Senate debates

Tuesday, 13 February 2018

Committees

Economics References Committee; Report

6:22 pm

Photo of Nigel ScullionNigel Scullion (NT, Country Liberal Party, Minister for Indigenous Affairs) Share this | Hansard source

I present the government's response to the interim report of the Economics References Committee on its inquiry into non-conforming building products, aluminium composite cladding, and I seek leave to have the report incorporated in Hansard.

Leave granted.

The report read as follows—

Australian Government response to the Interim Report: Aluminium Composite Cladding February 2018

Background

On 23 June 2015, the Senate referred an inquiry into non-conforming building products to the Senate Economics References Committee (the Committee), to examine:

    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 fabricators,

­ workplace safety and any associated risks,

­ costs passed on to customers, including any insurance and compliance costs; and

­ 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; and

    any other related matters.

The inquiry lapsed following the dissolution of the Senate (44th Parliament) on 9 May 2016, for the general election on 2 July 2016.

On 13 October 2016, the Committee resolved to re-open submissions to the inquiry, under the 45th Parliament.

As part of its broader inquiry into non-conforming building products, the Committee adopted additional terms of reference to seek submissions regarding the illegal importation of products containing asbestos, and their impact on the health and safety of the Australian community.

Submissions to the inquiry closed on 18 January 2017.

The Committee was previously required to report on its terms of reference relating to asbestos imports by 28 April 2017, with a full report on all terms of reference by 25 May 2017.

On 30 March 2017, the Senate granted an extension of time for the Committee to report by 31 August 2017 for the interim report on the illegal importation of products containing asbestos, and 31 October 2017 for the final report.

Following the Grenfell Tower fire in London, on 21 June 2017, the Assistant Minister for Industry, Innovation and Science, the Hon Craig Laundy MP, wrote to the Chair of the Committee, Senator Chris Ketter, to request the inquiry be used to conduct a public hearing to specifically examine the non-compliant use of cladding products in Australia.

The Committee agreed to prepare an additional interim report on the implications of the use of non-compliant external cladding materials in Australia as a priority.

On 17 August 2017, the Senate agreed to extend the reporting dates for the interim report on asbestos to 14 November 2017, and the final inquiry report on 30 April 2018.

On 6 September 2017, the Committee released its interim report on aluminium composite cladding, which included the following eight recommendations:

1. The Australian government implement a total ban on the importation, sale and use of Polyethylene core aluminium composite panels as a matter of urgency.

2. The Commonwealth government work with state and territory governments to establish a national licensing scheme, with requirements for continued professional development for all building practitioners.

3. The Building Ministers' Forum give further consideration to introducing nationally consistent measures to increase accountability for participants across the supply chain.

4. That the Commonwealth government consider making all Australian Standards and codes freely available.

5. The Commonwealth government consider imposing a penalties regime for non-compliance with the NCC such as revocation of accreditation or a ban from tendering for Commonwealth funded construction work and substantial financial penalties.

6. The Commonwealth government ensure the Federal Safety Commissioner is adequately resourced to ensure the office is able to carry out its duties in line with the new audit function and projected work flow.

7. The Commonwealth government's decision to give further consideration to Director Identification Numbers and recommends that it expedites this process in order to prevent directors from engaging in illegal phoenix activity.

8. That state and territory government's work together to develop a nationally consistent statutory duty of care protection for end users in the residential strata sector.

The Australian Government has given consideration to the findings and recommendations presented in the Committee's interim report, and tables the following response for the Committee's consideration ahead of the final inquiry report.

Government Response

The Australian Government recognises there is genuine community concern about the non-compliant use of combustible external wall cladding in Australia, and supports the decision of the Committee to specifically examine this issue as part of its broader inquiry into non-conforming building products.

The regulatory framework governing the built environment in Australia centres on the constitutional authority held by state and territory governments. As such, there are constitutional limitations on the extent to which the Australian Government can control building and construction activities.

