There’s an increasing call for better regulation in the industry, and the focus seems to have fallen on Australia’s building certifiers. But is it needed?

The issue of certification is more prominent than it has been in a long time. The industry has seen many raise the issue of non-compliance over the last few years, following the Opal Tower saga.

Australian building certifiers have come under more intense scrutiny. On one side, there is a large contingent that says that certifiers need more regulation. On the other, there is a backlash against proposed changes. The government’s push towards stronger regulation has not received unanimous praise.

This article examines the cases for and against better regulation for building certifiers. Before that, let’s look at the saga that thrust this issue into the limelight.

The Opal Tower Saga

The Opal Tower is a luxury apartment complex in Sydney. Its two-bedroom units sold for around $930,000 when the tower opened. Even a single-bedroom studio apartment would set the buyer back $600,000.

The tower offered a great location and a certain standard of living, which made it more upsetting for residents when they were evacuated on Christmas Eve 2018.

The cause was a crack that formed on a pre-cast concrete panel found on the building’s tenth floor. This sparked an emergency as immediate questions arose about the building’s integrity. If a crack could form on one panel, it is likely that more would form elsewhere. If left unchecked, this could even create the possibility of collapse.

Residents had to evacuate their homes to allow for an investigation. This involved tearing down walls to examine them, which created even more issues – some residents reported seeing their belongings strewn all over the place. Others managed to gain brief access to their units to get their things before having to leave again.

A State Investigation accompanies this investigation, which the NSW government has appointed two engineering professors for, tasked with creating an independent report on the incident. More importantly, the saga has led to calls for more scrutiny for certifiers. After all, the materials used in the tower all underwent and achieved certification, and supposedly followed Australian standards.

This has led to the NSW government taking a more hard-line stance.

Matt Kean, Minister for Better Regulation, had a stark warning for certifiers. He said: “If you’re a certifier who’s done the wrong thing, I will find you and I will throw the book at you.”

This threat accompanied a host of newly proposed measures aimed to tackle Australia’s non-compliance issue. These would include the following:

• An audit of between 25% and 30% of all certification work per year. This would focus primarily on recently built buildings and projects under development.
• Immediate barring from the industry of any building certifier who is found to be either negligent or corrupt.
• Bans of 12 months from certifying new strata projects for any certifiers who breach building quality codes of conduct.
• Provision of more information for buyers and homeowners. This would include information about the certifier’s work and disciplinary records.

Kean also suggests that we may see more industry changes occur as a result of this saga.

The NSW government clearly wants to enforce stronger regulation on building certifiers. That leaves the question: Is this fair, or even needed, in the industry?

The following are the cases both for and against stronger regulation for certifiers.

The Case for Stronger Regulation

Part of the case for stronger regulation comes down to developers being able to choose their own certifiers. Matt Kean claims that this is a ridiculous situation as it opens the door for corruption.

Hypothetically, a developer could choose a certifier that they know will provide what they need. There is a lack of independent oversight in this area of the building industry.

Some go so far as to claim the industry practically self-regulates regarding certification. This gives rise to concerns about public safety issues which the Opal Tower demonstrated perfectly.

Imagine if the issue had gone undetected and affects more of the pre-cast panels in the building. There is a very real possibility of collapse due to these non-compliant products. Poor certification is a part of the problem that allowed their use in the first place.

Supporters of Kean’s new regulations believe that they would help to eliminate such oversights in the future. This protects both building residents and those near to the buildings that may have structural issues.

Kean also points to the rising numbers of complaints made against building developers and certifiers. He notes that this is proof that something needs to happen to improve public confidence.

Kean says: “[In 2017/2018] alone, the Building Professionals Board (BPB) has received 163 complaints about certifiers. And the NSW public expects better.”

He goes on to discuss how this affects public confidence. He notes that buying a new home is a stressful enough endeavour and buyers should not have to worry about the possibility of neglectful or corrupt certifiers.

Notably, the 163 complaints that the BPB received is 32% higher than the amount from the previous year. And worryingly, many of these complaints occurred against repeat offenders. One certifier, named Gurdeep Singh, received a $40,000 fine in 2017/18. An examination of his record shows a further five disciplinary actions taken against him since 2009.

The BPB has also meted out 430 disciplinary actions since its founding in 2005. Yet it appears that these punishments have not halted the flow of faulty certification.

All of this suggests that the industry is not doing enough when certification issues arise. Kean’s regulations would likely lead to either a 12-month or permanent ban for Mr. Singh due to his violations.

Some suggest that this hard-line stance is a necessary one if the situation is to improve.

The Case Against Stronger Regulation

The announcement of the proposed regulatory changes has prompted a backlash from the industry.

Ironically, there is an argument that these changes could actually compromise public safety, an opinion of Steve Mann, Chief Executive of the Urban Development Institute of Australia NSW. He said: “Scale, skill, and experience vary widely among certifiers. The idea that a 2000-lot development could be assigned a certifier who may have received their qualification only a month ago is quite scary.”

He goes on to argue that the new regulations would create a lottery system. This could lead to inexperienced building certifiers having to tackle projects beyond their scope of expertise.

This situation, he says, places public safety at risk for the sake of tackling a minority of certifiers. Mann supports stronger punishments for those found to be either negligent or corrupt.

His response comes to the options paper that Kean put forth in December 2018. That paper suggested three ideas:

• A Rotation Scheme
• A Time Limit Scheme, requiring certifiers to take time off from working with clients upon reaching a set limit.
• A Cab Rank Scheme, which essentially creates a queuing system that awards projects to the certifier who is next in line

The aim here is to limit developers’ ability to choose their own certifiers. However, the paper has received criticism from some of Australia’s leading certification bodies.

The Association of Accredited Certifiers (AAC) was one of the most vocal in its opposition to the options. It claims that the three options presented offer no benefit to buyers or homeowners. Furthermore, they would result in the certification process becoming more costly and complex.

They also agree with Steve Mann regarding safety concerns. The AAC says an inability to choose the most qualified certifier for a development would put public safety at risk.

The Housing Industry Association levied similar criticism against the ideas. They state that the options are “based upon perceptions rather than realities”. In other words, they do not consider the practicalities of operating such schemes.

Interestingly, the AAC also examines the BPB complaints figures in their rebuttal. They say that of the 113 complaints received in 2016/2017, 92% got dismissed. This creates a hit rate of 8%, suggesting that only nine certifiers were found guilty. Finally, they say that certifiers submit 54,100 occupation and construction certificates annually.

They argue that 113 complaints, or even the 163 received in 2017/2018, is a very small number in comparison.

The Final Word

It is clear that the NSW government and building industry will continue to butt heads on this issue. It is also possible that the issue will get elevated to the national level.

What is not clear is what solutions will arise from these disagreements. The Opal Tower issue suggests that there is a certification problem that needs remedying. The rise in the use of non-compliant building products seems to support this fact.

It will be very interesting to see what course the industry takes in 2019.

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References:

1. Opal Tower structural flaws expose rot in Australian construction industry – World Socialist Web Site

2. NSW Government to crack down on dodgy building certifiers following Opal Tower saga – ABC News

3. Industry comes to defence of private certifiers – The Australian