The Government has announced an extensive review of the management of seismic risk in existing buildings to ensure it is
being managed effectively and in a workable, proportionate way.
At a high level, the Review will include:considering society’s expectations and willingness to pay to mitigate the risk of injury and death in an earthquake, and
for improving the resilience of buildings over timerecommending regulatory responses that balance life safety risks against the costs of regulation and impact on private
property ownersidentifying barriers to meeting regulatory requirements and the types of support or incentives that would help building
owners to better manage seismic riskconsidering how outcomes from seismic risk requirements align with broader Government objectives.
There will be opportunities for input during the Review and any legislative change would commence in 2026.
Massey University’s Dr Lauren Vinnell says the review is useful.
“We want to keep people safe, but we also don’t want people or businesses leaving buildings when they probably don’t
need to.
“Several goals of the review have the chance to improve this system if they are done properly. However, the ‘people’
side of things can be vastly complicated. Questions of ‘willingness to pay’ need to consider the full range of (not just
economic) costs and benefits of improving building resilience but also an understanding of how people think about their
earthquake risk in context.
“For many, there’s an idea that it’s a zero-sum game, so any money invested in seismic is money not invested in, for
example, road safety. This means that conversations focused on earthquakes can miss a large part of the process by which
the public balance risk against cost and decide how much they’re willing to invest for a particular hazard.
“Many of the words used in this terms of reference are understood differently between different experts, and between
experts and the public. Even ‘risk’ can mean vastly different things, so key to the success of this review will be
whether these conversations are happening with everyone on the same page about what is being said and what is being
meant.”
AUT’s Professor John Tookey says this is a public safety issue that should be expedited.
“There are an awful lot of buildings that are at risk across the country. Since introducing the legislation in place,
the levels of remediation undertaken have been less than expected.”
He says this is not surprising, given virtually all construction works require borrowed capital.
“As interest rates increase, so levels of general construction go down. This, then, presents a paradox for property
owners that need to remediate their earthquake prone buildings.
“On the one hand, quoted prices from engineers and tradies are likely to sharpen since they are actively competing for
scarce work. On the other, the acquisition costs are likely to be prohibitive if the works require owners to extend
their mortgages in order to start them.
“A simple thought experiment for any property owner at present is ‘how keen would you be to extend your mortgage by
$150k to protect your asset?’ For many ‘mom and pop’ type investors, this is unlikely to be attractive. Indeed if
anything it is likely to prompt some to divest themselves of at risk assets.
“On balance it is highly likely that the final outcome of this review will be to recommend extending the timeline for
getting remediation works completed. This is an obvious outcome that is highly beneficial to the government if not for
public safety. Firstly it will reduce the pressure in the general market and lessen the likelihood of a sell off
starting – particularly important in the weak market we have at the moment.
“Secondly – and much more importantly – it reduces the urgency on governmental budgets to implement remediation in
public buildings – schools, sports centres, hospitals etc.
“According to analysis by BRANZ in 2017, the timelines for governmental assets such as schools and hospitals in high and medium seismic areas are
respectively 7.5 years and 12.5 years from the date of the introduction of the law – July 2017. This makes the
government and local councils responsible for blanket remediation of all assets within these zones by the end of 2024
and 2029 respectively.
“Consequently, all of these remediation requirements will inevitably and increasingly hold governmental budgets hostage
as we get closer to these implementation dates. In order to encourage regular property owners the government needs to
set an appropriate example with early remediation works.
“This is a huge problem for a government seeking to reduce spending over the next one or two electoral cycles. It is
likely therefore that a particularly large can of seismic worms is going to be kicked some distance down the road. If in
doubt, move the goalposts.”
For more information: Earthquake-prone building and seismic risk management review | Ministry of Business, Innovation & Employment (mbie.govt.nz) https://www.mbie.govt.nz/building-and-energy/building/earthquake-prone-building-and-seismic-risk-management-review