Introduction and overview
On 23 June 2015, the Senate referred the matter of non-conforming
building products to the Economics References Committee (the committee) for
inquiry and report by 12 October 2015.
The committee was granted a number of extensions and the inquiry lapsed at the
dissolution of the 44th Parliament. On 11 October 2016, the Senate
agreed to the committee's recommendation that this inquiry be re-adopted in the
Under its terms of reference, the committee was to inquire into:
- the economic impact of non-conforming building products on the
Australian building and construction industry;
the impact of non-conforming building products on:
industry supply chains, including importers, manufacturers and
workplace safety and any associated risks,
costs passed on to customers, including any insurance and compliance
the overall quality of Australian buildings;
possible improvements to the current regulatory frameworks for ensuring
that building products conform to Australian standards, with particular
reference to the effectiveness of:
policing and enforcement of existing regulations,
independent verification and assessment systems,
surveillance and screening of imported building products, and
restrictions and penalties imposed on non-conforming building products;
any other related matters.
On 13 October 2016, as part of its broader inquiry, the committee
resolved to inquire into the illegal importation of products containing
asbestos. The committee adopted the following additional terms of reference for
this part of the inquiry:
The illegal importation of
products containing asbestos and its impact on the health and safety of the
Australian community, with particular reference to:
- the prevalence and sources of illegally imported products containing
the effect of illegally imported products containing asbestos on:
industry supply chains, including importers, manufacturers and
workplace and public safety and any associated risks;
possible improvements to the current regulatory frameworks for ensuring
products containing asbestos are not illegally imported to Australia, with
particular reference to the effectiveness of:
policing, enforcement, surveillance and screening of imported products,
including restrictions and penalties imposed on importers and end users of
products containing asbestos;
preventing exposure and protecting the health and safety of workers and
other people affected by the illegal importation of products containing
establishing responsibility for remediation of sites where illegally
imported products containing asbestos has been found;
coordination between Commonwealth, state and territory governments and
the role of the Australian Government in coordinating a strategic approach to
preventing the importation of products containing asbestos;
any other related matters.
In light of the tragic fire at the Grenfell Tower in London in June
2017, the committee agreed to prepare an additional interim report on the
implications of the use of non-compliant external cladding materials in
Australia as a priority.
Conduct of the inquiry
The committee advertised the inquiry on its website and wrote to
relevant stakeholders and interested parties inviting submissions.
The committee received 164 submissions, as well as a number of
supplementary submissions. The submissions range from government departments
and agencies to peak industry bodies, unions, individuals working in the
industry and consumers. A list of submissions to the inquiry is at Appendix 1.
Public hearings were held on:
- 13 November 2015 in Canberra;
- 15 February 2016 in Melbourne;
- 30 January 2017 in Brisbane (asbestos);
- 9 March 2017 in Perth (asbestos);
- 14 July 2017 in Melbourne (asbestos and cladding);
- 19 July 2017 in Sydney (cladding);
- 31 July 2017 in Adelaide (asbestos and cladding);
- 3 October 2017 in Sydney (asbestos);
- 17 October 2017 in Canberra (asbestos); and
- 2 August 2018 in Canberra.
The names of witnesses who appeared at the hearings are listed at
The committee thanks all individuals and organisations who assisted with
the inquiry, especially those who made written submissions and participated in
the public hearings.
non-conforming and non-compliant building products
In understanding the issues and findings in this inquiry, it is
important to understand the distinction between non-conforming building
non-compliant building products.
Non-conforming building products are 'products and materials that
claim to be something they are not; do not meet required standards for their
intended use; or are marketed or supplied with the intent to deceive those who
- Non-compliant building products are products that are 'used in
situations where they do not comply with the requirements of the National
Construction Code (NCC). A building product can be both non-conforming and
The Australian Building Codes Board (ABCB) illustrated the distinction
between non-conforming and non-compliant building products with the following
A building product that is labelled or described as being non‐combustible but which
is combustible is a non‐conforming
product. A building product that is combustible, and described as such, but is
used in a situation where a non‐combustible
product is required under the NCC, is not fit for purpose (it is a non‐complying product).
