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Economics References Committee
13/11/2015
Non-conforming building products

BURGESS, Mr Mark, Executive Manager, CSIRO Services, Commonwealth Scientific and Industrial Research Organisation

ZIPPER, Dr Marcus, Director, CSIRO Services, Commonwealth Scientific and Industrial Research Organisation

[11:50]

CHAIR: I now welcome Dr Zipper and Mr Burgess, representing the CSIRO. Do you have anything to say about the capacity in which you appear today?

Mr Burgess : I am the executive manager of CSIRO infrastructure technologies.

CHAIR: Thank you for appearing before the committee today. I invite you to make a brief opening statement should you wish to do so.

Dr Zipper : I would like to thank the committee for inviting CSIRO to submit to this inquiry and providing the opportunity to present today. This matter was led by Dr Anita Hill, our executive director for the future industries sector in CSIRO. Dr Hill is unable to attend today and asked that I represent CSIRO in her stead. The operations of my business unit include a number of areas, including delivering the testing and certification services relevant to the terms of this inquiry. Mr Mark Burgess, my colleague, directs the infrastructure technologies area within CSIRO Services. This group directly engages with customers and stakeholders in the evaluation of building products, and Mark will make a few comments also.

Mr Burgess : CSIRO has provided laboratory infrastructure to evaluate and test building products and systems for over 70 years. The group originated back in the days of the division of building and construction and developed from mergers with organisations like the Commonwealth Experimental Building Station, the National Building Technology Centre and scientific services laboratories. Delivering through the infrastructure technologies line of business within CSIRO, we continue to provide laboratory evaluation and certification of building products from our North Ryde, Highett and Clayton facilities.

A review of submissions made to this inquiry identified a range of proposed solutions and recommendations. These include mandated testing and certification, product registration and increased surveillance at both import and point of sale. I should highlight that CSIRO does not promote a particular view on any of these options, nor does it seek to make any recommendations on those options to this inquiry. But, noting the technical nature of product conformity—and that has been obvious in the hearing I have heard this morning—and CSIRO's long experience in testing and certifying building products, our submission and participation today is focused on providing feedback from our experience in testing building products and offering scientific support as necessary to aid the development and implementation of the inquiry's recommendations. We thank you, and we would be pleased to take questions.

CHAIR: Thank you very much. I want to ask you about your involvement with the Australian Industry Group research report The quest for a level playing field: the non-conforming building products dilemma. Are you familiar with that report?

Mr Burgess : Yes. CSIRO were invited onto the working group for that report, and I actually represented CSIRO on that report myself. It was a fairly wide-ranging focus on non-conforming products, but it did limit itself to, I think, five broad product categories. The final report, I believe, was well received and supported by a fairly wide-ranging survey that the Ai Group undertook in preparing that.

CHAIR: When was that?

Mr Burgess : The survey or the publication of the report?

CHAIR: The publication.

Mr Burgess : I believe it was about 2013.

CHAIR: Have you been involved in any other similar types of projects in relation to non-conforming building products?

Mr Burgess : Not specifically in relation to non-conforming building products. CSIRO through its activity in the general industry sits on a wide range of advisory groups, technical panels and Australian standards. It is just part of us putting input and our technical expertise back into the industry. We sit on, for example, the NATA advisory groups, the Commonwealth standards advisory group, the Building Codes Committee for the ABCB—we take seats on all of these committees.

CHAIR: In your submission you talk about the difficulties of relying on testing that is conducted on products that are imported into Australia. Are you able to provide us with any information as to whether or not non-conforming building products are more or less likely to be imported products?

Mr Burgess : I think the simple answer is: no, we have not studied it specifically with that question. I would like to highlight that our submission does state that there are ways that international testing can provide independent and very reliable testing. We have close relationships with a number of international testing laboratories working with building products. One off the top of my head is BRANZ, in New Zealand, for example, and there is also the Building Research Establishment, in the UK. Most countries have a very strong and reliable laboratory infrastructure. Many are signatory to the mutual recognition arrangement between NATA and—I think it is—ILAC, the International Laboratory Accreditation Cooperation. So we are not saying that international laboratories have a problem.

