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Building industry in turbulence

Victorian premier Daniel Andrews

“We’ll all be rooned,” said Hanrahan. If he’d been talking of the building industry he might just have been right. Especially when you think how shonky it’s starting to look and especially when you think how big a part of the economy it is.

Warnings of a possible collapse of the building industry itself are starting to circle on Tuesday. Buyers are being warned against taking a risk on mid to high rise apartments built in the past few years. The Andrews government in Victoria has finally announced $600 million to fix flammable cladding, but nowhere near enough, it’s thought. And the insurance industry is doing what it always does when things get tough and is heading for the hills.

Given the importance of building and construction to the economy and to so many ordinary people, this is not looking good.

Victorian premier Daniel Andrews we hear had asked the Feds to chip in half the cladding budget to replace flammable cladding on around 500 buildings in Victoria, after the Victorian Cladding Taskforce found 72 buildings it examined were “an extreme risk, 409 as a high risk and 388 considered a moderate risk”.

Treasurer Josh Frydenberg said, no no no. Building regulation was a state issue and that the Federal Government “would not pick up the bill”, an ABC report said.  The rest of the money would now come from high fees for building permits. Makes sense, you suppose.

Victorian Building Action Group’s Anne Paten who’s appeared on these pages said the grand total would not come close to what’s needed.

The real cost was “many, many billions of dollars” she said on ABC radio.

“We need enforcement of the laws and regulations that exist, and we need penalties when people ignore those laws.”

A big problem is insurers. They’ve stopped giving surveyors professional indemnity coverage for properties with cladding”

Now they’ve pulled the plug on building certifiers but inserting exclusions clauses that makes the documents pretty much not worth the paper they’re written on.

This makes them unable to operate. Some have already collapsed.

Also on Tuesday, The (occasionally useful) Australian cited chief executive of JMG Building Surveyors John Massey, whose company led the certification for Perth’s Optus Stadium, saying things were dire indeed.

“Mr Massey’s letter to the Prime Minister echoes a warning to him from five of the nation’s largest business groups that the building sector will grind to a halt unless unaffordable insurance premiums and exclusionary policies are dealt with,” the report said.

“Some building firms are already threatening to stop work on all projects involving cladding until the crisis is solved.”

He said some building surveying firms across Australia had already closed their doors and “many more will be forced to follow.”

“It’s past projects, not just projects going forward. Ministers don’t understand that.”

Master Builders Association chief executive Denita Wawn told the paper that premiums were “spiking as much as 200 to 300 per cent for inspectors, surveyors, designers and builders.”

David Chandler, regular columnist for The Fifth Estate and now appearing regularly in mainstream media, has advocated for a way to get insurers back into the market through “convincing changes to building regulation”.

He said a long term low interest loan from the federal government could help owners carry out rectification work.

Even Meriton’s Harry Triguboff has called for “immediate reforms” to the construction industry. As one of the biggest builders in the country with no doubt its share of defects to deal with, that’s a fabulous call and well overdue.

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Comments

3 Responses to “Building industry in turbulence”

  • Anne Paten says:

    Phillip summed up one aspect. Imagine commissioning a comprehensive and detailed Report on implementing the ‘Code’, then paying for it out of taxpayers’ money – and then ignoring 97+% of it.

    The key point is, as the Senate Inquiry into Non-conforming Building Products found, no one buys, reads or takes any notice of the pretend ‘Code’ or the supposed Standards because there are no consequences for ignoring all ‘rules’ and ‘regulations’.

    As for all other aspects – insurance companies are parties to gauging and they never lose out. All this nonsense about Surveyors/Certifiers’ premiums was a lot of hot air. Insurers can rarely be found by owners to enable them to make a claim (all kept secret) and when owners manage to make a claim, the insurers fight tooth and nail over years to get out of paying. All arranged through the advice many lawyers. So all in the building game are protected, except owners.

    This consumer catastrophe is now well past a joke. It is a national disgrace, and one worsening with each passing day.

  • Tim Renouf says:

    100% right Phillip.
    Numerous inquiries have called for standards be made free, as far back as the 2006 Productivity Inquiry into Standards Australia.

  • Five years ago, in 2014, engineers pitt&sherry, with Swinburne University of Technology, wrote a report several hundred pages in length, with 37 detailed recommendations, documenting’systemic flaws’ in Code implementation. This work was completed for and delivered to all state and territory and the Australian Government. The report came after meeting over 1000 stakeholders in every state and in regional areas around Australia. By 2019, precisely 1/37 recommendations has been acting on – making the Code document free, to increase the chances that professionals might actually read the thing. Unfortunately the supporting Australian Standards are more expensive than ever. What we have here is a systematic failure on the part of governments to actually govern – at least, in the public interest.

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