The Housing Industry Association (HIA) explained that non-conforming
building products are products that:
do not conform with the required Australian building regulations
and technical standards including incorrect certification;
are counterfeit copies of legitimate conforming products;
are supplied with fraudulent certification or documents attesting
to their conformance; and
are substituted for the original product at the point of sale or
Previous committee reports
The committee has heard from a range of stakeholders about the
widespread use of non-conforming and non-compliant products in the Australian
construction industry. The committee has tabled three interim reports in
relation to this inquiry:
Interim report: Safety—'not a matter of good luck' on 4
Interim report: aluminium composite cladding on 6
September 2017; and
Interim report: protecting Australians from the threat of
asbestos on 22 November 2017.
In addition, the committee's inquiry into the future of Australia's
steel industry examined the issue of non-conforming building products in
relation to steel. The report—Australia's Steel Industry: forging ahead—was
tabled on 1 December 2017.
Prior to these inquiries, the committee conducted an inquiry into
insolvency in the Australian construction industry, which examined issues
within the building and construction industry more broadly that may impact on
the use of non-conforming and non-complying building products. This report was tabled
on 3 December 2015.
Inquiry into insolvency in the
Australian construction industry, 3 December 2015
The committee's inquiry into insolvency in the Australian construction
industry found that businesses operating in the Australian building and
construction industry face an unacceptably higher risk than any other
stand-alone industry of either entering into insolvency themselves, or becoming
the victim of insolvency further up the contracting chain. The committee
In an industry characterised by low barriers to entry, small
profit margins and inequitable allocation of risk, an effective licensing regime
is necessary to protect participants from both unscrupulous and hapless
The committee is concerned that the structure of the building and
construction industry, in which contractors and subcontractors are working with
razor-thin profit margins, may lead to sub-optimal choices when procuring
building products. Such market structures, power imbalances and supply chain
profitability differences can incentivise, both consciously and unconsciously,
actions such as product substitution. At one end of the spectrum, it might
involve a sub-contractor, with little conscious thought, installing a slightly
inferior, cheaper product that is more expensive when rationally assessed over
its full life cycle. At the other end of the spectrum, such market structures
could incentivise conscious, deliberate product substitution that may
compromise the health and safety of both workers and building occupants,
especially when supervision and enforcement is lacking.
In addition, insolvency and illegal phoenix activity
can also make it difficult to assign responsibility for remediation when
non-conforming building products have been installed in a building. This issue
is highlighted in the case of Infinity cables.
In 2014, the Australian Competition and Consumer Commission (ACCC)
issued a national recall of Infinity and Olsent-branded Infinity cables which
failed to meet electrical safety standards due to poor quality insulation
The ACCC advised that electrical retailers and wholesalers have recalled
Infinity and Olsent-branded electrical cables, warning that 'physical contact
with the recalled cables could dislodge the insulation and lead to electric
shock or fires'.
In its recall notice, the ACCC reported that the cables were supplied
Victoria, Queensland, South Australia and Western Australia (2012–2013);
The importer and supplier of Infinity cables declared bankruptcy and
liquidated shortly after identification of the safety issue; consequently
retailers and electrical installers are meeting the cost of the remediation.
Four years on, and remediation is still ongoing, with the ACCC noting that it
had been advised by experts that any Australian locations of unremediated cable
could now present a safety risk.
Interim report: Safety—'not a
matter of good luck', 4 May 2016
The committee's 2016 interim report, Safety—'not just a matter of
good luck', noted that prior to the referral of this inquiry, industry had
already taken steps to address the issue of non-conforming building products.
