How Can the ACT’s Building Regulation Mess be Fixed? 5

Monday, April 18th, 2016
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Back in 2010, widespread problems surrounding defects in apartments throughout Canberra were exposed as an ABC report documented major water leaks, falling render and cracking in new units and apartments.

Whilst a government review at the time called for a raft of changes, little seems to have improved. Indeed, since 2009, complaints about builders, building work or defects have doubled, and now represent an average of 350 per year or more than one for every 10 building approvals of residential classification.

The government is now undertaking a further review. A discussion paper released late last year contained 27 recommendations across categories ranging from design to on-site supervision and inspection, through to licensing, residential building contracts, subcontractor payments and dispute resolution.

So what’s going wrong, and how can things be improved?

According to the Master Builders Association (MBA), a critical area of weakness revolves around builder licensing and training. In terms of licensing, Master Builders Association of ACT deputy executive director Michael Hopkins says assessment processes are deficient in some areas. This could be improved through requiring applicants to sit exams, conducting peer review in some cases and taking into account the quality of training the applicant has undertaken as a factor in determining whether or not a licence should be granted.

With much of the actual work being performed by trade contractors, meanwhile, Hopkins says mandatory registration could also be extended to trade contractors in a number of key specialisations.

With regard to training, Hopkins talks of a ‘race to the bottom’ in terms of providers which have sprung up offering Certificate IV in Building courses with little or no oversight in terms of the quality of instruction provided.

“We like to pride ourselves on providing quality training to the industry and what we are seeing a number of competitor training organisations doing is really a race to the bottom and offering the quickest, cheapest, Cert IV qualification going around,” Hopkins says. “Unfortunately, those qualifications are held in equal eyes as an MBA qualification when you apply for your building license.

“We think it’s important that the government regulates and audits these training providers and they need to be auditing training providers for the quality of training that is provided and not just financial accountability against government grants received.

“That is missing from the current system.”

Builders Collective of Australia CEO Phil Dwyer goes further, saying the number of builders within the Territory had doubled in recent years and there had been little or no assessment with regard to the quality of training they had undertaken or the adequacy of their knowledge, skills and experience.

“We have had all these new builders come in to the ACT and many of them as far as we are concerned don’t know how to build,” he said.

“Therefore, we’ve got all these complaints, and a lot of them are probably because the builders have ended up with a license but they don’t have the skill set to be able to build properly. Consumers who appoint builders are entering into probably the biggest investment of their lives, so surely we should have people that have the ability to be able to deliver that investment.”

On a further point, Housing Industry Association senior executive director of business, compliance and contracting David Humphrey said there were issues with the maintenance of licences, especially with regard to detached housing. On some occasions, licensees were using their licence not in the course of acting as genuine builders but instead as a back-door means of accessing land releases allocated to builders, he says. Whilst the government has gone some way toward addressing this, he says more could yet be done.

“Certainly, there remains a perception that there are too many people holding building licences in the ACT who are not using them,” he said. “If someone is not involved in the industry, there is no reason for them to hold an occupational licence.”

Beyond licensing and registrations, Owners Corporation Network (ACT) president Gary Petherbridge says a more fundamental problem revolves around a lack of participation on the part of professionals such as architects and engineers to provide detailed design and/or to subsequently supervise construction. Instead, developers would typically put out high level concept plans and leave the builder to work out detail for themselves.

Combine that with some of the challenges with regard to tradespeople skills and (sometimes) use of foreign labour and you have a recipe for trouble, Petherbridge notes.

“You can’t expect people who have just immigrated into Australia to come along and do proper water ingress prevention if they really haven’t got the skills,” he said.

“How do you expect a person who isn’t trained to be the new designer of where the expansion joints need to go when you have got concrete versus bricks that grow and change size at different rates? How do you expect them to know where to put the expansion joints so that major cracking doesn’t occur in the walls? You can’t expect it.

“You need proper architects and proper engineers who are fully qualified to do the detail and those same architects and those same engineers to be held responsible to deliver against that detail from a supervision point of view – not a project manager from the developer whose only aim is to cut costs.”

Petherbridge says the government in the ACT is heavily dependent upon developers from a financial perspective. Amongst a raft of changes, he would like to see a second stage added to the development approval process in which detailed design plans prepared by architects and engineers would be included.

Finally, there is consumer protection. Long and costly dispute processes often require parties to go through the courts, Hopkins said, and could be improved through a rapid dispute resolution process – potentially through the ACT Civil Appeals Tribunal being better equipped to deal with building disputes and having a greater threshold below which they are able to hear disputes.

Humphrey says there could be greater clarity as to deposit requirements and how that relates to warranty insurance as well as what can and cannot be included in a building contract. Dwyer, meanwhile, would like to see a statutory fund for consumer warranties and protection.

