Don’t blame the regulations for delays in new home building, blame the developers who build defects into new blocks, says Sid Gokani, CEO of the Australian Institute of Building Surveyors (AIBS).

Last week Mr Gokani lashed out after the story about Parramatta’s Ghost Tower surfaced in the Sydney Morning Herald.

In it we were told that a new 173-unit apartment block has lain empty for three years because of defects and the developer has, predictably. gone into liquidation.

We took the opportunity to ask Mr Gokani, whose members are at the coal face of defects checks, if overzealous quality control might be one of the reasons for the slow rate of new home building.

He said the opposite was true. The Parramatta block was an example of how poor enforcement rather than excessive regulation was delaying homes, by permitting defects. 

The following is the text of our Q&A, unedited except for a minor change for the sake of clarity.

It’s now a year since David Chandler retired. Has the momentum for reform and enforcement diminished?

With the Building Bill currently stalled, it’s fair to say that reform momentum has slowed. The reforms contemplated in that Bill were part of a comprehensive package identified during Mr Chandler’s tenure as Building Commissioner.

While AIBS cannot attribute this stalling directly to changes in personnel, as numerous factors may be influencing reform progress, what we can say with certainty is that these reforms remain critically important, particularly for the consumer protections they would deliver.

How can the industry resolve the dilemma that enforcement of building standards seems to involve more regulations and therefore red tape?

The reality is we don’t need more regulation; we already have requirements for licensing, inspections, and compliance across all construction work. What we need is for the government to ensure the existing laws are actually enforced. The framework is there; it’s the consistent application that’s lacking.

Is there a “magic bullet” that can cut red tape and reduce building defects?

No. If such a solution existed, governments would already be implementing it. However, reducing defects is actually quite straightforward. It requires sufficient compliance and enforcement work to ensure that a licence is viewed not as a tax on participation, but as a valued privilege, one that’s only available to those who can demonstrate they deserve to hold it.

Building surveyors need to be empowered to undertake any inspection necessary, ensuring that everyone working in the sector understands that non-compliance is likely to be discovered, with real consequences for their ability to continue operating.

If faster approvals are part of the solution, state and federal governments need to reconsider complex land use planning approval systems and whether it’s truly necessary to require planning consent for residential developments on residentially zoned land.

The industry seems to miss the point that it costs less to do the work correctly than it does to fix defects once they’re discovered. How do you address that lack of logic?

A licensed person who contracts to do work will likely only secure that job if they’re the cheapest bidder. This creates pressure to complete work as cheaply as possible, and sometimes shortcuts are taken because competitors will undercut you if you don’t. Once the work is completed, the licensed person can usually walk away with payment in hand, leaving others to deal with any defects.

The solution is simple: ensure that no one can simply walk away, and that the lowest common denominator of work remains compliant and fit for purpose. This way, you still get competitive pricing, but with work you can actually live with. If clients want work that exceeds minimum standards, they need to be prepared to pay accordingly, and the sector will happily deliver it.

Should developers be licensed and if so, how would that work?

Yes, absolutely. The Queensland government commissioned a report from a consultative body with sector-wide representation that outlined how to regulate developers effectively.

It proposed a definition of development requiring regulation and a licensing system that would assess directors of development companies along with ‘significant persons’ who are reputable and sufficiently experienced to deliver compliant, fit-for-purpose developments.

The Queensland model also examined peripheral issues such as financial performance, whether developers paid trades and suppliers on time and in full, and if they’d been part of entities wound up due to insolvency. Various requirements can be attached to a developer licence, but the central objective is to prevent those with poor track records from continuing to deliver substandard developments.

Should large low-rise schemes (three storeys or less with 20 units or more) come under the same strata laws as higher blocks with the same number of homes?

Any loophole creates opportunities for those looking to exploit regulatory gaps. If large low-rise buildings are exempt, operators will simply shift to different building classes to continue the same problematic practices. For this reason, AIBS supports uniform regulation across all building types.

The public benefit of adequate investment in robust compliance and enforcement is clearly demonstrated by outcomes in the high-rise apartment sector. As standards improve and poor performers are filtered out, compliance and enforcement efforts will become more efficient, allowing existing resources to cover more buildings.

When you allow the market to self-regulate for too long, it takes time to restore proper standards. However, when you do, reputable practitioners who won’t cut corners can compete on a level playing field, and quality improves without necessarily increasing costs.

What definitive action should government take next to enable us to build more and better homes faster?

Government should focus on two key initiatives.  First, establish a building manufacturer/supplier licence to regulate modern methods of construction in a manner that maintains regulatory neutrality with traditional construction approaches, while providing equal access to consumer redress.

Second, amend laws related to mandatory inspections so that building surveyors can engage competent, independent persons to undertake inspections on their behalf. This means a building surveyor could employ someone located near a [prefabricated unit blocks] factory to conduct inspections, eliminating travel costs and accelerating the process.

With these two straightforward steps, the market will open up to modern building supply approaches, and consumers won’t miss out simply because their building came from a factory rather than being built on-site by a traditional construction team.