Our submission is highlighting, though, that occasionally international laboratories do not have a total understanding of the complete infrastructure arrangement in Australia, which makes it difficult for international testing. The second problem we highlight in our submission is that a reliance on international testing can dilute the knowledge base that we have in Australia, so our promotion is that we do need a local, robust, testing environment because that provides a knowledge base which can then serve back to industry for scientific advice on testing.

CHAIR: Are there any countries in which there are located testing facilities where you would have some concerns about relying upon their results? You pointed to some where you think they are fairly reliable. It stands to reason that there might be others where you would not place as much reliance on them.

Mr Burgess : I would not nominate any country specifically. I think that would be unreasonable and not necessarily supported by evidence. The ones I mentioned are ones that we have personal relationships with. I have some evidence behind it. So I would not particularly point to any countries. I will highlight that different countries have different levels of sophistication in their testing environments. They also have different levels of rigour and development in their whole building industry, and that needs to be taken into account. As an aside, one of our team was recently in Dubai doing some work with their accreditation group, and they have actually asked CSIRO if we would like to talk further about working together on increasing the capability of laboratories through the UAE. I think most international testing is of an acceptable level, and I would not specifically highlight any failings.

CHAIR: Okay.

Senator MADIGAN: I suppose, from where CSIRO sits—for most people in the community this is a very complex issue. On the point that you made, I accept that product can be tested overseas to their standard and comply, but would you agree that, on the parameters to which we need some product to perform—the level of performance—what is overseas can be different because of our climate and because of the soil that it is exposed to? We have different conditions from where some of this product is coming from, so it does not necessarily perform the way we want it to, even though it complies overseas to their standards. It comes back to the standard and how the standard is written. Is that a fair comment?

Mr Burgess : Most definitely. I should highlight that my discussion on overseas testing laboratories was in relation to those laboratories testing to Australian standards, so it was not endorsing an open acceptance of international standards. There is an undertaking in the Australian standard-setting environment to normalise, where we can, our standards with ISO, so we are finding that more and more standards are co-branded as an AS-ISO standard. In that case, if that product has been tested to the matching standard in Germany, there is no reason that it should not be accepted.

Senator MADIGAN: So, for clarity for the committee, in some cases a product is tested to an overseas standard, but that may exceed what is required in Australia in some circumstances. So, if it complies with ISO-blah, the ISO-blah could be basically very similar to the Australian standard but exceed it. Would that be right?

Mr Burgess : The cases I am discussing are where the Australian standards process has adopted the ISO as acceptable for use in Australia or as the Australian standard. So it is a very—

Senator MADIGAN: So in some cases we do not have a standard for a certain product? They have looked around the world and they have said, 'We accept that particular standard as being the standard applicable to Australia'?

Mr Burgess : Yes.

Senator MADIGAN: We are not talking about the bona fide laboratory-testing places overseas, but we are concerned about these dodgy operators or dodgy certificates that are issued on product. Are you aware at the CSIRO of concerns in this area? Do you share those concerns of people in industry and consumers in Australia?

Mr Burgess : Anecdotally we hear this, like everyone else. We have in the past two years identified two specific cases of people falsifying our test reports—and by 'falsifying' I mean fraudulently falsifying a test report. Action was taken in both cases. So we are aware that there are operators out there who are working around the system.

I should highlight that our group, in testing building products, deal with about 700 customers, 700 product suppliers, each year. About 140 of those are Australian manufacturers; another few hundred are representing areas of government and other compliance agencies having testing done; and there are probably a similar number of imported manufacturers. I was listening to the HIA estimate before of a fifty-fifty ratio and reflected that that matched our view of our testing ratio as well. But I need to highlight that, for those companies coming to CSIRO for testing, whether they be importers or domestic product manufacturers, I believe that indicates a level of self-sorting. We tend not to get—to use your term, Senator—dodgy players coming to CSIRO for testing. We tend to get the quality, reputable organisations who want their testing done properly and prove it in the market. Our experience is a little bit biased or skewed to the good part of the industry, if I can use that term.

Dr Zipper : Like you said, we have only had a couple of cases where one of those dodgy ones, so to speak, have used our name inappropriately. We have picked up on them and—

CHAIR: Are you able to give us a bit more information about that?

