A paper which concluded that costs associated with mandating accessible housing features in the National Construction Code (NCC) are likely to exceed the benefits of doing so was based on flawed methodology and may have produced a misleading conclusion, a new analysis suggests.

Released  last month, the Consultation Regulatory Impact Statement (RIS) prepared by the Centre for Independent Economics (CIE) for the Australian Building Codes Board (ACBC) examined the likely costs and benefits associated with five different options being considered for the mandatory inclusion of accessible housing features in the NCC based on the Livable Housing Design Guidelines (LHDG) published by Livable Housing Australia.

That paper found that costs exceeded the likely benefits for all options considered and urged caution in rushing to introduce new accessible housing standards.

However, a new analysis has cast doubt over this conclusion.

In their DaltonCarter Economic Report RIS, Deakin University Emeritus Professor Rob Carter and AdHealth Consulting director and former Deakin Health Economics Associate Professor Andrew Dalton argue that there were ‘important methodological issues’ associated with the CIE calculations.

Were the correct methods to be used, the authors say the case for mandatory accessible housing provisions can be justified.

“We conclude that the economic credentials for all options considered by the CIE are considerably stronger than those presented in their report,” Dalton and Carter say.

“While the CIE favoured continuation of a voluntary code, we conclude that a social benefit code analysis based on our four key recommendations would underpin the case for adding a regulation to the national building code for all new Class 1a and Class 2 buildings.”

Around Australia, there have been efforts over the last decade to make housing more accessible for older Australians, families with young children, people with temporary injury or people with disabilities.

An important result has been the creation of Livable Housing Design Guidelines (LHDG), though which housing projects can achieve either Silver, Gold or Platinum certification based on the provision of features such as step-free access, ground floor toilets, step-free showers, reinforced bathroom walls to support grabrail installation, handrails on stairs, slip resistant flooring and minimum clearances in kitchen, bathroom and bedroom space.

In 2017, the Building Ministers Forum directed the ABCB to undertake a regulatory impact analysis into the possible inclusion of accessibility requirements for housing (Class 1a buildings and Class 2 apartments) into the NCC.

In response, the aforementioned Consultation RIS was prepared to examine the costs and benefits of various options for requirements based on the LHDG.

When doing this, CIE used two different approaches:

• a ‘problem reduction approach’ which quantifies the effect of issues arising from a lack of accessible housing along with the extent to which alternative options would avoid these issues; and
• a ‘willingness to pay’ approach which uses survey data to measure the value which people place on accessibility features proposed.

According to Dalton and Carter, the CIE paper suffers from methodological flaws in three areas.

First, both of the aforementioned approaches understate the benefits associated with improved accessibility.

Whilst both the problem reduction approach and the willingness to pay approach account for altruistic benefits associated with equitable access, the problem reduction approach includes benefits only from savings associated with a lower incidence of falls, hospital/care admissions, loneliness, necessary home modifications, need for carers, need for moving and premature entry into aged care.

It does not include benefits associated with freer movement into and out of homes, freer movement around the home and the ability to live with mobility on the same level as an entrance.

Meanwhile, the willingness to pay approach accounts for the benefits of greater mobility but does not count aforementioned savings in reduction in falls, hospital admissions and other areas.

Accordingly, neither of the approaches accurately measures benefits associated with accessible design in a holistic way.

To measure the full benefits of accessible design, Dalton and Carter say that both positive benefits associated with freer movement and the avoided costs need to be considered.

The only exception to this rule, Carter and Dalton said, was the degree to which the benefits and reductions in costs overlap.

Second, whilst the paper correctly included an estimate of the cost of space needed to accommodate the proposed NCC revisions (such as through wider hallways) it did not account for either the additional capital value generated by freeing up this indoor space or the potential uses which households could derive from this extra space being freed up, such as through the provision of study nooks or laundry cupboards.

Finally, Dalton and Carter argue that the discount rate of 7 percent used by CIE to calculate the present value of expected future benefits and costs associated with the proposed regulatory changes was too high.

Rather, it said a rate of 5 percent should be applied at most.

Were this to happen, the lower discount rate would mean that anticipated future benefits associated with mandatory accessible housing features would add up to a greater value in today’s dollars compared with what has been assumed in the Consultation RIS.

This matters, Dalton and Carter say.

Indeed, their modelling shows that if adjustments to account for the three areas above are made, the expected benefits of mandatory accessible housing provision will exceed the costs under several of the options considered.

Overall, Dalton and Carter say that after making adjustments for the aforementioned areas:

‘… we conclude that the economic credentials for all options considered are considerably stronger than those presented in the CIE report and underpin the case for adding a regulation to the national building code’.

Dalton and Carter’s paper come amid debate about whether or not accessible housing features should be mandated within the NCC.

On one hand, many disability/senior citizen advocates and accessible housing consultants argue that it should.

In a recent article, Dr Jane Bringolf, Chair of the Centre for Universal Design Australia, argued that inclusion of mandatory accessible housing was important both to cater for current and future needs of Australian households and to help create a society which is inclusive for all.

Whilst the (voluntary) LHDGs are well-considered, Bringolf says adoption of these by volume builders has been limited.

Building industry lobby groups, however, are pushing back.

In a recent note to its members, Housing Industry Association (HIA) argued that the provision of accessibility features should occur not through mandatory provisions in the NCC but rather through voluntary market-based incentives, improved consumer and industry information and education programs, and direct Government assistance to people with disabilities.

“A one size fits all approach is not the way to go, as it ignores the needs of individuals and reduces affordability through placing unnecessary costs on the broader housing market,” HIA said.

“The best approach to providing disability access is through a tailored and co-operative approach between the individual client and their builder and the residential development industry should be assisted to develop low cost technical solutions to accessibility needs in private dwellings as voluntary options.

“For home buyers with significant disabilities, governments could consider support measures to reduce the burden of accessibility related modifications to new housing.”

The Consultation RIS is open for consultation until Monday August 31.

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