Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse

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Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse
July
                                       2015

Riding the building wave boom
A new development in Silverdale.

Employees or not employees?
The difference between contractors and employees.

Builder’s guarantees
The inside story of how these work.
Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse
C O NTENTS

                                                                                                                                                                                  3 Building scene
                                                                                                                                                                                 5 Tools of the trade
                                                                                                                                                                                  6 Building essentials
                                                                                                                                                                                  8 Bunnings news

        welcome                                                                                                                                                              11 Trade advice
                                                                                                                                                                             12 Customer profile
    There are a lot of positives                                                                     One person who particularly loves what he does is a

                                                                                                                                                                             13 Legal advice
                                                                                                     builder we’re profiling in this edition of Trade Issue.
    about being in the building                                                                      Peter Goodwin has been swinging the hammer for
                                                                                                     over 37 years. A current project building 130 houses
    trade. This is not just because                                                                  in South Auckland is especially gratifying to him in

    of growth indicators pointing                                                                    helping provide first home buyers with affordable

                                                                                                                                                                             14 Compliance and
                                                                                                     accommodation. Peter makes his point perfectly.
    northwards, but because                                                                          “Building is great; it’s creating something from
                                                                                                     nothing. You walk onto a bit of turf and when you
    people get a great deal of                                                                       walk away there’s a house.”                                                               determination
    satisfaction in creating places                                They’re part of the landscape and in place for the                                                                                  #
                                                                   protection of both builders and their clients, yet many
    to live and work.                                              people still don’t grasp the finer points of building
                                                                   guarantees. The truth is our industry is a volatile one.
    Statistics show that 75% of construction businesses in New Zealand will have failed within 10 years. For everyone’s                                                           Earn learning points
    peace of mind, having some level of protection in place makes sense. Our article on the inside story of builder’s                                                               With Trade Issue
    guarantees is a must read for those looking for a greater understanding of where all the elements fit.
                                                                                                                                                                              Once you have read this
    Another area that is getting more and more attention from the IRD is where to draw the line between people that                                                           edition of Trade Issue
    are employees and those that are contractors. There’s no question having contractors on board can be beneficial                                                           remember to keep a record
                                                                                                                                                                              of your learning.
    to the bottom line. Our second-in-a-series article on tax implications shows, however, that given the opportunity
                                                                                                                                                                              1 hour of learning = 1 point July 2015
    the IRD will move in favour of defining people as employees. The implications and consequences for building
    businesses are significant.                                                                                                                                                                            Changes are happening to the LBP Skills
                                                                                                                                                                                                           Maintenance programme from
    One part of Auckland riding a larger than usual wave of growth is Silverdale, a formerly quiet rural area that is                                                                                      2 November 2015.
                                                                                                                                                                                                           Find out more at:
    now a booming suburb. As you’ll read, we’ve been particularly hands on in creating the new town centre complexes                                                                                       bunnings.co.nz/trade/trade-central
    through a relationship with our North Shore-based customer Bindon Group.

    Finally, this issue’s Determination shows how people in the know can change the Building Code.                                                                            Supporting your business
                                                                                                                                                                               with our trade promises
    Des Bickerton

    Commercial Manager

    The opinions expressed in Trade Issue are not necessarily those of Bunnings. Although every effort has been made to ensure the accuracy of the information, the reader
    remains responsible for the correct selection and use of tools, materials and systems as well as following any law or code mentioned in this issue.                      Terms and conditions apply. See Trade Desk instore for details.

2
Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse
B UI LDI NG SCENE

                   scene
BUILDING

By Rodney Dickens
                    scene
The return of the boom-bust cycle?                                                               Number of Consents for New Dwellings
The outlook for residential building has improved as a result of Reserve Bank                                     Total Dwellings                Apartments              Non-Apartments
Governor Wheeler’s decision to cut the Official Cash Rate (OCR) and the 1 April                                    Monthly          Annual     Monthly     Annual         Monthly          Annual
increases in KiwiSaver-related grants to first home buyers. Population growth should
                                                                                                 Jan-13             1,312           17,143      1,128      14,027            184               3,116
also remain well above average for the next year. This is a result of low numbers of
                                                                                                 Feb-13             1,542           17,481      1,273      14,257            269               3,224
Kiwis emigrating and above average numbers of immigrants that include Kiwis
                                                                                                 Mar-13             1,475           17,397      1,306      14,321            169               3,076
returning home from their ‘OE’.
                                                                                                 Apr-13             1,755           17,922      1,351      14,713            404               3,209
Largely as a result of the fall in mortgage interest rates since July 2014, existing             May-13             1,971           18,521      1,524      15,024            447               3,497
house sales reported by the Real Estate Institute have increased significantly since             Jun-13             1,539           18,783      1,241      15,233            298               3,550
late last year. Existing house sales are a useful leading indicator for consents for new         Jul-13             1,893           19,198      1,485      15,612            408               3,586
houses for New Zealand (excluding Canterbury) leading by seven months, as shown                  Aug-13             1,748           19,433      1,454      15,819            294               3,614
in the chart. The surge in existing house sales points to the potential for reasonably           Sep-13             1,862           19,775      1,513      16,107            349               3,668
significant upside in consents for new housing over the next seven months.
                                                                                                 Oct-13             1,891           20,027      1,545      16,332            346               3,695
Governor Wheeler acted quickly on the April hint he would cut the OCR. He delivered              Nov-13             1,267           20,636      1,519      16,385            748               4,251
such on 11 June and again hinted he will most likely deliver another reasonably soon.            Dec-13             1,035           21,290      1,382      16,721            653               4,569
This has resulted in some further downside in mortgage interest rates. An indication             Jan-14             1,644           21,622      1,352      16,945            292               4,677
that, along with the 1 April increase in the KiwiSaver-related grants to first home              Feb-14             1,768           21,848      1,493      17,165            275               4,683
buyers should be reflected in more upside in existing house sales over the next                  Mar-14             1,999           22,372      1,632      17,491            367               4,881
several months.                                                                                  Apr-14             2,082           22,699      1,374      17,514            708               5,185