Mr Burgess : Off the top of my head, no. I am very happy to take it on notice. In summary, it is a—

Senator MADIGAN: For the benefit of the committee, are you only aware of one case?

Mr Burgess : Two cases.

Senator MADIGAN: Two cases. That is all you are aware of.

Mr Burgess : That is all we are aware of.

Senator XENOPHON: What were the sanctions for these companies fraudulently using the very good name of the CSIRO?

Mr Burgess : We took a number of steps, in each case, when we were alerted to a falsified test report. We wrote to a number of industry parties. We wrote to the ABCB and a number of other groups in the industry asking them to circulate the existence of this report, to alert industry as quickly as possible. We wrote to the manufacturer of the product.

Senator MADIGAN: Was the manufacturer Australian or foreign?

Mr Burgess : The manufacturer was an Australian company and totally unaware of the falsified certificate. It was an installer using the product outside of where it should be used and they falsified the certificate. We satisfied ourselves that the manufacturer was an innocent party. The installer was untraceable, I am afraid. We alerted the ACCC and heard nothing more of it.

Dr Zipper : For 700 customers a year and two out of—how many years?—thousands it is not good, those ones, but it is pretty rare.

Senator MADIGAN: Of your 700 customers, we heard this morning, in evidence, where the states have roles of compliance and regulation et cetera and the Commonwealth does not go into those areas. Of the work you have conducted, how much as been for state departments, in this space, where they have wanted clarification or testing done on a product?

Mr Burgess : I do not have exact numbers, off the top of my head. We participate, quite closely, with many of the states, in various levels of both technical development and enforcement. For example, we were heavily involved in the state of Victoria in response to the Black Saturday bushfires. We helped out on committees that were evaluating bushfire shelters, committees that were developing the community bushfire shelters. So we do have quite a lot of involvement with the states at that level.

Senator MADIGAN: I am more interested not in the development of new products or bushfire shelters or how they should be constructed but in whether any of the states or territories have commissioned the CSIRO to do testing of products where they have had concerns. Are you able to take that on notice and get back to the committee?

Mr Burgess : I am very happy to take that on notice. One example that is fresh in my mind is the Lacrosse fire. When CSIRO was commissioned to test the composite material on that material we were commissioned by the MFB, in that case. Our report was, I think, copied into the MFB and the Victorian surveyors report.

Senator MADIGAN: It would be appreciated if you could supply that for the committee, the state or territory government instrumentalities. For example, there is the MFB or CFA in Victoria, the New South Wales fire department or consumer affairs of any of those states—that sort of thing—where they have asked you to check the veracity of something or technical details of a product.

CHAIR: In your submission you refer to the international accreditation programs, which goes to the question of our reliance on international testing. Are you satisfied with those accreditation programs—are they providing adequate protection for Australian consumers?

Mr Burgess : I will respond to the question, but I would preface it by indicating this is the National Association of Testing Authorities, which is Australia's peak body for laboratory accreditation. This is really falling into their area of work or domain. We do have a very rigorous and longstanding accreditation environment in Australia. In fact, NATA was one of the first accreditation bodies in the world. Subsequent to that, a similar body to NATA has developed in many countries.

These bodies have come together under the umbrella of ILAC, which is the international accreditation. They have created an agreed MRA, a mutual recognition of authority, between all these agencies, of which NATA are a signatory, and many countries are a signatory. That provides a great deal of a level-playing-field approach. More importantly, it also provides avenues for questions to be asked or issues to be raised. It provides a forum for those issues to be raised. As a laboratory also working internationally, it could be improved. It could always be strengthened. I also believe it works quite well, at the moment.

CHAIR: NATA has the responsibility of negotiating these mutual recognition arrangements. Is that how it works?

Mr Burgess : That is right. I believe the peak body in each country—NATA, in Australia's case—negotiates, through a common forum, a mutual recognition where we, basically, acknowledge each other's work. There is a level of auditing that goes on, across countries, where NATA audits other countries and other countries come and audit us. This is done under the ILAC umbrella. Details of that would be best put to NATA.

