Chris Ketter (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I present an interim report of the Economics References Committee on non-conforming building products.

Ordered that the report be printed.

I move:

That the Senate take note of the report.

I rise to table the interim report as part of the non-conforming building product inquiry. It is a sobering report, brought about by the events of the Lacrosse apartment building fire in 2014 and the tragic circumstances of the Grenfell Tower fire earlier this year. It is not acceptable in 2017 that people are injured and killed in their own homes. Homes should be places of safety, laughter, joy and community. To have lives put at risk or even lost in modern times is completely unacceptable. We can do better and we must do better.

Throughout this inquiry, we've heard from a number of different stakeholders, and the number of process failures when it comes to construction is utterly bewildering. As Senator Carr, whom I thank for his participation in this inquiry, succinctly put it: 'Over the last few decades, there has been a plethora of deregulation and privatisation. Proper controls, audits and enforcement were not carefully put in place when deregulation and privatisation was carried out. The issue of dangerous, flammable polyethylene cladding is really just a symptom of much bigger problems.' We will continue to tackle these bigger problems through the rest of the inquiry, but for now we have this interim report, which I think highlights the problems that are occurring, and some sensible recommendations that can protect the Australian people.

I'll turn to the problems that we have found with the use of this aluminium cladding. First, there is little accountability for non-conforming and non-compliant products in the supply chain. We heard evidence that importers and suppliers often have very little knowledge of where this cladding ends up—that it's used only in situations that conform to the National Construction Code. I am heartened by the fact that, in my home state, the Queensland government is moving to put accountability into the supply chain for importers, wholesalers and retailers when it comes to the sale of building products. This draft legislation from Queensland has been well received by most stakeholders, and I hope that it is implemented across the nation. Second, we heard evidence that certificates in many instances cannot be trusted. Fraudulent certificates seem to be rife, and the certificates do not contain significant information to explain where it is appropriate to use these products.

The problems don't stop there. When it comes to product standards, the current cladding standard falls far short. Australian standard AS 1530.1 conducts only small-scale testing and doesn't actually provide a good guide as to how a product will perform under a full-scale fire. At this point, I do commend the Four Corners program this week, which highlighted this particular issue in some depth. The structure of the National Construction Code also has numerous ways in which unscrupulous builders might circumvent reasonable requirements when it comes to fire protections. In the words of one of the witnesses:

The Building Code is too complicated. It is contradictory, with no hierarchy of control for various clauses which compete with each other.

There were also concerns raised about a lack of standards for licensing, with many roles requiring little in terms of education and professional development, and some roles having no licensing requirements at all. In fact, in 2003, the Queensland Labor state government brought in licensing for wall cladding installers, which seems to be an important reason that more of this cladding isn't occurring in Queensland. It was actually one of the suppliers in our inquiry who made the point, I think, from recollection, that around 70 per cent of the cladding installed is done by one of four licensed installers of cladding. Substitution of non-compliant cladding is apparently rife throughout Australia, particularly since polyethylene cladding is slightly cheaper. It seems that cost dominates many of the decisions taken in the building industry, to the detriment of end consumers and the wider public.

When it comes to building surveyors, those entrusted with keeping an eye on builders, we heard about problems there, too. We heard concerning evidence that surveyors are often in a situation where they do only visual inspections on sites and are often unable to verify the cladding type once the cladding is installed and sealed up, so they are not actually able to see if it is fire-resistant cladding or another form of cladding. Other stakeholders shared concerns about surveyors being not much more than certificate collectors, constrained to trusting electronic certificates sent by email.

We also heard concerns that many surveyors are paid for by the builders, which makes it all the more difficult for a surveyor to challenge a builder where they suspect nonconformance or noncompliance. In the end, this leaves much of the risk of nonconformance and noncompliance with the owners. In many cases body corporates are not formed until after the construction is complete and are left with hidden faults that emerge many years after any warranties have expired. The Owners Corporation Network lamented that there is a greater duty of care in the sale of a refrigerator than in the delivery of people's homes. No matter where you turn in this industry, you can find people trying to evade their responsibilities and place the blame somewhere else, and in the case of flammable cladding the process hasn't failed in just one place—it has failed at almost every point of the chain. That is why there needs to be a multifaceted approach to addressing this issue, which I will address now.

Let's talk about the recommendations in the report. Polyethylene ACP cladding can currently be installed in low-rise buildings and signage. We have to trust that people are not using it in inappropriate circumstances, like high-rises. The committee has come to the conclusion that the public risks associated with this product outweigh the benefits that it can provide, so our first recommendation is that the government implement a total ban. For a small additional cost we can remove the risk entirely.

The second major area is licensing. Some accountability needs to rest with the people responsible for installing building products as well as people such as building surveyors, building inspectors, builders and project managers. If there is a threat that people might lose their licence if they don't comply with the codes, then we stand a better chance. It would seem that the federal government has the capacity under the training regime in terms of Commonwealth funding powers. There is a need for national licensing, for a high bar to be set for qualifications and for it to be harmonised across the states to improve productivity. The federal government can and should act in this area. The committee has also recommended that accountability for others in the supply chain be strengthened, with the Queensland legislation—the Building and Construction Legislation (Non-conforming Building Products—Chain of Responsibility and Other Matters) Amendment Bill 2017—being a very good starting point. In fact, I don't think any witnesses in the course of the inquiry provided any negative feedback on the Queensland bill.

