Other measures to address non-conforming
This chapter considers ways to make information regarding non-conforming
building products more available and explores various deterrent options. This
chapter examines the development of national databases, Commonwealth funded
building work and the enforcement of the Code for the Tendering and
Performance of Building Work 2016, and mandatory recall insurance for high-risk
products. The last section of this chapter discusses some of the issues arising
from the committee's interim report on asbestos.
The committee received evidence from a range of submitters that the
development of a consolidated national database of conforming and
non-conforming products could provide a useful tool to assist industry
participants to address the issue of non-conforming building products. Such a
national database would go further than the one-stop-shop website which has
already been established (discussed in Chapter 3), which provides general
information on non-conforming building products.
Master Builders Australia argued for the development of an information
portal that consolidates existing information about certified products and
their appropriate use:
There is a common lack of guidance information on how to use
a building product in practice and no information about what is the best
evidence or way to educate a consumer as to how a product should be used. Were
this information made mandatory and done so in a way that is produced
consistently, industry participants would be better placed to address NCPs.
The National Electrical and Communications Association (NECA) also
supported the development of a national database, suggesting:
Given concerns relating to the authenticity and accuracy of
test certificates, NECA believes the database use could be extended to include
the verification of test certificates to maintain an imported product's proof
of compliance. Test certificates are generally accepted by importers as proof
of a product's legitimacy but in certain cases, certificates have been found to
be illegitimate or counterfeit. In order to enhance this process, verification
could be based off a list of legitimate, accredited test labs that are subject
to an audit regime based upon track record and level of risk.
SAI Global noted that it conducts over 100 000 global audits annually
and has experience in supply chain control, auditing and assessing against
standards across a large number of industries. In its view, the enforcement of
the standards and data collection across the supply chain is not well managed
and, where registers are kept of certification, they are isolated and difficult
for consumers to find and use. As such, SAI Global expressed the view that
central management of supply chains is necessary to ensure compliance. It
The sheer number of products and the lack of a single
database to be able to check batches / shipments leaves the process and
subsequent product open to Economically Motivated Adulteration (EMA) where
substitution occurs either in the manufacturing process or in the supply chain.
The product verification can be further inhibited by fraudulent documentation.
SAI Global considered the centralised database should be self-funded by industry
Economic benefits to the suppliers result from finding
non-conforming product earlier in the supply chain, preferably prior to
shipment from the manufacturing point thus lowering economic risk and product
The Housing Industry Association (HIA) indicated it had moved on from
plans to develop a national database as it had not received government funding
for its development:
There are a number of other groups that have undertaken work
in the register space. Some of those are private; some of those are government
is a group that has produced a register. What we have seen so far have been
very simple attempts at collecting information about a product, putting that in
one space and allowing someone to find that information. What no-one has done
yet is establish a register that says whether a product is good or not good,
and it's a challenging thing. So without support for HIA to do that, and we
always knew that was a significant task, we have now looked to see if there are
other ways to solve that problem and we're not actively looking to develop a
The Department of Industry, Innovation and Science noted that there are
a number of industry led initiatives which provide tools and resources; however,
the department itself is not involved in the development of a national register
or database to facilitate people getting access to accurate information about
The committee agrees with views in submissions that the development of a
consolidated national database of conforming and non-conforming products could
provide a useful tool to assist industry participants to address the issue of
non-conforming building products. The committee believes the government should
consult with industry stakeholders to determine the feasibility of developing a
national database of conforming and non-conforming products.
The committee recommends that the Australian Government consult with
industry stakeholders to determine the feasibility of developing a national
database of conforming and non-conforming products.
With regard to compliance, the committee notes that the Shergold and
Weir Report recommended that 'each jurisdiction establishes a building
information database that provides a centralised source of building design and
construction documentation' (Recommendation 12).
This recommendation is aimed at improving access to documentation to enable
information sharing and data analysis to inform regulatory decision-making. The
Shergold and Weir Report suggested the following information should be
the name of the appointed building surveyor or issuing authority;
a description of the proposed building work;
details of all practitioners engaged;
details of design certificates relied on and any information
about third party review;
details of any performance solutions and any information about
third party review;
enforcement actions taken;
final approval information, including details of certificates
relied on and fire safety maintenance requirements and any design assumptions
that must be maintained or considered in future changes to the building; and
details of compliance inspections/certificates issued in relation
to ongoing maintenance obligations through the life of the building.