However, the strength of the upside in the housing market over the next year is likely           May-14             2,125           22,853      1,685      17,675            440               5,178

to surprise the Reserve Bank and contribute to stronger economic growth than is                  Jun-14             2,002           23,316      1,490      17,924            512               5,392
consistent with Governor Wheeler’s medium-term inflation target. Consequently,                   Jul-14             2,282           23,705      1,584      18,023            698               5,682
it will increase the risk that interest rates will increase next year; possibly at about the     Aug-14             2,059           24,016      1,483      18,052            576               5,964
same time net migration will be starting to make a less positive contribution to                 Sep-14             1,985           24,139      1,492      18,031            493               6,108
housing demand.                                                                                  Oct-14             2,152           24,400      1,689      18,175            463               6,225
                                                                                                 Nov-14             2,420           24,553      1,639      18,295            781               6,258
Much as the OCR cuts delivered by Governor Bollard in 2003 contributed to a
                                                                                                 Dec-14             2,199           24,717      1,446      18,359            753               6,358
boom-bust housing market cycle, Governor Wheeler’s cuts increase the risk of
a boom-bust cycle over the next two to three years.                                              Jan-15             1,703           24,776      1,141      18,148            562               6,628
                                                                                                 Feb-15             1,758           24,766     1,349       18,004            409               6,762
The Productivity Commission report is important. The Productivity Commission                    Mar-15              2,271           25,038     1,640       18,012            631               7,026
released its draft report on land supply issues on 17 June, including 38
                                                                                                Apr-15              2,112           25,068     1,365       18,003            747               7,065
recommendations aimed at reducing new housing costs.                                            Source: Statistics New Zealand

You can view the Commission’s summary report by going to www.productivity.govt.nz
and search ‘using land draft report summary’. See pages 26-40 for the summary of                 Consents for New Houses & REINZ Dwelling Sales
findings and recommendations.                                                                    New Zealand excluding Canterbury
                                                                                                  Three month average of seasonally adjusted numbers
The Commission is seeking feedback and the final report is scheduled for release in             1,800                                                                                           9,600

September. It may not be until 2017 that changes in land supply, and other policies by                                                                                                          8,800
                                                                                                1,600
councils flowing from the Commission’s review, have any impact on building activity.                                                                        Dwelling Sales                      8,000
                                                                                                                                                            Adv. 7 mths right scale
This issue, however, warrants monitoring because like the Housing Accords, it has               1,400
                                                                                                                                                                                                7,200
the potential to be a game changer for residential building.                                                                                                Consent left scale
                                                                                                1,200                                                                                           6,400

                                                                                                                                                                                                5,600
                                                                                                1,000
                                                                                                                                                                                                4,800
                                                                                                  800
                                                                                                                                                                                                4,000

                                                                                                  600                                                                                           3,200
         Rodney runs Strategic Risk Analysis, a property and economic research company.             Jan-01           Jan-04           Jan-07      Jan-10         Jan-13               Jan-16
         Visit their website www.sra.co.nz to sign up for free property and economic reports.

                                                                                                                                                                                                        3
Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse
18V 8 PCE KIT
                                          3 x 6AHBATTERIES
                                                 & CHARGER

                                          1 x UTE BOX
                                            $1216                        52
                                                                          EX GST

                                                       Online registration required.

                            OUR TOOLS WORK
                            AS HARD AS YOU DO

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    With over               EziTilE offers over 50 tiling tools to get any
    50 tiling tools,       tiling job done. Engineered to perfection,
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4
Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse
TOOLS OF THE TRADE

innovation
With winter here, you’re going to need tools, building
materials and accessories that you can be guaranteed
are going to last you the job as well as the weather.

HARD WORKING BOOTS SKU03550497 - 03550511
Dewalt Nitrogen Safety Boots are made from premium                                                                      GREAT VALUE TOOLS SKU00296839
buffalo leather with a tough yet flexible nitrogen steel
cap. An injected PU and TPU outer sole is resistant to                                                                  The AEG 18V 8 Piece Combo Kit is one of the best value
most oils and chemicals, has high tolerance against                                                                     trade power tool kits on the market. Includes Heavy Duty
splitting and cracking. $126.09 excl GST                                                                                Hammer Drill, Compact Impact Driver, ½” Impact
                                                                                                                        Wrench, 165mm Circular Saw, 125mm Angle Grinder,
                                                                                                                        Jobsite Blower, Compact Radio and LED Torch. Packed
                                                            ADJUSTABLE DECKING
                                                                                                                        into an AEG limited edition ute box. $1216.52 excl GST.
                                                            SKU00290675/290678/290681/290684/292280

                                                            Deckchair Adjustable Joists are preformed, adjustable
                                                            timber joists that provide a level sub-structure ready to
                                                            fix the decking of your choice over sloping membrane
For even harder working boots, the Dewalt Titanium          or concrete decks/balconies. 1200mm lengths that
Safety Boots are made from nubuck leather and contain       connect together to fit any length deck to max 4.8m wide.
a removable, dual density comfort innersole with            Made from LVL 3.2 treated timber to avoid warping.
moisture wicking properties and an injected PU and          From $27.65 excl GST.
TPU outer sole. $173.04 excl GST.

