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Economics References Committee
19/07/2017
Non-conforming building products - use of non-compliant external cladding materials in Australia

GENCO, Mr Joseph, Director, Technical and Regulation Division, Victorian Building Authority

SMITH, Mr Murray, Acting Chief Executive Officer, Victorian Building Authority

[15:35]

CHAIR: I will read out my opening statement, but before I do that I will place on the record that the New South Wales Department of Premier and Cabinet had been invited to appear, but the committee secretariat informs me that we have not received a response from the New South Wales Department of Premier and Cabinet.

I welcome officials from the Victorian Building Authority. I remind officials that the Senate has resolved that an officer of a department of the Commonwealth or of a state or territory shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. Thank you for appearing before the committee today. I invite you to make a brief opening statement, should you wish to do so, and then we will open it up for questions.

Mr Smith : Thank you for your invitation to attend today's inquiry hearing. The Victorian Building Authority welcomes the opportunity to address the inquiry. I will keep my comments as brief as possible. I understand that members of the committee may have specific points for discussion. I would like to focus my comments on two aspects: the specific actions concerning the VBA's cladding audit and more generally the challenges presented in the current supply chain for building products.

Most people would be aware of the November 2014 Lacrosse building fire. Unlike the tragic events in London, occupants of the Lacrosse building could evacuate safely and the fire performance of the building limited the destructive damage. As described in the MFB post-incident analysis, the fire safety equipment in place at Lacrosse included, but was not limited to, fire sprinkler systems, emergency warning intercom systems, emergency lighting, emergency exit signage, fire isolated exit stairs, fire extinguishers and fire and smoke detection systems. The point that I wish to make is that the Lacrosse building was constructed with a range of fire safety measures that have not been available in other jurisdictions. Beyond that, I do not intend to talk about the fire incident itself but rather the resulting cladding audit that the VBA commenced in May 2015. It released its audit findings in February 2016. The VBA recognises and has been actively involved in addressing matters arising out of that audit since that time.

The VBA audit was the first of its kind within Australia and represented a collaborative approach between the VBA, the City of Melbourne and the MFB. The audit focused on buildings that provided accommodation for sleeping occupants, including vulnerable-use buildings such as hospitals. Typically, those buildings fall under the categories of classes 2, 3, 9 and 9A of the National Construction Code. The audit scope was: new buildings constructed between 1 January 2005 and 30 April 2015 with a construction of 10 or more storeys and a construction value of $2 million or greater. The suburbs of Melbourne, Docklands, Southbank, East Melbourne and Parkville were selected. The suburbs chosen were based on the assessment that the greatest density of the scope that I have previously described was in that general locale.

The 10-year window was determined as being the period in which the use of ACP as cladding was identified as becoming particularly prevalent in the Victorian environment. Within this audit process, some 168 building projects were identified. The process did not only rely on desktop audit; once building projects had been identified, a VBA inspector attended each site to assess the project and record details of their observations in writing and through the use of photographs. Those reports then formed part of the broader documentation relating to the building project.

The VBA audit involve the coercive acquisition and analysis of thousands of documents, including design drawings, specifications and permits. Where the VBA audit could not demonstrate compliant use of external wall cladding materials, the project was referred to the municipal building surveyor to independently assess the building. The MBS inspected each site and on most occasions was with the MFB to determine whether a building was able to continue occupation and, if it was not deemed suitable for occupation, to take any necessary steps to ensure the safety of the occupants.

To determine the level of risk posed by any non-compliance identified, a working group comprising the City of Melbourne's MBS, the MFB representatives and the VBA was established. The purpose of the group was to broadly monitor the remaining building compliance activity arising out of the audit; to identify any emerging issues, challenges or barriers, and resolve them collectively where appropriate; to achieve a consistent and common means of reporting; and to ensure a consistent and common means of communicating with owners, occupiers and the public relating to the audit and inspection results.

I would like to spend a few moment to provide context for the findings of the VBA audit. When the audit is discussed the emphasis tends to be on the findings that 85—or 51 per cent—of the building projects audited did not demonstrate compliance. In the context of this audit the term 'non-compliance' was used in its broadest sense—that is, if it was not possible to rule out non-compliance on the basis of the information that was available at the time of the initial assessment then it was deemed to be non-compliant. Of those building projects initially deemed non-compliant, a total of 44 have since been demonstrated to be compliant through the provision of additional documentation and/or fire safety engineering reports. In effect, 127 building projects—or around 76 per cent of those audited—were able to demonstrate compliance.

A total of 24 building projects determined to be non-compliant remain with the VBA. The VBA is working with the relevant building surveyor and builders to bring the building permits into compliance. The City of Melbourne's MBS has determined that these buildings are able to be occupied. A further 17 building projects in the scope of the audit remain with the City of Melbourne. In addition to the Lacrosse building, only one other building identified in the VBA audit required an emergency order to be issued by the MBS—in this case, it was at Port Phillip—and that was the Harvest Apartments at 144-150 Clarendon Street, Southbank. The VBA has further examined its audit findings to assess whether there are practitioners who were involved in serious or systemic instances of non-compliance. Those practitioners identified have been served with notices to produce documents related to other building works. The VBA is considering the material received in response to these notices to assess building compliance.