In 2012, HIA held a national summit, Building Products: A compliance
free zone, which raised the profile of product compliance as an industry
In November 2013, Ai Group released a research report on non-conforming
building products, The quest for a level playing field: The non-conforming
building product dilemma. The Ai Group's report analysed the steel,
electrical, glass, aluminium, engineered wood and paint sectors to gauge the
scale of the problem and its causes. In brief, the report found that the
product conformance framework—'all regulations, codes of practice, standards,
certification scheme (first, second or third) or accreditation schemes that
bring about product conformance in the building and construction sector
including the regulators, regulation, codes of practice and standards'—does
not operate effectively. The report found:
Gaps and weaknesses were identified in the building and
construction conformance framework allowing nonconforming product onto the
market. These include inadequacies of: surveillance; audit checks; testing;
first party certification and enforcement. The report suggests that building
certifiers bear a disproportionate share of the burden for ensuring product
conformance. Greater emphasis on conformance at point of sale and increased
responsibility on product suppliers and builders may be required.
The product conformance framework, that is collectively made
up of the regulators, regulation, codes of practice and standards, does not
operate effectively. There is confusion among stakeholders about who has
responsibility and the arrangements for recourse when non-conforming product is
The end result is an uneven playing field. Companies,
including importers, manufacturers and fabricators that are playing by the
rules are adversely impacted by suppliers of NCP paying scant regard to the
standards and requirements set by Government and industry. Industry needs to
show leadership and cohesion to tackle this issue.
In March 2014, following the release of the report, Ai Group convened a
forum, including government and industry stakeholders, to determine an action
plan to address the matters identified in the report. The Construction Product
Alliance was formed to facilitate industry involvement.
In September 2014, the Australasian Procurement and Construction
Council (APCC) together with 30 key industry stakeholders developed and
launched the Procurement of Construction Products—A guide to achieving
compliance. The guide was produced in response to the increasing evidence
of, and concerns about, the market penetration of non-conforming construction
products, particularly for many 'safety critical' products.
The 2016 interim report raised concerns in relation to: the illegal
importation of building products containing asbestos; the 2014 Lacrosse
apartment fire in Melbourne and the use of non-compliant aluminium composite
cladding; and national recall of Infinity cable, which was found to be
non-conforming. The committee observed that:
Clearly there has been a serious breakdown in the regulation
and oversight of both non-conforming and non-compliant building products, which
requires determined action. The committee notes progress already underway,
especially the work of the [Senior Officers' Group]. Given the seriousness of
the problem, the various areas of glaring weakness in the regulatory regime,
including the certification process, and the disjointed regulation of the use
of building products, both manufactured in Australia and overseas, the
committee has formed the view that it should continue its inquiry.
Interim report: aluminium composite
cladding, 6 September 2017
The committee's interim report on aluminium composite cladding was
brought about by the events of the Lacrosse apartment building fire in
Melbourne in 2014 and the tragic Grenfell Tower fire in London in 2017.
The report found that deregulation and privatisation in recent decades,
without proper controls, audits and enforcement, as well as the increase in
product importation following the significant decline in Australia's
manufacturing base, have led to the proliferation of unsafe building products
over the last few decades.
The committee heard evidence that there is little accountability for
non-conforming and non-compliant products in the supply chain.
In the case of the Lacrosse apartment fire, it appears that no party has
While the owners' corporation blames a range of contractors
for the fault, LU Simon [the builder] is largely passing blame for the fire to
architect Elenberg Fraser and other consultants.
The architects say they are not responsible because they
merely designed the building. At fault, they say, were the builder, fire
engineer and surveyor.
The building surveyor says that while it was not at fault, if
it is found to have in part caused the fire, the occupants of the building must
share the blame, because the owners' corporation "failed to conduct any
routine inspections to ensure balconies of the Lacrosse apartments were not
used for storage".
A lack of accountability has led to the risks of non-conforming and
non-compliant products being left to building owners, particularly in cases
where hidden faults 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'.
The committee heard evidence about the reliability of certification
documentation, particularly the prevalence of fraudulent certification. In
addition, product substitution was identified as perhaps the most significant
contributing factor to the prevalence of non-compliant products in Australian
buildings. There were also concerns raised about a lack of nationally
consistent standards for licensing for building practitioners.