The committee gives in-principle support to the collection of detailed
building construction and maintenance documentation for buildings to enable the
audit of buildings in the instance of another incident of widespread use of
non-compliant building products, such as has occurred with aluminium composite
The committee gives in-principle support to Recommendation 12 of the Shergold
and Weir Report '[t]hat each jurisdiction establishes a building information
database that provides a centralised source of building design and construction
documentation' so regulators are better placed to identify where non-compliant
building products have been installed.
Code for the Tendering and Performance of Building Work 2016
The Code for the Tendering and Performance of Building Work 2016 (the Code) commenced on 2 December 2016.
The Code contains a range of requirements for code covered
entities. The Code also places obligations on funding entities both during
the procurement of Commonwealth funded building work and during the conduct of
Building contractors or building industry participants, who are
subcontracting Commonwealth funded building work are responsible for ensuring
all expressions of interest, tenders and contractual documentation are
consistent with the requirements of the Code. All subcontractors invited to
express interest in, or tender for, Commonwealth funded building work must be
informed of the application of the Code to the work.
The report of the committee's inquiry into the future of Australia's
steel industry noted that the Code for the Tendering and Performance of Building
Work 2016 requires Commonwealth funding entities to only enter into building
contracts with preferred tenderers where code-covered businesses can prove that
their products comply with Australian Standards.
It also noted that the 2017 Commonwealth Procurement Rules also require, where
contracts are above a certain threshold, that if an Australian Standard exists
for particular goods or services being procured, 'tender responses must demonstrate
the capability to meet the Australian standard, and contracts must contain
evidence of the applicable standards'.
The committee commented that:
Code is an important instrument for government procurement, but the question of
who holds responsibility for the enforcement of compliance with the Code is yet
to be determined.
One of the key roles of the Australian Building and Construction
Commission (ABCC) is to monitor the Code. Ms Cathy Cato from the ABCC noted
that the Code is the only area of the ABCC's jurisdiction that relates to
Australian Standard building products:
The code places requirements on funding entities who are
procuring Commonwealth funded building work. Two of the requirements relate to
the use of Australian standard building materials and products. Firstly, before
entering into a contract, a funding entity must collect information from the
preferred tenderer about whether the building materials to be used to undertake
the building work comply with relevant Australian standards published by or on
behalf of Standards Australia. Secondly, a funding entity must only enter into
a contract with a code covered entity that only uses products in building work
that comply with the relevant Australian standards published by or on behalf of
To assist funding entities to comply with these code requirements,
the ABCC has published model clauses that funding entities may include in
tender and contract documentation when procuring Commonwealth funded building
work. If the funding entity imposes the requirements and a contractor fails to
use Australian standard building materials, the contractor could be in breach
of its contract with the funding entity. The code also provides that, if
satisfied a funding entity has not complied with the code, the ABCC
commissioner may refer the matter or make a complaint to the secretary of the
Department of Finance for investigation or further action.
The role of the ABCC in relation to the Code is limited to making sure:
...that funding entities put these model clauses into their
tenders and their contracts so that they are collecting the information that
they should be so they can assess during that tender stage whether or not
companies will use Australian standard building materials. Our proactive
activities to date show that those model clauses are being used across the
board and also that the contracts themselves contain that requirement.
While the compliance framework exists for Commonwealth funded building
work, there appears to be limited recourse to penalise companies that do not
comply with the Code.
The committee noted in its interim report on cladding that it did not
consider that loss of accreditation to conduct Commonwealth funded building
work to be a strong enough penalty for non-compliance with the NCC. The
committee is of the view that a stronger penalties regime should be imposed.
The committee recommends the Australian Government consider imposing a
penalties regime for non-compliance with the National Construction Code such as
revocation of accreditation or a ban from tendering for Commonwealth funded
construction work and substantial financial penalties.
Mandatory recall insurance for high-risk building products
The committee's interim report on asbestos noted concerns raised by
stakeholders about the potential impacts of product safety recalls on the
public and industry, and expressed the view that consideration should be given
to introducing mandatory recall insurance to reduce the economic impact of such
recalls. Concerns raised by stakeholders were not limited to recalls in
relation to asbestos containing products, but product recalls for
non-conforming building products more generally.
