Building: Spotlighting the System 16

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Monday, May 9th, 2016
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For many reasons, the spotlight is firmly focused on the building industry. Apart from the non-conformance fiasco and dysfunctional ‘governance,’ the industry has distinguished itself for building one of the biggest man-made disasters in Australia’s history.

Once deregulation was evaluated and the consequences for consumers calculated, the decision to proceed determined this would be the disaster we were bound to have.

Government marketing gurus have fed the public misinformation, managing to obscure, confuse and secret away the real causes. Inexplicably, the villain supposedly to blame has been ‘the system.’ Now it is possible to shine a light on the distorted design.

The decision takers

It is key to see how those in charge of the ‘system’ facilitated the decades-long building industry disaster. We have those who seized power in charge of the building system and our accommodating politicians sanctioning their control. The public officials as the policy advisors (think “Yes Minister”) completed the trifecta, supporting the power elite and sustaining the corrupted legal and governance framework. Most disturbing, all were fully cognizant of the harm visited upon millions of unsuspecting, defenceless Australians. The team worked collaboratively, covering up the truth of the ‘problems’, protecting the wrongdoers and hiding their wrong doing.

Their decisions have had calamitous consequences for us all, not least for consumers, who have suffered horrific harm, predominantly because they were rendered powerless to defend themselves. This was/is abuse of power, unadulterated betrayal of trust and unjustifiable, unconscionable conduct.

The widespread use of non-conforming building products has added another devastating layer to the disaster spawned by the industry’s sullied governance. This non-compliance was also authorized by the decision makers, and was not a chance happening. It was predictable and predicted, its impact calculable back in 2000 when Percy Allan warned of the dire effects of ‘no controls.’ His cautionary advice was ignored, the design remained and we were bequeathed the disaster. The cause was simplified for sale: ‘Systemic Failure’ – no persons involved!

How ‘the system’ was stitched up by government

A study of official policy and an analysis of the empirical evidence reveal how this disaster was crafted. As one would expect, at its core was/is bad policy, which generated bad outcomes. And over time, repeatedly worse policy delivered excessively worse outcomes.

  • The economy dominates government policy making, with the building industry used as the primary lever to propel economic growth – a policy that was about profits not people.
  • All Governments agreed to the vested industry interests dictating policy to suit their own commercial interests and the quid pro quo seriously damaged consumers.
  • Two decades ago, government embarked on ‘self-regulation’ (which is code for ‘no regulation’) and while in control of the system, industry facilitated the growth of no controls – the legacy a lawless industry, thence the downhill slope to disaster!

How governance led to further disaster

The ‘governance’ authorities advise governments, which were long ago captured by the vested interests. With money the key motivator, business and bureaucracy forged a partnership and the result is the consumer travesty repeatedly on the public record!

Business and its bureaucratic partners devised a pro-business policy and developed close, mutually beneficial relationships from which both have benefitted enormously.

The ‘corporatocracy’ has total power, the commercial interests moving seamlessly from the private to the public sector and in reverse; many persons hold multiple positions across both sectors, working simultaneously in business and ‘regulation.’

To ensure that self-interest prevailed over the public interest, the Biz-Bureau team had to devise and enact an anti-consumer policy to ensure ‘systemic failure.’ In place of a healthy governance culture based on independence, fairness, meeting statutory obligations and accountability, one centred on conflict of interest, collusion, corruption and much cover up now dominates, entrenched as accepted practice.

The role of vested interests

Building policy was conceived at the behest of the vested interest groups: banks, insurance companies, developers, and the so-called ‘industry associations.’ Formulated out of self-interest, ‘self-regulation’ and carrying favour has worked to deliver unimaginable financial rewards for the beneficiaries. More than having the ear of the pollies, they are the officials, comprising all positions on building committees, boards and advisory groups. Incredibly, instead of being regulated, they are the official regulators.

Those represented run the gamut from large organisations which are ostensibly there to provide oversight and others in the industry, such as lawyers, engineers, planners, and builders. Over-represented are the ‘certifiers.’ Known as private building surveyors, they have played critical roles in the race to the bottom.