For this reason, the Australian Government works collaboratively with the state and territory governments to ensure a nationally consistent and cost effective approach to building and construction regulation, through the development and maintenance of the National Construction Code (NCC).

The NCC sets the minimum performance requirements for the design, construction and performance of buildings throughout Australia. The NCC provides the states and territories with model regulation that is fully or partially adopted through their respective legislation and for which they have responsibility for implementing.

Further to the state and territory regulatory frameworks, the Australian Government is responsible for:

    World Trade Organization Technical Barriers to Trade (WTO TBT) Agreement
          Building and Construction WHS Accreditation Scheme

        The Prime Minister, the Hon Malcolm Turnbull MP, has sought assurance from State and Territory Premiers and Chief Ministers that all governments will work together to determine the extent to which the non-compliant use of cladding products is an issue across Australia.

        The Prime Minister has strongly encouraged all governments to carry out a greater level of auditing of high-rise buildings, and appropriate compliance and enforcement action, to ensure the safety of Australia's built environment.

        The Government considers, based on evidence submitted to the Committee and the Committee's findings, that there is a broader issue of non-compliance with the state and territory regulatory framework that is undermining the effective implementation of Australia's world class NCC.

        As such, through the Building Ministers' Forum (BMF), all governments have agreed to examine the broader compliance and enforcement problems, within the regulatory and administrative systems, which impair the effective implementation of the NCC, such as:

                The outcome of the BMF Assessment will be to make recommendations on a range of issues to establish a national best practice model for compliance and enforcement, and improve the building and construction regulatory system.

                Notwithstanding the outcome of the BMF Assessment, the Australian Government believes the most valuable course of action to safeguarding our built environment is to ensure:

                        Building Ministers ' Forum

                        The Building Ministers' Forum (BMF) is a ministerial‐level body consisting of Australian Government, State and Territory Ministers responsible for building and plumbing policy.

                        The BMF is responsible for overseeing governance of the built environment. As such, one of its primary responsibilities is to establish the strategic priorities for the Australian Building Codes Board (ABCB).

                        The ABCB was established in 1994 through an Intergovernmental Agreement (IGA), as a cooperative reform of building regulations by the Australian Government and the states and territories.

                        The IGA recognises that the states and territories have primary responsibility for regulating building and construction. In order to facilitate the development of a more efficient and comprehensive code, the Australian, state and territory governments, through the IGA, commit to provide annual funding contributions towards the operations of the ABCB.

                        The BMF also considers other policy and regulatory issues impacting the building and construction industries. While Ministers each receive advice from their respective officials, the BMF has recognized the benefits of cooperation and alignment between jurisdictions on issues of national significance.

                        In addition to the ABCB, the BMF has also established the Senior Officers' Group (SOG) and the Building Regulators' Forum (BRF) to provide policy advice to the BMF and coordinate regulatory matters, respectively.

                        The reporting arrangements to the BMF are illustrated by the diagram at Attachment A.

                        Australian Building Codes Board

                        The ABCB is a multi-jurisdictional standards writing body, responsible for developing and maintaining the NCC, and providing technical code and standards advice to the BMF.

                        The ABCB consists of an independent Chair, ex‐officio representatives from the Australian, state and territory governments, up to five industry representatives, and one representative of local government.

                        The ABCB operates in accordance with the IGA, which is updated from time to time. The current version of the IGA is provided at Attachment B.

                        The ABCB is supported in its work program by the ABCB Office, which resides in the Australian Government Department of Industry, Innovation and Science. The ABCB Office implements the ABCB's decisions and provides the ABCB with technical and administrative support.

                        Senior Officers ' Group

                        The BMF established the SOG on 31 July 2015, to investigate and develop a national strategic response to issues of non‐conforming building products (NCBP). The formation of the SOG demonstrated a need for jurisdictions to collaborate on policy matters of national significance, beyond that of the NCC and the remit of the ABCB.