Senator XENOPHON: I go back to those companies that misused the CSIRO name. Is it a case where you did provide a report but they misrepresented the report or that they were not involved in the report and you did not provide a report for them at all?

Mr Burgess : In the last instance, which is the one freshest to my mind, they took a report for a product. They changed the scope of testing for that product, by marking up the report certificate, and they were using that to promote their services.

Senator XENOPHON: When you say 'marking up the report certificate' do you mean they altered the report certificate?

Mr Burgess : They altered the certificate.

Senator XENOPHON: That sounds a bit like fraud to me.

Mr Burgess : Um—

Senator XENOPHON: For the Hansard, is that a yes?

Mr Burgess : I—

Senator XENOPHON: You do not want to comment if it is fraudulent, but they did alter the certificate. And they are not meant to alter the certificate.

Mr Burgess : They did alter the certificate. Without a legal background, I would not—

Senator XENOPHON: They altered the certificate. The certificate was not, on the face of it, the original certificate provided by the CSIRO.

Mr Burgess : Correct.

Senator XENOPHON: It did not reflect what the CSIRO certified.

Mr Burgess : Correct.

Senator XENOPHON: I think Senator Madigan is saying 'a falsified document', but it was not a true record. It purported to provide certification for something you do not provide certification for.

Mr Burgess : Correct.

Senator XENOPHON: It is no longer the CSIRO's document but purporting to be a CSIRO document.

Mr Burgess : Yes.

Senator XENOPHON: In that case, was there a correction made by the company involved?

Mr Burgess : No. We were unable to trace the origin of the falsification, in that particular case. After attempts were made, we were unable to trace where it came from. We believe it came from just a small product installer. We traced the company that actually commissioned CSIRO to do the test report in the first place. We spoke to them at length, and it was not their doing. They were as surprised as anyone else. I raise it because it shows the complexity and the challenges we face in this area.

Senator XENOPHON: Was there any investigation by any authorities in that case? The great thing CSIRO has is its reputation, and it has the potential for damaging CSIRO's reputation.

Mr Burgess : We managed that side through the industry. I believe we reported it to the ACCC. I would have to verify—

Senator XENOPHON: Do you know if the ACCC did anything on that?

Mr Burgess : I do not believe they did. But, again, I would need to verify that.

Senator XENOPHON: Going to the report The quest for a level playing field: the non-conforming building products dilemma, the art work on the cover is very interesting. It shows two disconnected hands that are about to be bolted on to two arms, with a crane in between. A number of recommendations were made. When was this report put out?

Mr Burgess : I believe it was 2013. It was not a CSIRO report; it was the Ai Group.

Senator XENOPHON: But you were involved in it.

Mr Burgess : We participated on the working group, along with about 10 other parties, I think, at the time. It was quite a large working group.

Senator XENOPHON: We will ask Ai Group about that. The report said:

1. There are gaps and weaknesses in the building products conformance framework resulting from:

a. Confusion amongst stakeholders about the responsibilities of regulators and insufficient knowledge of the

conformance framework;

b. Inadequate surveillance, audit checks, testing, enforcement and first party certification;

c. Too much responsibility placed on building certifiers by the current conformance framework and inadequate clarity of their role; and

d. The conformance framework placing an over emphasis on regulatory controls at the point-of-installation.

Clearly, one of the solutions they identified was an adequate testing regime. How expensive is it? I am not asking you for a quote, but could you give us examples and ballpark figures? What does it cost to appropriately and adequately test some material—and the average? Let's say I have some cladding and I want it checked out for combustibility, what am I looking at for that?

Mr Burgess : The combustibility test on cladding is a very simple straightforward test on a very small specimen. The specimens are 30 millimetres in diameter, or something like that. It is $1,500, which is the test we did for Lacrosse. It is a $1,500 test. I would not like to leave that hanging without some clarification. Testing can also be very expensive.

Senator XENOPHON: So if you wanted to check the level of formaldehyde in a kitchen cabinet, for instance, as to whether or not it complies, I imagine that would be more complex?

Mr Burgess : We do not offer that test.

Senator XENOPHON: Who would offer that testing?