There are also many who work in the satellite ‘building dispute industry’ who are enjoying enormous monetary benefits from the ‘no-policing policy’ fashioned to fuel the exponential growth of ‘disputes.’ Under Wynne’s Way, disputes will now skyrocket, more consumers again the casualties. The ‘system’ has worked a treat, enabling businesses to ignore the rule of law, to build third-world buildings while making unmerited mega incomes!

So what of the consumers?

Critical to the success of ‘the system’ failing were the political, legal and governance arrangements. Premised on partiality, imbalance and injustice, the ascendant interests cleverly orchestrated policy to ‘fail’ consumers, making them compliant, subservient victims. Thoroughly insidious, the scam was coated in legitimacy, effectively making ‘legal’ what would otherwise be overtly illegal; the key components biased legislation, unfair contracts, a bent legal system and junk insurance  – all generously doused in deception.

For the ruse to work, consumers had to play their role as ‘cash cows’ and fund the multi-trillion dollar building industry. Otherwise, they had to be silent. From the outset, it was a simple exercise to disenfranchise consumers. Officially deemed not to be stakeholders, they were negated into non-existence. Not consulted and not represented, they were easy to ignore. Consumers’ rights were ‘legally’ assigned to industry, and with consumers silenced there were no protestations as building interests wrongly became the ‘protected.’

In summary, those in positions of influence who engineered policy had no concern for consumers or the community. Thus, building was arranged to benefit business, the quality of buildings and harm to consumers deemed irrelevant. This regardless of the costs to individual consumers and their families and despite the millions of Australians crushed every year! Meticulously strategized, the cause was to be simple ‘Systemic Failure’ with no ‘persons’ implicated.

Under the spotlight, behind the ‘system’ we can see just who fashioned the failure!

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Discussions
16
  1. Les Williams

    Nailed it –what a great and very accurate piece

  2. Mark Whitby

    Great article Anne,

    As you say, there are few rights for the home owner consumer, due to the protections afforded to business and enterprise… I might say at huge long-term cost to the economy because of the waste of costly repairs.

    What you say in your article should in all fairness, be a compulsory attachment to all residential building contracts… with consumers given a fortnight to read it (and the contract)… prior to signing.

    I wonder if any authority will ever point this sort of thing out to new home owners before they sign their contracts with blinkers on… hell-bent on getting the largest possible house from the biggest builders, because they see that (the size of the building firm) as some sort of security should something horrible go wrong with their homes.

  3. Andris Blums

    Dear Anne , ok we all know that vested interests captured the consumer protection provisions pre 1997/8 in NSW and Victoria which still exist in Queensland . The purpose was simply to turn a non profit mutual type consumer protection provisions into a profit generating system for the insurance industry in cohots with the HIA . The MBA fell in line .

    If you check the Insurance News letter on line , section Analysis you will find a recent article were basically the insurance industry admits the current arrangement are a financial farce

    Those who read this comment should take the Insurance news article as a starting point and make a submission to the current review of the Australian consumer law with there starting point that FOR PROFIT CONSUMER PROTECTION IS A OXYMORON and that the Queensland non profit mutual model is the solution

    Prior to 30/614 the travel agent industry had in place for 25 years a Travel Compensation Fund that protected consumers if there travel agent failed or disappeared or stolen there funds . Again some people in the industry took the view that this legislated system with $25million surplus in funds was an anachronism and needed to be abolished . The idea was the fund would be replaced by a specific insurance product .

