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Economics References Committee
15/02/2016
Non-conforming building products

GINIVAN, Mr John, Acting Executive Director, Statutory Planning And Heritage, Department of Environment, Land, Water and Planning, Victoria

[15:26]

CHAIR: Welcome. I invite you to make a brief opening statement and then we will ask questions.

Mr Ginivan : Thank you for the opportunity to appear today. I would like to begin by reflecting on the event that largely informed Victoria's consideration of approaches to bring improvements to the current regulatory frameworks for ensuring that building products conform to the Australian standards. The Lacrosse Building fire, in Docklands, has been cited by some as a catalyst event for opening up debate around non-conforming products. Many submissions to the inquiry reference this event, and indeed a number have made reference to Lacrosse in their appearance before the inquiry. I think it is important to draw the distinction that whilst Lacrosse did bring a very stark reminder of the impact and cost to residents and the community when buildings do not perform, I understand that the cladding product in question, was non-compliant with the National Construction Code standards for use in buildings of three or more storeys, rather than non-conforming in nature. The point being, that a product that is safe for use in certain circumstances, if used inappropriately, or in the wrong conditions, can have extreme effects. Consumers and businesses also need to be confident that products and materials that are used in the construction of their buildings will perform to the required standard.

Victoria's submission to the inquiry is premised on two key observations on the current building regulatory system. Firstly, there is no single organisation or regulator responsible for certifying products as conforming with relevant standards, and secondly, that certificates of conformity with the Building Code of Australia performance requirements, where they are available, are not always explicit in respect of the range of use or circumstances in which a product may be relied upon to be fit for purpose. Consequently, Victoria advocated for the introduction of a mandatory certification scheme under which certificates of conformity with standards are explicit in respect of the range of use or circumstance in which a product may be relied upon to be fit for purpose.

We do not for one minute envisage that such a scheme would be required for all building products. Rather, the focus should be on high-risk building products with life safety implications. I acknowledge that the question of what the definition is of 'high-risk building products with life safety implications' needs to be addressed so that industry is clear on what products fall into this scope. Our discussions at state level indicate that products such as external and internal wall treatments, steel reinforcements, timber used in structural application and emergency warning equipment may fall into this category.

I also acknowledge that the Australian Building Codes Board is moving to strengthen its CodeMark certificate of conformity process, and this is an important step forward. We welcome the enhanced CodeMark scheme and understand the intended scheme will provide more stringent rules and be more explicit on the minimum content required to be included in the certificate. This will improve clarity around what the certificate of conformity is certifying compliance with. However, that approach is still based on voluntary participation. Victoria advocates going one step further by making CodeMark accreditation mandatory for high-risk building products with life safety considerations. This would further reinforce the integrity of the supply chain process. Endorsing mandatory assessment and certification for products that have a life safety consideration, similar to a WaterMark, which is a mandatory certification scheme for plumbing products, would improve certainty and reliability around the use of building products and materials. It is important that there are explicit restrictions on the use of certain building products in inappropriate circumstances. To ensure that building work includes only appropriate building products, there is a need for a mechanism for product suppliers, builders and building surveyors, or certifiers, to be readily able to determine whether products are safe and compliant for use in the relevant circumstances.

In advocating for a mandatory system, Victoria acknowledges there may be more than one avenue by which this could be achieved. A system that offers a choice between CodeMark certification and certification from an alternative recognised industry certification scheme with consistent applications of standards would equally strengthen regulation of high-risk products. A noteworthy scheme is the JIS Mark product accreditation scheme that operates in Japan. The JIS Mark scheme includes standards, requirements, test methods for assessing product conformity and requirements for marking and product declaration. JIS Mark can be applied on a mandatory basis for specific high-risk building products and on a voluntary basis for others. Where a mandatory requirement is set, I understand that accreditation must be obtained before imported products are cleared for entry into Japan.

The Australian Building Codes Board commented in its submission to the inquiry that compliance at point of sale may be more effective than reliance on certification at the end of the supply chain. I agree that compliance at point of sale is important.

As noted by the ACCC in their submission, their stakeholders say that regulators do not have sufficient or consistent investigative or enforcement powers to address non-conforming building products. Where a building product fails to perform or is defective, a building regulator's powers in general are limited to pursuing the practitioner who used the product or requiring the owner to remedy the work upon safety grounds. Building system performance, when it fails, not only affects the robustness and reputation of the building industry; it can adversely affect the personal safety of industry workers, emergency services personnel, the community and building residents. Most recently, in New South Wales, we have seen the issue of asbestos being found with an imported cement compound in building panels—and you have just heard discussion on that this morning. In this case I understand the products in question were tested in Asia and certified as being asbestos free; however, I understand that testing by the National Association of Testing Authorities found that they contained white asbestos. The discovery of asbestos in imported fibrous building panels is an example of where differential national standards have resulted in the importation and use of a product that does not meet Australian standards or law. It is therefore critical that the issue of non-conforming building products is appropriately considered at the national level and policy options developed to address weaknesses in the system as early as possible in the supply chain.

