Last August, the Australian Competition and Consumer Commission raised alarm after testing proved that electrical cables which had been sold through 19 retailers which were present in around 40,000 homes and businesses throughout the country were susceptible to premature degradation and could potentially degrade and cause electric shock or fire.
Fast forward to early May and despite the regulator spending a whopping $80 million on a nation-wide recall, only 15 per cent of the estimated cable supplied had been rectified and thousands of cables which the regulator says could become dangerous by as early as 2016 remained in buildings and houses. Once faulty and dangerous materials are in the built environment, it seems, they are difficult to get back.
But neither the Infinity saga nor last year’s well-publicised combustible cladding debacle in inner Melbourne are isolated examples. More than nine in 10 respondents to an Australian Industry Group survey in 2013 from the manufacturing, fabrication and building sectors reported the penetration of non-compliant products across industries such as steel, electrical products, glass, aluminium and engineered wood. Reports of fraudulent product safety certificates are widespread.
With the signing of the Free Trade Agreement with China and the long term future of domestic manufacturing in areas such as steel in doubt, many fear the problem will get worse.
In addition to the safety risks, the financial impact upon consumers and the industry cannot be understated. One builder estimates that the costs associated with rectification work from non-complying products needing to be replaced – labour, machinery, fuel, liquidated damages – can amount to between 0.25 per cent and 2.5 per cent of the value of the contract. In another case involving a single home worth more than $1 million, remedial work amounting to a whopping $800,000 was needed including all glass doors and windows, according to the Australian Windows Association. In that case, not one single glass door or window was compliant across the entire house.
This is hardly a new phenomenon. Unions, manufacturers and industry bodies have been up in arms about NCP proliferation for years.
Politicians are taking notice. A Senate Inquiry to investigate the reasons for the proliferation of materials that don’t meet local standards or which may conform but which are used inappropriately was announced on June 23. The regulatory regime, Independent Senator Nick Xenophon told The 7:30 Report, appears to be ‘flawed or simply not working.'
What is going wrong?
Part of the problem, Housing Industry Association senior executive director of building, development and the environment Kristin Brookfield says, revolves around the complexity of the various parts of the building supply chain. At the very first stage, many offshore suppliers may have difficulty understanding Australian building requirements and standards, with even those who make a genuine attempt to do the right thing possibly misunderstanding or misinterpreting some aspects of the requirements.
Upon entry into Australia, in the case of the vast majority of products, there are no effective mechanisms for checking and confirming that the product meets requirements (in the case of electrical products, a scheme is now in place, but it was not in place at the time of the Infinity debacle). At the next stage, while the architect, builder – or even, in the case of cheaper products for DIY projects, the consumer – should check and confirm that the products are fit for purpose at the point of purchase, they may not be able to obtain that information or even know what to ask for.
Finally, the building surveyor is required to sign off on practical completion of the building, but cannot realistically be expected physically test or inspect every single material that goes into the building.
All this, Brookfield says, means there are a number of points where things could go wrong, especially when none of the checking is mandatory. And none of this is even to mention the emerging realm of purchases made online.
“There are a number of different points within the supply chain where either things can be done right, checked and sorted, or where they can fall through the crack,” Brookfield said. “There are plenty of opportunities to ask (and check about product compliance), but there are also plenty of opportunities to forget.”
Construction, Forestry, Mining and Energy Union National Secretary Michael O’Connor is less charitable, accusing the current government of deliberate inaction in order to facilitate the recent FTA negotiations.
O’Connor says the government has abolished a Manufacturers Leaders Group which was examining the issue of how to ensure imported product conforms to standards, defunded an Australian Industry Participation Authority designed to ensure local building product suppliers were given appropriate opportunities to participate in large-scale resource and infrastructure projects, and refused to participate in an International Trade Remedies Forum to address the dumping of overseas building products.
“This Government inaction on the issues is not coincidental with the pursuit of the China Free Trade Agreement,” O’Connor said. “After setting a self-imposed deadline to sign the agreement the Government has apparently taken a cautious approach in the above areas to prevent letting anything get in the way of the signing.”
“This has resulted in the selling out of the building products manufacturing industry and by extension the Australian construction industry by not pursuing the above priorities identified by industry, lest it was objected to by Chinese negotiators who clearly wanted and achieved unfettered access for their building products manufacturers into Australia's construction market.”
O’Connor wants the government to mandate and run a testing and sampling regime and to lead and assist industry in developing an intelligence-led, risk-based approach to standards conformity compliance assurance on imports. Also, as procurer of major public infrastructure projects, O’Connor says, the government should ensure only conforming products are used on these developments.
Brookfield, meanwhile, wants a clearer demarcation of responsibility among different parties within the supply chain. She also wants more builders and consumers to return unsatisfactory materials.
“We are suggesting that people be brave enough to send things back,” she said.
“That’s the kind of brave action we might need a little bit more of. It’s difficult sometimes to do but I think if people start to be brave enough to say no and to get documents or have something tested, the suppliers are going to realise that the people they are selling to want this done well."