    The insurance industry failed to deliver and there is now no consumer protection and several millions has already been lost by consumers with no redress and the various state consumer protection directors have public egg on there face in the media and the relevant ministers have gone silent on the issue . I would characterise the ministers position as AWOL

    Just another example of CONSUMER PROTECTION FOR PROFIT

    CONSUMER PROTECTION FOR PROFIT IS THE ISSUE . Which industry will be next unless the Australian Consumer Law recognises that for profit consumer protection is a OXYMORON

    • Brett Bates

      In respect of the insurance component you are spot on. The concept of for profit – and let's not kid ourselves – that should be for massive and continuing profit, the idea that a cabal of corporate insurers would not try to obfuscate each and every potential claim is naive from the outset. Here in NSW it was (as it always is) an entirely predictable response that saw government destroy a purpose built Building Services Corporation fund operating on contributions on a proportional basis of the project value by each and every building project that required a BA (CC). It worked so well that the lobbyist big end of town wanted in on the action. As they say, the rest is history. Just like privatising CTP insurance from GIO, everyone was told it would be much cheaper and far better. Why any rational person would ever trust the lies that emanate out of our politicians and senior public sector bureaucrats mouths is the greatest mystery of all.

  4. Andrew

    Well done Anne.
    When will consumers get a voice in an industry that is basically supporting the Victorian economy at the moment.
    We are the ones that are spending our hard earned money and we get no support from the government officials who are there to regulate the industry.
    It is time that consumers get a voice and the Anne would be the best choice to represent us.
    Keep up the good work.

  5. annette watson

    what a great article. A home is the biggest investment in anyones lives. Being one who has suffered thru the failures of builders complying with the regulations, I can see the consumer has no rights. we have no protection in building our dream homes.

  6. Diarmuid Hannigan

    As the free marketeers, the economic rationalists and free traders of the new world order invaded our paradise, our land where regulators did their jobs of growing the national interest to develop our family cohesiveness, the regulation doers who used to be engineers and skilled tradespeople were replaced with lawyers, economists and spin doctors who sleep with thieves. The consumer protection regulators who were set up in the mid 1970`s were colonised by the legal fraternity, a group who because they are born into the house of privilege and make the laws have always made sure they remain unaccountable for their actions. We no longer live in a paradise were our consumer rights are protected but in a stinking swamp of corruption where those that run it sail past in their ocean going yachts while stealing our life boats that we need to survive.

  7. Dubravka

    It is obvious that this was bad policy and it seems to be that it has been made worse over time. No controls mean that consumers have no protection and they do not know that they and their families have a very high chance of being seriously hurt. Building is an enormous expense and for most people the greatest expense in their whole lives.

    The government must stop what is happening and bring back controls. If not the community will continue to suffer and this is very wrong.

  8. Mary

    It's about time!

  9. Jenna Corbett

    In a nutshell! What do you do when The Building Warranty Insurance has been legislated not to work? And Every so-called Government and Self -"regulated" Building and Consumer Authority is filled with All those with vested interests, from Inspecting Consultants to Lawyers and pretend "Builders" who paid for their registration, who all make Money from Failed Building, and Local Councils both cowtow to development driven anti-community planning, and also pass individually flawed Permit after Permit. (All reported in Govt's own reports again & again, VAGO"s etc.) Had a look at the quite frankly, awful unhealthy development out Berwick, Cranbourne way lately? NO 1, I agree with Andriss's comment and fix up BWI and set up a non-profit building compensation fund,. These are People's Homes, Life Investments and Dreams being destroyed, unfortunately with similarly corresponding life impacts. Keep talking & educating & change will come.

  10. Irvine

    The key problem here as Anne has pointed out is the underlying emphasis on business, the role of the vested interests and this at the expense of the majority of people. We know that we are all consumers in the building industry, whether entering the new building market, renovating or organizing repairs to our homes as they are needed. The system is obviously not fair. Worse, we know it has been set up to be very unfair.

    We need to pressure for change and a fair deal for all Australian consumers.

    No amount of building and contributing to the economy and its growth is worth the harm caused to owners, future owners buying defective, unsafe buildings and all Australians. The major stakeholder group of consumers has been left out even though they pay for all building! Something is very wrong. Consider that there is so much anger in the community and no wonder that the ordinary person has lost trust in governments everywhere.

  11. Joel Pearson

    Certainly, it must be acknowledged that there are weaknesses in the system and these must be called out. The number of apartment defects in NSW, consumer complaints in ACT and the number of consumers affected by poor building practices in Victoria is unacceptable. That consumers, for instance, are being asked to pay to replace cladding at the Lacrosse apartments in Docklands is an absolute joke.

