The software many councils use to process building consents may cost more in the future, with the increased fees likely to passed on. File photo. Photo: 123rf
An Australian company fined more than a million dollars for muscling into the market for software that processes building consents is making IT changes that could push up consenting fees in many cities and districts.
Objective Corporation's new moves could push up IT costs at cash-strapped councils.
When Objective took over the two closest local competitors in the building consent software market in 2019, the court said it was advised this "would effectively hand over the New Zealand market to Objective".
The listed Sydney company went ahead with the takeovers, but later admitted its move had "substantially lessened competition" and the High Court fined it $1.54m in 2022.
But Objective was not forced to give up either local company, even though it had about two-thirds market share through its two existing products GoGet and AlphaOne, according to the court.
The company has now told many small and big councils that GoGet is ending, and has suggested they shift to its new software called Build, with new pricing schedules.
"Council is aware of forthcoming changes that will or will probably raise costs," the Upper Hutt City Council told RNZ.
"A new product has been offered as an alternative, and this will incur implementation costs and an increase in per-application costs."
Wellington City Council said the software change "may have cost implications", depending what the council decided to do.
Masterton District Council said Objective had asked it to "make changes that have cost implications".
Christchurch City Council also uses GoGet. Auckland City Council - the country's largest consenter - does not use Objective systems.
RNZ understands the current flat fee per consent will change under Build to a fee based on value of work, with a likely increase of $1000 per consent for work over $1 million.
Objective declined to comment.
Hutt City Council said it was evaluating its options and doing detailed costings around replacement IT systems for building control.
"It is not expected that these costs will have significant impact on our existing building consenting fees," the council said.
The Masterton council noted it aimed at 100 percent cost recovery in building, "so there would be cost implications for customers".
"The council will look for the most effective, cost-effective IT solution to ensure minimal impact on customers."
Councils confirm changes
Eight out of a dozen councils approached by RNZ confirmed they face the software change by mid-2026.
Nelson City Council - whose contract with Objective stands until March 2025 - said it was assessing the potential impact.
RNZ understands Objective initially gave councils a tight deadline of June this year for a better deal for moving to its new system, but they now have more time.
Wellington City Council said "we are considering all our options". It said it was in a tender process and could not share commercially sensitive information.
The Christchurch City Council said it was in talks with the vendor on possible ways forward.
"Any ways forward will align to our procurement policies with market options considered, and costs being a factor in any final decision, "it said.
The cash-strapped South Wairarapa District Council said it was looking at the potential impacts and "exploring supplier options" to balance functionality and affordability.
Carterton District Council said it adopted the application portal from Objective in April this year, to match up with South Wairarapa and Masterton councils.
"We have since received notification from Objective that they will stop supporting GoGet and suggesting upgrading to the entire Build system," the Carterton council said.
"We are now considering other available systems before committing to any one product."
Tauranga City Council uses AlphaOne.
"The imminent changes to software used by building consent authorities will have no cost implications for Tauranga City Council," it told RNZ.
"We have been using AlphaOne since 2017, and the platform is progressively changing to Objective Build. The increased costs will be for building consent authorities that use GoGet to process/inspect building consents."
Some councils already use the front-end portal of Build. The shift now invited is to use the entire system.
Objective's previous conduct
The High Court decision against Objective in July 2022 said its 2019 conduct was "serious" and deliberate.
The Sydney firm had bought the company behind AlphaOne in April that year, and six months later paid $5.4m for the GoGet company Master Business Systems (MBS) of Feilding, which also owned half of the cloud-based Simpli Portal.
"These companies were each other's closest competitors" for consenting software in New Zealand, Judge Palmer said.
"The acquisition was part of a considered and concerted commercial strategy pursued over the course of at least a year."
Objective did not have to apply to the Commerce Commission for clearance, but this meant it ran the risk of falling foul of the commission.
The judge said the fact the company knew it had bought up close competitors "should, at the least, have raised a red flag at Objective".
Instead it carried on, with its actions removing "a key competitor", although it did not intend to breach the Act and cooperated with the investigation, the judge said.
"That competition would otherwise likely have continued for least the short and medium term, to the benefit of building consent authorities in terms of price, supply terms and service quality."
The company submitted that its aim was to acquire MBS's expertise so it could develop higher quality software.
Both the court and the commission decided that forcing Objective to divest would not restore or maintain competition, and risked interrupting the supply of software to customers. This meant the $1.54m fine was the sole penalty.
The court noted in 2022 that Objective had not put its prices up after it bought the local companies, and had brought in better technology and a help centre in Palmerston North.
Online, the company said its software allowed public services to become completely digital.
"We invest significantly in the ongoing development of our products to deliver outstanding solutions to the public sector and regulated industries," it said.
""The result - is stronger national and community outcomes; and accountability that builds trust in government."
The Build software was being rolled out in close collaboration with a working group of more than 150 building industry participants including councils, architects, engineers and building product manufacturers, it said.
The corporation had revenue of $3.8m from building consent software in New Zealand in 2020; the whole Australian group, which calls itself a "leading global software company", had $120m in revenue last year. https://nz.objective.com/
It has case studies of Hutt and Waitomo councils on its website that promote its ability to enhance "transparency, efficiency and customer satisfaction".