                                                                                                                        STRONGER PROTECTION
QUALITY BATHROOM SUITE SKU04821900                                                                                      SKU00252006/252000/252003/251997/252014/252011

                                                            LAY DOWN THE FLOOR SKU00295977
Caroma Kari Toilet Suite is a stylish wall faced toilet,                                                                With reinforced welded corners, a galvanised steel frame
with concealed plumbing fittings for a great finish.        Rescom Flooring is an alternative product for wood or       and pre-welded quality reversible ball bearing hinges,
Includes a soft close quick release toilet seat and a box   fibre cement construction flooring. Moisture resistant,     the Protector Aluminium Ezi Frame gives you a strong
flushing rim for quieter flushing and less splash. WELS     non-hazardous and easy to install, Rescom Flooring also     fence. Adjustable sizes all the way up to 2500x1800mm
4 star rating/3L flush, S Trap set-out 60-200mm, P Trap     features diaphragm bracing capacity. No tile underlay is    and can be hinged left or right. Adjustable to fit most
set-out 185mm. $581.74 excl GST.                            needed either. 2250 x 900 sheet size. $66 excl GST.         openings. $85.90 - $117.39 excl GST.

                                                                                                                                                                                   5
Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse
B U I L DING E SSE N T I AL S

essentials
    BUILDING

                                 20oz Fatmax
                                 Anti-Vibe Hammer
                                 SKU00561255

                                 $
                                      34
                                      EXCLUDES GST
                                                    74                    Galvanised Toolbox
                                                                          1050w x 365d x 392h mm.
                                                                          Lockable. Heavy duty.
                                                                          SKU00265904
                                                                                                                        $
                                                                                                                            6522
                                                                                                                             EXCLUDES GST
                                                                                                                                                          200 Amp Jumper Leads
                                                                                                                                                          2.5m. SKU00292100
                                                                                                                                                                                              $
                                                                                                                                                                                                  2348
                                                                                                                                                                                                  EXCLUDES GST
                                                                                                                                                                                                                 EACH

                                                                                                                        Gas
                                                                                                                        Torch Kit

                                                 9478                                                                      12087                                                              25913
                                                                                                                        SKU00312707

     42 Piece Socket Set
                                            $                                                                          $                                      Point Laser Level          $
                                                                                                                                                              30m. Shelf levelling 3 points
     3/8” metric. SKU00320069                    EXCLUDES GST                                                                   EXCLUDES GST                  plumb laser. SKU00312309        EXCLUDES GST

                                                                                                                                                                                         Concreter
                               Wet Weather Set                                                                                                                                           Wheelbarrow
                               Sealed seams and foldaway                                                                                                                                 Bolt free plastic tray, heavy
                               hood. Yellow. Available in                               Contractors Spade                                                                                duty tyre, well balanced
                               S,M,L,XL. SKU00269056                                                                                                                                     construction. SKU00208035

                                                                                             4254
                                                                                        SKU00257532

                               $
                                   1737
                                     EXCLUDES GST
                                                 PER
                                                 SET
                                                                                        $
                                                                                              EXCLUDES GST
                                                                                                                                                                                         $
                                                                                                                                                                                              17304
                                                                                                                                                                                               EXCLUDES GST

6      Terms and Conditions: Not all services and products featured are available in all stores, but may be ordered. See in store for product availability.
Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse
BUILDI NG ESSENTI ALS

                                                                                   18V 2 Piece
                                       $
                                            564                   35                                              $
                                                                                                                      415                  65                                           $
                                                                                                                                                                                            564            35
                                                                                   Combo Kit                                                            5.5hp
         Mitre Saw                                                                 Includes hammer drill,                                               Plate Compactor
         & Stand Combo                                                             impact driver & 2 x 1.5Ah                                            53 x 37cm plate size. 25cm
         SKU00258124                             EXCLUDES GST                      li-ion batteries. SKU00279737          EXCLUDES GST                  compaction depth. SKU00249780       EXCLUDES GST

                                                                                                                                                             10.8-18V
                                                                                                                                                             Bluetooth
                                                                 18V                                                                                         Speaker
                           $
                                127                 83                                                                   $
                                                                                                                              867                   83                                  $
                                                                                                                                                                                            146            96
                                                                                                                                                             Accepts 10.8V, 14.4V
   185mm                                                         4 Piece Brushless Combo Kit                                                                 and 18V XR Li-Ion
                                                                 184mm circular saw, 83Nm hammer drill,                                                      batteries. Integral roll
   Circular Saw                                                  220Nm compact impact driver, 125mm                                                          cage. 3.5mm auxiliary
   1200W. SKU00295878               EXCLUDES GST                 angle grinder & charger. SKU00295881                           EXCLUDES GST                 port. SKU00295009              EXCLUDES GST

                                                            12V
                                                            Heated Hoodie
                                                            3 heat settings.
                                                            Sizes S-3XL. AEG
                                                            battery required,
                                                            sold separately.
                                                            SKU06230236

                                                            $
                                                                120                  87                                         $
                                                                                                                                    100                                                 $
                                                                                                                                                                                            720            87
                                                                                                                                                             Impulse
                                                                                                      125mm                                                  Framemaster
                                                                                                      Angle Grinder                                          Lithium ion battery.
                                                                    EXCLUDES GST                      720W. SKU00814892                  EXCLUDES GST        SKU00205956                    EXCLUDES GST

                                                   14.4V
                                                   Cordless Hammer
                                                   Drill Driver
                                                   Keyless chuck. Metal
                                                   gears. 2 batteries & case.