Dr Zipper : I do not know if other parts of CSIRO do. I do not think we do. There would be someone around who does, but I am not sure what they would charge.

Senator XENOPHON: What sort of tests do you do at the moment?

Mr Burgess : We have seven effective testing teams, ranging from fire properties of materials; structural fire properties, which is fire resistance levels of walls, for example; fire detection and occupant warning systems, such as smoke detectors and emergency sirens; through to acoustic ratings, which are far more on the amenity side than the safety side. We also do testing of slips and surfaces, which is pedestrian safety. So the testing is quite diverse. It is across three different sites and covers quite a range of building products.

Senator XENOPHON: You have said that surveillance should be relevant to the risk profile. Are you able to build a risk profile fairly quickly—you can assess by the risk profile the level of testing that is needed of a product, or its use?

Mr Burgess : I believe that can be done. The reason that statement was put in our submission was to highlight that in the example you just gave, with the combustibility testing in relation to the Lacrosse fire, it was a $1,500 combustibility test versus a very expensive facade replacement. I will not quote figures, but the press has recently been throwing some very large numbers around. On the other hand we may have a fairly simple waterproof sealant product that may cost $20 a tube, but the testing could be $20,000. The damage that could be caused by failure of that product if it was used to waterproof seal a balcony, and suddenly you get water ingress through a 20-storey building, could amount to many millions of dollars. That point was put in there to highlight that. Simply, the price of a product cannot relate to its risk, and nor does it relate to the testing fee. They are three independent variables.

Senator XENOPHON: The point was made by the Housing Industry Association that there is a difference between compliance and conformity, because conformity is basically that human element to make sure that people use the product as intended, if it is a compliant product.

Mr Burgess : I think it is vice versa.

Senator XENOPHON: Yes, sorry, vice versa. Conformity is if the product is adequate and compliance is the human element involved.

Mr Burgess : Correct.

Senator XENOPHON: In terms of your solution, there should be a more robust regime of testing. Correct?

Mr Burgess : I think the solution proposed is to ensure we have a robust testing infrastructure in Australia. That is promoted for two reasons. One, because industry, the public and government can then rely on that infrastructure, where necessary. Also, because a robust infrastructure provides the knowledge base and the feed of that knowledge into industry, which will lift performance levels.

Senator MADIGAN: When we talk about the testing, for the product that is being tested we need to have the right tests formulated so that when consumers or builders buy that product it is clearly suitable for the purpose for which you buy it. So it is not just the standards or how those tests are conducted and what the product is tested for. That is the issue. It is what the tests are, isn't it?

Mr Burgess : That is a very good point in that when CSIRO or any registered test authority tests a product we are testing a single example and we are testing that at one point in time. If we test a brick for its fire performance, we are testing that brick as delivered to our laboratory on that day. The role of certification, which sits above the testing environment, is then to translate that point in time to—I will not say in perpetuity—a longer-lived example, which then brings in cases of where it was manufactured, what quality systems it was manufactured to, and how it fits into the regulatory environment. That happens at the certification level. The testing level offered by CSIRO is a very specific response of 'we test this product to this nominated standard, following the standard'. To be cheeky, one of our test officers coined the term 'the standard and nothing but the standard', which is the way they approach it. Then, lifting that up to certification is a secondary exercise.

Senator MADIGAN: The point here is that CSIRO is not responsible for the standard to which they test the product.

Mr Burgess : Correct. We do participate very heavily in the standards-setting process, as you would expect of CSIRO, which places its expertise for the benefit of the nation in that way. But we do not write the standards.

Senator MADIGAN: The industry has a lot to do with the design of standards, doesn't it?

Mr Burgess : Industry is a participant in the standards-setting process, yes.

Senator MADIGAN: But they have a big input into that process, don't they?

Mr Burgess : That question would probably be best put to Standards Australia for their processes in managing the make up of the committee.

Senator MADIGAN: But would you be aware that some of these committees that are dealing with a standard have quite a few members of industry on them?

Mr Burgess : There are industry members. In terms of the ratio of industry and to interest groups, I would only be speculating.

CHAIR: Thank you very much gentlemen. I now welcome Ms Paten from the Victorian Building Action Group.