Australia’s building sector must be prepared to wear greater costs in order to address poor construction practices, a respected lawyer says.
In a keynote address to a conference hosted by the Australasian Fire and Emergency Service Authorities Council (AFAC) held in Melbourne last week, construction lawyer Bronwyn Weir described a breakdown in building regulation and practices which has contributed to problems including flammable cladding, structural faults and other building defects.
In response, Weir – who co-wrote the Shergold Weir report containing 24 recommendations which the Building Ministers Forum has agreed to implement – says change is needed both in how we approach regulation and in the overriding culture of the industry.
As part of this, she says the industry needs to bear greater cost during design and construction.
For this, she makes no apology.
Indeed, Weir openly acknowledges that implementation of recommendations in the Shergold Weir report will result in additional costs.
Provided that measures implemented to improve building practices are effective, Weir says any up-front costs needed to get things right pale in comparison to the financial and emotional burden borne by consumers when defects occur.
“There must be costs to achieve benefits,” Weir said.
“A lot of people say to me, ‘It’s going to cost so much money if we have to do more inspections and the documents have to be better quality and have to be finalised earlier in the process.’”
“I just say, ‘good’. This rectification cost is enormous. If we can put cost upfront, it will be nowhere near the costs that we are seeing that the community are going to have to bear in terms of rectification – not just hard money costs but the emotional and financial trauma which owners in apartment buildings go through in trying to manage and respond to these incredibly significant defects in these buildings.
“I make no apology for the fact that implementing our recommendations will bring more costs to the construction process. So long as that is done in a way that we have better quality buildings, … that benefit will outweigh the costs enormously.”
Weir’s comments come amid growing awareness about the burden of poor practices which have occurred throughout Australia’s building sector over recent years.
A report commissioned by the Construction, Forestry, Maritime, Mining and Energy Union found that in apartments constructed over the past ten years alone, defects associated with cladding, waterproofing, structure and fire protection will cost taxpayers and consumers around $6.2 billion.
According to Weir, change is needed in both approaches to regulation and the culture of the industry.
On regulation, this needs to be aligned with modern industry practices.
At the moment, Weir says most states’ regimes are decades old and afford little recognition to either changes in the types of building being constructed or the risks involved and skill sets which are needed to deliver on these buildings.
As an example, building approval processes across most states follow a linear approach under which design is assessed, approvals are granted and buildings are assumed to be constructed according what has been approved – with some states requiring inspections before occupancy certificates are issued.
Weir says such an approach is not compatible with non-linear nature of design and construct projects whereby building starts when design is far from complete and design details are fleshed out during construction.
As a result, she says the regulatory process bears little resemblance to market practices and regulations have little impact upon what happens on the ground.
Next, regulation must be enforced.
On this score, Weir points to Queensland’s approach to security of payments. In that state, the government introduced laws which require principal contractors on commercial or multi-residential building projects which meet certain criteria to set up special accounts known as project bank accounts (PBAs) into which the principal pays money and through which amounts are paid directly to subcontractors and suppliers.
Whilst some contractors complain about the extra burden associated with operating these accounts, Weir says PBAs are necessary to ensure that head contractors actually pay their subcontractors. (In 2015, a Senate Inquiry found that Australia’s construction industry had a ‘culture of non-payment’, and that subcontractors were being short-changed to the tune of $630 million per year.)
Having laws on paper which say that subcontractors must be paid is one thing, Weir said. Making it happen is another.
Weir talks of other areas where enforcement should be tighter. Whilst governments have powers to suspend builder licenses for those repeatedly involved in insolvent companies, this needs to actually happen much more than is currently the case.
Next, Weir says regulators must rethink how they communicate with each other and with industry.
At the moment, she says states, local governments and private certifiers all have oversight roles yet rarely communicate effectively with each other.
As well, understanding of the industry at a practical level is lacking among government officials.
Policy makers and regulators, Weir said, need to understand the sector in order to engage effectively with industry whilst also being able to discern any agendas or self-interest at play in different industry players’ advocacy efforts.
Finally, Weir says public interest outcomes must be the overriding priority.
On this score, she says some in the industry adopt interpretations of the National Construction Code which are designed around finding loopholes and moulding interpretations about technical aspects of the Code to achieve outcomes desired by clients. Instead, the focus should revolve around broader considerations about what the Code intended to achieve.
In the judgement relating to the Lacrosse apartment fire handed down by the Victorian Civil Appeals Tribunal (VCAT) in February, Weir says VCAT acknowledged that the building may well have been compliant according to some literal interpretations of parts of the Code but failed when evaluated against Code objectives of preventing the spread of fire and ensuring the safety of first responders.
As well, industry associations need to rethink who they serve.
Mission statements of many groups, Weir says, focus primarily around interests of the particular members of that association.
This, she said, is wrong. For any profession, public and community objectives must be paramount.
As well, each group needs a strategy to respond to the defects issue and to promote better practices and culture within its own industry segment.
Australia’s building sector must address poor practices and defects.
For this to happen, both regulatory approaches and industry culture need to change.