"Reportable" electrical issues in commonwealth countries
I can't speak for NZ, but here in the US, electricians could be held liable for the problem under what's referred to as the "last eyes on it" concept. He saw something, did nothing about it, so he owns it. That doesn't mean he HAD to fix it, just that he would have to tell the owner about it and if they have a permitting process (like we do in most states), the electrician would be required to tell the inspector about it. 

What an inspector (again, HERE) could do is to "red tag" the site, basically shutting down all work until the violation is corrected. They can't bring in jack-booted thugs, beat your door down and cart you off to jail, but in SOME jurisdictions they could issue a non-occupancy order, forcing you to go to a hotel or something.