Building Cladding Crisis: The Government Response

There has been a huge amount of publicity around non-compliant building cladding but what does it all mean? Kerin Benson Lawyers has created a three part series explaining What the Building Cladding Crisis is about, the Government Response and Insurance. Below is the third and last of these Newsletters.

The Building Cladding Crisis has been met with responses from both Commonwealth and State and Territory governments.

This Newsletter summarises the responses from both the Commonwealth and ACT governments.

  1. Commonwealth Government

a ) Commonwealth Parliament

On 23 June 2015, the Commonwealth Parliament Senate referred the matter of non-conforming building products to the Economics References Committee for inquiry and report.[1]

In the light of the Grenfell Tower fire in June 2017, the Committee agreed to prepare an additional interim report on the implications of the use of non-compliant external cladding materials in Australia and on 6 September 2017 the ‘Interim Report: aluminium composite cladding’ was produced.[2]

This Interim Report contained 8 recommendations being:

i. Recommendation 1.The committee recommends the Australian government implement a total ban on the importation, sale and use of Polyethylene core aluminium composite panels as a matter of urgency.

Within a short time of the release of the Interim Report (ie on 11 September 2017), Senator Nick Xenophon introduced the Customs Amendment (Safer Cladding) Bill 2017 which intended to amend the Customs Act 1901 and ban the importation into Australia of polyethylene (PE) core aluminium composite panels. However, this Bill has not progressed very far.

Indeed, some of the problems outlined with the bill include:[3]

  • the bill does not define what constitutes a “polyethylene core aluminium composite panel”. Is it an Aluminium Composite Panel with a 30% PE core or one with a 100% PE core? and
  • it doesn’t address Aluminium Composite Panels with a PE core that are already within Australia or the use of Aluminium Composite Panels with a PE core.

ii. Recommendation 2. The committee recommends that the Commonwealth work with state and territory governments to establish a national licensing scheme, with requirements for continued professional development for all building practitioners.

The committee acknowledges that greater enforcement of existing regulations is needed. However, current building regulations appear inadequate and are too easily evaded, largely due to existing deemed-to-satisfy and performance-based pathways, which provide avenues to circumvent the Australian Standards in the National Construction Code.

The committee also considers that a national licencing scheme for all trades and professionals involved in the building and construction industry including building surveyors, building inspectors, builders and project managers, would improve compliance and provide greater consumer protection and public safety outcomes.

iii. Recommendation 3. The committee recommends that the Building Minister’s Forum give further consideration to introducing nationally consistent measures to increase accountability for participants across the supply chain.

The committee supported the implementation of nationally consistent mandatory on-site inspections throughout the construction process. Whether this is done through the reinstatement of the role of Clerk of Works or some other process is eventually a decision for governments.

In addition, the committee agreed that responsibility for building compliance was weighted too heavily at the end of the supply chain. Consequently, measures need to be put in place to ensure greater accountability across the supply chain.

iv. Recommendation 4. The committee strongly recommends that the Commonwealth consider making all Australian Standards and codes freely available.

In the committee’s view, making Australian Standards freely available would reduce the overall cost of compliance and insurance and most significantly, it will reduce the cost and impact on future state and territory emergency, fire and medical services.

v. Recommendation 5. The committee recommends the Commonwealth consider imposing a penalties regime for non-compliance with the National Construction Code such as revocation of accreditation or a ban from tendering for Commonwealth funded construction work and substantial financial penalties.

The committee considers that the Federal Safety Commissioner (FSC) has an important role in ensuring compliance with the National Construction Code on Commonwealth funded projects but is concerned that it is not adequately resourced.

vi. Recommendation 6. The committee recommends the Commonwealth ensure the Federal Safety Commissioner is adequately resourced to ensure the office is able to carry out its duties in line with the new audit function and projected work flow.

vii. Recommendation 7. The committee welcomes the Commonwealth’s decision to give further consideration to Director Identification Numbers and recommends that it expedites this process in order to prevent directors from engaging in illegal phoenix activity.

The committee is concerned that it has been nearly two years since its report on insolvency in the construction industry was tabled and the Productivity Commission’s report was released and considers that a Director Identification Numbers (DIN) initiative should be considered as a matter of urgency. A DIN initiative would go some way to preventing directors engaging in illegal phoenix activity.

viii. Recommendation 8. The committee recommends that state and territory governments work together to develop a nationally consistent statutory duty of care protection for end users in the residential strata sector.

The committee believes that there needs to be a greater awareness and protection for consumers in the residential strata sector. The committee considers there is an urgent need to provide a statutory duty of care to cover the discovery of non-compliant or non-conforming building products for the increasing number of the Australian public who purchase residential apartments.

It should be noted that the above eight recommendations are only recommendations and derive from an interim report.

In February 2018, the Australian Government response to the Interim Report: Aluminium Composite Cladding was released and responded to each of the above recommendations. The responses ranged from Supported, Supported in Principle and Noted to Not Supported.

Prior to December 2017, Craig Laundy was the Assistant Minister for Industry, Innovation and Science and as such, was responsible for this issue. Upon his move to another portfolio, concerns have been raised that any progress on this issue will flounder. However, the Office of Mr Laundy has confirmed that he retains responsibility for this issue.

