Referral of inquiry
On 23 June 2015, the Senate referred the matter of non-conforming
building products to the Economics References Committee for inquiry and report
by 12 October 2015.
On 15 September 2015, the Senate granted an extension to the committee to
report by 3 December 2015.
On 23 November 2015, the committee was granted a further extension to report by
16 March 2016
and subsequently by 10 May 2016.
Under its terms of reference, the committee was to give particular
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.
Conduct of inquiry
The committee advertised the inquiry on its website and in The Australian.
It also wrote to relevant stakeholders and interested parties inviting
The committee received 75 submissions. The submissions and answers to
questions on notice are listed at Appendix 1. On 13 November 2015, the
committee held a public hearing in Canberra and on 15 February 2016 in Melbourne.
A list of witnesses is at Appendix 2.
The committee has agreed to table this interim report and to request an
extension to present a final report no later than 30 September 2016.
The committee thanks all those who assisted with the inquiry, especially
those who made written submissions.
The Australian building and construction industry accounts for around 8
per cent of Australia's gross domestic product and employs around 9 per cent of
the workforce. The industry contributed $108.4 billion to the Australian
economy in the 2013–14 financial year. At the end of June 2014, the building
and construction industry generated $359 billion in total income and employed
Definition of non-conforming
Although the terms of reference relate to non-conforming building
products the committee also received evidence relating to non-compliant
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).
A product that is non-conforming and/or non-compliant can pose serious
risks to the integrity of a building and the safety and welfare of those on the
construction site and the ultimate inhabitants of the building. For example,
the Building Ministers' Forum (BMF) recognises:
The issue of non-conforming building products (NCBP), whether
domestically manufactured or imported is an important and complex issue. It can
have life safety, health, economic, legal and social consequences.
The issue of non-conforming building products affects a range
sectors—construction, manufacturing, imports and retail.
Context of the inquiry
Prior to the referral of this inquiry, industry had already taken steps
to address the issue of non-conforming building products, including:
In 2012, the Housing Industry Association held a national summit,
Building Products: A compliance free zone, which raised the profile of
product compliance as an industry issue.
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—including the regulators, regulation, codes of
practice and standards—does not operate effectively. This results in an uneven
playing field whereby companies, including importers, manufacturers and
fabricators that are 'playing by the rules' are adversely affected by suppliers
of non-conforming building products.
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.
Lacrosse apartment building fire
On 25 November 2014, a fire occurred at the Lacrosse apartment building
in Docklands, Melbourne. The fire started on an eighth floor balcony, and affected
'two floors below and extended upward to all floors in the building to the
roof, engulfing 16 levels in 15 minutes'. The Metropolitan Fire Brigade found
that the use of aluminium cladding was a contributing factor to the rapid
vertical spread of the fire. The CSIRO conducted tests on the cladding and
found it to be combustible and non-compliant with National Construction Code
standards for use in buildings of three or more storeys.
The Victorian Building Authority (VBA) launched an external wall
cladding audit in Melbourne following the Lacrosse fire. The audit found that
'non-compliance in the use of external wall cladding materials is unacceptably
This high profile incident drew attention to poor building practices.
Building Ministers' Forum
The building conformance framework for non-conforming building products
centres primarily on the constitutional authority held by state and territory
governments and enacted through their building legislation. As such, compliance
and enforcement is ultimately a matter for each state and territory to review
The Commonwealth works collaboratively with the states and territories
through the BMF. The BMF oversees the implementation of nationally consistent
building and plumbing regulation through the Intergovernmental Agreement for
the ABCB. The BMF meets annually or on a needs basis.
On 31 July 2015, shortly after this inquiry started, there was a meeting
of the BMF. The BMF released a communique following its meeting, noting that it
shared the concerns of industry about the 'health and safety risks posed by
potentially non-conforming building products and materials making their way
into the Australian building and construction supply chain and the
non-compliant use of building products'.
