KEY POINTS …
-the Lambert major review in 2015 has not been acted upon; 20 years: 18 reports urging reform in the NSW building industry
-the government has failed to implement the vast majority of the Weir & Shergold recommendations
-the most significant factor: no consequences for defective work of builders and developers
-Mr Lambert argued for a new Building Act, development codes, a new regulatory agency with broad audit and investigative powers; the industry needs to be more accountable!
Pressure grows on NSW government to act on reform of building industry
August 9, 2019
The government’s most recent plan to lift building standards in NSW fails to address the deep problems in the industry, a former head of the NSW Treasury says in a damning indictment of the state’s attempts to protect home owners.
With property developers including Mirvac on Thursday themselves calling for measures to lift the quality of apartment construction, the NSW government is under increasing pressure to implement wholesale reform in the home building sector.
*Former Treasury secretary Michael Lambert said in a submission to a parliamentary inquiry that building regulation and quality were worse in NSW than in other states.
*Mr Lambert made similar arguments in his major review of the home building industry in 2015, which has not been acted upon. He noted there had been 18 reports urging reform in the NSW building industry over the past two decades.
“The time is well and truly past when piecemeal tinkering with the system can suffice,” Mr Lambert said. “I would argue that building regulation and building outcomes in NSW are poorer than in any other major Australian state.”
He said regulatory approaches had to date not addressed the “major problems afflicting the industry”. The government’s recent discussion paper, in which it proposes a registration scheme for the building industry, “continues that practice”, Mr Lambert said.
The parliamentary inquiry into building standards also received a submission from lawyer Bronwyn Weir and former senior public servant Peter Shergold, who prepared a national report into regulation that was handed to state governments early last year.
*In their submission, Ms Weir and Professor Shergold point out the government has failed to implement the vast majority of their recommendations. The government says it will implement those proposals.
Apartment owners have already told the inquiry of numerous horror stories, including leaking sewage and crumbling building facades.
The issues in the home building sector have been thrust into the spotlight by high-profile building evacuations – including at Olympic Park and Mascot – and revelations in the Herald of buildings unfit for residence.
But experts have told the inquiry the problems in the sector are more widespread than these cases, typically relating to smaller defaults that do not require evacuations.
*One highlighted issue is the problem of split incentives: in essence, builders and developers often do not retain an interest in apartment blocks after they are built, while the eventual owners of apartments have no control over their construction.
The City Futures Research Centre at the University of NSW, which argues that the recent high-profile building failures likely represent the tip of an iceberg, called for easier access to transparent information about a building’s construction and industry.
*Banjo Stanton, a lawyer specialising in construction and strata disputes, said the “most significant factor behind the steep increase in residential unit block defects” was that builders and developers “are generally well aware that there will be no consequence for them if the work is done defectively“.
“That is due to loopholes in the law and the ability since late 2003 to build and develop residential buildings higher than three storeys via $2 companies,” wrote Mr Stanton of Stanton Legal, in a submission to the inquiry chairman, Greens MP David Shoebridge.
The inquiry into building standards was the subject of debate in Parliament on Thursday after the Minister for Better Regulation and Innovation, Kevin Anderson, was asked why he was refusing to appear before the inquiry. Mr Anderson did not address the question but said a new building commissioner would attend.
Labor leader Jodi McKay said: “We have a crisis in the building industry and the minister must front up and answer questions.”
Mr Shoebridge said: “It’s standard practice for those ministers who are up to speed with their portfolio and willing to answer questions to appear before upper house committees.”
A spokesman for Mr Anderson said ministers “rarely” appeared at such inquiries.
On Thursday, Susan Lloyd-Hurwitz, the chief executive of one of the country’s biggest developers, Mirvac, added to calls for improvements in construction practices.
“Of particular urgency currently is the need to raise building standards in Australia,” Ms Lloyd-Hurwitz said.
She said it was “unacceptable” that families who bought or rented apartments in good faith could find themselves without a home to live in and then face years of legal battles and substantial costs to rectify buildings.
“It’s an outrageous situation as people bought them in good faith and now they have to battle through the legal processes,” she said
*Mr Lambert believes a more comprehensive reform package is required than has been proposed by the government.
A new Building Act needs to be written, he argued, as do new building development codes. As well, a new regulatory agency needs to be established with broad audit and investigative powers, and those involved in the building industry need to be made more accountable.
Jacob Saulwick is City Editor at The Sydney Morning Herald.
Megan Gorrey is the Urban Affairs reporter at the Sydney Morning Herald.
Carolyn Cummins is Commercial Property Editor for The Sydney Morning Herald.