                        The SOG is responsible for developing and providing strategic advice to the BMF on national building and construction policy issues and any other matters requested by the BMF.

                        The SOG is currently chaired by the Queensland Department of Housing and Public Works, and consists of senior officers from the Commonwealth and each jurisdictions' building authority. The Terms of Reference for the SOG are provided at Attachment C.

                        Building Regulators ' Forum

                        The BRF was established to provide an intergovernmental forum for state and territory building regulators to work cooperatively and efficiently on regulatory responses to issues of national significance, in addition to providing the BMF with regulatory advice.

                        The BRF consists of the senior regulator of each state's and territory's building authority, and representation from relevant Commonwealth agencies.

                        The BRF is currently chaired by the Victorian Building Authority, and consists of the senior regulator of each jurisdictions' building authority. The Terms of Reference for the BRF are provided at Attachment D.

                        BMF Measures to Improve the Safety of Australia ' s Built Environment

                        The Australian Government has been working in partnership with all governments, through the BMF, to assure the Australian community that our buildings, in particular our high-rise buildings, are safe.

                        On 16 December 2016, the BMF endorsed the implementation of a comprehensive package of measures to address the health and safety risks associated with the non-compliant use of cladding in high-rise buildings.

                        As part of the package of measures, the ABCB will implement a number of changes to the NCC, including:

                                  On 30 June 2017, in response to the concerns raised as a result of the Grenfell Tower fire in London, the BMF agreed to examine the broader compliance and enforcement problems within the building and construction systems that affect the effective implementation of the NCC.

                                  The BMF Assessment will consider and make recommendations on the establishment of a national best practice model for compliance and enforcement for building and construction, to improve the compliance and safety of Australian buildings.

                                  The Terms of Reference for the BMF Assessment are provided at Attachment E.

                                  It is acknowledged that the Committee supported the BMF's decision to commission the BMF Assessment, and appoint Professor Peter Shergold AC and Ms Bronwyn Weir as the independent experts. 1

                                  On 30 June 2017, the BMF also directed the Australian Building Codes Board (ABCB) to expedite the implementation of a comprehensive package of measures to prevent non-compliant use of wall cladding on high-rise buildings, through an amendment (as outlined above) to Volume One of the 2016 edition of the NCC (rather than waiting until the release of NCC 2019).

                                  The ABCB Office published the Public Comment Draft for NCC 2016 Volume One Amendment on 18 August 2017, with feedback on the proposed amendment closing on 10 September 2017.

                                  The ABCB Office and the ABCB's technical advisory committees have reviewed the responses received on the Public Committee Draft and recommendations will be made to the ABCB for its November 2017 meeting. As such, the amendment is expected to be adopted in early March 2018.

                                  The ABCB will also publish an updated Fire Performance of External Walls and Cladding Advisory Note (to reflect the amended provisions), and a new Evidence of Suitability Handbook.

                                  In addition, on 6 October 2017, the BMF agreed that all Ministers will use their available laws and powers to prevent the use of aluminium composite panels (ACPs) with a polyethylene (PE) core on class 2, 3, or 9 buildings of two or more storeys, and class 5, 6, 7 or 8 of three or more storeys until it can be demonstrated that manufacturers, importers, installers, working in collaboration with building practitioners, are complying with:

                                  1. the new fire testing standard for external wall cladding products (AS 5113:2016); and

                                  2. a newly established system of permanent labelling on cladding products to prevent product substitution.

                                  To ensure ACP products are supplied and used for the purpose for which they are designed, the BMF agreed to address inappropriate advertising and labelling of PE aluminium composite cladding utilising available laws and powers, and to ask the Legislative and Governance Forum on Consumer Affairs (CAF) to create a national information standard for ACP products.

                                  Aluminium Composite Panels

                                  The Commonwealth Scientific and Industrial Research Organisation (CSIRO) was asked to provide advice on the various types of ACPs currently manufactured. The CSIRO has expertise in the testing of building facade materials, as well as the assessment of the configuration of materials in construction in accordance with relevant building codes and standards.