Master Electricians Australia (MEA) and the Furniture Cabinets and
Joinery Alliance noted that in an ideal world, manufacturers, importers and
suppliers of faulty electrical products would have a process in place to fund
the removal and replacement of any faulty electrical equipment.
However, MEA noted:
Unfortunately, this is not always the case with companies
often going into liquidation after a product they have manufactured, imported
or supplied is identified as being unsafe.
Mandatory recall insurance would give security to consumers
that any faulty or non-compliant electrical products purchased are removed and
replaced without delay.
NECA outlined how non-mandatory recall insurance might not work to
Whilst varying forms of product recall insurance exist within
the electrical products supply chain within Australia, NECA understands that
its take-up is often by the more reputable businesses within the sector. The
uptake of recall insurance by those distributors/importers that arguably
require it most is low. This was all too evident in the Infinity Cable case.
The Queensland Proposal, an alliance of industry groups representing the
Queensland building and construction industry, argued that more needs to be
done to minimise the impact of a product safety recall on the public and
industry. It recommended the government consider introducing:
Mandatory recall insurance where manufacturers, importers and
suppliers of high risk products are required to have a process in place to fund
the removal and replacement of any product found to be faulty and/or not
compliant to Australian Standards.
The committee acknowledges concerns raised by stakeholders
about the potential impacts of product safety recalls on the public and
industry, and is of the view that consideration should be given to introducing
mandatory recall insurance to reduce the economic impact of such recalls. As
noted in Chapter 3, the BMF is determining the feasibility of mandatory
certification for high-risk building products. The committee believes that
where building products are deemed to be high-risk, consideration should be given
to requiring importers and suppliers to hold mandatory recall insurance.
The committee recommends that the Australian Government consider the
merits of requiring manufacturers, importers and suppliers to hold mandatory
recall insurance for high-risk building products.
Building products containing asbestos
Removal and remediation of asbestos
The committee observed in its interim report that the removal of
asbestos can be expensive, time consuming and dangerous; and while the aim of
Australia's regulatory framework is to stop asbestos at the border, recent
incidents highlight the reality that asbestos containing materials remain an ever-present
threat to Australians.
The committee believed that Australia's work health and safety (WHS)
legislation needs to be strengthened to specifically provide that, where
illegally imported asbestos is discovered, it is mandatory that it be removed
and disposed of, providing it is safe to do so, and that the costs of any such
removal and disposal will be borne by the importer of the illegal asbestos. In
addition, the committee considered that, in cases where illegally imported
asbestos is not discovered during installation, mechanisms should be developed
to clearly establish who has legal responsibility for remediation of sites. The
committee was particularly concerned about cases where, at the time asbestos is
discovered, the companies involved in the illegal importation of the asbestos,
supply or fabrication have ceased to exist.
As such, the committee recommended:
...that Commonwealth, state and territory governments work
together to develop nationally consistent legal obligations to require the
removal and/or disposal of illegally imported asbestos (if it is safe to do so
following consideration of the hazards likely to be faced by the workers
undertaking the work) and to make importers responsible for the cost of such
removal and/or disposal of asbestos.
This recommendation was supported in the Australian Government response
to the interim report:
Under the model WHS laws, all jurisdictional regulators have
powers to deal with the removal and disposal of asbestos that has been
unlawfully imported and then used in a workplace. SWA [Safe Work Australia] is
currently reviewing these powers to determine whether they need to be
strengthened. The issue is also being considered as part of the independent
review of the model WHS laws which is due to report by the end of the year.
Should any issues with regulators' powers to deal with
removal and disposal of asbestos be identified, amendments to the model WHS
laws will be progressed through SWA's usual governance processes including
consideration by Safe Work Australia Members and WHS ministers.
Establishing a national portal for
information on asbestos containing products
As noted in Chapter 3, following the recommendations in the SOG Report,
the Commonwealth has launched a one-stop-shop, non-conforming building products
webpage providing information on non-conforming building products, key links to
the non-conforming building product webpages of each state and territory
building jurisdiction, and a mechanism for industry and consumers to report
non-conforming building products.