                                                                                                                                                                                            21565
                                                   SKU00285175

                                                        12783                                                           19826
                                                                                                  50 Piece                                                   280W
                                                   $                                              Rotary
                                                                                                  Tool Kit
                                                                                                                    $                                        Random
                                                                                                                                                             Orbital Sander
                                                                                                                                                                                        $
                                                           EXCLUDES GST                           SKU00174701               EXCLUDES GST                     SKU00719790                    EXCLUDES GST

We reserve the right to restrict the purchase of commercial quantities. All prices are exclusive of GST. Prices valid to Monday 31st August 2015.                                                               7
Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse
B U NNINGS NE W S

     Riding the building wave boom

     Once famous for the                                     A company that is also at the forefront of harnessing
                                                             growth is Bindon Group, one with years of experience
                                                                                                                         up to 50% in growth is projected in certain areas
                                                                                                                         compared to the population recorded in the 2001
     lifestyle and nearby                                    in the construction and design industry. General            census results. People need places to live and work
                                                             Manager Mark Bindon says considerable government            and we’re doing our best to keep up with supply.”
     beaches, Silverdale has                                 expenditure on roading and infrastructure has effectively
                                                                                                                         Bindon Group has focused on the area’s rapid
     now become a bona fide                                  brought the Hibiscus Coast to within a 25 minute drive
                                                             of the Auckland CBD.
                                                                                                                         development with a number of completed projects
                                                                                                                         under its builder’s belt. A soon-to-be-completed
     business hub.                                           “As a result, Silverdale is booming driven by the twin      development is a new prime retail and office complex
     In property development terms Auckland is currently     factors of growth and demand. Rodney’s population has       again in the ‘heart’ of the urban hustle and bustle.
     ‘hotter than hot’. One area seeing more than normal     grown by 15% over the last five years and is projected      Located at 2 Milner Avenue and known as Lot 3 it is an
     activity is Silverdale on the city’s northern fringe.   by the Council to grow to 117,000 by 2021. Moreover         impressive undertaking by any standard.

                                                                                                                                      “Lot 3 has been ongoing
                                                                                                                                      for about 16 months and
                                                                                                                                       is very near completion.
                                                                                                                                       At this stage we’re 85%
                                                                                                                                               tenanted.”

8
Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse
BUNNI NGS NEWS

                                                                                                                            As specialist commercial
                                                                                                                            designers and builders,
                                                                                                                            Bindon Group provide a
                                                                                                                            conception to completion
                                                                                                                            package deal, tailoring
                                                                                                                            their architectural design
                                                                                                                            and construction services
                                              Lot 3 located at 2 Milner                                                     in order to create
                                              Street, Silverdale, is an
                                              impressive undertaking                                                        buildings that work for
                                                  by any standard.
                                                                                                                            their occupants.

Expenditure on roading                                        that retailers and office occupiers will be proud of. Lot 3
                                                              has been ongoing for about 16 months and is very near
                                                                                                                            “Clearly Bindon had made a commitment to be part
                                                                                                                            of this growth. They’re a great client to work with
and infrastructure has                                        completion. At this stage we’re 85% tenanted.” The            and long may this relationship continue.” Other
                                                              project occupies a total site area of 4,041sqm,               projects are already being planned for the Silverdale
effectively brought the                                       the three-level development comprises 15 retail units         area with the Bindon/Bunnings team looking to

Hibiscus Coast to within                                      ranging in size from 44sqm to 260sqm, plus seven
                                                              quality office units, from 55sqm to 257sqm. In addition,
                                                                                                                            continue to meet demand.

a 25 minute drive of the                                      2,277sqm of car parking will create space for 85 cars,        “Bunnings has been a key
                                                              including two loading spaces.
Auckland CBD.                                                                                                                partner for many of our
                                                              Bunnings Silverdale has been the key material
As the saying goes location is everything – Lot 3
                                                              supplier for a number of Bindon projects, including            projects and in this case
                                                              Polarity Plaza and Lot 3. One of the biggest challenges
borders the new The Warehouse and Countdown
                                                              with any building project has been in securing
                                                                                                                             played a critical role in
facilities and is also within sight of ‘sister’
development Polarity Plaza (also built by Bindon with
                                                              builders, especially during times of exceptional               making sure materials
                                                              growth, says Mark.
Bunnings support), which was 100% fully occupied
before completion.                                            “With so much competition in the area and in the
                                                                                                                             were available.”
                                                              context of the overall ‘boom’ this is an issue for every
“We’re builders and developers for the Lot 3 project but
                                                              developer. Bunnings has been a key supply partner for
have been solely construction partners for a number of
                                                              many of our projects and in this case played a critical
other undertakings in the area,” says Mark.
                                                              role in making sure materials were available, and
“We offer a full service that includes project feasibility,   delivered, as required.” Bunnings account manager
estimating, design, design-build, management and              Scott Godkin has been at the Silverdale branch for
construction. As specialist commercial designers and          eight years. In that time he’s seen the area go from
builders, we provide a conception to completion               strength to strength.
package deal, tailoring our architectural design and
                                                              “And why wouldn’t it with such a great lifestyle,
construction services in order to create buildings that
                                                              wonderful beaches and so close to Auckland. We’ve
work for their occupants.”
                                                              worked closely with Bindon Group on a number of
“Our experience gained through creating Polarity Plaza        projects taking care of supply, pricing and overall
means that we’re completely confident in the high             customer service. I visit the sites regularly and it’s
quality of the product that is on offer at Lot 3. Spaces      amazing how much activity is taking place.”