                                  ACPs are legitimate products with a multitude of uses for example, advertising, signage, interior design features, caravans, refrigeration and freezer applications, and trailers.

                                  ACPs are flat sheet materials, faced with thin aluminium sheet (typically 0.5mm thick) on both sides. The thickness of the overall panels are often in the 3 to 4 mm range, but examples up to 6mm are available.

                                  The various types of ACP are distinguished by their core materials, which significantly influence the fire properties of each panel. While some examples of 100 per cent mineral core ACPs have been identified, the majority of ACPs have a core material that is a mixture of a polymer (polyethylene) and mineral fillers or fire retardants. The proportion of the polymer can be as little 1-3 per cent or as high as nearly 100 per cent.

                                  ACPs are described in manufacturer's marketing material as being one of three categories:

                                  1. A2—ACPs are classified as 'A2' when tested to European fire certification usually have 3 per cent or less of polymer.

                                  2. FR (an abbreviation for fire retardant)—FR-ACPs contain some fire retardant in the core and typically contain around 30 per cent polymer.

                                  3. PE (an abbreviation of polyethylene)—PE-ACPs have a core close to 100 per cent polymer.

                                  A number of ACPs using A2 and FR descriptors are certified for compliance under the CodeMark certification scheme for use externally on Type A and B construction 2 3, but with specific limitations on their application and use.

                                  A further variant of ACP does not include polymers, but instead uses an aluminium 'honeycomb' core, bonded with adhesive. Some examples of this ACP have been shown to comply with non-combustibility concessions provided in the NCC, and subject to meeting additional requirements of AS 1530.3 'may be used where a non-combustible material is required'4.

                                  It should be noted that none of the three descriptions (A2, FR, PE) relate to test methods or provisions in Australia's NCC. 'Non-combustible' is a defined term in the NCC, determined by the test method in AS 1530.1. It is unlikely that any ACP would meet this criteria because in practice, the fire performance of an external wall is not only dependent on the material properties, but also on aspects of the whole system including (but not limited to), sheet fixing method, insulation type, cavity fire barriers, geometry and penetrations.

                                  Accordingly, when engineered appropriately, some ACPs may meet the performance requirements of the NCC for external walls. Further, it is noted that PE-ACPs may also have other applications permitted under the current requirements of the NCC, with examples including as an attachment, signage, interior wall lining and design features.

                                  The Committee's focus was primarily on the ACPs with a 100% PE core; the following responses focus on matters associated with this product type.

                                  Response to the Recommendations

                                  Recommendation 1

                                  The Australian government implement a total ban on the importation, sale and use of Polyethylene core aluminium composite panels as a matter of urgency.

                                  Response Not Supported

                                  Ban on Importation

                                  The introduction of border controls to restrict importation of aluminium composite panels with a 100 per cent polyethylene core (PE-ACPs) is not supported by the Australian Government, as it would be neither effective nor practical to implement such restrictions.

                                  It would be impractical for the Department of Immigration and Border Protection (DIBP) and its operational arm, the Australian Border Force (ABF), to screen PE-ACPs for a number of reasons, including:

                                            PE-ACPs are suitable for use by Australian businesses in advertising signage and interior design. A ban on the importation of PE-ACPs would have unintended consequences for Australian businesses that currently use such fit for purpose products.

                                            Further, PE-ACPs are not the only type of external wall component that could be considered combustible or hazardous if used in a non-compliant manner with the NCC, many of which are manufactured domestically. As such, the introduction of a ban on the importation of an individual product would not solve the issue of non-compliance with the NCC.

                                            It is also important to note that Australia must act in a manner consistent with our international trade obligations; as such, relevant technical regulations and standards must not be more trade restrictive than necessary, and must not be applied discriminately (i.e. only to imports).

                                            Ban on Sale and Use

                                            The introduction of a ban on the sale and use of PE-ACPs is also not supported by the Australian Government.

