Australia’s building code is failing to provide a clear and consistent framework for the regulation of new building and construction work throughout the nation, the interim report of an inquiry has found.

Last week, the Australian Treasury published its interim report for the National Construction Code Modernisation Project.

The project is examining how the National Construction Code (NCC) and its governance arrangements can be modernised to ensure that they are fit for purpose and suitable for the current operating environment.

Overall, the report found that:

• The Code is not operating as intended. Complexity and uncertainty around performance solutions is forcing the industry to rely on ‘set recipe’ deemed-to-satisfy solutions to demonstrate Code compliance. This restricts the adoption of new products and construction methods and constrains the industry’s potential to innovate and implement clear process improvement.
• The Code has grown in complexity, with the NCC being difficult to navigate, interpret and apply; being overly complex in some areas; being poorly aligned with how it is used on site and being subject to multiple variations across states and territories. This is further constraining productivity and innovation and is driving up costs which compound across the stages of design, approval, procurement, construction and certification.
• As a result, confidence and trust in the integrity of the Code has been eroded. This is particularly the case as stakeholders increasingly report that compliance outcomes depend on interpretation rather than clear rules, that the system rewards process compliance over effective building performance, that there is a lack of national consistency and that building failure continues to occur.

“Stakeholders have been clear and consistent,” the interim report read.

“While the NCC provides Australians with safe, quality buildings, it has not kept up with modern practices, and the system around it is no longer functioning as a simple, nationally consistent regulatory framework.

“Differing views on proposed solutions exist, but there is strong alignment on the underlying problems and the need for reform to enhance industry productivity, clarity, certainty, trust and national consistency; and support housing delivery.”

The report further noted that:

“… the benefits of the NCC have diminished over time. The NCC has become more complex, less predictable and less national. It has expanded in volume and scope, accumulated layers of guidance and interpretation, and been implemented inconsistently across states and territories.

“As a result, the NCC is no longer delivering the clarity and certainty required to support a modern construction sector under acute housing pressure.”

NCC Under Review

The release of the interim report comes as the Treasury is undertaking a review into the Code and its governance arrangements as part of the NCC modernisation project.

The NCC is Australia’s primary set of technical, performance-based provisions for the design and construction of buildings throughout the nation.

It sets out minimum levels of performance that new buildings are expected to meet in terms of health, safety, amenity, accessibility and sustainability.

The initiation of the review follows decisions that were made by Commonwealth, state and territory building ministers at the Building Ministers Meeting last October.

At that meeting, ministers agreed to pause all non-essential residential changes to the Code until at least the end of the National Housing Accord period in June 2029.

Ministers also agreed that the Code and its governance arrangements should be reviewed to ensure that the NCC is fit for purpose and supports the industry to build more homes more quickly.

It comes as Commonwealth and state/territory governments have set a target to deliver 1.2 million new homes over the five years ending 30 June 2029 under the National Housing Accord.

A discussion paper released earlier this year received 213 responses.

Treasury has also held targeted workshops with key user groups as well as bilateral discussions with industry, professional bodies and governments.

Code not operating as intended

As mentioned above, the report found that the Code is no longer operating as intended.

In particular, it found that:

• the Code is complex and difficult to use
• there is a lack of national consistency in terms of Code implementation, with multiple variations at the state and territory level
• the NCC is unclear in its objectives whilst decision making processes regarding Code updates are opaque and disconnected from real-world impacts
• pathways through which innovative products and methods cand demonstrate compliance are slow, uncertain and costly; and
• there is a lack of clarity about what is needed to demonstrate Code compliance.

A particular concern is that the Code has become more complex in scope and nature.

First published as the Building Code of Australia in 1988, the NCC originally focused on structural and fire safety and was generally regarded as a practical, site-focused tool.

Over the past decade, however, its scope has expanded to also encompass livability, accessibility, sustainability and amenity.

As a result, the NCC has grown in size and complexity.

Since its first publication, the Code has expanded in length by 8.5 times whilst the number of referenced documents has roughly doubled (from 81 to 169) and the number of defined terms has also risen from 64 to 363.

This has made the Code more complex and difficult to use. This is made even more difficult to follow by the fact that Code requirements (with the exception of the Housing Provisions) are organised around technical themes rather than construction stages.

Simply constructing a compliant bathroom in a new home, for example, requires builders to navigate at least six different sections of the Code in addition to energy efficiency and livable housing requirements. To understand compliance requirements at each stage of the build, users need to jump between multiple sections of the Code as well as paywalled Australian Standards.

A related concern involves a lack of consistent application among states and territories.

Whilst the Code is a national document, decisions in respect of its implementation vary according to individual states and territories.

Take for example, changes to heated and water service requirements that were introduced in the 2022 edition of the Code (NCC 2022).

To improve efficiency, safety and sustainability, NCC 2022 introduced mandatory and measurable requirements for heated water services. These involved limiting outlet flow rates, restricting shower/basin temperatures and establishing stricter energy-efficient water heater standards such as mandatory solar or heat pump systems for new homes.

Whilst the Code intended to achieve this through referenced Australian standards, rules across different states vary with regard to when requirements apply, what systems are permitted and how compliance is demonstrated.

In particular:

• New South Wales largely replaces NCC requirements with its own BASIX compliance pathway alongside modified scald control triggers and replacement exemptions.
• South Australia replaces NCC requirements with their own prescriptive provisions for permitted heater types, minimum gas star ratings and solar/heat pump thresholds and expands scald control triggers.
• Victoria adds replacement exemptions for scald control, adds extra compliance requirements for thermostatic mixing valves and links aspects of heater compliance back to state plumbing regulations.
• Tasmania and Queensland embed alternative water heating and energy requirements and jurisdiction specific provisions.

All this, the report argues, adds to the time and cost of delivering new homes.

(To simply deliver a bathroom in a new home, builders need to consult six different sections of the National Construction Code in addition to energy efficiency and livable housing requirements)

33 options across five areas

In response, the interim report suggests that 33 actions be considered across five areas.

These include:

• simplifying NCC access and use
• improving national consistency and reducing state the number of state and territory variations
• introducing tougher and more rigorous cost-benefit analysis in decision making regarding Code changes
• enabling clear pathways for innovative methods and new products to demonstrate Code compliance; and
• reducing the cost of demonstrating compliance.

The next phase of the project will focus on deepening the evidence base, testing potential reform options and assessing implementation impacts to ensure changes are practical, proportionate and nationally workable.

The final report will be provided to building ministers later this year.

Report welcomed

Building and property industry lobby groups have welcomed the report.

Mike Zorbas, Chief Executive Officer of the Property Council of Australia, said the reform directions outlined in the report provide a constructive foundation for further work ahead of the final report.

“This is about improving the system end‑to‑end in the name of better and more affordable housing for all Australians,” Zorbas said.

“A thoughtful, evidence‑based approach to simplifying compliance is the right way, the only way to lift productivity and get more homes built sooner.”

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