                                                                                                                                                                                    9
Riding the building wave boom - A new development in Silverdale - July 2015 - Bunnings Warehouse
NO WIND WASH BARRIER
                                                                                                                                                 reduced thermal performance
     New Underfloor Roll with wind-wash barrier                                                                                                                   Thermal
                                                                                                                                                                Performance
                                                                                                                                                                    Out

     Protection form the negative effects of air movement under your floor
     • A barrier to cold and windy conditions                                                                     NO WIND WASH BARRIER             NO WIND WASH BARRIER
                                                                                                                 reduced thermal performance     increased thermal performance
     • Super-soft insulation
     • Can be stapled in place
                                                                                                                                  Thermal
                                                                                                                                Performance

     • Improved thermal performance – cooler home in summer                                                                         Out

       and warmer home in winter
                                                                                                                   NO WIND WASH BARRIER
                                                                                                                 increased thermal performance
           Bonus

         Purchase a minimum of 10 rolls of the new Earthwool®
         Glasswool insulation for your chance to receive 1 of 30
         Bahco Insulation saws via redemption*.

         Valued at $5215 excl GST
     Terms and Conditions
     1.The Bahco saws (Prize) are available by redemption from the Promoter (Knauf Insulation). 2. To be
     eligible to redeem a saw, claimants (Bunnings trade customers only) must purchase a minimum of 10 (ten)
     rolls of the new Earthwool Glasswool Underfloor roll. 3. To make a claim, claimants should send a
     copy of their receipt and preferred delivery details for the saw to brittney.kenward@knaufinsulation.com.
     4. The first 30 claims received by the Promoter will receive a saw, by Post. 5. The offer is open
     to Bunnings Trade customers only. 6. Multiple claims will not be accepted, only one claim per
     customer. 7. The Prize is not transferable and cannot be transferred for cash. 8. Only purchases made
     between 15th July and 15th August 2015 will be accepted. Final date to sumbit claims is midnight
     15th September 2015. 9. Please allow up to one month for the delivery of the Prize, after the claim
     has been submitted to the Promoter.

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10
TRADE ADVI CE

      Employees or not employees?
      That is the question
      By Nikki Mandow

In an on-going series about dealing with the Inland Revenue Department (IRD),
Nikki Mandow explores why the Government wants your contractors to be employees.
                                                                                                                       Play by the rules
                                                                                                                       The Government has issued some
There’s a riddle and it goes something like this. When is a contractor not a contractor? The answer: When the tax
                                                                                                                       guidelines to help businesses in
man considers him (or her) an employee. There’s no question that contracting is very common in the building and
                                                                                                                       this regard. Search “employee or
trades sector. Mainly because working with a contractor, rather than a full-blown employee, has a number of
                                                                                                                       self-employed contractor” on the IRD
advantages. But be warned: the ‘tax man’ unquestionably favours employees more than contractors.
                                                                                                                       website but the devil is in the detail.
For a start, collecting tax from employees is easy - almost half the Government’s tax take comes from PAYE             People they define as employees could
(pay as you earn). Also, contractors can claim all sorts of expenses that employees can’t, thus reducing the amount    easily apply to contractors too.
the IRD can get its hands on. The bottom line is that the tax man will take a dim view of someone who claims their
                                                                                                                       For example, people who:
worker is a contractor when the IRD classifies them as an employee. Working out when a contractor might be
deemed an employee isn’t an exact science. One person with a clue to the riddle is Graham Lawrence, a tax              • work set hours;
specialist at Auckland accounting firm Bellingham Wallace.                                                             • are paid at a set rate (can be given on the job
He cites a legal precedent as case in point when a court decided a contractor was in fact an employee, on the            instructions);
grounds that they worked fixed hours; received training from the company; didn’t work for anyone else and had          • work at the premises or work site of the person
little investment in plant and equipment (instead using the company’s gear).                                             employing them;
The IRD, says Lawrence, use similar logic. If tax officials decide your contractor is an employee, they will demand    • do the same sort of job as people who are treated
PAYE on the contract payments (with ‘use of money’ interest). “The risk is all on the company, not the employee.         as employees.
The IRD can choose to pursue either but it’s much easier going after a company than an individual. Moreover, if        On the other side, the IRD rules say that contractors:
you’re in dispute with the IRD, it will often refuse to pay other money it owes you (for example a GST refund) until
                                                                                                                       • can get other people to work with or for them,
the dispute is settled.”
                                                                                                                         without needing to get permission from anyone
In the case of the contractor/employee issue above, the business had to pay PAYE to the IRD to get a GST refund          else, and pay these people from their own funds;
it needed. It then had to go back to the contractor/employee and try to get the PAYE money back from them, which       • organise a replacement if they can’t do the job;
was all time consuming and stress creating.
                                                                                                                       • correct unsatisfactory work in their own time and
                                                                                                                         at their own expense.
The risk is all on the company, not the employee. The IRD
can choose to pursue either but it’s much easier to go after
a company than an individual.