When it comes to Australian standards, we heard evidence that the prohibitive costs of purchasing building product and meeting construction standards can also inhibit strong code compliance. I have urged the government to consider making Australian standards free for users. In response to the issue of strata properties, often high-density apartment blocks, I have recommended that a duty of care be extended to strata communities so that builders and developers have the responsibility to deliver compliant buildings to end-user apartment owners. Regarding Commonwealth-funded construction projects, the committee has recommended that the new Federal Safety Commissioner be given adequate resources to carry out audits against the National Construction Code performance requirements for building materials. In addition, there should be a penalties regime for noncompliance. Commonwealth-funded construction should be done according to the national code.

In summary, the issue is a very sobering one. We can debate many issues in this chamber, some more trivial than others, but this report goes directly to the safety of the Australian people. In line with this, I would encourage Minister Laundy to do his job as minister. Along with this report I have tabled a letter in which the minister has bizarrely requested the committee to investigate the claims made throughout our public hearings. Memo to the minister: you are the minister, you are part of the government, you control the regulators and it is on you to fix this mess. It is not the responsibility of a parliamentary committee.

Nick Xenophon (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

I concur with Senator Ketter, the chair of this inquiry by the Economics Reference Committee, and commend him for the work that he's done—and, of course, I commend the work of the secretariat and my colleagues. This very important inquiry on non-conforming building products was instigated several years ago, at the end of 2015, and that involved my then colleague Senator John Madigan and Senator Lambie. The trigger for this inquiry was the Lacrosse building fire in Melbourne in November 2014. It was due to luck alone that no lives were lost in that fire. The committee quite rightly revisited the issue of cladding following the awful tragedy of the Grenfell Tower fire in London in June this year. This inquiry is very timely and very urgent. I agree with everything Senator Ketter has said about the need for urgent action in relation to this.

It is up to the government, it is up to the minister and it is up to the states to take immediate action in relation to this. If the government won't act, the next step will be to have an amendment to the Customs Act in terms of safer building products so that, once and for all, we can ban polyethylene building products coming into this country. We don't need them. We can go without them. The cost differential between the two per square metre is minuscule. That is the evidence the inquiry has heard. It would ensure that these products are not used in high-rise buildings. At the moment, the flammable material can be used for shop fittings; it can be used on single-storey buildings. But why let them into the country in the first place? The cost involved would be negligible in terms of having a fire retardant, a material that is actually safe, so that you will not effectively have buildings wrapped in petrol.

On a recent episode of Four Corners, fire safety engineer Tony Enright stated:

A kilogram of polyethylene will release the same amount of energy as a kilogram of petrol, and it gets worse than that because polyethylene is denser than petrol too, so that's about, a kilogram of polyethylene is like about one and a bit, one and a half litres of petrol. … If you look at a one metre by one metre square section—

of PE core cladding—

that will have about three kilograms, the equivalent of about five litres of petrol.

People live in these buildings and sleep there overnight. So why would we have any of those buildings effectively wrapped in petrol? That is what we are talking about. There must be immediate action in relation to this.

That is why this inquiry has been so important. Everything that the chair has said is spot-on. We need to make sure that we have action by the states and the Commonwealth in relation to this as a matter of urgency. Unless the states act with alacrity, with a great sense of urgency, the way to stop this from occurring is to stop bringing this stuff into the country. But that still leaves thousands of buildings that have this cladding. There must be that audit. I am not satisfied that the audit has been as comprehensive as it could have been.

We asked questions of the South Australian government—I think they were questions by Senator Hume—about the new Royal Adelaide Hospital, the two magnificent buildings. We should have been told immediately what sort of cladding they had, because there is an audit that is occurring on that. I think the government has assured us there isn't a problem. But this is information a government should have at its fingertips with an audit. So ban the stuff from coming into the country from now on, and let's have a comprehensive audit so remediation can be carried out and people can live and work safely in these buildings.

This report is of utmost urgency. The committee has done its work—and I note that Senator Carr was a very active participant on this committee. We have done our work. We have issued the warnings. We have said there is no excuse not to act. Let us hope that governments federal, state and territory do not hesitate to act on the recommendations of this inquiry to do what is necessary to protect public safety. We cannot, under any circumstances, bear the tragedy that occurred in London just a few months ago. We must prevent any risk of that happening here. That is why this report is of utmost public importance and urgency and we must act on it.

Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Link to this | Hansard source

This report of the Economics References Committee on non-conforming building products is one of those seminal reports that the Senate has an opportunity to deal with from time to time. I know a great deal of public debate occurs about the role of the Senate. I think there is often undue criticism paid to the way the Senate operates. One of the most important functions the Senate has, and I think the real secret of the Senate's power in this country, is the power of exposure. Senator Ketter, as the chair of this committee, has led it through a daunting series of public hearings and through the examination of submissions from over 160 submitters.

