Tuesday, 17 September 2013

Information failures and risky buildings [updated]

There's a trade-off when government agencies disclose known risks. Take, for example, AIDS disclosure laws. Some US states require that partners or others likely to be at risk from a patient testing positive for HIV;  others fear that the effect of such disclosure laws is to induce those at risk to avoid being tested. I've certainly not seen any data sufficient for running that cost-benefit analysis,* but it's plausible that either regime could be the correct one.

Wellington Council has a list of buildings sharing the same design flaw as the collapsed CTV building in Christchurch. But they won't tell anybody which buildings are on that list. Is this likely to be efficient? It depends on how Council knows and what they do with the information. If these kinds of flaws get found when Council officers dig back through the old building plans, then there's little risk that disclosure induces building owners to hide flaws. If they're found instead when owners inform Council, then disclosure could induce owners to keep quiet. So, in the former case, disclosure makes sense. In the latter case, it's a trade-off. Whether it makes sense to keep things quiet then depends on the number of owners who would likely be deterred from revealing risks in the disclosure regime and on whether Councils actually do anything to ensure that risky buildings are made safe. If buildings of that sort fall under the usual "you have 30 years to fix it" rule, then it seems unlikely that we're doing much good by keeping things quiet. If they're working towards much quicker repairs of disclosed faults, and if we think that tenants would overreact to the risk disclosure, and if we think that building owners would hide faults in a disclosure regime, then perhaps non-disclosure makes sense.

I'm inclined to agree with NoRightTurn that the case for disclosure seems strong - and especially since the justification seems to be to avoid imposing losses on the owners of risky buildings rather than to avoid that other owners notify Council of building deficiencies. But I'd reverse that call if it turned out that Council were really pushing to get this fixed and if there were substantial risk from unknown building flaws that would fail to be notified under a disclosure regime.

Update: 'An Engineer', in comments below, suggested that errors in the list would be sufficient reason for non-notification. I agreed, noting that there would then be reason for Council to get in touch with owners to ensure that buildings were up to scratch, with disclosure if they weren't fixed. Now looks like half the buildings have been cleared.

* This state-by-state variation seems eminent fodder for empirical work on the effects of disclosure laws on testing rates. File under "future honours projects" if it's not already been done.


  1. I'm not familiar enough with this area, so I'll pose it as a question:

    How much information asymmetry would there be between a building owner and a building inspector?
    The information asymmetries in the HIV example are large. What about buildings?

  2. Little asymmetry between the HIV tester and the patient conditional on testing; little asymmetry between owner and inspector conditional on inspection, I'd have guessed. Action would be in frequency of Council checks and how much relies on self-reporting by owners. As I don't know that, I don't know whether keeping things quiet is efficient.

  3. Do note that I'm pretty sceptical of that it's a good idea to keep quiet about these buildings. I just put up the conditions under which I'd switch to thinking keeping quiet is a good idea. I don't think they're particularly likely to obtain, but it's not impossible either.

  4. Yes. Did not miss the emphasis. You'll know it if I disagree!

  5. Whether it's a good idea or not to disclose this information, the law is clear. Under Local Government Official Information & Meetings Act 1987 all public information is discoverable unless there is a good reason not to release it (and WCC have quoted the explicit exemption clause they are relying on). Note that both case law and the commentaries published by the Ombudsman make it clear that information is all information that WCC has acquired in the course of its official duties whether it was sought or not; whether it is on paper, digital format or just in someone's head. The effectiveness or otherwise of WCC's policies is not grounds for refusal to supply the requested information.

    If this decision were to be tested I think it would all boil down to how you interpret the word "unreasonably". There could be lots of different arguments here but I would have thought that once it is discovered that a building would not have got a building consent at the time of construction because it did not meet the Building Code in place at that time the owner is effectively breaking the law that requires that all buildings are constructed according the Code. I would not have thought that a building owner had a "commercial position" while they stand outside the law.

    On asymmetries: in the case of large and complex buildings the majority of the consenting is done by the designer in the form of producer statements. Very few councils have the engineering skills to completely assess such buildings.

  6. If it's disclosures at time of building through the regular consent process leading to notification of flawed design a couple decades later, I'm less worried about creating an incentive to hide new info about vulnerabilities.

  7. It would be unusual for a building owner to communicate anything about their building to the council after a CCC has been issued. I think what has happened here is that WCC have gone through their files - which in some cases may date back 30+ years - to find possible deficiencies. I think they are withholding the information because they do not have confidence in the integrity of their records - i.e. that they have compiled either an accurate or complete list. They are, of course, worried about the backlash if there are mistakes.

    I would have had more confidence if they had used LGOIMA s7(2)(d) instead (avoid prejudice to measures protecting the health or safety of members of the public) as that would have indicated they had a definite programme to force building owners to upgrade dodgy buildings.

    But as I say I don't think building owners are required to furnish new info about a building to the council. So the argument is moot.

  8. Worries about errors are a sensible reason for holding back *for long enough to verify whether there are errors*. The case for blanket non-disclosure now seems pretty weak. Council could simply ask owners for evidence of structural upgrading work in the absence of which warn notices would be promulgated.

  9. Of course. The other factor I should have mentioned is the role of insurance companies. It is invisible to the public but councils are in a continuous state of litigation mostly related to subdivision and especially to building regulation. It is common enough for councils to make ex gratia payments without admitting fault just to make claims go away. These payments are covered by liability insurance. In this case I suspect WCC's insurance provider has a lot to say about the risks WCC might run by making this list public. So when WCC refuse to release the information citing financial impact concerns I suspect they are thinking a lot closer to home than the building owners.

  10. There IS a good reason this information should not be released. The process used to identify the list of (1980s) buildings was extremely broad and done (too) rapidly in response to a request from the Royal Commission. Describing the design issue as 'the same.. as the collapsed CTV building' is over dramatic. On detailed review most of these buildings have minor issues (relative to design standards) but no likelihood of collapsing like the CTV building - or put another way, they pose far less risk than unreinforced masonry buildings, or even steel/concrete buildings from the 1960s or earlier.

    In summary, I do not think it reasonable to publish the list until owners have had the chance to do the detailed investigation that can identify whether each building is actually a risk.

  11. That makes sense. But wouldn't Council then have told us that they're going to release the list after they've verified its accuracy with the owners of identified buildings?

  12. Possibly. It is reasonably likely that buildings that actually have a problem just join the bigger list of earthquake prone buildings.

    To confuse things further, the list focuses on one particular thing, which in the CTV Building was done about as badly as is conceivable. Despite that, it was probably not the main cause of failure. Thus even in buildings found to have concerns due to this issue, there is probably less risk than in many older buildings designed before modern standards (post 1976 basically) came into force.