The committee made a number of recommendations, including:
implementing a total ban on the importation, sale and use of polyethylene
core aluminium composite panels as a matter of urgency;
establishing a national licensing scheme, with requirements for
continued professional development for all building practitioners;
introducing nationally consistent measures to increase
accountability for participants across the supply chain;
making all Australian Standards and codes freely available;
imposing a penalties regime for non-compliance with the NCC such
as revocation of accreditation or a ban from tendering for Commonwealth funded
construction work and substantial financial penalties;
ensuring the Federal Safety Commissioner is adequately resourced
to ensure the office is able to carry out its duties in line with the new audit
function and projected work flow;
expediting the process of introducing Director Identification
Numbers in order to prevent directors from engaging in illegal phoenix
developing a nationally consistent statutory duty of care protection
for end users in the residential strata sector.
The recommendations from the interim report on aluminium composite
cladding are listed in full at Appendix 3.
Australian Government response to the Interim report:
Aluminium composite cladding
The Australian Government response to the Interim report: Aluminium
composite cladding was tabled on 26 February 2018. The response stated that
the Australian Government:
Did not support the total ban on the importation, sale and use of
Polyethylene core aluminium composite panels as a matter of urgency
Noted the recommendation to establish national licensing scheme national
licensing scheme, with requirements for continued professional development for
all building practitioners (Recommendation 2);
Supported the recommendation that the Building Ministers' Forum (BMF)
give further consideration to nationally consistent measures to increase
accountability in the supply chain (Recommendation 3);
Supported in principle that the Commonwealth make all Australian Standards
and codes freely available (Recommendation 4);
Noted the recommendation that the Commonwealth government
consider imposing a penalties regime for non-compliance with the NCC such as
revocation of accreditation or a ban from tendering for Commonwealth
Noted the recommendation to ensure the Federal Safety
Commissioner is adequately resourced to ensure the office is able to carry out
its duties in line with the new audit function and projected work flow
Supported the recommendation to give further consideration to
Director Identification Numbers and recommends that it expedites this process
in order to prevent directors from engaging in illegal phoenix activity
(Recommendation 7); and
Noted the recommendation for a nationally consistent statutory
duty of care protection for end users in the residential strata sector
Interim report: protecting
Australians from the threat of asbestos, 22 November 2017.
The committee's interim report on asbestos found that, although the
importation, use and sale of asbestos has been banned since the end of 2003,
Australians remain at risk of exposure to asbestos through the illegal
importation of asbestos containing products including; gaskets, insulation, brake
pads and even children's toys. The committee heard evidence that frontline
workers and community advocates were too often the last line of defence in
identifying asbestos in building and consumer products.
The interim report included 26 recommendations aimed at:
pursuing a coordinated, strategic approach to enforce Australia's
strict asbestos prohibition at the border, including whole of government
coordination of activities to address unlawful asbestos imports;
providing increased funding for the Asbestos Safety and
Eradication Agency (ASEA);
making sure those in supply chains are more accountable for
illegal asbestos importation;
continuing Australia's information campaign on the risks of
asbestos in the Asia-Pacific region and pursuing global restrictions on
chrysotile (white) asbestos through the 2019 Rotterdam Convention;
strengthening asbestos-related regulations, including increased
improving product testing standards;
establishing a national public asbestos register; and
providing better information and training for industry participants.
The recommendations from the interim report on asbestos are listed in
full at Appendix 4.
Australian Government response to
the interim report: Protecting Australians from the threat of asbestos
The Australian Government response to the Interim report: Protecting
Australians from the threat of asbestos was tabled on 22 August 2018. The
government noted the substantial number of the recommendations set out in the
There is further discussion of some of these recommendations Chapter 5.
Australia's Steel Industry: forging
ahead, 1 December 2017
The committee's inquiry into the future of Australia's steel industry received
evidence indicating that some imported products pose a considerable safety risk
because they do not comply with Australian Standards, or their certificates
stating compliance are fraudulent.
The committee's recommendations sought to:
Improve certification processes for structural and fabricated
steel and harmonise standards between jurisdictions and regulatory bodies.
Develop a confidential reporting mechanism for non-conforming
building products, impose stricter penalties for non-conforming or fraudulent
materials, and establish a public database to register these products and their
At the time of reporting, the Australian Government had yet to table a
response to this report.
