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2020 must see the realisation of construction industry reforms

Michael Chesterman
Michael Chesterman January 6, 2020

I am of the view that the construction industry will be significantly disrupted in the next several decades as a result of innovation-driven change. In this regard, I recommend as compulsory reading an excellent joint report published in 2016 by Construction Skills Queensland (CSQ) and CSIRO entitled “Are you ready for change?” (CSQ report).

However, it is also apparent to me that at the close of 2019, the construction industry was also beset with many issues that now require urgent government responses. I view this to be necessary government-initiated disruption of the industry. If 2019 was mainly about developing reforms to address these issues, then 2020 must be principally the year of the implementation of them.

Recent communiques from the Ministerial Construction Council and the Building Ministers Forum demonstrates the range of issues that have been the forefront of consideration by governments and industry stakeholders during 2019.

Ministerial Construction Council

The Ministerial Construction Council provides a platform for key stakeholders and government organisations to discuss matters relating to the QLD industry.

Who is on the Ministerial Construction Council?

According to  the government’s response to the Parliamentary Committees recommendations into the Building Industry Fairness (Security of Payment) Act 2017, the Council consists of representatives from:

Australian Institute of Building Surveyors; Plumbing and Pipe Trades Employees Union QLD/NT; Australian Institute of Architects; Air Conditioning and Mechanical Contractors’ Association; Engineers Australia; Housing Industry Association; Master Builders Association Queensland; Master Plumbers Association of Queensland; National Association of Women in Construction; Master Painters Queensland; Master Concreters Australia; Australian Manufacturers and Workers Union; National Fire Industry Association; Association of Wall and Ceiling Industry Queensland; Queensland Building and Construction Commission; Landscape Queensland; Construction, Forestry, Mining and Energy Union; Queensland Council of Unions; Subcontractors Alliance; Master Electricians Australia; and Electrical Trades Union.

Council meeting

On 3 December 2019, the Council met at the Southport Sharks Australian Football Club on the Gold Coast.  The release of a subsequent communique outlined that the following issues were discussed, namely:

  • New mechanical services licensing framework update;
  • New Minimum Financial Requirements for contractor’s update;
  • Safer Builder Program update;
  • Development of compulsory continuing professional development for licensed contractors;
  • Building Industry Fairness Reforms Implementation and Evaluation Panel report and the Special Joint Taskforce report update; and
  • Proposed legislative amendments in response to two independent reports to enhance the building certification system.

Building Ministers’ Forum

According to the Department of Industry, Innovation and Science website, the Building Minsters’ Forum is:

“The Building Ministers’ Forum (BMF) is made up of Australian Government and state and territory government ministers with responsibility for building and construction. The BMF oversees policy and regulatory issues affecting Australia’s building and construction industries. Details of membership, roles and responsibilities are set out in the BMF Charter. The BMF’s work covers three broad themes:

  • harmonisation of building regulations and standards;
  • collaboration on compliance and enforcement; and
  • other policy issues affecting Australia’s building and construction industries.”

BMF meeting

The BMF met on 13 December 2019 in Canberra to discuss national reforms. The release of a subsequent communique detailed progress on the following reforms, namely:

  • In relation to a report (‘Shergold/Weir Building Confidence report”) that focused on shortcomings in the implementation of the National Construction Code (NCC) and an assessment of the effectiveness of compliance and enforcement systems for building and construction standards, it was noted the development of:
    • amendments to the NCC;
    • new CPD module on the NCC to ensure building partitioners have a better understanding of the requirements within the NCC;
    • new definition of ‘complex buildings’;
    • new code of conduct for building surveyors;
    • detailed national specification for inclusion in a building manual for commercial buildings;
    • model provisions to set out the roles and responsibilities for documenting, approving and recording performance solutions; and
    • a national data-sharing framework to support the progress of a comprehensive national building data portal.
  • Coordinated response to Professional Indemnity Insurance. It was stated that:

“Enduring solutions, that reduce the cost of insurance for building industry practitioners and ensure protection for consumers, must be underpinned by the systemic reforms that are being implemented through the national work on the Building Confidence recommendations. States and territories agreed to achieve greater national consistency with regards to licensing requirements for professional indemnity insurance.

Building Ministers agreed to convene a meeting in February 2020 with the Insurance Council of Australia to discuss a suite of measures to reduce the cost and improve the availability of professional indemnity insurance premiums for building industry practitioners.”

  • A technical specification for labelling aluminium composite panels.
  • Security of Payment. It was stated:

“Building Ministers agreed that states and territories would seek to apply model parameters if they are considering the implementation of statutory trusts in their respective security of payment regimes, to provide a nationally consistent approach to the reform. States and territories would continue to assess the costs and benefits of implementing statutory trusts with respect to local sector conditions and stakeholder feedback.”

  • Digital Twins. It was stated:

“Ministers were briefed by CSIRO’s Data61—the Commonwealth’s data and digital sciences arm — on the opportunities to use digital solutions to improve compliance in the building and construction sector, including the ability to track products in the supply chain.”

  • Industry Qualifications.
  • Fire Safety in Early Childhood Centres.

Final thoughts.

2019 saw a lot of very worthwhile development of new proposed regulation to address serious industry issues. Government and industry stakeholders have really applied themselves to coming up with a number of solutions (hopefully!) and it was very pleasing to see a high level of cooperation.

However, there is no doubt that clients, investors and financial institutions have lost a large degree of confidence in the industry, particularly as a result of several well publicised failures of high rise multi-storey residential buildings. In the Shergold/Weir Building Confidence report, it is stated:

“A significant change in the building and construction industry over the past 30 years has been the increase in construction of multi-storey buildings, particularly for residential living. According to the Australian Bureau of Statistics the number of apartments being built in high-rise buildings (that is, buildings of four or more storeys) in Australia each year has almost tripled in less than a decade. In 2007, 30,000 apartments were built in high-rise buildings, increasing to almost 90,000 in 2015. By comparison, the number of apartments being constructed in low-rise and semi-detached dwellings over the same period was steady with approximately 10,000 new apartments in low-rise buildings and 20,000 new apartments in semi-detached buildings per year.”

It is apparent that Australians are increasingly embracing living in high rise apartments and it is therefore essential that the industry be able to construct such buildings, so they are safe and satisfy all performance and building standards requirements.

It is therefore not an unreasonable expectation of clients, investors and financial intuitions that the government apply new or amended legislation that will improve construction outcomes, particularly those relating to high rise multi- residential buildings.

It also needs to be recognised that in addition to the issues I identified in this article, the industry this year will have to come to grips with very significant changes to the way in which Project Bank Accounts will operate and the implementation of outstanding Security of Payment reforms relating to mandated and prohibited clauses in building contracts.

This year will see many changes and developments in the Industry. We at Helix Legal are committed to keeping you informed.

Not intended as legal advice. Read full disclaimer.
Michael Chesterman
Michael Chesterman January 6, 2020

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