To ensure there is a consistent approach taken by architects, designers, engineers, building surveyors and builders to achieve compliance with the legislation, the VBA has undertaken the following. It has contacted more than 20,000 building practitioners in Victoria and registered architects and asked them to provide information about the possible use of ACP cladding as a component of the external walls of buildings they have been involved with. It issued its audit findings in February 2016. A copy of that has previously been provided to the committee but I am happy to provide another copy if you wish. The VBA issued an industry alert on 24 February 2016 to improve the understanding of building practitioners about the requirements of the BCA and the specification of components of external walls, including cladding. It also continues to work with the ABCB to identify opportunities to clarify relevant parts of the BCA.

After the release of the ABC national guidance note on external walls, the VBA removed its industry alert and published the guidance notice from the ABCB. The VBA has recently republished the ABCB note to all building surveyors, domestic builders unlimited and commercial builders. The VBA has organised and hosted roundtable discussions with building industry representatives, and meetings with stakeholder reference groups aimed at addressing the shortcomings in industry practice and knowledge identified during the VBA audit. Of course, we have undertaken compliance and enforcement activities when required, including in relation to both Lacrosse and Harvest.

I understand that the inquiry is keen to be informed as to the status of enforcement actions of the VBA against practitioners involved in the Lacrosse building fire. As these actions are afoot at the moment, I am only able to discuss these issues at a high level. The VBA referred the following practitioners responsible for the project to the Building Practitioners Board: the fire safety engineer, the registered builder and the relevant building surveyor. The architect's conduct was referred to the Architects Registration Board of Victoria. The Architects Registration Board has determined not to proceed with any action against the architect.

In a broader context, and as a result of the audit, the VBA supported the Victorian Minister for Planning to participate in discussions at the national Building Ministers' Forum, which determined that action on a national level was required. This resulted in a direction to the ABCB to consider mandatory third-party certification and the establishment of a cross-jurisdictional senior officers working group. The VBA will continue to press for the readability of the NCC to improve, as this is particularly important when the code is performance based rather than prescriptive based. We have commenced a similar cladding audit in the City of Port Phillip.

The VBA acknowledges and welcomes the establishment of the Victorian Cladding Taskforce. The purpose of this task force is to, broadly, bolster the state's ability to detect and address non-compliant cladding, and ensure residents, owners corporations and building managers are better informed about the issue. It will also make recommendations to the government on how to improve compliance and enforcement of building regulations to better protect the health and safety of building occupants. Key agencies at that task force include WorkSafe Victoria, the MFB, the VBA, the Municipal Association of Victoria, and Emergency Management Victoria.

Finally, I would just like to touch on supply chain issues. The Lacrosse building fire highlighted two critical weaknesses in the current building product certification system: firstly, that there is no single organisation or regulator responsible for certifying products for compliance with relevant standards and, secondly, that certificates of conformity with the Building Code of Australia performance requirements, where available, are not always explicit in respect of the range of uses and circumstances in which a product may be relied upon to be fit for purpose. Complex regulatory frameworks exist at both state and national levels that need to be considered in a holistic way. The issue of industry supply chains and import of goods into Australia need to be considered in addition to the regulation of the use of and building of construction projects. From the VBA's perspective, heavily weighting compliance and enforcement activities for these types of products at essentially the end of the supply chain, as currently is the case, is problematic and requires further thinking. Otherwise, our regulatory efforts will remain largely reactive rather than proactive.

Senator XENOPHON: Can we please get a copy of that statement? It might be useful for the purpose of questions. It was a very comprehensive opening statement.

CHAIR: Yes.

Senator KIM CARR: We will get it photocopied for you.

Mr Smith : It has some slight changes to it.

Senator XENOPHON: That's all right.

Senator KIM CARR: We'll take it as delivered. That's the way we'll cover that.

Mr Smith : I can provide a cleaner copy at a later date.

Senator KIM CARR: Thank you very much, but it's just for the questions today. That would be very helpful. Mr Smith, thank you very much for coming. It's a long way to Sydney to actually appear—we were in Melbourne on Friday, but we couldn't quite get it to work for you?

Mr Smith : I am not aware of the workings of the inquiry or who attends when.

Senator KIM CARR: So I was very pleased that you were able to come today.

Mr Smith : Thank you.

Senator KIM CARR: Let's hope that you are just as pleased at the end of this as we are now. I have got here a report from the Melbourne Age of 23 June this year, and it says:

Planning Minister Richard Wynne has slammed the Victorian Building Authority, which has been leading the government's investigation into the cladding issue, for a slow response to the controversy.

"The VBA needs to be more responsive when dealing with the critical issue of cladding," a spokesman for Mr Wynne said.