                                  Every issue of Trade Issue will cover a number of topics that effect
                                  how we as an industry go about our daily business. If you have any
                                  subjects you would like to disuss or have a case history you would
                                  like to share email us at comment@tradeissue.co.nz

                                                                                                                                                                                11
C U STOMER PR O F I L E

     The sunny side of building
     By Nikki Mandow

     With 37 years under the                                                                                                   Six of the best lessons
     hammer, Peter Goodwin                                                                                                     from a building veteran.
     still gets a buzz out of                                                                                                  Be hardnosed on payment. Stand on your
                                                                                                                               own two feet and borrow as little as possible. The trick
     building homes.                                                                                                           is to turn houses over quickly. Get in, get out, make a
                                                                                                                               fair and reasonable return and go onto the next one.
     A major housing project is taking shape on a street in
     South Auckland. There will be 280 houses in total of                                                                      Don’t take risks – particularly when times
     which 130 fall under Peter’s domain, with an average                                                                      are tough. During downturns, some people have
                                                                   The end of his training coincided with the recession        gotten into the spec market trying to create work.
     build time of one a week.
                                                                   of the mid-1970s. After a few companies Peter was           Peter has watched them borrowing and getting
     “Building is great; it’s creating something from              working for went broke, he decided it was easier to         deeper and deeper into debt.
     nothing. You walk onto a bit of turf and when you walk        go out on his own. “I was 21 and running my own
     away there’s a house.” This sense of pride and rate of                                                                    Communication, honesty and loyalty
                                                                   business, doing up houses for social welfare; putting
     completion is good news for a house-starved
                                                                                                                               are key to success. If you’ve made a mistake,
                                                                   in wheelchair ramps and that sort of thing. I thought
                                                                                                                               put your hand up. If something comes up and you
     Auckland. As each of Peter’s houses gets finished, they       social welfare was secure – as long as you made sure
                                                                                                                               can’t get to a job for a week, tell your customer.
     will be bought by the New Zealand Housing                     the paperwork was done, you’d get paid on time.”
     Foundation, a charitable trust which helps first home                                                                     Find people you get on with and stick
                                                                   The work led to bigger contracts; whole houses, then
     buyers into houses by taking a stake in the property.                                                                     with them. Peter’s not affected by a skills
                                                                   full subdivisions where Goodwin Building Services
                                                                                                                               shortage because he works with the same people as
                                                                   was the developer, selling finished properties to
     Starting early                                                                                                            much as possible. He has an electrician that he has
                                                                   Housing New Zealand. At its height, Peter was
                                                                                                                               worked with for 30 years, and a painter he has worked
     Peter’s interest in building started early as a kid helping   employing a dozen chippies and building 120 houses
                                                                                                                               with for 20 years.
     his father, a woodwork teacher, with DIY projects at          a year. A few years ago Peter’s two sons, Russell and
     home. His dad told him he could leave school if he had        Dean, followed their father into the business. They         Give people leeway to make decisions.
     a job. Once he turned 15 he signed on as an apprentice        now head up the day-to-day operations, allowing             Peter had the head of one of his teams ring him for
     ‘chippie’ under the old training scheme requiring             Peter to work fewer hours and take more holidays,           advice. He asked “what would you have done if you
     8000 hours and night school to get through the                but he has no plans to retire. “I’ll still be here making   hadn’t been able to get hold of me? And he told me.
     theoretical stuff.                                            a nuisance of myself.”                                      So go and do that. I trust you.”

12
LEGAL ADVI CE

The inside story on builder’s guarantees
By Ben Rickard

No one plans on going                                            How does an independent guarantee                            builder’s guarantee agrees to meet the
                                                                                                                              builder’s obligations if the builder can’t.
                                                                 benefit the homeowner?
under, but in a volatile
By Ben Rickard
                                                                 As well as fixing defects, third party builder’s
                                                                                                                              It’s first and foremost the builder’s
                                                                                                                              responsibility to meet their
sector like building,                                            guarantees also:
                                                                                                                              obligations; the

guarantees are part of                                           • Protect the homeowner’s deposit.                           guarantee stands
                                                                                                                              behind
                                                                 • Guarantee the completion of their project if their
the landscape for                                                  builder can’t, as well as covering the extra costs
                                                                                                                              them and
                                                                                                                              steps up if
consumer protection.                                               to do so.
                                                                                                                              the builder can’t.

                                                                 Do builders have to provide them?
Question: Explain the difference between the responsibility
                                                                                                                              How do guarantees benefit builders?
to guarantee their work for 10 years under the Building          No. The new disclosure rules that came into force in
Act and the cover provided by a 10-year Certified                January only require you to disclose whether you can         There is no benefit for the builder under the terms of
Builders Homefirst or Master Build Guarantee?                    offer a guarantee. However, some trade associations          the guarantee itself. It only benefits homeowners if
Answer: If a building company is still trading then its          do require their members to provide them.                    their builder lets them down. However, as more
                                                                                                                              information is available to the public through
customers can use the Building Act to enforce their
rights. However, if the company has closed down then             Your customers can’t be                                      mandatory checklists, and disclosures, demand for
                                                                                                                              independent guarantees is likely to increase, so
its legal obligations under the Act can’t be enforced
because the company no longer exists. Hence the need             sure you’ll be around for the                                builders who offer them will benefit.
for an independent guarantee to protect homeowners’
                                                                 next 10 years if something                                   Third party builder’s guarantees provide benefits to
position and interests.                                                                                                       homeowners that aren’t available under the law, such

That’s OK, many might say. The last thing on the
                                                                 does go wrong.                                               as for loss of deposit and extra completion costs.

agenda is going bust and no one necessarily plans                Builders that are not members of a trade association,        They also ensure that homeowners have some
for this to happen. The issue is that your customers             but do want to provide their clients with an independent     protection when they can’t enforce their rights under
can’t be sure you’ll be around for the next 10 years if          10 year guarantee, can contact Builtin and apply to          the Building Act or Consumer Guarantees Act because
something does go wrong.                                         become Homefirst Guarantee accredited.                       their builder is no longer around. As with many things
                                                                                                                              in life it is better to be safe than sorry.
The truth is our industry is a volatile one. Statistics
show that 75% of construction businesses in New                  Are guarantees insurance?                                    For more information, a table of the
Zealand will have failed within 10 years.                                                                                     protection available through third party
                                                                 No. An insurance contract is between two parties (the
                                                                                                                              guarantees and implied warranties in law
This leaves the industry with a number of other                  client and the insurer) and pays if certain events
                                                                                                                              and examples of overseas legislation visit
questions, or issues, which might shed more light                happen. A builder’s guarantee is between three parties
                                                                                                                              Bunnings.co.nz/trade/trade-central.
on the subject.                                                  (the client, builder and surety). The surety behind a

          Builtin New Zealand is a specialist in insurance & guarantees for the construction industry.
          For more information visit www.builtin.co.nz, email Ben Rickard at ben@builtin.co.nz or call him on 0800 BUILTIN.