                                            The Australian Government and the SOG have acknowledged that the current regulatory framework places a significant burden on the end of the product supply chain (i.e. on the builder/installer and the building certifier/surveyor).5 However, a ban on the sale and use of PE-ACPs would place a disproportionate burden on the beginning of the supply chain, effectively penalising product manufacturers and suppliers rather than making the entire building supply chain more responsible for ensuring products are fit for purpose and used in compliance with the NCC.

                                            A diagram outlining the building product supply chain is provided at Attachment F.

                                            The Australian Government is of the view that the national measures currently being pursued by the BMF, through the work of the SOG, will effectively increase accountability of all participants across the building supply chain, and improve building product conformity and compliance with the NCC.

                                            Manufacturers and suppliers are expected to undertake due diligence to ensure their products conform to Australian standards and regulations; however, beyond specifying the products design and intended purpose there is little within a manufacturers control to ensure these product are installed in compliance with building regulations.

                                            Should manufacturers present false information or make misleading representations about building products or their suitability for use, reforms to state and territory building and construction regulations would assist with addressing the problem. This may include the extension and harmonisation of the powers of building regulators nationally. The Australian Consumer Law (ACL) is a broad principles based framework with strong general prohibitions against misleading conduct and misrepresentations in trade and commerce. Given the specialist nature of building products and usage as well as the specialist regulation of the sector, the Government considers more specific protections are needed in State and Territory building regulations.

                                            The recent legislative reform in Queensland around the chain of responsibility for non-conforming building products is a positive step forward.

                                            As stated above, on 6 October 2017, the BMF agreed to address inappropriate advertising and labelling of PE-ACPs utilising available laws and powers, and to ask the CAF to create a national information standard for these products. This request will be considered by CAF.

                                            Recommendation 2

                                            The Commonwealth government work with state and territory governments to establish a national licensing scheme, with requirements for continued professional development for all building practitioners.

                                            Response Noted

                                            The Australian Government notes this recommendation, and is supportive of measures to support mobility and alignment of regulation across jurisdictions, however occupational licensing is the responsibility of states and territories.

                                            A consistent occupational licensing scheme across jurisdictions has been previously considered by the Council of Australian Governments (COAG). The Commonwealth moved away from national licensing in 2013 when COAG announced that occupational licensing would remain a state and territory matter which would be addressed through the Council for the Australian Federation. This decision followed extensive state−based consultation, after which the majority of states decided not to pursue the proposed National Occupational Licensing Scheme (NOLS) reform.

                                            The BMF Assessment is expected to consider licensing and accreditation of building practitioners and related professionals, among other matters.

                                            The outcome of the BMF Assessment will be to establish a national best practice model for compliance and enforcement for building and construction, to improve the compliance and safety of Australian buildings. As such, the findings of the BMF Assessment may inform the case for change, and potential options for government intervention.

                                            Recommendation 3

                                            The Building Ministers ' Forum give further consideration to introducing nationally consistent measures to increase accountability for participants across the supply chain.

                                            Response Supported

                                            The Australian Government supports this recommendation, noting that the state and territory governments have the constitutional authority for the regulatory framework that governs the built environment.

                                            Through the BMF and the SOG, the Australian Government has been working with the states and territories to improve accountability across the building supply chain. The Queensland Government has recently passed an amendment to their building legislation, the Building and Construction Legislation (Non-conforming Building Products—Chain of Responsibility and Other Matters) Amendment Act 2017 is an example of how jurisdictions can improve regulatory oversight of the building product supply chain.

                                            The purpose of the Queensland legislation is to, among other matters:

                                                  Queensland's legislation is based on principles agreed by the BMF, and is intended to be used by other jurisdictions as a model to be either adopted in full or revisited as appropriate to accommodate their existing regulatory structure.

                                                  While some of the powers and enforcement measures contained in Queensland legislation may already exist in other jurisdictions, the legislation can be a 'best practice' approach to impose consistent obligations on participants of the building product supply chain and improve jurisdictional ability to detect and address non-conforming building products.