He said the building authority needed to explain why it had taken so long to hold disciplinary hearings into the building practitioners who worked on the Lacrosse building, which was ravaged by a blaze fuelled by cladding similar to that installed on Grenfell Tower.

"They need to explain why it has taken so long to bring the practitioners in question before a disciplinary hearing," the minister's spokesman said.

Are you able to tell the committee why it has taken you so long?

Mr Smith : I would say that, in terms of the disciplinary process, the VBA referred that matter to the Building Practitioners Board last year, after an investigation was undertaken. In terms of the time frame, as to why that matter still is not resolved, as you would appreciate, inquiries in that form—and I note that they have since changed, under the new legislation that the government has introduced—are similar to court litigation and the subject of delays sometimes brought on not by the VBA but by the people who are brought before the Building Practitioners Board. Certainly in this case they have exercised their rights to access other courts to determine whether or not the Building Practitioners Board has the appropriate authority to hear the matter. So some of those delays are not as a result of the VBA, and in fact I would say that our investigation moved quite quickly and we are now faced with a situation—

Senator KIM CARR: It is four years since the fire.

Senator XENOPHON: Which fire are we talking about?

Senator KIM CARR: Sorry?

Senator XENOPHON: Which fire are we talking about?

Senator KIM CARR: The Lacrosse fire.

Senator XENOPHON: 2014.

Mr Smith : Yes, I understand that. The first part of the process was a post analysis undertaken by the MFB, which was completed, from my recollection, around the middle of 2015. The investigation commenced. What I am telling you is: it was quite complex in regard to the matter, and we have referred it as quickly as we can.

Senator KIM CARR: And, in particular, it became a matter of judicial contest as to your authority. That is the nub of your—

Mr Smith : Not our authority. The Building Practitioners Board is a separate, independent statutory body that hears disciplinary matters.

Senator KIM CARR: So now that has all been clarified, has it?

Mr Smith : There are hearing dates for August for all three of the practitioners—

Senator KIM CARR: And you do not want to prejudge any of that—I understand. So this is a sub-judice question now, is it?

Mr Smith : Well, it is more of a case that it is not a matter that the VBA has any control over, and, once it is handed over to the Building Practitioners Board, it is not a matter for the VBA.

Senator KIM CARR: There is another question that has arisen in the evidence before us and that is that the regulatory regime in Victoria is actually quite limited. For instance, who is a builder? Who is a building subcontractor? It seems that it is open to just about anybody who wants to claim that they are a builder or a building contractor. Is that the case?

Mr Smith : I would disagree that that is the case. There is clearly a regulatory scheme that involves registration and licensing of practitioners. In terms of that, what I can say is that, over the last few years, there has been significant reform of the legislation that governs the building regulatory system, and that continues. There have been two tranches brought forward, as broad as licensing and registration, through to disciplinary action, and that will continue this year in terms of the introduction of better inspection powers for the VBA and other authorised officers.

Senator KIM CARR: You have heard—or I am not certain that you have heard this, because you were outside, but we have been asking witnesses to explain why we should not recommend to the Commonwealth parliament that we seek national registration, national licensing arrangements, for people involved in the installation of building materials, in line with the national standards. What's the view of the authority on that matter?

Mr Smith : I have to be careful here, Senator, because we're straying into a policy question.

Senator KIM CARR: So you have not considered it?

Mr Smith : We know that currently mutual recognition exists between the states in regard to licensing and registration, and that's where it currently sits. So that's probably as far as I can take it for you.

Senator KIM CARR: What are the licensing requirements for builders in Victoria?

Mr Smith : They are stipulated under the regulations in the act.

Senator KIM CARR: How do you lose your licence in Victoria if you're caught putting up bodgie building products?

Mr Smith : You would go through the disciplinary process—

Senator KIM CARR: How many people have lost their licences in recent years?

Mr Smith : I don't have those figures in front of me. I'm happy to provide them.

Senator KIM CARR: Is it a number of people?

Mr Smith : I just don't have those figures in front of me, Senator. I'm happy to provide them.

Senator KIM CARR: Is it a common practice that people are actually brought before disciplinary tribunals in Victoria?

Mr Smith : People regularly appeared before the disciplinary process previously under the Building Practitioners Board, and it occurs both—

Senator KIM CARR: And that was common, was it?

Mr Smith : Yes, there were hearings quite regularly.

Senator KIM CARR: Can you give us, on notice, the numbers in the last five years?

Mr Smith : Certainly, Senator.

Senator KIM CARR: And the number of people who've actually been disciplined.

Mr Smith : Yes, we can do that.

Senator KIM CARR: For insulation and non-conforming building products.

Mr Smith : I'm not sure. It's difficult to provide that level of detail, in terms of the data. We can tell you—

Senator KIM CARR: Why not?

Mr Smith : We don't record the level of detail that makes it easily accessible. What we would have to do is go through each individual case to see what the allegations were in order to establish whether or not they're relevant to—

Senator KIM CARR: Whatever data you can provide would be useful to us.