                                                                                                                                                                                       13
C O MPLIA NCE AN D D E T E R MIN AT IO N

     The power
     of logic
     By Louise Swann

     Believe it or not it IS
     possible to modify the
     building code. It’s just a
     question of knowing how.
     There are times when complying with the building
     code is just too difficult or even too expensive. Under
     the Building Act there is the opportunity to change the
     building code provided that the overall performance is
     not comprised.

     Changing the building code is called a modification or
     waiver. Modifying clause B2 (durability) is a common
     occurrence where the CCC application is more than five
     years after the consent was issued. This modification
     has the effect of backdating the durability period. As
     always the devil is in the detail.

     A territorial authority issues a modification or waiver
     and this determination relates to a territorial authority’s
     decision to refuse to modify a fire code clause.

     Blaketown School contracted building company
     Lockwood to design and build their new school hall.
     The hall had a kitchen, accessible bathroom, male and
     female toilets and three exit points (two of which were
     fire exits). It was Lockwood’s archetypal internal wood
     finish that caused the problem.

     Wood is a durable, tough wearing internal lining that
     has been used for decades. Up until a couple of years
                                                                   The second option was an intumescent coating, but            group number requirements providing certain design
     ago, wood linings finished with a clear polyurethane or
                                                                   Lockwood was not sure about it due to the lack of            considerations are met. Lockwood considered these
     paint coating complied with the building code when
                                                                   supporting evidence on durability and safety, its            design requirements; maximum travel distance and
     used in commercial and other public buildings.
                                                                   cost and the difficulty of applying it.                      means of escape as well as additional considerations;
     The introduction of the new fire building code clauses                                                                     number of occupants, fire hazard, and presence of active
                                                                   The third option was to apply to the territorial authority
     included requirements for internal linings in respect of                                                                   fire safety systems. They also argued that the safety
                                                                   for a modification to C3.4(a). The aim of the
     time to flashover.                                                                                                         objective of the new C clauses remained unchanged
                                                                   modification was to allow a finish achieving material
                                                                                                                                from the old C clauses. And if Lockwood buildings
     The specific clause is C3.4(a) and it specifies the           group number of 3.
                                                                                                                                complied with the safety objective of the old C clauses,
     material group for ceiling and wall surface linings
                                                                   Before applying for the modification, Lockwood               then it should follow that Lockwood buildings meet the
     depending on the use of the building.
                                                                   explained to the school board of trustees in order to        safety objective of the new C clauses. Grey District
     In buildings such as a school hall, the material group        ensure them that their building would still be safe          Council refused to grant the modification and so an
     number must be no more than 2S. Where wood is to be           for the kids.                                                application for a determination was made.
     used as an internal lining there are very few options and
     in fact Lockwood had three options. The first was lining
                                                                   All based on performance                                     The decision
     the internal surfaces with plasterboard. This was
     proposed when the consent application was first lodged        The framework Lockwood developed was based on the            In his decision the Determinations Manager noted that a
     and whilst this achieved compliance with the code, it         acceptable solution documentation. Buildings that are        modification, or waiver, should only be granted when it
     was not a preferred option.                                   located on a marae are not subject to the same material      is explicitly or implied necessary for the granting of the

