KEY POINTS:
It is possible to sympathise with the city councils that believe they are shouldering too much of the liability for the leaky home crisis. They can point quite validly to other parties that are equally or more culpable.
That cannot, however, justify the attempt by the Auckland City Mayor, John Banks, and his Wellington counterpart, Kerry Prendergast, to get the Government to bail them out of their financial obligations. An appeal to the party with the deepest pockets may be the obvious resort but it is also one that plays down the councils' responsibility for the predicament faced by leaky home owners. Was it not, after all, their officials who inspected buildings that were all too soon to become rotting nightmares and issued consents and code compliance certificates?
Much of the impetus for the mayors' initiative probably stems from last year's landmark High Court award of $250,900 against the Waitakere City Council for approving the construction of a leaky house owned by Colleen Dicks of Hobsonville. This exposed all councils to liability for building consents issued under a faulty national code. In the view of Justice David Baragwanath, the Waitakere City inspectors were "untrained or simply careless" and treated the approval process as "a mere formality". Commendably, Waitakere Mayor Bob Harvey accepted the judgment. "If we have not done what we're supposed to do, we say sorry and write the cheque," he said.
Other councils, having reflected on the ruling, are obviously less sanguine. The mayors of the country's two largest cities obviously fear the consequences for ratepayers if their councils have to assume all the liability because, in many cases, builders and other parties have folded their tents. They also know that ratepayers express their grievances at the ballot box. When their spending power is diminished, they tend to have little time for arguments about fairness and equity.
It would, nonetheless, be unfair if councils were left to cover the full costs. Any analysis of the crisis produces an intricate web of blame. Changes to the building code in 1991 were pivotal, as was the permission granted in 1996 for the use of untreated timber, and as was the failure of the industry watchdog, the Building Industry Authority, to act on alarms first raised in 1998. The authority might appear an obvious target for compensation, but the Court of Appeal has found it did not have sufficient "proximity" to the problem. This refocused attention on the councils, a situation reinforced by Justice Baragwanath's ruling that authority residing in national institutions did not relieve local government of the right and responsibility to use its judgment. If the building code was deficient, he said, council inspectors should have adhered to previous standards.
Owners of rotting homes need to find compensation where they can and, given the sums typically involved, are not too fussed by its source.
Together, Auckland and Wellington face the prospect of paying a sizeable proportion of a billion-dollar bill. It seems unlikely, contrary to what Wanganui Mayor Michael Laws suggests, that their inspectors were far less diligent or that their outsourcing practices were particularly lax. They are simply the location of many of the country's leaky buildings. They and their ratepayers, therefore, have a particularly acute problem.
Councils are already making attempts to limit the cost to ratepayers. Cases are being settled out of court wherever possible, and greater attempts are being made by their insurers to sheet liability home to builders. The resort to a Government bail-out is a step too far, however. Questions of fairness and proportionality aside, local authorities have a case to answer. Where they have made errors, they must pay.