Shergold and Weir Report
In mid-2017, following the Grenfell Tower fire, Professor Peter Shergold
and Ms Bronwyn Weir were commissioned by the Building Ministers' Forum (BMF) to
independently assess broader compliance and enforcement problems within the
building and construction systems across Australia.
Their report, Building Confidence—Improving the effectiveness of
compliance and enforcement systems for the building and construction industry
across Australia (Shergold and Weir Report), stated:
We have heard suggestions that large numbers of practitioners
operating in the industry either lack competence, do not properly understand
the NCC and/or have never had proper training on its implementation.
We have consistently heard that the adequacy of design
documentation is generally poor and that, on occasion, builders improvise,
making decisions on matters which affect safety without independent oversight.
This exacerbates disputes about the quality and compliance of building work. It
also results in inadequate information to guide the future maintenance of
safety systems in buildings. These issues undermine public accountability in
building approvals processes.
We have been told that oversight by licensing bodies, state
and territory regulators and local governments can be weak due either to
inadequate funding or a lack of skills and resources to undertake effective
enforcement. We found that, until relatively recently, there has been almost no
effective regulatory oversight of the commercial building industry by
regulators. Those involved in high-rise construction have been left largely to
their own devices. Where there has been supervision, this has generally been by
private building surveyors whom critics argue are not independent from builders
The compliance and enforcement systems have not been adequate
to prevent these problems from emerging and they need to change as a matter of
As such, the Shergold and Weir Report proposed a significant package of
reforms to strengthen effective implementation of the NCC, including:
consistent approach to registration of certain categories of building
practitioners, and compulsory continuing professional development, including
mandatory training on the NCC and supervised training;
powers conferred on regulators and greater collaboration between state and
local government bodies to improve regulatory oversight;
early engagement with fire authorities on designs, which include, performance
solutions on fire safety matters;
focus on the
integrity of building surveyors, including minimum statutory requirements for
their engagement and role, and a code of conduct with legislative status;
regulatory database to provide information sharing to inform regulatory
activities, accessible by appropriate authorised persons, including owners and
on design practitioners to prepare documentation that demonstrates that
proposed buildings will comply with the NCC, and a more robust approach to
third party review of designs, and to the documentation and approval of
performance solutions and variations;
on-site inspections of all building works, and greater oversight of the
installation and certification of fire safety systems in commercial buildings;
production of a comprehensive digital building manual for commercial building
owners, which may be passed on to successive owners, to include
as-built construction documents; details of fire safety systems and maintenance
that the BMF
agree its position on the establishment of compulsory product certification
system for high-risk building products.
The Shergold and Weir Report recommended a commitment to a three-year
timetable for implementation of the recommendations.
The Shergold and Weir report's recommendations are listed in full at Appendix 5.
The Shergold and Weir Report was presented to the BMF in February 2018, and
published in April 2018. The committee had the opportunity to consult some
stakeholders on their views on the report at a public hearing on 2 August 2018.
At its meeting on 10 August 2018, the BMF noted that the Shergold and
Weir Report 'makes 24 recommendations fundamental to the effective delivery of
Australia's National Construction Code (NCC)'.
The BMF directed the development of a paper that sets out an implementation
plan for reform, incorporating feedback from industry stakeholders, for
consideration at the BMF's next meeting. The paper will focus on
recommendations 9 to 11 (which relate to the integrity of private building
surveyors), with further consideration of recommendations 1 and 2 (relating to
nationally consistent registration of building practitioners) and
recommendation 13 (relating to documentation provided by design practitioners).
The Department of Industry, Innovation and Science advised the committee
that the BMF meeting on 10 August 2018 included an industry forum where the
ministers heard directly from industry stakeholders about their views on the
report and the key priorities.
Structure of the report
This report consists of five chapters, including this introductory
Chapter 2 provides examples of building products where
non-conforming products have been identified.
Chapter 3 explores the actions taken by government to identify
and respond to non-conforming building products.
Chapter 4 examines options to lift professional standards in the
building and construction industry.
Chapter 5 considers other measures to address non-conforming
Navigation: Previous Page | Contents | Next Page