In terms of hoped for outcomes, both Master Builders and HIA have expressed a degree of caution with regard to the breadth of topics discussed and suggest that the government narrow its focus to critical priority areas.

Moreover, HIA remains cautious about some aspects of the review, acknowledging in its submission that there is room to update and improve the system but stressing that this should be achieved through better regulation as opposed to more.

Furthermore, much of the evidence put forward within the discussion paper appeared to relate to an internal review which did not appear to have been released for public dissemination and analysis, HIA said, making it difficult to determine whether or not whether genuine market failure has occurred or whether non-compliance is the real issue.

Finally, some of the recommendations contained in the paper could be problematic, HIA argued. A proposal to have a government-appointed inspector conduct inspections over and above those conducted by the building certifier, for example, would not only add unnecessary costs but would also create confusion surrounding who is ultimately responsible for regulatory functions, building approvals and occupancy permits, the group argued.

As things stand, building industry regulation within the ACT has room for improvement.

Should suitable and appropriate steps be taken, the number of defects occurring will hopefully begin to decline.

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  1. Tom

    The ACT currently has over 1000 "A" Class builder's licences on issue. There is no way a community the size of the ACT can sustain anywhere near this number of 'A' Class licensees. As for why, the MBA has been as guilty as anyone in pushing "quickie brickie" and "B" Class licence training. ….and as for the second stage DA process that Petherbridge espouses, we have supposedly had it for decades! It's called "Building Approval"!

    Not holding any breath for constructive change here anytime soon. Too many pigs feeding from the trough.

  2. Jhoanna

    As Tom said below, there are currently over 1000 A class builders licences already been issued in the ACT. I understand what is MBA stating above re getting the right training before getting the licences but how do we tackle those builders that already have licences? The article is great at highlighting the problem but the solution does not just stop at the builders. Here are my thoughts that could possibly help this situation:

    – Revamping the internal ACTPLA processes and procedures to ensure that they receive the right documents before providing out building permits e.g. not just a tick and flick process.
    – Increase the certifiers' responsibility and accountability on signing off inspections. Perhaps, ACTPLA conducts (if they haven't done it already) in depth audits of the certifiers work to ensure inspections that have been conducted is at a standard.
    – Lastly, increasing the homebuyers' awareness/knowledge before they sign on a builder and their building contract is one way to screen out dodgy builders.

    Providing good training for builders, engineers, architects etc is one thing, however, other factors also plays to ensure that everything is done properly.

  3. Anne Paten

    Andrew, as you said there were problems in 2010 re leaky apartments and there are still problems in the ACT – the same onest as there are in every state and territory across Australia. I would suggest that there is more than room for improvement, but also that nothing will change. We have now had 'problems' on a disastrous scale since the early 1990s and as for consumers, they have no hope of mitigating their losses – least of all in Tribunals that operate without adherence to rules, be they the 'Rules of evidence', independence of members and 'experts' or following fair procedures.

    The emphasis on fostering disputes instead of 'registration' and enforcing regulations are but two of the major problems. And no-one wants to change the general policy of 'no rules' so I cannot see any steps being taken to reduce defective, non-compliant work. There are no punishments, so why would there be any need for changes in behavior?

  4. Brett Bates

    I'm glad that associations like MBA and HIA are finally speaking out about the deleterious impact of government policy on the deregulation of the vocational training sector. When the issuance of an occupational licence is linked to a qualification, then you better make damn sure that the organisation providing the training and assessing the competence of the person being issued a qualification is right up to standard. The best way to achieve this is to have it delivered on an 'arms length' approach. That is the training organisation must have no vested interest or benefit existing for them to use 'short cuts' to quickly process as many customers through a course to generate their income. The problem in the ACT is being replicated right around Australia. The federal bureaucracy ASQA proved it was worse than useless in its feeble efforts to try to control and regulate the massive influx of new training providers that seem capable of producing so many 'instant' professional builders. My submission to the NSW OFT inquiry inquiry which is running along similar lines to this one in the ACT is to have TAFE develop a standard builder licence examination in consultation with OFT Home Building Service division. The prerequisite to sit this proposed exam (conducted and invigilated independently by TAFE) would be the current minimum licencing qualification of a Certificate IV in Building. Applicants can have 'obtained' their Cert IV through any RTO but issuance of a licence would only come about by passing a standardised exam assessment within a face to face setting – no online quiz or RPL. That will sort out who actually undertook real training and assessment or if as Tom suggests, they did a 'quickie brickie' type of program

  5. Mick

    Bring in mandatory PI insurance for everybody working on a building site or anything to do withe the build project. Watch the defects miraculously start disappearing. The government would need to be the insurers because the insurance industry would decline to offer the product.