14
COMPLIANCE AND DETERM I NATI ON

                                                                                                                Get to know your
building consent to be issued. Plus if there there were compelling reasons that supported the view
                                                                                                                Account Managers
that a modification or waiver was appropriate. The determination identified a number of key factors
                                                                                                                Profiling Michael Clark
for consideration:
                                                                                                                Michael is new to the Bunnings
• The extent and possible consequence of non-compliance with the specific clause & the extent                   Ashburton team, although he’s worked for Bunnings for 2.5
   to which the modification will still be consistent with the principles of the Act;                           years and has been in the industry for 15 years. He enjoys
                                                                                                                learning new skills needed to keep up to date with progress in
• The availability of other reasonably practical solutions and associated costs, and;
                                                                                                                the industry, and he also enjoys the great support from his
• Any special or unique circumstances.                                                                          Bunnings team members and customers.
                                                                                                                When he’s not working, Michael enjoys spending time with his
The determinations manager considered these factors. Specifically he concluded that there was a
                                                                                                                family, cycling, hockey and watching rugby.
relatively small occupancy load; short evacuation time; shortened pathways; increased door widths
                                                                                                                Ashburton, 027 652 5271
and, in fact, a third exit door. Moreover the building users were unlikely to be asleep. The Determinations
Manager allowed the modification. The school hall could be completed using a traditional polyurethane finish.   Bunnings Trade Account Managers
                                                                                                                Area Sales Managers Avondale Trade/                      Hornby Trade/
Consider all options for achieving compliance                                                                   Gareth Osborne
                                                                                                                                    Silverdale Trade
                                                                                                                                    Craig Petzer
                                                                                                                                                                         Riccarton/Shirley
                                                                                                                                                                         Chris Sunman
                                                                                                                027 839 0109        027 436 0293                         027 260 2468
and establish when these are appropriate.                                                                       Matt Cardey
                                                                                                                                            Cambridge                    Darren Payne
                                                                                                                                            Bruce Robertson              027 503 6046
                                                                                                                027 652 5268
                                                                                                                                            027 475 8661
The lessons to be learned.                                                                                                                                               Martyn Hugo
                                                                                                                Tim Trowell                 Cambridge/Te Aroha/          027 240 8950
Frequently you hear the phrases “comply with the rules” or “council requires this”, but as this                 027 200 2034                Paeroa
                                                                                                                                            Nigel Phillips               Te Puke
determination shows this is not always the case. The building code is performance based. The key is to                                      027 230 8569                 Dean Cubis
                                                                                                                Troy Taylor                                              027 487 2697
use robust and defensible logic so you can amend the code to meet your specific project requirements.           027 200 2032                Glenfield/Silverdale Trade
                                                                                                                                            Joanne Smith                 Whakatane
Make sure the client is on board and understands what you are doing and why.                                                                027 246 2002                 Greg Diemar
                                                                                                                Area Account                                             027 490 4302
Here are some suggestions of things to consider:                                                                Managers                    Hamilton
                                                                                                                                            Darren Mayo                  Blenheim
                                                                                                                Avondale Trade/                                          Stuart Washington
                                                                                                                                            027 246 2008
• Identify that complying with a particular provision of the code is not appropriate.                           East Tamaki Trade                                        027 481 0557
                                                                                                                Denis Richardson            Hamilton/Putaruru
• Establish what the actual difference is between your proposal and the particular performance                  027 4981948                 Alan Miller                  Feilding
                                                                                                                                            027 499 7165                 Kevin Walpole
  criteria of the code. The more objective you can be, the better.                                              Avondale Trade/Mt Roskill
                                                                                                                                                                         027 446 1786
                                                                                                                Greg Dalley                 Pukekohe
                                                                                                                027 200 1964                Carla Hira                   Hawera
• Evaluate what impact this will have on the achievement of the overall objective of the                                                    027 246 2015                 Grant Cambie
                                                                                                                East Tamaki Trade
  relevant code; i.e. the part that relates to safety.                                                          Derek Wang                  Silverdale Trade             027 445 2917
                                                                                                                027 459 1734                Scott Godkin                 Lyall Bay/Naenae
• Consider all options for achieving compliance with the code and establish when these                                                      027 431 8504                 Gary Sim
                                                                                                                East Tamaki Trade/Botany/
  options are appropriate.                                                                                      Mt Wellington               Te Awamutu/Tokoroa           027 246 2014
                                                                                                                Blair Wilcock               Brent Pottage                Heinz Baker
• Identify any unique circumstances including any previously issued determinations                              027 436 9902                027 457 9979                 027 442 0234
  covering the same or similar issue.                                                                           Mark Haddon                 Whangamata                   Naenae
                                                                                                                027 453 7211                Barry Leighton               Steve Boyles
                                                                                                                Manukau/East Tamaki         027 49 32018                 027 445 0955
                                                                                                                Trade                       Ashburton/Hornby Trade       Derek Rodger
                                                                                                                Sam Marcel                  Shaun Parker                 027 702 0414
                                                                                                                027 498 1796                027 702 2129
                                                                                                                                                                         William Hurihanganui (CJ)
                                                                                                                Wini Ryan                   Ashburton                    027 232 5283
                                                                                                                027 246 2003                Michael Clark
                                                                                                                                            027 652 5271                 Nelson
                                                                                                                Takanini/Papakura/
                                                                                                                                                                         Rowan P Ellison
                                                                                                                East Tamaki Trade           Dunedin
                                                                                                                                                                         027 652 5271
                                                                                                                Jason Rosnell               Aubrey Gray
                                                                                                                027 246 2010                027 459 1738                 New Plymouth/
                                                                                                                Ryan Silvester              Gisborne/Gisborne Trade      New Plymouth Trade
                                                                                                                027 289 5576                Terry Pointon                Danny McVicar
                                                                                                                                            027 445 4375                 027 246 2011
                                                                                                                Tony DeCleene
                                                                                                                021 528 840                 Hastings                     Palmerston North
                                                                                                                                            Ian Sill                     Howard Yates
                                                                                                                Whangarei                                                027 246 2012
                                                                                                                                            027 490 6529
                                                                                                                Scott Scampton
                                                                                                                027 499 0812                Mt Maunganui                 Vanessa Linton
                                                                                                                                            Dean Hollamby                027 445 0957
                                                                                                                Kaikohe/Kerikeri
                                                                                                                                            027 228 6462                 Porirua/Naenae
                                                                                                                Steve Hawkins
                                                                                                                027 475 5019                Roger Corrin                 Jennie O’Regan
                                                                                                                                            027 246 2004                 027 442 5467
                                                                                                                Avondale Trade/Glenfield
                                                                                                                Forrest Jin                 Rotorua                      Waikane/Naenae
                                                                                                                027 484 2591                Andrew Chadwick              Matt Jenkins
                                                                                                                                            027 246 2006                 027 243 1932
                                                                                                                Jeff Zhang
                                                                                                                021 242 5980                Mark Canning                 Nod Edmonds
                                                                                                                                            027 498 7136                 027 274 2947
                                                                                                                Avondale Trade/North
                                                                                                                Shore                       Taupo                        Wanganui
                                                                                                                Craig Canty                 Mike Bush                    Todd Smith
                                                                                                                027 246 2001                027 492 9019                 027 459 1732

                                                                                                                                                                                              15
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16
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