we outlined in August 2021 might also be worth considering in greater detail, such as:

  • Removing draft determinations;
  • Stricter case management and firm timetables for key events;
  • Removing persons with an interest;
  • Making all determinations on the papers and removing the option of a hearing;
  • Increasing the price of entry. $287.50 including GST is too cheap and encourages unmeritorious applications;
  • Introducing a triaging phase, including the use of online dispute resolution.

We also think there could be merit in MBIE outsourcing the writing of determinations to the private sector.  There are a number of technical and legal experts that could write determinations for the Manager to consider and approve.

In the end, we need to think differently about determinations because the system that was set up in the early 2000s is no longer fit for purpose.

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