Mr Smith : Certainly, yes.

Senator KIM CARR: We have heard a number of witnesses draw to our attention the assertion that there's widespread documentation fraud in certification processes. Are you familiar with those claims?

Mr Smith : Yes.

Senator KIM CARR: What have you done about it?

Mr Smith : In terms of that, there is an issue about who would actually respond, as a regulator, to that. For example, I'm aware that Consumer Affairs Victoria recently prosecuted a person for essentially having a false certificate in regard to a building product in the last few months.

Senator XENOPHON: What was that building product?

Mr Smith : As I understand, it was a fire safety wall or a separation product. In other words, it was designed to prevent the spread of fire.

Senator XENOPHON: Between apartments or between walls.

Mr Smith : Yes.

Senator XENOPHON: That's pretty serious. So the product itself did not provide the protection it was certified to—or the certificate was false.

Mr Smith : My understanding is it failed by a number of minutes or seconds. The details of that, again, I could provide to you.

Senator KIM CARR: Can you tell us how often these prosecutions for fraudulent use of documentation occur?

Mr Smith : I couldn't give you an answer, on the basis that, as I said in my opening statement, the regulation of those particular products is diffuse. If it's a product that is presented as something it's not, it may be false and misleading; therefore, it falls into national consumer law—in some cases, not all. So I can't give you an answer to that.

Senator KIM CARR: Do you have any data at all on the instances of prosecution for the misuse of certification, either for products or for buildings?

Mr Smith : In terms of buildings per se, the VBA undertook a significant and complex investigation in East Gippsland where a building surveyor was using unregistered inspectors, and they were held to account.

Senator KIM CARR: That was one case.

Mr Smith : Yes. It was one that involved a number of locations.

Senator KIM CARR: How often does that occur?

Mr Smith : I haven't got that information in front of me today.

Senator KIM CARR: Would you take that on notice, if you can't provide that advice?

Mr Smith : Certainly, yes.

Senator KIM CARR: It has also been put to us that a company will have one licensee and use people that are non-licensed for certification work. Is that a practice that you're familiar with?

Mr Smith : I'm not exactly sure what's being—

Senator KIM CARR: That certification processes are undertaken by companies where the principal might well be licensed but no-one else in the company is or a significant number of people are not licensed and are undertaking certification work.

Mr Smith : I might defer to our technical expert, if I may.

Mr Genco : That's not dissimilar to other sort of professions and practices where you might have a senior engineer, or a certifier, for want of a better word, that would be signing off on the end product and documents. But they would have juniors that are qualified, and should be qualified, producing the bulk of the work that is then overviewed by themselves.

Senator KIM CARR: And you don't see a problem with that?

Mr Genco : That is the course of a professional practice. At the end of the day, the person who is signing off the certification takes the responsibility for that certification.

Senator KIM CARR: So in the case where a product has been certified but is actually non-conforming or non-compliant, who should be held responsible?

Mr Smith : It would depend on the nature. If we talk about non-conforming as to non-compliant, I understand the inquiry has had a lot of discussion around that in terms of the difference. It would depend on the nature of the use of the product if it was—

Senator KIM CARR: If someone signs off that a product is compliant when it's not, who should be held responsible? Or if a building is signed off as being fit for purpose and is not, who should be held responsible?

Mr Smith : There are two parts to your question. The first part is: if certification has been provided that is, for want of a better term, false, then the person that certified it should be held responsible. In terms of the building, it is a number of parties that have responsibility in that space. And as you can see from the Lacrosse matter, a number of people are going through a process of the responsibility they hold in that process.

CHAIR: Mr Smith, thank you for your opening statement. You indicated that 24 building projects following on from the audit are determined to be non-compliant, and those are with your organisation at the moment. When you say 'non-compliant', that is in the sense that they haven't demonstrated to be fully compliant and therefore are non-compliant. Can you tell us what degree of noncompliance we are dealing with here?

Mr Smith : I can tell you that all those buildings have been assessed to be able to be occupied, and, in terms of the level of compliance, it varies. It is certainly not at the high-risk end in terms of those particular matters.

CHAIR: So they are able to be occupied, but there still remains issues of breaches of the building code?

Mr Smith : Yes, the building code or the building act or the building regulations, as stipulated in Victoria.

CHAIR: And 17 projects are with the City of Melbourne?

Mr Smith : Yes.

CHAIR: Can you tell us anything about those?

Mr Smith : They remain with the City of Melbourne, because they work through to get them through the level of compliance and satisfaction again if those buildings were demonstrating to be the level of compliance that was such that it needed an emergency order, I'm quite sure that the City of Melbourne would issue an emergency order.

CHAIR: Are those 17 projects fit to be occupied?

Mr Smith : Yes, they are able to be occupied. That is my understanding.

Senator KIM CARR: I've been advised there was a cladding fire in Brunswick in March 2016. Were you familiar with that?

Mr Smith : Sydney Road in Brunswick?

