How can we ensure issues such as the leaky building issue in NZ don't crop up in Australia, particularly given the laxity of our regulatory regime?

There is a crisis in Canberra reminiscent of the leaky building syndrome in NZ. Prior to a conference that brought together politicians from all sides of the political spectrum, former head of the Australian Building Codes Board John Grant made the following observations about the systemic problems in multi-unit developments in the capital city:

  • widespread waterproofing failure in the ACT, particularly in multi-unit developments and apartment blocks
  • buildings varying from the government-body approved specifications without formal authorisation often resulting in an inferior result
  • poor trades craft, often resulting from developers squeezing margins and demands for work to be completed in unrealistic time frames
  • regulatory failure where inspectors too often failed to identify problems compounded by a fear that private certifiers are not arms-length from clients, not independent and not performing role of statutory policeman.

Prior to addressing the points raised above at the conference, Grant and I turned our minds to some solutions for the ACT policy makers to consider. Key suggestions included the following:

  • developers and builders need to be compelled to inform potential buyers of deviations from approved building plans. If they fail to do so, they should be subject to the full force of the Competition and Consumer Act 2010 (CCA) if conditions are breached
  • it must be recognised that the most serious regulatory deficiency in the ACT concerns lack of robust probity controls. There must also be cognisance of the fear that unless the building industry and the building regulations have robust enforcement regimes in place, the leaky building syndrome and compromised construction outcomes would continue and gain momentum

In my address at the conference, I noted that in the late 1990s, I represented Australia (at Grant’s behest) at a Japanese law reform think tank.

The think tank was charged with the responsibility of overhauling Japanese building control. A key part of my submissions and recommendations to the Japanese officials was that auditing of key building practitioners had to be mandatory and carried out annually.

Japan took this recommendation very seriously and subsequently implemented a mandatory annual inspection regime for certifiers. I expressed sadness that Australia never went down this path, as this had in part contributed to a high incidence of building failures that may well have been averted if a more robust and early intervention auditing regime had been introduced.

It was submitted to the audience that the current system of auditing, being largely complaint inspired, was a post-crisis rather than preventative paradigm.

I suggested that a mandatory regime needed to be set up so that every ACT building certifier is audited annually. This is not a big ask, as there are only a handful of certifiers in the ACT. The benchmark regime proffered in my address was that of the legal fraternity, where lawyers who operate trust accounts are audited bi-annually, with one of the audits being without notice.

Under this regime, lawyers pay for the independent auditors, so the cost of the probity regime isn’t borne by government. I stressed that, absent mandatory auditing, shoddy workmanship would prevail and the problem of defective workmanship would not be solved at inception.

The solution volunteered would up the ante of enforcement.

I suggested that in a post-GFC world, government wouldn’t in all likelihood underwrite that cost, so it would have to be underwritten by levy or a law society inspired model. But any law reform initiative that failed to take the bull by the horns by introducing mandatory auditing would I feared culminate in the maintenance of the status quo and would merely be tokenism, a little more than a case of trimming the hedges.

Mention was made of the Latvian supermarket roof floor collapse that killed nearly 30 people a couple of years ago, which was in part due to the post-GFC austerity measures that were introduced and the disbanding of the national building inspectorate. This highlighted the importance of enthusiastic funding of probity officers and inspectors.

I argued that legislation also needed to be amended to remove the power of certifiers to issue performance based building permits. That freedom had to be aborted. Certifiers should be limited to issuing building permits on the basis of the prescriptive or deemed to satisfy provisions of the BCA.

The Building Code of Australia needed to be become far more prescriptive and over bearing in terms of water ingress provisions and the removal of any semblance of alternative solutions – discretion-based solutions available to achieve approval outcomes.

I stated that unless policy makers embraced these types of reforms, they would not be able to deliver the reform solutions that would improve the building ethos in the ACT.

Further, it was critical that the law reformers resist the temptation to tinker with the periphery. The critical imperative was to confront the heart of the problems being essentially those of enforcement and light touch regulation with the view to imposing far more rigorous building controls.

The ACT policy makers needed to introduce reforms that recognise that market forces left to their own devices have failed accordingly laissez- faire regulation needed to be relegated to the vault of yesteryear.