    That said, I think the above article does go over the top. Whilst there is an unacceptable number of dogdgey builders out there, there are also a lot of good ones as well who are properly trained and who go about their work properly and safely. The vast majority of houses, commercial buildings and infrastructure we have delivered here in Australia is of good design and high quality workmanship. We don't have a lot of the bad practices like they have overseas in places like India and Brazil whereby illegal construction is rampant and they just build extra floors beying the building approval willy nilly. We don't have it like Thailand, where you see cables hanging over footpaths (which you just hope are not live). We don't see buildings just collapse regularly like they do in some parts of the world. The fact is, most of our homes and buildings and infrastructure are well designed, safe and pleasant to live, work and play in, and overall of good quality.

    Yes, let's call out bad and unsatisfactory building practices for what they are. But let's also celebrate the many good parts of our built environment – the well designed houses, offices, shopping centres, hospitals etc. and road and train services as well as lovely parks which we all enjoy – which make our cities rank so well amongst the world's best places to live.

    • Mark Whitby

      Joel, although you might have a good point about many projects, I think you are a bit over the top with your comment that the vast majority of houses… "are of high quality workmanship".

      Of the 500 + houses I have inspected (including over 50 drop-ins), barely a handful came into that category; with all (but that particular handful) having over 10 commonplace defects in them, and many with well over 50 defects built into them. Although I speak of Victoria, I have had occasion a few times to see the same mistakes occurring in NSW.

      I think you need to downgrade your vast majority considerably… and also your high quality category by perhaps 2 levels.

      Of course if you compare Ozzy houses with third world countries then our houses look good. But the 10 000 (so far) Melbourne western suburbs waffle pod slab failures perhaps on their own lower your praise a few notches.

      As regards incorrect cladding of a large number of commercial buildings, I believe your high quality category similarly needs to be downgraded… and all because of the lack of checks and balances described by Anne.

  12. Anne Paten

    Joel, your comments are in stark contradiction to the facts. In the 2012 University of NSW report (following a 3 year study), of all new apartments erected, 85% were found to have defects! Those in charge of strata buildings in Melbourne say that it would be a similar percentage. This means that the two largest building states have managed to deliver 85% of strata buildings as new with in-built defects! Also consider the number of consumers suffering financial detriment – 40% in Victoria and 30% across Australia in 2011 – this before the full frontal assault from non-conforming products and materials factored in to these statistics over the past 3 years. I refer here to the 40,000 buildings with dangerous electrical cabling, the cladding debacle still not fully known, the steel, asbestos, etc., etc.
    In relation to your comparison with Brazil and Thailand – these are third world countries. Australia is supposed to be a First World country and it should be able to build First World buildings! And we do have buildings falling down – many of these stories have been in the media and others not reported – the stories and pictures exposing same on Facebook, etc. quickly removed. Just imagine putting the dangerous cladding on the Melb Cancer Centre the year after the Lacrosse fire and with it already used on the Children's Hospital and the Women's Hospital (both in Melbourne)!
    There is no exaggeration in what is outlined above. This is more than a crisis. It is a disaster hurting hundreds of thousands of Australians every year because the buildings we build are of very poor standard and far too many are unsafe. We all need to face the reality, to acknowledge the problems and implement the solutions!

  13. Stephen

    A very good piece, the time for real change is NOW. Less talk and more REAL action is what is needed. It is just not good enough.

  14. russ jones

    One of the best house inspections you can get is to be standing looking at the frame of the house you are paying to have built and an older person walk,s buy says G/Day & starts chatting twenty mins later when he wonders of you know what the builder has done wrong and not done. Basically poor workman ship, saved a dollar by spreading things out a bit more knows most inspections are soon covered up ( called X/Mass party ) If all inspections were done with builder and owner and inspector on site the poor quality would improve if the next progress payment had to be signed by all before payment. R. Jones. (might even save legal costs.)