.,, ... ¥• NSW GOVERNMENT

·Building Professionals ·soard

Regulation Review Independent Pricing and Regulatory Tribunal PO Box Q290 QVB Post Office NSW 1230

16 July 2014

Draft Reports on Local Government Compliance and Enforcement and Reforming Licensing in NSW - submission

Thank you for the opportunity to provide a submission in relation to the above reviews.

The Independent Pricing and Regulatory Tribunal's (Tribunal) reviews on local government compliance and enforcement and on reforming licensing provide an important opportunity to enhance building regulation in NSW while optimising economic benefits for the community.

The Building Professionals Board (Board) is broadly supportive of the recommendations in the draft reports and considers their release timely given the imminent review of the Building Professionals Act 2005, the Building Professionals Regulation 2007 and the Board's Accreditation Scheme. It is considered that a number of the recommendations will inform and provide direction and impetus to the Act review, in particular, the proposal for a single regulatory body for building and construction and the application of a licensing framework and licensing guide.

The Board has also been working with the Department of Planning and Environment in regard to building regulation reforms arising from the Planning Review conducted in 2013. The reform initiatives already address at varying levels the recommendations in the Tribunal's report on compliance and enforcement.

The Board has not addressed every recommendation in the draft reports, but has provided, at Attachments 1 and 2, comments on recommendations that are pertinent to the NSW building certification system.

Should you wish to discuss any aspect of the submission, please contact Dr Gabrielle Wallace, Manager, Building Professionals Board on telephone 9860 1889.

·ncerely

eorge President Building Professionals Board

Building Professionals Board Ph 9860 1800

3 Marist Place Parramatta 2150 Fax 8575 4090

PO Box 3720 Parramatta 2124 website: bpb.nsw.gov.au

Attachment 1

Building Professionals Board's submission to the Draft Report on Local Government Compliance and Enforcement(October 2013)

Recommendation 18: Building Authority

From a whole of government perspective (and from the perspective of a consumer focussed on building outcomes), building regulation, licensing and registration of builders, skills training and consumer protection all have an impact on building outcomes. It follows that the efforts of the various agencies of government involved (mostly the Building Professionals Board and Fair Trading) should effectively be coordinated and efficiently delivered.

The Board supports in principle a single Building Authority and this is the Board's preferred approach. An alternative approach could be the development of a joint program between the administrations of Planning and Environment, Fair Trading and Local Government. This would involve better coordination through various mechanisms, but may well be a second best solution to a single entity where the need for coordination is internalised. However, such approaches have failed in the past. (Witness the example of the Victorian Building Commission, which was established with the 'single agency' in mind, but was recently restructured when it was judged to have fallen short of its objectives).

There are pitfalls in this approach and structural solutions are no guarantee of success in terms of securing better outcomes in themselves. Besides execution risk, including the cost and potential disruption to existing programs and operations, an agency restructure will not of itself deliver solutions to current regulatory problems. This was identified in the Maltabarow Report 1,

which made a series of recommendations, which after favourable public exposure, is now being implemented. The same can be said of Fair Trading, where a number of reforms are being pursued. Further, the former Department of Planning and Infrastructure had embarked on a program of regulatory reform known as 'Chapter 8' of the Government's Planning White Paper.

!PART has acknowledged these issues by hedging their draft recommendation as being subject to a cost benefit analysis. This is a sensible suggestion which might be achieved by bringing forward the planned review of the Building Professionals Act and adding to the evaluation of the Board's effectiveness and the operation of the Act, a requirement for a cost benefit analysis of establishing a single Building Authority. This should involve an assessment of the current reforms being pursued by the BPB and Fair Trading and how the solutions to current problems may best be progressed.

However, subject to the above discussion, the Board of the BPB is in principle supportive of IPART'S draft recommendation for the creation of a Building Authority.

Recommendation 18: Partnership model with local councils

The Maltabarow Report identified as a key issue the current lack of clarity regarding the respective roles of building certifiers and Councils in building certification. One of its key recommendations was for these roles to be clarified and a more cooperative framework be developed so that each can better serve the requirements of the planning system and Councils can better serve their local communities. This framework would recognise the central obligation of private certifiers to local Councils as the consent authority for developments as well as the key role that Councils have for the enforcement of consent conditions. An important project is currently underway to develop this framework. Some of the initiatives being considered include

1 "Building Certification and Regulation -Serving a New Planning System for NSW" - a report prepared for the Minister for Planning in May 2013 by Mr George Maltabarow

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certifiers being given a first instance enforcement obligation, with mandatory reporting to councils of non-compliances by builders and owners.