Senator KIM CARR: Yes.

Mr Smith : Yes.

Senator KIM CARR: Brunswick's not been covered by your audit though, has it?

Mr Smith : No, but we're aware of the matter, and it was referred to the VBA last week by the municipal building surveyor of the City of Moreland.

Senator KIM CARR: So what action is going to be taken with regard to that?

Mr Smith : With respect to that, the municipal building surveyor for the City of Moreland is satisfied that it is currently safe to occupy, and it will now go through a process to determine what the next action is in regard to that particular building.

Senator KIM CARR: Have you looked at the circumstances around that fire at all?

Mr Smith : My understanding is an air conditioning unit malfunctioned on the eighth floor, and as a result of that a fire commenced. That fire travelled up outside the building to the ninth floor, and then travelled up further to the top of the building, essentially, and then petered out. Although it is not required to, the building has a sprinkler system and various other fire-safety measures.

Senator KIM CARR: What sort of cladding did they have on it?

Mr Smith : At this stage we haven't established that. We've just had the referral last week from the City of Moreland. We've certainly attended the site and are just working through the documents that are associated with that particular site.

Senator XENOPHON: Mr Smith and Mr Genco, thank you very much for being here. I want to go through some aspects of your opening statement. I understand you can't comment on policy. It is terrific that you are here. There is a great degree of irony that you have travelled up to Sydney to be here whereas the New South Wales government, I think it was, couldn't find the time or, for whatever reason, wasn't here.

Mr Smith : Senator, the only thing I can say is that the weather is better here today.

Senator XENOPHON: I thought you were just here for the pleasure of being before this committee!

Mr Smith : Well, of course I am!

Senator XENOPHON: In your opening statement, you made the point that the Lacrosse building was constructed with a range of fire safety measures that may not have been available in other jurisdictions, which is true. One of the issues that was raised in the report was that the sprinkler system played a key role in putting out the fire or stopping it from spreading internally.

Mr Smith : Yes.

Senator XENOPHON: We heard earlier today, and we heard it last week, that the speaker system worked above specification—beyond its minimum specifications—and we got more details on that today. In fact, what occurred, as I understand it from the evidence, was that 23 of the sprinklers were operating rather than six, which was the minimum standard. Has the authority, or any other body that the authority could instruct, undertaken any modelling to establish what would have happened to that fire at the Lacrosse building if only the six sprinklers as specified were working, and not the fortuitous situation where there were almost 4 times the number of sprinklers working, on that evening?

Mr Smith : No, I am not aware.

Senator XENOPHON: Do you think there ought to be some modelling done of that or some assessment or analysis done of that?

Mr Smith : As I understand it, there was a post-incident analysis completed by the MFB. They are the experts on this.

Senator XENOPHON: Sure. But it would be reasonable, without having a post-incident analysis in front of me—you are not aware of any analysis being done of what the impact would have been if only the specified standard was complied with and not well in excess of the standard being complied with?

Mr Smith : No, I am not aware.

Senator XENOPHON: Would you be interested in finding out what the result of that would be?

Mr Smith : Certainly. I imagine that would be of most interest to the ABCB in terms of the National Construction Code and whether there are alterations required to that.

Senator XENOPHON: Perhaps it is something we could ask the ABCB, Chair. Going through the actual audit itself—again, this is not a criticism; I am just trying to understand this—the audit's quote was new buildings constructed between 1 January 2005 to 30 April 2015, construction of 10 or more stories. This cladding material with the polyethylene core is not meant to be on buildings of more than one storey, or perhaps two storeys, as I understand it. Is that your understanding?

Mr Smith : Yes.

Senator XENOPHON: Two storeys in some circumstances, where it is certified or where exemptions are given. If you are caught in a fire and you are on the third, fourth, fifth, sixth, seventh, eighth or ninth floor, you are in real strife if you can't get out of that building safely. How many buildings are there, say, between three and 10 storeys? Is any assessment being carried out of that? I am concerned about all of those buildings where they are not high-rise—they are medium high-rise, if you like: seven to nine storeys. What is the position there?

Mr Smith : We modelled the scope on the basis of the building that was subject to the fire, and you can see that in terms of the scope. In terms of the broader question that you are asking, part of the answer or the answer to that lies with the establishment of the Victorian Cladding Taskforce to determine what other scoping or—

Senator XENOPHON: That former Premier Baillieu is chairing?

Mr Smith : Yes, with John Thwaites.

Senator XENOPHON: Okay. A former deputy premier. That is a bipartisan committee, if there was one.

Mr Smith : Yes.

Senator XENOPHON: A Liberal premier and a Labor deputy premier. I want to ask about the scope of the audit. It said that the process did not rely on a desktop audit, and you have gone into more details. You said once building purchase had been identified, a VBA inspector attended each site to assess the project, record details of their observations in writing and through the use of photographs, and then form part of the broader documentation. You also use coercive acquisition and the analysis and thousands of documents. You said that, where the VBA audit could not demonstrate compliant use of external cladding materials, it was referred to the MBS. Did the MBS come back to you in relation to their findings or their assessment?

