The building industry faces a period of re-regulation – and consequently higher costs – following an agreement by federal and state ministers on Thursday.
They agreed to co-operate to prevent the recurrence of problems such as combustible cladding, crumbling buildings and lax self-regulation.
Federal Industry Minister Karen Andrews and her state and territory counterparts adopted a Queensland proposal to co-ordinate much-needed construction industry reforms by beefing up an existing agency, the Australian Building Codes Board, rather than creating a new layer of bureaucracy, a move Victoria had also resisted.
The souped-up ABCB, funded by the states and territories, and on which industry also has representation, will co-ordinate efforts by all states and territories to make changes specified by the Building Confidence report they commissioned in 2017.
“Today the jurisdictions have agreed to the implementation of our report being facilitated through a dedicated team overseen by the ABCB,” construction lawyer Bronwyn Weir, a co-author of the Building Confidence report, told The Australian Financial Review.
“This will not slow down the progress of reform under way in some states. It will not result in a single set of laws … A centralised implementation effort will drive greater consistency and enable improved communication about what governments are doing to bring confidence back to the sector.”
Industry welcomed the move.
“We’re pleased to see ministers seized of the urgency for an effective and co-ordinated approach around the country,” Property Council of Australia chief executive Ken Morrison said.
The one-day Building Ministers Forum, which followed their previous gathering in February, could do no more than scratch the surface of a range of problems that stem from areas as diverse as construction contracts, consumer protection, insurance and regulation of practitioners.
Reforms to come likely include mandatory registration of engineers, who at this stage only have to be registered in Queensland, although Victoria has laws under way to do the same. There will also likely be a new model for the design, construction and certification of new large buildings, which will demand greater scrutiny and independent verification of certification.
“These sorts of reforms will add to costs,” said Kristin Brookfield, the Housing Industry Association’s chief executive for industry policy.
“What we have is a recognition through [the] Shergold-Weir [report] by governments of the need for change and a realisation by industry that things can be improved and that will come at some cost.”
Others cautioned that compliance should be achieved by having stronger regulators, but without going too far.
“If you have a complex with 400 or 500 apartments, would you have some third-party certifier looking over the shoulder of a waterproofer who does the waterproofing of every bathroom in that 400 or 500-apartment building?” said Lindsay Le Compte, executive director of the Australian Constructors Association industry group.
“That seems a bit of overkill to me. Provided that the waterproofers are properly licensed, that they sign off appropriately, and provided the head contractor does their job responsibly you would be OK.”
If the construction and verification processes can be managed transparently and in a way that creates more confidence around the risks of building, however, it could be sufficient to bring insurers – who are currently giving the industry a wide berth – back to the table.
“If these initiatives are implemented in a consistent fashion, then yes, the insurance industry will be able to respond accordingly and the market will normalise,” said Insurance Council of Australia chief executive Rob Whelan. “At the moment it is not a normalised situation.”
The states are desperate for insurers to step back in and let the industry function properly, without the temporary measure that NSW, Queensland and Victoria have applied of allowing building certifiers – who play a key role in the construction chain – to keep practising without professional indemnity policies that cover them for cladding-related claims.
“We are moving towards [cladding] rectification works on private buildings in the next couple of months,” Victorian Planning Minister Richard Wynne said.
“And as we currently stand, building surveyors will not be able to be engaged to certify those buildings because currently they have no professional indemnity insurance and we will be continuing to advocate with the insurance industry to get the level of cover and comfort.”
Ms Andrews, who repeated an earlier refusal to give Victoria the $300 million it requested for cladding rectification, took the failure of her proposed taskforce with good grace and said she was happy with the plan to use the ABCB to make changes.
“I’m very happy to commit to an implementation team, whether it be called an implementation team – previously I referred to it as a taskforce – the important thing is the outcome,” she said.
Thursday’s agreement ends the political finger-pointing that preceded the meeting, but only applies to future buildings and offers no relief for the slew of high-profile current problems such as at Sydney’s Opal, Mascot and Zetland residential buildings, combustible cladding nationally or the increasingly apparent crisis of building defects.
“Clearly there are some legacy, historical issues that will take some time to resolve,” Ms Andrews said.
“Quite frankly, some of them may not have already been discovered. So we need to be very conscious that this is a two-stage approach. One is to deal with the historical legacy issues and the second is the program for the future. The program for the future will provide comfort to the insurers that there is a pathway to lower their risk profile.”
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