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Secret sting operation on building sites

"Operation Landing", an inquiry started by multiple government agencies after intelligence indicated problems in Auckland's new-home building sector, was kept secret for more than a year.

A sting operation at building sites for new homes in Auckland found specially qualified builders missing at four out of five venues inspected and a range of regulatory and employment problems.

The Labour inspectorate noted nearly all sites failing to meet employment obligations were run by Chinese companies. Thirteen sites were to have been visited by Immigration New Zealand and five people were deported.

Newsroom can reveal the existence of Operation Landing, which hit 152 sites in South Auckland and the North Shore over a 12-day period at the end of 2016, after obtaining a copy of the “joint operations report”.

Dated February last year, the report is signed by a Ministry of Business, Innovation and Employment (MBIE) official - with the Labour Inspectorate, Immigration NZ, Auckland Council, Inland Revenue and WorkSafe are all listed among agencies involved.

Key findings include:

-The absence of licensed building practitioners (LBPs) – who are specially assessed to carry out essential structure or weathertightness work on residential buildings - at 81.3 percent of sites

-No consented building plans available at 75 to 80 percent of sites

-Issues with plumbing, gasfitting and drainlaying at 28.3 percent of sites

-A lack of employment records or agreements, or the use of contractors without any legal basis at 41.18 per cent of the 85 sites examined by the Labour Inspectorate

The report, which identifies three separate phases, also highlighted challenges faced as part of “diverse ethnicities working in the sector”.

Problems associated with overseas workers and the construction industry have grown alongside New Zealand’s housing crisis – with the shortage in local skilled-trades workers resulting in a strong reliance on visa-approved people in the building industry.

Under Operation Landing, building sites were broken down by “major ethnicities of the workforce”. Nearly two-thirds of the sites were listed as Asian or Chinese (64.7 percent). The next most prevalent ethnicity was European or Kiwi (16.7 percent). Notably, the Labour Inspectorate reported nearly all the sites which failed to meet employment obligations were Chinese ones. It also advised Immigration NZ to follow up on 13 sites. As a result, five people were deported – four Chinese and one Malaysian.

We had compliance in the places we targeted [that] we knew compliance was likely to be

The report outlined the experience of Operation Landing teams at 61 sites that were part of the Millwater residential development on the North Shore.

"It was surprising to find less that a fifth of those sites having the licensed builder on site on any day," it said.

"The experience of this operation indicates it is probable that most LBPs are not on building sites often. It was also found to be difficult to establish the details of LBPs in respect to Chinese/Asian operated sites (even using interpreters)."

Wayne Burroughs, head of MBIE’s integrated regulatory enforcement branch, said Operation Landing started after suggestions of non-compliance in the new-build sector.

Of the 152 sites in the operation’s first phase, just a third were identified before the actual sting, said Burroughs - who also signed the joint operations report.

“We had a location there that we had an intelligence report about non-compliance, and once they went to that property, they then just spread themselves along the street and into the next street from that building area.”

However  “two probes” started after the first part of Operation Landing showed non-compliance was not widespread across the sector, Burroughs said.

When asked to be more specific about the follow-up, Burroughs said it had targeted “known company brands” working in the residential-build sector.

Of those examined, 50 to 60 percent were found to be compliant, he said.

“Once we got the Landing report, we had to test how widespread was some of that non-compliance. These 152 [that] were targeted are those which didn’t have a franchise link or were no-billboard-known companies.

“We had compliance in the places we targeted [that] we knew compliance was likely to be".

The report provides strong reassurance that the systems and checks that the Auckland Council has in place are working well

Burroughs was also unable to comment on current compliance levels in the sector.

“I can’t really guess that. Our regulators are having ongoing work with the construction sector.”

He was adamant Operation Landing’s initial findings could not be interpreted as indicative of possible structural issues with new residential builds.

“We are able to confirm...that there’s no leaky-homes syndrome here,” he said.

“We’ve found that with the technical team, the council’s inspections are working well. They will get remediation if it’s not up to scratch before they pass them for inspections,” he said of the overall building process.

When contacted about the operation, Auckland Council 's general manager of building consent Ian McCormick said: “The report provides strong reassurance that the systems and checks that the Auckland Council has in place are working well."

Newsroom has also requested the data regarding the follow-up phases of Operation Landing. It is yet to be provided.

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