Mr Smith : Yes.

Senator XENOPHON: You've said that the MBS inspected each site—on most occasions with the MFB—to determine whether the building was able to continue operation and, if it was not deemed suitable for occupation, to take any necessary steps for the safety of occupants. How many of those buildings actually were subject to testing of the panels? In other words, did it just rely on the paperwork? If the paperwork said, 'This has got fire-retardant material'—and we've heard evidence that there can be fraudulent documentation—was any testing such as destructive testing carried out, where you drill a hole in the core and determine whether that material is polyethylene or, in fact, fire-retardant material?

Mr Smith : The MBS does not have power to do destructive testing.

Senator XENOPHON: No legislative power to do so?

Mr Smith : That's correct. I would note that, later this year or early next year, that will change with respect to the ongoing reforms of the legislation and that the VBA will have the power to—

Senator XENOPHON: At a state level. Is that going to be rolled out nationally too?

Mr Smith : No, that's in terms of the Building Act in Victoria.

Senator XENOPHON: Just hold on a second. You're saying that the MBS inspected the site, in some cases with the MFB, but you had to rely on documentation as to whether there was polyethylene, fire retardant or a honeycomb structure?

Mr Smith : Yes.

Senator XENOPHON: Honeycomb you can work out.

Mr Smith : Yes.

Senator XENOPHON: But I think we had the material. I don't know if you can tell the difference with a visual inspection. You probably can't see. This is the combustible core. It's two or three millimetres, and then there's the fire-retardant core. How can you tell?

Mr Smith : That's why we look at the documents from three perspectives.

Senator XENOPHON: You relied on documents, though, didn't you?

Mr Smith : Yes.

Senator XENOPHON: You didn't actually rely on any testing.

Mr Smith : We don't have the power to undertake destructive testing.

Senator XENOPHON: But you accept that there've been cases of fraudulent documents with certification—correct?

Mr Smith : Yes.

Senator XENOPHON: So how confident are you that that audit that was carried out following the Lacrosse fire is robust and accurate?

Mr Smith : We sourced documents from three sources—council, the registered building surveyor relevant to that particular site, and the builder—and triangulated the data from those three to establish whether there were any discrepancies.

Senator XENOPHON: But destructive testing, so-called, wasn't carried out because you don't have the legislative power to do so?

Mr Smith : At the moment we do not have the legislative power to undertake destructive testing.

Senator XENOPHON: When you get that legislative power—and I hope you get that sooner rather than later—will there be any revisiting of some of the building sites that you audited to carry out destructive testing, even on a spot check basis, to see whether the documentation matches up with the actual reality?

Mr Smith : It'll depend on the nature of the legislation, but we'll certainly consider that. I have to note that, again, that's also an issue that the task force may take an interest in in terms of the new compliance and enforcement ability.

Senator XENOPHON: In terms of orders, were the residents of the buildings that were non-compliant—and I think the level of compliance went up after further tests or further inquiries—told, 'Well, you're in a building with polyethylene cladding or non-compliant cladding'? Were people informed as to the results of each building? Were the occupants told?

Mr Smith : If an order was issued, it's my understanding that, through the owners corporation—

Senator XENOPHON: Were there any orders issued?

Mr Smith : There were two: there was an emergency order issued for Lacrosse, and there was an emergency order issued for Harvest.

Senator XENOPHON: Okay, but there were still a number of other buildings that were non-compliant and had the flammable cladding on them—is that right?

Mr Smith : There were certainly non-compliant buildings, and on the VBA website we have a list of buildings that were on that. As they became compliant, they were removed.

Senator XENOPHON: But some of those buildings that are non-complying have the polyethylene cladding material—correct?

Mr Smith : Yes.

Senator XENOPHON: So that information was put on the website?

Mr Smith : Yes.

Senator XENOPHON: But the occupants themselves weren't directly notified with a note under the door or anything like that?

Mr Smith : I'm not aware of that.

Senator XENOPHON: Were the strata corporations or the owner corporations advised of that?

Mr Smith : I am not aware of that.

Senator XENOPHON: Do you think they should have been advised?

Mr Smith : As I say, we referred the matter to the MBS to determine whether or not they were able to continue to be occupied.

Senator XENOPHON: To put it fairly: you discharged your obligation. You referred it to the MBS, so it was up to the MBS to tell us whether they required occupants to be notified.

Mr Smith : That is right. It is up to the city of Melbourne to determine that.

Senator XENOPHON: So you are saying that, if polyethylene flammable material is on a building which is noncomplying, the risk is mitigated by a sprinkler system or other mitigating factors. Is that right?

Mr Smith : Yes. Because of the nature of the National Construction Code, there are a number of ways to mitigate that risk.

Senator XENOPHON: Even though the material is noncomplying it can still be allowed there, or does it have to be eventually removed?