Also, Councils would be given the right to require certifiers to investigate and report on matters of concern regarding consent compliance. Access to cost recovery for enforcement actions by councils would also be a feature of this framework, addressing Council concerns that private certification has resulted in not only loss of control over building development, but an additional cost burden where private certifiers or builders do the wrong thing.

This approach would seem to incorporate the 'partnership' concept that IPART contemplated in this draft recommendation and implementation of a more cooperative framework along these lines would seem to have the potential to be an element of such a partnership. Accordingly, the Board supports this draft recommendation.

Recommendation 19: Register of accredited certifiers

The Board currently maintains a register of accredited certifiers on its website. It also maintains a record of disciplinary action taken against certifiers in the last five years and beyond and the recently remodelled website directs enquirers to review this record once a selection of a particular certifier is made. So, a link between a particular certifier (which specifies his level of accreditation) and the disciplinary record is easily made.

However, the link is not automatic as !PART suggests it should be in the longer term. The Board is currently seeking to strengthen its disciplinary processes by the appointment of a judicial officer who has reviewed the way it conducts investigations and will chair its disciplinary committee. It is also increasing the resources available to investigators and has resolved to take a more rigorous approach to the imposition of penalties. These measures are, in the view of the Board, key to restoring public confidence in the certification system. However, the Board will monitor the response to its new website and consider whether the register should be upgraded with the automated feature suggested by IPART.

The Board supports this recommendation.

Recommendation 20: Council conditions of consent

The Maltabarow Report identified lack of clarity in defining the scope of a certifier's role, both in terms of the level of due diligence required and the range of matters to be addressed. The Board has now embarked on development of a Practice Guide, which will have legal status (as is the case in other Australian jurisdictions). This task is however complicated by the range of practices followed by local Councils in imposing conditions of consent. Clearly, certification would be greatly assisted if Councils refrained from imposing conditions inconsistent with the building code of Australia.

However, this problem extends beyond consistency with the BCA. It also applies to conditions relating to building consent. These conditions, for example, include requirements for certain architectural features and landscaping. Such conditions tend to vary greatly from Council to Council and significantly complicate the work of a certifier as well as serving to confuse consumers and adding to building costs. The Board does however acknowledge that in some circumstances, departures from standard conditions may be justified.

These matters are unnecessarily complex and the former Department of Planning and Infrastructure initiated a program of regulatory reform (the 'Chapter 8' program) to address these issues and they are now being pursued by the Board. Completion of this program as well

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as the practice Guide will be key to effective resolution of the problems of consent and approval consistency, both in terms of the BCA and building code variations.

The Board therefore supports the proposal that an independent body (perhaps IPART) should adjudicate Council departures from standard conditions. It would like to stress however, that this proposal should extend to conditions of consent more generally.

Recommendation 21: Certifiers to advise councils of breaches by builders

As mentioned previously, this issue is being addressed in the Board's project (being conducted jointly with local Council representatives) to develop a more cooperative framework between private certifiers and Councils. While Councils should always retain enforcement powers, and will need to decide when they should be invoked, certifiers should be obliged to issue first instance enforcement notices and advise Councils. Further, they should be required to investigate and report on matters of concern to Councils.

The issue in regard to occupation certificates would appear to be more complex than the process suggested by IPART. The point at which a certifier's job is complete may not necessarily coincide with satisfying all conditions of consent. Indeed, the exact scope and purpose of the occupation certificate is currently under review in the Chapter 8 regulatory reform process. One solution may be for Councils to issue the certificate once a certifier's report is received. To this end, the certifier may be required to issue a "building certificate" which would certify some more limited compliance which discharges the certifier of statutory obligations.

The thrust of IPART's draft recommendation is supported by the Board. However, it should be noted that there may be wider implications than those contemplated in the report.

Recommendation 22: Principal Certifying Authority signage information

The issue of making it easier for all interested parties to make complaints against certifiers would appear to be more involved than the IPART draft recommendation would suggest. Formal complaints to the Board necessarily involve detailed information, including statutory declarations by complainants to enable the statutory disciplinary powers of the Board to be invoked. However, a complaint about building activity (such as the runoff example referred to by IPART) are better directed to Council as the Certifier would not be expected to be on site more than a limited number of times during the course of a job.