                                                  The New South Wales (NSW) Government has also recently announced it intends to reform the legislation governing building certification systems in NSW, to improve the requirements relating to the accreditation, investigation, auditing and disciplining of certifying authorities.

                                                  The NSW Government intends to replace the existing legislation with a new Building and Development Certifiers Act, and will release a draft exposure Bill for public comment in late 2017.

                                                  The BMF Assessment will provide recommendations for a national best practice model for the administration of building compliance and enforcement regulations.

                                                  Recommendation 4

                                                  That the Commonwealth government consider making all Australian Standards and codes freely available.

                                                  Response Supports in Principle

                                                  The Australian Government supports this recommendation in principle.

                                                  Access to the NCC

                                                  The Australian Government notes that the BMF, in May 2014, decided to make the NCC available free online.

                                                  This decision has dramatically increased the number of practitioners accessing the NCC, with users increasing from 11,000 (when the NCC was printed and sold) to 160,000 (when the NCC was made free online as a PDF).

                                                  The ABCB is also simplifying the design and language of the NCC to make it easier to understand by a wider audience.

                                                  To implement this decision, the Australian Government and state and territory governments increased their collective contributions to the operations of the ABCB and the ABCB Office, via the IGA. As such, while the NCC has been made available free online, its development and maintenance is still paid for by all governments.

                                                  Access to Australian Standards

                                                  The Australian Government notes that standards are voluntary unless referenced in legislation. It is estimated that one-third of some 7,000 Australian Standards are referenced in legislation, with the majority referenced in state and territory regulation.

                                                  Australian Standards must be purchased from commercial distributor SAI Global. Under a Publishing and Licencing Agreement (PLA) with Standards Australia, SAI Global has the exclusive right to distribute Australian Standards until December 2018, with an option for a further five years through to 2023. The Australian Government is not a party to the PLA.

                                                  It is also noted that Australian Standards that are made freely available still have to be paid for and that the cost of doing so will be borne by either the taxpayer or the consumer.

                                                  It should be noted that whilst the Standards that are referenced in the NCC are not available for free, the mandatory requirements of the NCC can often be satisfied through solutions that do not necessarily rely on the purchase of a Standard. In other words, whilst the NCC references standards, it does not mandate their use.

                                                  Ensuring reasonable public access to Australian Standards is fundamental to the reliability of products and services in the economy. Improving access to standards requires the support of Standards Australia and SAI Global in facilitating greater flexibility and cost options available to government.

                                                  In July 2017, the COAG Industry and Skills Council (CISC) established a Standards Accessibility Working Group tasked with investigating options for improving standards accessibility. The working group will report back to the CISC by 31 January 2018.

                                                  Finally, access to Australian Standards via the National Library of Australia and the state and territory libraries, was restored for private research and study purposes until February 2019.

                                                  Recommendation 5

                                                  The Commonwealth government consider imposing a penalties regime for non-compliance with the NCC such as revocation of accreditation or a ban from tendering for Commonwealth funded construction work and substantial financial penalties.

                                                  Response Noted

                                                  The Australian Government notes this recommendation.

                                                  Penalties regime

                                                  It is important to note that the State and Territory governments have responsibility for regulating building and construction activities in their respective jurisdictions, which includes penalising non-compliance with the NCC.

                                                  There are constitutional limitations on the extent to which the Australian Government could regulate matters that the NCC deals with.

                                                  The BMF has commissioned an expert assessment to consider the broad compliance and enforcement problems within the State and Territory regulatory systems.

                                                  The BMF Assessment is not limited to considering the enforcement and penalty regimes of each state and territory. Rather the BMF Assessment is considering the systemic issues causing non-compliance and the compliance monitoring capability of jurisdictions to detect and respond to identified non-compliance. As such, the outcome of the Assessment is expected to inform how jurisdictions can improve both compliance monitoring and enforcement practices across Australia.