Mr Smith : If it comes to a point of definition of saying that something is noncompliant and it can't be made compliant in accordance with the relevant act, yes, it would need to be dealt with.

Senator XENOPHON: It is not going to be some sort of miraculous event where somebody says that they can turn polyethylene into fire retardant.

Mr Smith : Yes.

Senator XENOPHON: Are you saying then that, if it is noncomplying, it could be made compliant by having, say, an adequate sprinkler system? You are not saying that, are you?

Mr Smith : I would just refer to—

Senator XENOPHON: It is a difficult issue; but, ultimately, if it is noncomplying, it is noncomplying. Correct?

Mr Smith : I might refer that to Joseph.

Mr Genco : Senator, if you wouldn't mind, I will take that question. The National Construction Code is a performance based code. Basically, you have your prescriptive requirements, which is your recipe-type book of 'You do this, this and this and it becomes compliant,' but at the higher level there are the principles of performance, which allow a bit of trade-off with regard to, say, if you provide sprinklers, you do other things and there is no recipe with the performance. It has to be a purpose design, where you put in safety measures to counteract and lessen other aspects of it. So there is the potential there that you can put in some sort of ACP in certain areas.

Senator KIM CARR: You are familiar with the evidence on Friday from Commonwealth officials. I will quote directly. The official is talking about the question of compliance, and he says that there has been action but then he says: 'The code is the code. The code has not changed. The code does not allow this type of cladding—combustible wall elements in buildings—so the only thing that is available to the ABCB, because we do not have powers to audit, is to seek compliance to enforce. There is a way we can better socialise what requirements of the code are. They were initiated in the first instance in 2011-12 and then subsequently in the cross instance through the National Advisory Note and the development of AS 5113 standard, which has been referred to. Bear in mind, there is already a standard in the code and it remains the code, which is AS 1530—the standard that must be used if we are going down to the deemed to satisfy pathway.' In other words, you are turning black into white by saying that these combustible wall elements have become compliant because you have a sprinkler system in place. Is that the evidence you are presenting to us?

Mr Genco : No, Senator. What I'm trying to say is that, in the context of what the ABCB were talking, they were talking the prescriptive requirements where you have your recipe book and you say, 'If you have a building of excellent—

Senator XENOPHON: You call it a recipe book?

Mr Genco : yes—deems to satisfy.

Senator KIM CARR: 'Deems to satisfy'—so it is clearly not compliant. It is a combustible wall element.

Mr Genco : In the 'deemed to satisfy' you have to meet all the deemed to satisfy provisions. However, at the higher level, it is a performance based code.

Senator XENOPHON: Sorry, I don't understand this higher level stuff. You are saying—

Senator KIM CARR: I tell you what, I understand what is going on here.

Senator XENOPHON: Hang on, you're not supposed to have polyethylene cladding on buildings more than one storey—correct? That is the general rule?

Mr Genco : Under the prescriptive requirements.

Senator XENOPHON: Okay, so you're not allowed to. It's not allowed, correct?

Mr Genco : Correct.

Senator XENOPHON: But you're saying it can be allowed if you do some other things.

Mr Genco : Correct.

Senator XENOPHON: You've got me completely bushed on that one.

Senator KIM CARR: So the prescription is really not a prescription at all.

Mr Genco : It is a method of compliance with the code. Performance requirements—

CHAIR: It's a get-out-of-jail free card.

Senator XENOPHON: It's not much of a code, is it?

Senator KIM CARR: It's not really worth a dab of glue, is it?

Mr Genco : The performance requirements are at the upper level in they're deemed to satisfy—

Senator XENOPHON: What's an upper level? Are you talking about the upper levels of the building or upper level as in some conceptual—

Senator KIM CARR: It's 10 storeys up, on fire!

Mr Genco : The performance requirements at the start of the code or of each section are the mandatory requirements that need to be met. They are deemed to satisfy it. Provisions that are prescriptive are one way of meeting those performance requirements.

Senator XENOPHON: You're not allowed to have it on polyethylene cladding on buildings of more than one storey, but you might be allowed to have it if other things come into play, correct?

Mr Genco : Correct, if it is purposefully designed.

Senator XENOPHON: You know, that doesn't pass the pub test. We are talking about single-storey pubs and multi-storey pubs!

Senator KIM CARR: It doesn't passed any test.

Senator XENOPHON: You agree that it does not pass the pub test?

Mr Genco : I agree that that is the way the National Construction Code is written. It is a performance-based code.

Senator XENOPHON: You know what the pub test is, in terms of the general pub test?

Mr Genco : Yes, I do.

Senator XENOPHON: It doesn't really pass it, does it?

Mr Genco : It's difficult to describe to people outside of the industry, as to the difference between performance and prescriptive—

Senator XENOPHON: That means that people living in a high-rise building with this polyethylene cladding presumably are allowed to live in those buildings because there is a sprinkler system in place or other mitigating measures, but it is not supposed to be on that building in the first place, correct?