To address the issue of non-conforming building products, the BMF
established a Senior Officers' Group (SOG) which was tasked with reporting back
to the BMF in six months on strategies to 'minimise the risks to consumers,
businesses and the community associated with failure of building products to
conform to relevant laws and regulations and at the point of import'.
The SOG comprises two senior officers from each state and territory as well as
With regard to non-compliant products, particularly in the wake of the
Lacrosse building fire in Melbourne, and in order to 'ensure that community
health and safety is effectively maintained', the BMF also agreed that the ABCB
would investigate 'options for a possible mandatory scheme for high risk
building products with life safety implications and report to Ministers within
Senior Officers' Group report
In determining its recommendations, the SOG considered a range of
information sources, including the submissions made to the committee's inquiry.
The current secretariat for the SOG, the Queensland Department of
Housing and Public Works, coordinated feedback on implementing the strategies
in the SOG's report to address non-conforming building products. A consultation
draft of the SOG's Strategies to address risks related to non-conforming
building products report has been released. The closing date for written
submissions providing feedback on SOG report's proposals was 11 April 2016.
In its consultation draft, the SOG explained that it considered
available information and invited industry to present further evidence of
NCBPs. It was able to identify examples of confirmed NCBPs, though these were
not sufficient to demonstrate the extent of the issue. In its view:
...the resulting primarily anecdotal evidence was insufficient
for the SOG to confidently assess the prevalence of NCBPs in the Australian
building and construction industry supply chain, nor was it enough to assess
the current impact of NCBPs.
Even so, the SOG made a number of pertinent observations, including that
there were a number of barriers preventing the collection and reporting of data
on NCBPs in Australia such as:
contractual obligations or commercial relationships that may
prevent or discourage reporting of NCBPs;
fear of litigation from manufacturers or suppliers of NCBPs;
confusion and misinformation about where to report NCBPs;
lack of time, resources and support for building professionals to
verify or report the non-conformity of building products or that claims made
about products are false or misleading;
lack of powers for state and territory building regulators to act
on reports of suspected NCBPs under the current regulatory framework; and
no central register or data collection framework, nor an
information-sharing mechanism between state and territory building regulators.
Worryingly, the SOG also found that there was limited ability for any
regulator to stop known NCBPs entering Australia and making their way into the
building-product supply chain. Among its other findings, the SOG noted:
there is a gap in the investigative and enforcement processes for
building products whereby the state and territory building legislation
primarily provides for regulating the licensing and conduct of builders not
there is no central coordinating mechanism or forum for building
regulation that could provide a central point of contact for building
regulators or industry, nor a mechanism to encourage information-sharing and
collaboration between jurisdictions;
consumer law regulators have varying degrees of cooperation with
building regulators and different approaches to the treatment of building
products under the Australian Consumer Law;
the current regulatory framework places a disproportionate burden
on the end of the product supply chain for identifying NCBPs (builder,
installer and building certifier/surveyor) and after a building product has
already been paid for and/or installed.
The SOG's report also reflected concerns raised in the committee's inquiry
that 'there is confusion regarding responsibilities and where to obtain
information regarding NCBPs'.
In its recommendations to the BMF, it highlighted the importance of
taking a measured and proportionate risk-based approach to addressing the issue
of NCBPs and suggested a number of complementary strategies that should be
considered as a package. Firstly it noted the 'current legislative roles and
responsibilities of the Commonwealth, states and territories, including the
identified gaps and weaknesses, impacting on action in relation to NCBPs'.
It made the following recommendations:
Provide in-principle support for improvements to the regulatory
framework to enhance the powers of building regulators to respond to incidences
of NCBPs e.g. providing the ability to conduct audits of existing building work
or take samples from a building for testing.
