The concerning number of new buildings with defects in Sydney is a result of the privatisation of the building certification process, developer greed and the neoliberal approach to planning in New South Wales.
Following the forced evacuation of residents from the Opal and Mascot Towers after the discovery of major building defects, NSW Greens MLC聽David Shoebridge chaired a 2019 into the regulation of building standards.
The inquiry鈥檚 covered a range of issues, including the use of flammable cladding in many developments, building certification and the response to building defects. The report included many examples of dodgy practices and downright negligence by developers, certifiers and building companies.
Although significant, high-profile cases of construction defects that require residents to evacuate are relatively infrequent. The real issue is the prevalence of ongoing defects, such as waterproofing failures, non-compliance with fire safety standards and structural issues.
of more than 1000 strata owners in NSW found that 72% knew of at least one significant defect in their housing complex. In newer buildings constructed since 2000, 85% of respondents reported defects.
Construction companies face few liabilities for these widespread building defects. Mandatory insurance is supposed to cover the cost of repairing defects, or completing unfinished work, in the event of the builder dying, disappearing or becoming insolvent.
However, the NSW government amended the Home Building Act in 2002 to exempt construction companies having to take out mandatory insurance for residential buildings taller than three storeys.
Private certification
Building certifiers are responsible for ensuring building standards are met. They issue a range of certificates that state that work has been carried out in accordance with the law, or authorise the occupation of a new building.
Building certification used to be carried out by local councils. However, following the Local Government Act in 1993 and planning 鈥渞eforms鈥 in 1998, the industry was privatised. Now, private companies or individuals are responsible for the majority of the state鈥檚 building certification.
This shift came after developers undertook a significant lobbying effort: local councils were seen as a roadblock to their business plans.
It has also stripped local government of planning powers and introduced 鈥減lanning panels鈥, which broadens the scope of developments that do not have to go through local council approval.
Planning panels are made up of a chairperson, appointed by the NSW planning minister, two 鈥渆xperts鈥 chosen by the local council 鈥 though from a pool pre-approved by the planning minister 鈥 and one community representative. The upshot is that they are dominated by development and property industry representatives who often approve development applications despite strong community opposition.
The 鈥渃utting red tape鈥 rhetoric to improve efficiencies rings false in light of the thousands of dwellings that now require costly repair work.
Many environment and community groups, as well as local councils, opposed private certification at the time. 聽聽聽聽
There is an inherent conflict of interest between the certifier and the developer in the current certification system. Developers鈥 focus on maximising profits mandates that work be carried out quickly and cheaply, including the certification process.
Certifiers are expected to defend the public interest and ensure buildings are safe. However, since it may result in rising costs or delays, it is often seen as being against their commercial interests to do so. 聽
Certifiers rely on maintaining friendly relationships with developers and builders to ensure future contracts.
As developers and builders are free to appoint the certifier of their choice, they choose those that will issue certificates with minimal delay.
For the most part, certification has become a 鈥渢ick-the-box鈥 process, in which developers only have to provide the required documentation, rather than be subjected to ongoing scrutiny throughout the design and build stages.
In many cases certifiers carry out few, if any, physical inspections of the worksite during construction.
Developer greed
Many of those who have bought into defective buildings are unable to take on wealthy developers and construction companies to seek compensation. Even when residents have tried to take legal action, the system is stacked against them.
Developers and construction companies commonly use the practice of 鈥減hoenixing鈥, which involves the creation of $2 companies to carry out specific projects that then transfer the profits and wind up.聽This ensures that developers and construction companies generate huge profits, while avoiding legal and financial responsibility for defects.
The government has failed to crack down on phoenixing, which is no surprise given it would harm the profits of its developer mates. Developers鈥 focus on maximising profits leads to corners being cut through all aspects of the design and construction process.
The poor quality of many new apartment buildings contributes to the rip-off. Overall, apartment residents are lower income, renting, young聽and from non-English speaking backgrounds.
The NSW government continues to ignore calls for meaningful building reform and the proper regulation of the building industry. Its neoliberal approach to planning is clearly failing to provide quality and affordable housing.