Mr Genco : In the first place, as to prescriptive requirements: if the building is purely designed using the prescriptive requirements, no, it's not.

CHAIR: Was the use of that material compliant?

Mr Genco : In which building?

CHAIR: In Lacrosse.

Mr Genco : In Lacrosse, no, that was non-compliant. That was not even considered as part of the performance decisions that were incorporated in the design of the building.

Senator XENOPHON: Okay, this is doing my head in. I am very grateful for your evidence and very comprehensive submission and opening statement, but is it your view that sooner rather than later we need to remediate and remove this flammable cladding material on high-rise buildings?

Mr Genco : There has to be evidence and a purposeful design that it has been included in and that the appropriate safety measures have been put in place.

Senator XENOPHON: Hang on, but you're not supposed to have it on in the first place.

Mr Genco : In some cases, it may need to be removed.

Senator XENOPHON: But, hang on, it's not supposed to be on high-rise buildings, correct?

Mr Smith : If I could just interrupt for a moment, the answer to your question is yes.

Senator KIM CARR: Thank you.

Senator XENOPHON: So it has to be removed eventually?

Mr Smith : Yes.

Senator KIM CARR: Wouldn't it be easier, for the future, if we just banned this stuff from being used on external cladding?

Senator KIM CARR: There was a nod, for the Hansard reference.

Mr Smith : My apologies. Certainly, it would make regulation a lot simpler.

Senator XENOPHON: Sorry, Mr Smith, I'm having trouble absorbing this. Is it the evidence of the Victorian Building Authority that this polyethylene-material cladding ought to be relieved from buildings? As in, it must be removed in due course.

Mr Smith : That is certainly the position of the VBA. In terms of—

Senator XENOPHON: When, though? In what time frame?

Mr Smith : We are looking at our options to accelerate that in terms of the powers that we been previously given. We will look to do that in the very near future, noting that in the Victorian system if we issue a direction to fix that can be appealed to the Building Appeals Board.

Senator XENOPHON: But you've got to issue the direction first.

Mr Smith : That is correct, yes.

Senator XENOPHON: But we're talking about a bill for removing this flammable cladding that will run into the billions of dollars, so that's why there is resistance from industry—is that right?

Mr Smith : Yes.

Senator XENOPHON: Who's going to pay for it, though? If you've bought an apartment and you've done so in good faith, are you going to be lumbered with the bill or does it go back to the builder? Who is responsible for it?

Mr Smith : I can't answer that question.

Senator XENOPHON: Because is there is still a legal bunfight with Lacrosse, isn't there?

Mr Smith : Yes.

Senator XENOPHON: I need to ask you a question in the context of South Australia. What cooperation do you have with your South Australian counterparts? According to the Guardian Australia on 16 June, the South Australian government is conducting a cladding audit. Have you talked to them about your experiences? Who is the lead agency that you are dealing with South Australia?

Mr Smith : I can tell you that we have spoken to our South Australian counterparts. Not in great detail, but certainly we've exchanged what they're doing and what we are doing.

Senator XENOPHON: Which agency are you dealing with?

Mr Smith : I can't recall.

Senator XENOPHON: If you can just tell me on notice, I can check with the South Australian government.

Mr Smith : Yes.

Senator XENOPHON: In summary, to go back to before, you acknowledge that this flammable cladding material—this polyethylene cladding material—has to be removed from buildings?

Mr Smith : That is certainly the position of the VBA.

Senator XENOPHON: Thank you.

CHAIR: Mr Smith, you may not be able to comment on this, but you would be aware of the Queensland government introducing a chain of responsibility bill that is currently before the parliament at the committee stage. Can you tell us whether you have had any involvement in that consultation leading up to the development of that bill? That is because there is some suggestion this may be a template for a national approach. Can you shed some light on that?

Mr Smith : The VBA has certainly been briefed by the Queensland Building and Construction Commission about that legislation.

CHAIR: Is any similar legislation being developed in Victoria?

Mr Smith : That's not a matter that I could comment on as an independent statutory body.

CHAIR: Just finally, the audit report that you issued stated that many types of external cladding materials are used throughout the Victorian building industry but whether one is fit for purpose over another is not properly understood by architects, designers, engineers, building surveyors and builders. What do we need to do to fix that?

Mr Smith : I think there are a number of things that we can do and some of those been outlined in my opening remarks about ensuring that there the right amount of information available to people. It is also about making sure that, as we go through this disciplinary process, people are well aware of what occurs in terms of those particular matters. From a regulatory point of view, we will continue to use our appropriate enforcement tools as the situations arise and, again, bring issues and use powers that we do have when we need to. There is a much broader question in terms of the building regulatory system and there are a number of players in this space, as I'm sure you can appreciate.

CHAIR: And that's the problem, yes. Thank you very much for appearing before us today.

Senator KIM CARR: Thank you for coming.

CHAIR: I thank all of those who have made submissions and sent representatives here today. The committee stands adjourned.

Committee adjourned at 16 : 27