The interactions between certifiers and councils are being addressed in the project to develop a more cooperative framework referred to earlier. However, the issue of signage is acknowledged and will be included in the scope of matters to be resolved in this joint exercise between the Board and Local government.

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Attachment 2

Building Professionals Board's submission to the Draft Report on Reforming Licensing in NSW (October 2013)

Recommendation 1: Use of Licensing Framework and Licensing Guide in the review of licences

Recommendation 2: Include reference to the Framework and Guide in the NSW Guide to Better Regulation and require agencies to assess licensing proposals against the framework

The Board supports the recommendations. The Licensing Framework and Guide will support a consistent evidence-based approach across Government.

The Framework and Guide will require additional work for the Building Professionals Board and this will have resourcing implications. The Guide also notes the importance of seeking input from industry, consumer and government stakeholders when designing a licence. The Board currently consults with the broad community and any additional requirements will have resourcing implications that the Board will need to consider.

Reviewing all categories of accreditation is expected to be a major undertaking in addition to the current work on the review of the Building Professionals Act and Building Professionals Regulation, due in December 2015.

Recommendation 9: Removal of mandatory continuing professional development (CPD) for all Home Building licences and certificate holders

The Board proposes that the recommendation be reconsidered. CPD is essential to ensure that a licence holder maintains currency in their industry and develops new skills and knowledge to enhance their practice.

The report notes useful alternatives, such as Fair Trading providing e-newsletters, in communicating the policy, legislative and practice changes. However, this does not replace the experience of a learning environment. This is especially important in remote areas with less peer support or opportunity to meet other professionals.

CPD can also lead to the completion of units of competency for nationally recognised training that may provide additional pathways to higher qualifications such as those offered by the Housing Industry Association. Also, there are significant reforms to building, compliance and regulation that should be supported with CPD.

The removal of the requirement for mandatory CPD may have an adverse impact on the built environment and certification through a potential increase in non-compliant building work and an increase in complaints about poor compliance with current building standards, adding to delays in, or non-issue of an occupation certificate. Aggrieved building owners may be more likely to engage in litigation against accredited certifiers for non-compliant building work as, unlike builders, certifiers are required to hold professional indemnity insurance.

State-based mandatory CPD programs are also valuable for licencedlaccredited building professionals through the mutual recognition process (e.g. certifiers).

Recommendation 10: Raise the value threshold for requiring Home Building Licence to $10,000 and then $20,000 after three years

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Recommendation 11: Raise the value threshold for requiring an Owner-Builder permit to $10,000 and then $20,000 after three years

The Board proposes that this recommendation be reconsidered. The Board is concerned that increasing the value threshold for requiring a licence for building work, including for owner­builders, will increase the incidence of work being undertaken by persons without the necessary qualifications and skills to undertake the work. This outcome will likely diminish consumer protection as it could potentially increase the incidence of building defects and non-compliance with the National Construction Code and building standards, thereby compromising building safety.

Certifiers are required to hold professional indemnity insurance. As these unlicensed builders are not required to hold insurance, the Board is concerned of an increased risk to certifiers to litigation, as the 'last man standing' in these situations, should defective work arise. See also comments on Recommendation 9.

As an alternative to the recommendation, the Board proposes a once-only lifetime licence to do work under $10,000 (and later $20,000). It is considered that applicants for this licence would still be required initially to demonstrate skills in building work. The licence will potentially also provide holders access to continuing professional development and make them subject to disciplinary actions.

The Board has received feedback from the certification industry concerned with owner-builders undertaking building work. It is noted that some owner-builders undertake work without necessary approvals. It is noted that construction certificates and occupation certificates are currently not able to be issued for work already undertaken without the required approvals. The inability for an occupation certificate to be issued for this type of work can impact on the conveyancing of the land with cost implications for owners and the community.

Recommendation 27: Review by an independent body of the training and continuing professional development conduct rules for all occupational licences

The Board supports the recommendation.

Recommendation 28: Agencies should review licences against IPART's assessment of areas of licence design and administration that could be improved

The Board proposes that the recommendation be reconsidered. IPART's suggested approach for accreditation and other licence fees to be reflective of transaction costs is noted. The Board is currently partly funded from fees set by legislation and it is considered that a change in the structure of one type of fee to accommodate the recommendation will affect other fees and potentially impact on the Board's overall funding position. As an alternative, the Board suggests that accreditation and other licence fees should also cover the whole cost of the Board's compliance function, from accreditation (licensing) to review, auditing and disciplinary functions.

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