                                                  Revocation of accreditation / ban from tendering for Commonwealth funded construction

                                                  Under the Building and Construction Industry (Improving Productivity) Act 2016, the Federal Safety Commissioner administers the Building and Construction Workplace Health and Safety Accreditation Scheme (the WHS Accreditation Scheme).

                                                  Under the WHS Accreditation Scheme only builders accredited by the Federal Safety Commissioner can enter into head contracts for building work that is funded directly or indirectly by the Australian Government, subject to certain financial thresholds.

                                                  As such, the WHS Accreditation Scheme enables the Australian Government to use its market influence, as a client and provider of capital, to improve WHS across the building and construction industry.

                                                  The Australian Government notes the Federal Safety Commissioner made the compliance of building products with the Performance Requirements of the NCC a condition of accreditation in January 2017. The Federal Safety Commission has the power to suspend or revoke the WHS accreditation of companies that fail to meet the NCC's Performance Requirements. This creates a major commercial imperative for compliance amongst those companies seeking to access Commonwealth funded construction projects.

                                                  Recommendation 6

                                                  The Commonwealth government ensure the Federal Safety Commissioner is adequately resourced to ensure the office is able to carry out its duties in line with the new audit function and projected work flow.

                                                  Response Noted

                                                  The Federal Safety Commissioner is adequately resourced to carry out its functions.

                                                  Recommendation 7

                                                  The Commonwealth government ' s decision to give further consideration to Director Identification Numbers and recommends that it expedites this process in order to prevent directors from engaging in illegal phoenix activity.

                                                  Response Supported

                                                  The Australian Government supports this recommendation.

                                                  It is acknowledged that the interim report was released just prior to the Government's announcement of a comprehensive package of reforms to address illegal phoenixing.

                                                  The Government's package of reforms includes the introduction of a Director Identification Number (DIN) and a range of other measures to both deter and penalise phoenix activity. The DIN will identify directors with a unique number, which will interface with other government agencies and databases to allow regulators to map the relationships between individuals and entities and individuals and other people.

                                                  Recommendation 8

                                                  That state and territory government ' s work together to develop a nationally consistent statutory duty of care protection for end users in the residential strata sector.

                                                  Response Noted

                                                  The Australian Government notes this recommendation and agrees in-principle with its intent.

                                                  The Government notes that the Committee made this recommendation drawing heavily on the submission of the Owners Corporation, following the High Court of Australia's 2014 decision in Brookfield Multiplex Limited v The Owners Corporation Strata Plan 61288. 6

                                                  In essence, the High Court held that the builder of a strata-title apartment complex did not owe a duty of care to the Owners Corporation from latent defects in the common property.

                                                  The regulation of strata and common property title is the responsibility of state and territory governments. However, as per the High Court's decision, a duty of care under common law cannot be assumed for strata owners who buy a property that turns out to be defective.

                                                  The Government believes that if nationally consistent legal protection for end users of residential strata is to be considered, the most appropriate mechanism is through legislative reform of existing state and territory strata laws.

                                                  In addition, the findings and recommendations to be tabled in the final report of the Shergold and Weir assessment of the broader compliance and enforcement problems within the building and construction systems, would be valuable in guiding any such reforms.

                                                    1 Interim Report, pp. 41.

                                                    2 Type A construction is the most fire-resistant, and applies to class 2, 3 and 9 buildings of three or more storeys; and class 5, 6, 7, and 8 of four or more storeys.

                                                    3 Type B construction is the next most fire-resistant, and applies to class 2, 3 and 9 buildings of two or more storeys; and class 5, 6, 7, and 8 of three or more storeys.

                                                    4 NCC, Volume 1, Clause C1.12

                                                    5 Senior Officers' Group, Strategies to address risks related to non-conforming building products, pp. 14, February 2016

                                                    6 [2014] HCA 36

                                                  Attachments are available from the Senate Table Office.

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