Provide in-principle support for improving Commonwealth, state
and territory processes for addressing issues involving NCBPs by:
establishing a national forum of building regulators to facilitate
greater collaboration and information-sharing between jurisdictions;
improving collaboration between building and consumer law regulators and
consistency in the application of the 'false and misleading claims' aspect of
the Australian Consumer Law;
developing education strategies to better inform consumers and building
industry participants and to encourage greater responsibility in the safe use
of building products; and
considering the establishment of a 'one-stop-shop' national website to
provide a single point of information for consumers and building product supply
chain participants, including examining arrangements for hosting and
maintaining a website.
Provide in-principle support for:
mechanisms that ensure that, where all states and territories prohibit
the use of a NCBP, evidence is provided to the Commonwealth enabling
proportionate action to be taken based on the risk posed by the product; and
an information sharing arrangement where import data collected by the
Department of Immigration and Border Protection (for the purposes of reporting,
detecting and controlling the movement of goods across the Australian border)
can be provided to state and territory regulators to facilitate compliance and
enforcement activities in relation to NCBPs.
Approve that the Working Group of Senior Officers and the ABCB
work with Standards Australia to initiate a review of Australian Standards
related to high risk building products referenced under the National Construction
Code, with a view to assessing the costs and benefits of mandating third party
certification and establishing a national register for these products.
Provide in-principle support for independent research to be
undertaken, including manufacturer and random off-the-shelf product testing, to
improve the evidence base relating to NCBPs.
It also recommended that the BMF:
Note the value and importance of existing building industry
initiatives, such as industry third party certification schemes, in identifying
instances of building product non-conformity.
On 19 February 2016, the BMF met to consider the SOG's report, which it
endorsed. Following the meeting, the Queensland Minister for Housing and Public
Works, the Hon Mick de Brenni, announced that 'for the first time we have a
national approach to non-conforming building products'.
The Ai Group welcomed the commitment made by the BMF to address
non-conforming building products. It noted the 'increasing incidence of
non-conforming product in the market place—including recent reports of up to 64
building sites with asbestos-tainted concrete fibre sheeting—show that the
problem is only worsening'.
Non-compliant building products
In response to the Lacrosse fire and the subsequent VBA audit's
findings, the BMF agreed to work cooperatively to implement a range of measures
to address safety issues associated with high risk building products, as well
as the wider issue of non-compliance. The ABCB will support measures to address
the risks specifically associated with cladding used in high-rise buildings, as
well as developing proposed additional actions to address the wider issue of
non-compliant use of building products.
This includes the ABCB working with the SOG to review NCC requirements related
to high risk building products with a view to assessing the costs and benefits
of mandating third party certification and establishing a national register for
The Victorian government raised concerns that Certificates of Conformity
(with the Building Code of Australia performance requirements), 'are not always
explicit in respect of the range of use or circumstances in which a product may
be relied upon to be fit for purpose'.
As part of the actions to be taken by the ABCB following the BMF, the
CodeMark Certificates of Conformity 'will be made clearer as to what particular
products can be used for, as part of a package of improvements to the voluntary
building product certification scheme'.
A further outcome of the latest BMF meeting was the acceptance of an
offer from the Department of Immigration and Border Protection, with assistance
from the Australian Competition and Consumer Commission, 'to establish relevant
information sharing between the Commonwealth, states and territories with a
resolution to fast track and report within two months'.
In response, the Ai Group applauded the move to improve information
sharing between government agencies while reiterating its support for the
Construction Product Alliance's call for the establishment of a confidential
Ai Group considered it should be a priority to assess the feasibility of
establishing a confidential reporting system, such as the Confidential
Reporting of Structural Safety (CROSS) that is operated in the UK, to
facilitate the reporting of non-conforming building products.
The committee commends the concerted effort industry stakeholders have
made to bring this serious issue to the attention of Commonwealth, state and
territory governments and ensure it is at the centre of the Building Ministers'
Forum's agenda. The committee supports a coordinated national approach to
addressing the complex issues around non-conforming building products and
encourages the Commonwealth, state and territory governments to take definitive
action. The committee is interested in the outcome of the consultation on the
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