With regard to the illegal importation of non-conforming building
products containing asbestos, the committee noted in its interim report that
the information that is currently available online regarding this risk can be
difficult to locate and recommended that the Asbestos Safety and Eradication
Agency develop a
one-stop-shop website to provide a single point for participants across the
supply chain to access information regarding the illegal importation of
The committee is pleased to note that the government supported this
recommendation. The government response to the interim report advised:
The Government supports measures to improve public access to
information about asbestos. ASEA updated its website on 2 February 2018 and
provides access to a wide range of information about asbestos, including links
to relevant agencies such as the Department of Home Affairs for more detailed
advice. ASEA's website provides:
comprehensive information about Australia's ban on importing
asbestos, including a list of goods that are at risk of containing asbestos
information on who to contact for asbestos issues, including
links to state and territory WHS and environmental regulators
consumer protection information including safety alerts and
identification and disposal information including links to
relevant government agencies in each state/territory
information for homeowners
general asbestos information including asbestos related research.
ASEA will continue to refine its website to ensure it
provides up-to-date links to comprehensive information that meets the needs of
Offences and penalties
The committee's interim report on asbestos noted evidence received from
a range of submitters that there is a need for a greater focus on enforcement,
including prosecution and penalties to effectively deter the illegal
importation of asbestos. While the committee acknowledged the challenges of
enforcing the existing importation of asbestos offence, it held the view that a
review of the relevant provisions of the Customs Act 1901 (and other
relevant legislation) should be conducted. In particular, the committee
expressed concern that the 'mistake of fact' defence is not operating as
intended and recommended that the current threshold required to make out the 'mistake
of fact' defence should be increased.
committee also expressed concerns regarding by the apparent lack of enforcement
of the importation ban since it came into force on 31 December 2003, and
considers that there needs to be a greater focus on prosecutions for importing
asbestos. The committee recommended that reviewing the quantum of penalties
would have a significant deterrent effect on the illegal importation of
The government response to the interim report noted that the Department
of Home Affairs is 'preparing advice to support the review on changes to the
offences and penalties for the unlawful import/export of asbestos, detailed in
customs legislation, including in relation to the 'mistake of fact' defence'.
At a public hearing on 2 August 2018, Mr Joshua Hutton, from the
Department of Home Affairs, noted that while the review process was ongoing, he
was able to provide an update to the committee.
What we've actually received approval for from government is
to list asbestos as a tier 1 good under the Customs Regulations. That means
that, in a prosecutorial sense, in a legal sense, imprisonment of up to five
years is now on the cards as a penalty for illegal importation of asbestos. As
part of that process, we looked at things like the mistake of fact offence and
absolute liability versus strict liability. For these types of offences, the
strict liability and the presence of the mistake of fact defence is quite a
core legal principle and so was going to be a hard threshold to get over.
However, changing it to a tier 1 good, as listed under the Customs regs, does
take away a small aspect of the strict liability and changes it to an absolute
liability offence. However, the mistake of fact defence is still present and
able to be used.
Mr Hutton stated further, 'the fact that it puts imprisonment, a term of
up to five years, on the table for the penalty. In terms of the more egregious
offenders and repeat offenders, we felt that that was an appropriate penalty to
be used as a deterrent'.
Having received approval for this change, the next step for the department is
the process of amending the regulations to reflect the change.
The committee is encouraged by the Australian Government's support for
the committee's recommendation to develop nationally consistent legal
obligations for removal and remediation where asbestos containing products have
been installed in buildings. The committee welcomes the review these powers by
Safe Work Australia and the independent review of the model WHS laws. The
committee looks forward to seeing the findings of these reviews.
The committee is also pleased that the government has actioned the
recommendation to develop a one-stop-shop information portal to provide single
point for participants across the supply chain to access information regarding
the illegal importation of asbestos.
The committee supports the listing of asbestos as a tier 1 good under
the Customs Regulations, and agrees that a term of up to five years
imprisonment for more egregious offenders and repeat offenders is an
appropriate penalty to be used as a deterrent. However, the committee notes
that this change does not remove the 'mistake of fact' defence, which is still
present and able to be used. The committee remains concerned that the 'mistake
of fact' defence is not operating as intended and reiterates its recommendation
from the interim report on aluminium composite cladding.
The committee recommends that the Australian Government review the Customs
Act 1901 (and other relevant legislation) to address the challenges of
enforcing the existing importation of asbestos offence, with the aim to close
loopholes and improve the capacity of prosecutors to obtain convictions against
entities and individuals importing asbestos. This review should include
consideration of increasing the threshold required to use 'mistake of fact' as
a legal defence.
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