The Economics References Committee is expected to hand down its Final Inquiry Report on 16 August 2018.

b) Building Ministers Forum

The Building Ministers Forum (BMF) (a body of Commonwealth, state and territory Ministers responsible for building and plumbing policy and regulation) oversees the implementation of nationally consistent building and plumbing regulations through the 2015 Intergovernmental Agreement for the Australian Building Codes Board (ABCB). The Building Ministers Forum meets annually or on a needs basis[4] and is responsible for setting the regulatory agenda for both the administration of building control and reforms to the National Construction Code.

At the end of June 2017, the Building Ministers Forum announced that it:[5]

  • would direct the Australian Building Codes Board to expedite the implementation of measures through the National Construction Code to prevent the non-compliant use of cladding;
  • has directed the finalisation of the implementation of the recommendations set out in the Strategies to Address Risks Related to Non-Conforming Building Products report published in 2016, particularly the establishment of a national forum of building regulators;
  • has, with the Australian Building Codes Board, created a website providing information about non-compliant building products and allowing members of the public to submit a complaint or enquiry about a product (see https://www.abcb.gov.au/NCBP/Non-conforming-building-products); and
  • will commission a report by an independent expert on the compliance and enforcement problems affecting the implementation of the National Construction Code.

On 24 August 2017 it was announced that Professor Peter Shergold AC and Ms Bronwyn Weir had been commissioned as experts to assess the compliance and enforcement problems within the building and construction systems across Australia that are affecting the implementation of the National Construction Code.[6]

c) Australian Building Codes Board

On 14 August 2017, the Australian Building Codes Board announced that the National Construction Code would be amended out-of-cycle prior to the next scheduled edition of the National Construction Code in 2019. The key aspects of the amendment cover:[7]

  • a new verification method that adopts the external wall testing standard, AS 5113;
  • improving the evidence of suitability provisions;
  • clarifying the Deemed-to-Satisfy provisions relating to the fire performance of external walls; and
  • referencing an updated sprinkler standard, AS 2118.

Feedback on the public comment draft of the NCC 2016 Volume One Amendment 1 was due on 10 September 2017, with the amendment’s adoption date being 12 March 2018.[8]

  1. Territory Response – ACT Government

Following the Grenfell Tower fire on 14 June 2017, each State and Territory in Australia (with the exception of the Northern Territory) announced audits, or the extension of existing audits, into Aluminium Composite Panels.[9] We shall focus on the Australian Capital Territory response.

Unfortunately, the ACT Government has not been forthcoming with much information and there is little information publicly available on this topic. Therefore most of the information below was obtained via various Canberra Times articles from 2017.

Like a number of other Australian jurisdictions, the focus of the Australian Capital Territory has been on an audit of buildings for the use of combustible cladding material. Indeed, this has been the sole step taken by the Australian Capital Territory government as it has not, unlike other jurisdictions, enacted or even amended any legislation to address combustible cladding material.

A summary of the response of the Australian Capital Territory government is as follows:

  • in July 2017, the ACT government announced the establishment of a taskforce to coordinate work to identify and address buildings that are at a high risk from combustible cladding;
  • the taskforce included representatives from the Environment, Planning and Sustainable Development Directorate, the Emergency Services Agency and Access Canberra;
  • the taskforce has found combustible cladding at the following sites:
    • Cententary Hospital for Women and Children in Woden;
    • Canberra Hospital;
    • Belconnen Community Health Centre; and
    • Health Protection Service in Holder;
  • in addition, 46 schools and 7 public housing buildings had aluminium cladding although it is unclear as to whether any of that cladding contained flammable polyethylene;
  • as at June 2018, the taskforce appears to be continuing its work as the demand for qualified fire engineers has soared following the Grenfell Tower fire and there are a limited number of qualified fire engineers available for this work;
  • the surge in demand also extends to contractors and materials and consequently, the ACT Government has had to wait before the cladding identified on the above buildings can be replaced;
  • the risk posed by combustible cladding in Canberra is relatively low compared to other cities as Canberra has fewer high rise buildings; and
  • the ACT government is to take part in the abovementioned national review into building compliance and certification.

Further, it should be noted that the above taskforce only reviewed buildings owned by the ACT Government. The ACT Government is waiting on the Commonwealth to confirm if any buildings owned by the Commonwealth require rectification work.

Private property owners such as owners corporations and apartment owners need to review their own buildings to determine if there is any combustible cladding on them. In this regard, the writer has advised one large apartment building, which was found to have flammable cladding.

Curiously, it appears that concerns about flammable cladding in the ACT were raised in the ACT as far back as 2009 but a solution to the problem was never agreed upon.

 

[1] The Senate Economics References Committee, Non-Conforming building products, Interim Report: aluminium composite cladding, February 2017, p.1.

[2] Ibid, p.2.

[3] Minter Ellison, “Cladding: To Ban or not to Ban, that is the Question”, 12 September 2017.

[4] The Senate Economics References Committee, Non-Conforming building products, Interim Report: aluminium composite cladding, February 2017, p. 8

[5] Minter Ellison, “Cladding: the Australian landscape since Grenfell”, 12 September 2017.

[6] The Senate Economics References Committee, Non-Conforming building products, Interim Report: aluminium composite cladding, February 2017, p. 14.

[7] Ibid, p. 21

[8] Ibid, p. 21

[9] Ibid, p. 14 and 15.

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