The con­struc­tion indus­try, cur­rent state of play in NSW

There has been a flood of arti­cles and com­men­tary from all cor­ners of the con­struc­tion indus­try since the high­ly pub­li­cised ​‘Opal Tow­ers’ inci­dent. This arti­cle is not intend­ed to pos­ture again over the poten­tial rights of the Opal Tow­er res­i­dents (ques­tions which many stra­ta own­ers have faced before) but to look at what has come out of this inci­dent and what affect, if any, it will have on the con­struc­tion indus­try in New South Wales.

Inves­ti­ga­tion into the industry

There has always been, and prob­a­bly always will be, enquiries and inves­ti­ga­tions into the build­ing and con­struc­tion industry. 

The Cole Roy­al Com­mis­sion which com­menced on 29 August 2001, found that the indus­try was char­ac­terised by ​‘law­less­ness in the con­duct of indus­tri­al rela­tions’ and as a result ​‘sweep­ing changes were rec­om­mend­ed to the indus­tri­al rela­tions applic­a­ble to the indus­try’. These ​‘sweep­ing changes’ took until 2005 to be intro­duced by the Fed­er­al Gov­ern­ment and then leg­isla­tive reform again occurred in 2012 . 

Fol­low­ing the ​‘Opal Tow­er’ inci­dent and the recent spate of ​‘cladding’ fires, there have again been calls for a roy­al com­mis­sion into the res­i­den­tial build­ing indus­try and dur­ing the lead up to the recent State elec­tions, the Labour Gov­ern­ment announced that it would, if elect­ed, appoint a ​‘stra­ta com­mis­sion­er’ and ​‘cre­ate an office to over­see all stra­ta issues but with par­tic­u­lar focus on defects in new­ly con­struct­ed build­ings’ . Giv­en the Lib­er­al Gov­ern­men­t’s re-elec­tion, whether a sim­i­lar approach will be tak­en by the elect­ed gov­ern­ment remains to be seen.

Decline in construction

This is all occur­ring whilst the ​‘con­struc­tion sec­tor’ mar­ket has been report­ed as going from ​‘bad to worse in late 2018’ . The decline was par­tic­u­lar­ly preva­lent in the res­i­den­tial unit activ­i­ty, which is sur­pris­ing giv­en from a lay­man’s glance there are units ​‘going up’ all over Syd­ney. How­ev­er, the decline is report­ed to be in ​‘new orders’ in the res­i­den­tial build­ing mar­ket, which prob­a­bly makes more sense. 

This is pos­si­bly not the pre­dic­tion the Gov­ern­ment was hop­ing for with its ini­tia­tives to pro­mote urban rede­vel­op­ment with the com­mence­ment of the stra­ta renew­al leg­is­la­tion under the stra­ta reform pack­age intro­duced in late 2016 . 

Increase in build­ing defects

Peo­ple in the indus­try have known for many years that there are short­falls in the indus­try and that ​‘con­sumer’ pro­tec­tion afford­ed to home own­ers under the Home Build­ing Act 1989 is lack­ing, with avenues to bring claims lim­it­ed, cost­ly and sub­ject to strict time lim­i­ta­tions. Fur­ther, the reliance upon ​‘cer­ti­fi­ca­tion’ of build­ings is giv­en more weight than it should, when look­ing at the pic­ture from a ​‘lia­bil­i­ty’ perspective.

A grant has recent­ly been made by the ARC Link­age Projects Grant Pro­gram to the UNSW City Futures Research Cen­tre to ​‘iden­ti­fy and quan­ti­fy defects in stra­ta in NSW, exam­ine the cause of these qual­i­ty issues and pro­pose inno­v­a­tive solu­tions’ and is intend­ed to be a research col­lab­o­ra­tion task between var­i­ous key stra­ta indus­try organ­i­sa­tions which will take place over the next two years. Hope­ful­ly this research will bring to the fore­front once again, the short­falls in the con­struc­tion indus­try and pro­mote some dis­cus­sion about what can be done that will have a pos­i­tive impact on the sector.

In their defence, there are many builders and devel­op­ers in the indus­try who ​‘get the job done right’. They attempt to build in accor­dance with the Nation­al Con­struc­tion Code of Aus­tralia , they don’t cut cor­ners and, if defects do arise from their orig­i­nal con­struc­tion work, they get back on the job and fix them. On the flip­side, there are also many builders that don’t ​‘get the job done right’ and it is home own­ers who are often left to foot the bill when a builder and/​or devel­op­er is no longer around to rec­ti­fy build­ing defects aris­ing from the orig­i­nal con­struc­tion works.

Hope­ful­ly, it does not take a cat­a­stroph­ic event to advance the above ​‘calls’ for reform, pro­mote fur­ther dis­cus­sion and ini­ti­ate what would be a ​‘wel­come’ change. The result being the cre­ation of a cohe­sive and work­ing con­struc­tion industry.

Infra­struc­ture improvements

Recent announce­ments by the Fed­er­al Gov­ern­ment in the 2019 bud­get are pos­i­tive with the aim to increase infra­struc­ture and ser­vices to Aus­tralians which are need­ed to cope with the pop­u­la­tion pres­sures in our cities. The Prop­er­ty Coun­cil of Aus­trali­a’s Fed­er­al Elec­tion Plat­form pro­vides sup­port to this promise . This must sure­ly be a pos­i­tive announce­ment to those devel­op­ers who have approval to build res­i­den­tial stra­ta com­plex­es in our cities. It will increase the attrac­tive­ness of those devel­op­ments to con­sumers in the long term, par­tic­u­lar­ly to those peo­ple liv­ing in the areas of our cities where this con­struc­tion is con­cen­trat­ed, to ease the impact of the increas­ing population.

Res­i­dents of the Greater Par­ra­mat­ta Area have already seen evi­dence of the focus on infra­struc­ture at a state plan­ning lev­el with a Spe­cial Infra­struc­ture Con­tri­bu­tion frame­work for ​‘fund­ing the deliv­ery of state and region­al infra­struc­ture’ estab­lished in 2017 with the City of Par­ra­mat­ta Coun­cil iden­ti­fy­ing $1 bil­lion worth of infra­struc­ture required to sup­port Par­ra­mat­ta as ​‘Syd­ney’s Cen­tral City’.