I also would like to take a couple of moments to update the committee on other changes that Victoria has introduced as a result of the Lacrosse fire, and the first of those is in relation to sprinkler systems. For buildings that are required to have sprinkler protection, the Building Code of Australia does not require sprinkler systems for balconies with a floor area less than six square metres and a depth of less than two metres. The majority of the balconies in the Lacrosse fire were less than two metres deep and did not trigger the requirement for sprinkler installation.

The Metropolitan Fire Brigade's report and post-incident analysis into the Lacrosse fire commented:

Had the sprinkler system extended to the balcony area of each apartment, fire would have most likely been contained to the level of fire origin.

To address this vulnerability, Victoria introduced the Victorian Building and Plumbing Amendment (Balcony Sprinkler Protection) Interim Regulations 2015 on 15 December 2015. The regulations amend the National Construction Code in Victoria so that:

… all new multi-storey residential buildings, hotels, healthcare buildings and aged care buildings that are required to install sprinklers designed to AS 2118.1, must extend that sprinkler protection to include all covered balconies, regardless of size.

These changes apply to new building designs from 15 December 2015 and will be implemented as a Victorian variations to the National Construction Code in May 2016.

In addition, a further regulatory change requires that all aluminium-composite panels and other like panelling be considered for their fire performance before being accepted as part of a deemed-to-satisfy solution. Under the deemed-to-satisfy provisions at clause C1.10, Fire hazard properties, a building surveyor may determine the fire hazard properties of a material without testing that material.

Use of products and materials should not be discretionary in a deemed-to-satisfy approach. A design using non-standard products and materials should be subject to evaluation by a suitably-qualified and experienced practitioner against the National Construction Code performance requirements for an alternative solution. The interim regulations correct this anomaly by removing the discretion.

CHAIR: Mr Ginivan, I will just ask you to wind it up, if you could.

Mr Ginivan : Yes, I am just finishing.

The last comment I will make is in relation to the building audit. You have probably looked at the Victorian Building Authority's website in relation to the audit that it commenced. One of the key actions coming out of the Lacrosse fire was to commence an audit of building permits for high-rise developments issued around central Melbourne in the last 10 years, to try to get a sense of what the scope of the problem is and to examine how different products had been used.

That audit is very close to conclusion. When that is available we will certainly be providing a copy to the committee.

CHAIR: Thank you. Before I hand over to Senator Madigan, I just want to refer you to that part of your submission that refers to the fact:

Of the estimated 100,000 plus building products in the Australian marketplace, only some 130 are CodeMark assessed.

Can you tell us what conclusion we should draw from that?

Mr Ginivan : The conclusion is that if there is a very significant number of products with the voluntary scheme then you are probably not going to end up with a significant uptake across the full breadth of products that are available. One of the questions, however, that will emerge with that is, I guess, resolving a definition of what constitutes 'high-risk' building products. Our submission certainly is that any mandatory scheme should target those things of highest risk, not simply target every single product for the sake of creating a burden.

CHAIR: Just so that I understand your recommendation: are you saying that for the building products which are high risk—which have the potential to threaten life—there should be a mandatory certification process?

Mr Ginivan : We are certainly saying there should be a mandatory certification process for building products that have life safety consequences. How many of those, out of the plethora of products that are available in the marketplace, is a matter that we would need to resolve nationally if there were consensus that a mandatory scheme should be put into play.

Senator MADIGAN: In your earlier evidence statement there you mentioned 'NATA-testing of building products'. Correct me if I am wrong, but did you say that NATA conducted testing? As far as I am aware, NATA is the National Association of Testing Authorities. They do not conduct testing themselves; they certify bodies that do testing. Could you clarify that for us?

Mr Ginivan : I will certainly take that on notice. My understanding was that in this case NATA did conduct some testing, but I will certainly take that on notice to verify that for you.

Senator MADIGAN: You mentioned the VBA before. Would you be able to furnish the committee with statistics of how many complaints to the VBA were related to faulty or nonconforming, not-fit-for-purpose building products?

Mr Ginivan : I will need to ask the Victorian Building Authority if they have that data. As I did indicate, we will certainly be able to table the conclusions from the audit that the Victorian Building Authority is running.

Senator MADIGAN: But we would like specific statistics, if they have them, of how many of the other complaints that they received—

Mr Ginivan : We will certainly take it on notice to ask.

