BIPARTISAN APPROACH IS A MUST TO FIX BUILDING CRISIS
CONSTRUCTION is a major part of the Gold Coast’s economy. As a builder, I have watched and experienced the building industry change dramatically over the past 50 years. Some good and some not so.
Today a builder is also a tax collector and paper pusher burdened by pages of compliance certificates necessary to meet legal requirements.
The days of the multiskilled hands-on builder are rapidly disappearing and the trades within the industry are becoming fragmented and highly specialised. This has led to a greater use of subcontractors which brings with it the issue of responsibility, especially in today’s litigious society and risk averse political climate.
The Queensland government introduced private certification in 1998 to improve efficiency and flexibility in the building approvals system and offer a choice outside of what was perceived as a slow-moving local government bureaucracy. In 2011 the system was reviewed to improve the transparency and reliability of private certification, which saw building inspections move away from local government into the private sector.
As in any profession that can lead to financial loss, damage or physical harm, a prerequisite of holding a private certification licence is professional indemnity insurance. Herein lies the basis of what has become a ticking time bomb.
The ticking time bomb involving private certification threatens to destabilise this industry in ways that will significantly increase building costs pushing some investors, first home buyers and industry players out of the market. The issue of combustible cladding has exposed cracks that threaten the construction industry.
The first to feel the effect are the private certifiers who must deal with a rapidly shrinking pool of insurers reluctant to gamble on an identified exposure to risk. Major players including leading insurance provider Lloyds of London are part of the growing exodus. This reluctance has further compounded certification costs by an astonishing 600 per cent in premiums by those still willing to insure.
Shadow Housing Minister Michael Hart said: “This is a massive problem the government must address, and soon, or the building industry will be on its knees.”
He has a point. In Adelaide last August, the Building Ministers Forum, part of COAG, agreed to an Australia-wide approach to addressing professional indemnity insurance in consultation with the Building Regulator’s Forum, the insurance industry and industry stakeholders.
More recently, at a Building Minister’s Forum meeting, State Minister for Housing Mick de Brenni again agreed to a national approach in dealing with the crisis. The priority at this point is to allow certifiers to continue operating. In that regard, Mr de Brenni announced he would allow certifiers to have exclusions in their professional indemnity insurance.
However, the minister qualified his announcement by pointing out that the wording of any such change must be specific to combustible cladding. This change would bring Queensland in line with NSW and Victoria.
Industry sources inform me there is no mention within the act with regards to insurance exclusions, however the application for a private certification licence prohibits it. Perhaps to speed the process, the Minister could begin there.
What was not discussed at the BMF was the rectification of existing buildings with combustible cladding. As it now stands, the responsibility of removing combustible cladding rests with the building owners who in good faith purchased the property in the expectation that such property had met all required standards.
In a report on the BMF meeting furnished by participants Master Builders Queensland, they clearly spelt out their position in that builders, certifiers and building owners should not be left to pay for the rectification of buildings that were deemed compliant at the time they were built. Sounds fair and reasonable but the letter of the law may see it otherwise.
Part of the dilemma faced within the construction industry is the allegation that Queensland has not kept pace with some content or changes within the National Construction Code (NCC). Each state is responsible for its own industry code. By extension it is reasonable to expect that should this be the case, the state should take responsibility in the event of any shortcomings.
What further compounds the issue is that the commercial construction sector is partially selfregulated which has allowed a broader interpretation of the NCC.
A broad consensus across building owners and public sentiment indicates that the burden of rectification should fall on the developer under these circumstances.
This could prove difficult as the entity responsible for the development may no longer exist or the shift of the responsibility to the architect, engineer, subcontractor or certifier could become a lengthy, costly and ultimately futile exercise.
From a legal position, there is no easy solution.
The building industry seeks action, not platitudes, to address an identified issue that was evident for some time. The implementation of an exclusion is a worthy solution but only if it brings back those insurers that have left the market and the flowon effect of that brings down premiums to reasonable levels. If not, where do we go from there?
There is also talk about reverting certification back to local government but realistically that’s like shifting the deck chairs on the Titanic and the burden onto ratepayers. It’s just another way of shifting responsibility. Would Council want it? I doubt they would, especially with a Mayor who demonstrates his desire to keep rates down.
As for those of us who are comfortable in not being affected by combustible cladding, think again. The 600 per cent insurance increase is a cost that must be addressed, and certifiers are left with little recourse but to spread it across all avenues of their business so we will all pay. If they don’t their business will collapse, and the construction industry will come to a halt. Our city let alone the state and nation cannot afford that.