I have been here a few years now and I can say to you that it is rare that you have an opportunity to see evidence presented to a Senate committee from such a diverse group of people in an area of the Australian economy that's often renowned for its division and diversity. But, in this case, what's remarkable is the uniformity of views. As a participant in this inquiry, I have been struck by how broadly based the concerns of the building practitioners have been. Whether it be employer organisations, unions or consumer groups, a very powerful concern has been expressed about the systematic failure of the regulatory regime in this country to deal with fundamental issues of public safety.

The real anxiety that I have here is that there is an opportunity for this parliament to put an end to the buck-passing on what, for some time, has been a litany of abrogations of responsibilities by just about everybody concerned with the building industry. It is a common feature of this industry that someone always has somebody else to blame. The circumstances around the Lacrosse fire in Melbourne highlighted something in this country, whereby a fire started by a cigarette butt spread within 11 minutes across 23 storeys of a residential building. We were incredibly lucky that no-one was killed in that circumstance. The firefighters who witnessed that, men of extraordinary experience—31 years experience—said that was the most devastating fire they've ever witnessed in an urban area. That testimony was repeated many times over by senior firefighters across the country. This is in the circumstance where we saw the recent events in the United Kingdom, where a fire tragically killed 80 people, highlighting once again the use of this plastic-centred aluminium cladding, which essentially explodes.

There have been 19 significant fires like this in multi-storey buildings around the world. In one case in Dubai, a building caught fire twice. There have been a number of fires in Australia, including a couple in Melbourne. According to the evidence, at least 10,000 buildings across the country contain this building material. According to the evidence, we have here a systematic failure as a result of the privatisation and the deregulation of the building industry, which has led to what is now clearly a major problem of public safety in this country. What we have is an abrogation of responsibilities where governments have been, essentially, seeking to refer this to one committee of procrastinators after another so that nothing actually gets dealt with. Senator Ketter has drawn our attention to what's happened in Queensland, and I commend the Queensland government for at least making that effort. They're the only government in the country that have actually made an effort. In the case of Victoria, litigations are continuing about the Lacrosse fire nearly four years after the event.

When you talk to officials about these things, they don't dispute the evidence. It's not as if people are saying, 'No, this is not happening.' They are not saying that there hasn't been widespread document fraud, widespread certification fraud or widespread substitution of products. When you ask officials, for instance, from the Victorian Building Authority, they say, 'Yes, it's true'. They acknowledge it. When you ask, 'How many prosecutions have there been for fraud?' they say, 'We know of one with some evidence.' There's no-one taking action here, so, in the circumstances in Melbourne, it's the residents of the Lacrosse building who are now left responsible for removing this cladding.

This is cladding which was, according to the evidence before the committee, saving $3 a square metre. It's going to cost billions to take this stuff down. That's an extraordinary proposition. Audits have been undertaken across the country and governments all over the country are trying to duck and weave when it comes to how many buildings are involved. There are 2½ thousand, according to a leaked submission, in New South Wales alone. So our recommendations go to some pretty simple propositions here. In the first instance, this is stuff that's so dangerous that it can't be used in low-rise buildings. It's just not justified to be used in low-rise buildings. Everyone acknowledges that it should not be used in high-rise buildings, which it has been. When you ask the simple question, 'How does that occur?' people say, 'It is compliant for low-rise buildings.' It shouldn't be. It should be banned, and that's the recommendation of the committee.

Just like asbestos, this stuff—the plastic cores—is too dangerous to be used for the external cladding of buildings. We are saying that we have to bring public accountability back into the system for public safety in the building industry. There has to be a national licensing authority to secure that. In the medical industry, if a doctor's caught doing malpractice, they lose their licence and are deregistered. This committee's recommending to the parliament that that's one way of bringing back public accountability into the building industry for all building practitioners. We're saying that, if you want to breach the code, there ought to be penalties for breaching the code with regard to Commonwealth buildings.

The Office of the Federal Safety Commissioner that's in place there is an absolute paper tiger. It has no real authority, no real powers and no real resources. It is a complete joke of an office. For Commonwealth-funded buildings, that should change. We should ensure that actions are put in place. The Commonwealth Minister for Industry, Innovation and Science is the responsible minister for the Building Ministers' Forum. He should not only take responsibility for this but also ensure that the supply chain is actually brought back into this. We should ensure that Australian standards and the products of their work—particularly the building codes themselves—are available to the industry, but not at such prohibitive prices as to make them unavailable.

This is an important inquiry that's making recommendations to the parliament which I trust the political parties will take up. It provides an opportunity to restore public confidence and public accountability for public safety and provides an opportunity for this parliament to show real leadership, because clearly this government has failed to do so. The assistant minister's letter to the committee suggesting that it was the parliamentary committee's responsibility to police breaches of the code is a complete joke, and it demonstrates why this government just doesn't understand its own responsibilities to prosecute people who have broken the law. I seek leave to continue my remarks later.

Leave granted; debate adjourned.