Senator MADIGAN: are actually pertaining to nonconforming, not-fit-for-purpose building products. Also, if you or the responsible Victorian authorities have statistics of complaints—for instance, when you get plumbing or electrical work done and you are given a certificate of compliance by a plumber or an electrician—how many of those complaints are attributed to nonconforming, not-fit-for-purpose plumbing or electrical products?

Senator XENOPHON: Victoria, essentially, as a result of the Lacrosse fire, is going it alone, or has led the charge, to try to change regulations and to change the approach to nonconforming products.

Mr Ginivan : I would go a step further than that. The Victorian government has certainly advocated nationally for improvements in the approach, in terms of both product conformity and improving arrangements around compliance, and there is certainly a strong interest amongst the other jurisdictions to improve the framework. Where that ultimately lands, we will wait and see.

Senator XENOPHON: Will this come up at the ministerial meeting of the state and federal ministers next Friday?

Mr Ginivan : Yes, it will certainly be on the agenda.

Senator XENOPHON: What do you think is a reasonable time frame—even a ballpark time frame—for this to be resolved and to get some concrete recommendations that can be rolled out nationally?

Mr Ginivan : Ministers will need to consider the advice that will be coming back to them at their forum at the end of this week and make whatever decisions they make on the basis of that advice.

Senator XENOPHON: Is there a risk of Victoria just going it alone? I am not saying it should not, but I am saying: is there a risk of Victoria being the only state with stricter standards than other states? That could act as an incentive for other states to lift their game.

Mr Ginivan : It would not lead to an ideal outcome, because, as the committee would be well aware, Victoria does not control the importation of products into Australia or across borders into Victoria. So our fundamental view is that there needs to be a national approach to this as part of a sequence of bolstering, if you like, the entire framework for how buildings are delivered. This approach, this focus on building product conformity and compliance with standards is one part of it. The skilling-up of the sector, in terms of appropriate use of products in the right circumstances, is part of it. The proper heads of power to discipline poor performance is equally part of a comprehensive approach to it. Our view, however, is that, if the sector does not have confidence that when a product arrives it is what it says it is and it is fit for purpose, then there is increased risk right through the chain for those products to be inappropriately used. Usually, as history has shown us, it is not until there is a fairly significant rollout of something into the market that the true weaknesses of those products are discovered, and it is then a very expensive and complicated and often dangerous process to rectify that. So our view is we should get it right at the front end of the process and we should reinforce that at every step of the way through the building process.

Senator XENOPHON: I know you made reference to the CodeMark building product certification scheme as providing, perhaps, a foundation for a more comprehensive approach to allow new and innovative projects to be assessed for compliance with the Building Code of Australia. Have you been aware of some of the complaints around the CodeMark scheme—that there is room for improvement, that some of the claims made about some CodeMark certified products have been criticised? I am using fairly diplomatic language. Are you aware of that at all?

Mr Ginivan : I am certainly aware that the Australian Building Codes Board was reviewing the operation of CodeMark with a view to learning, I presume, from feedback from stakeholders around how the model is working—and you would expect the board to do that just as part of continuous improvement of the scheme. Any scheme like this can always be improved. I am certainly aware that the certificates that come out from the CodeMark scheme are not necessarily framed as clearly as they could be. One of the reforms that is being made in the shorter term is to improve the readability and legibility of documentation that comes with that scheme.

Senator XENOPHON: Just finally, can you outline what the benefits of a mandatory scheme compared to a voluntary scheme would be with CodeMark. Do you think a mandatory scheme would negatively affect innovation and product development?

Mr Ginivan : I will answer the last question first. It should not affect innovation and product development. It should in fact bring confidence that new products that come to market will perform as said and therefore should allow them to penetrate the market more quickly.

The benefit of a mandatory scheme is that it brings confidence from end to end of the process that if a product has been accredited it is what it says it is. That needs to be robust. People need to have confidence in it. A voluntary scheme remains a voluntary scheme. In the real world where we have products being imported from all over the place—and I am not for one minute saying that imported products are necessarily better, worse or otherwise than Australian manufactured products—we would say that all products, irrespective of country of origin, ought to have the same rigour of testing and evaluation to have confidence that they are what they say they are.

Senator XENOPHON: That includes issues of fraudulent certification?

Mr Ginivan : Yes.

CHAIR: Just on that ABCB review of the CodeMark scheme, do you have any updates that the Victorian government has been provided with in relation to that?

Mr Ginivan : My understanding is that the review is moving well. We will certainly have an update from the board at the Building Ministers' Forum at the end of next week.

CHAIR: And that goes to the ministers. When do you think the outcomes will start to be published?

Mr Ginivan : Very soon, I understand. Some of the improvements around documentation and certificate layout design, as I understand it, are moving forward now.

CHAIR: Thank you very much, Mr Ginivan. That concludes our hearing today. I thank all those witnesses who have appeared.

Committee adjourned at 15:47