Improving the ACT Building Regulatory System

Improving the ACT Building Regulatory System Schedule of individual reform proposals Proposal Consultation responses Response Act/Regulation Design and Documentation 1.1 Minimum Design Documentation Guidelines and education materials for minimum documentation requirements for a building approval application: Initially focusing on residential parts of buildings and covering different types of work, performance standards, alternative solutions and building elements at a higher risk of non compliance. With potential for inclusion of documentation of maintenance requirements for provision to future owners. Supported by sample plans and specifications. Very high level of support 94% of respondents to related survey question supported (48 of 50) Over 90% of written submissions that commented on the proposal supported. Many respondents considered the guidelines should be mandatory to be effective across the industry. Develop guidelines for minimum documentation for a building approval application, commencing with initial design documentation, with a view to expanding to maintenance documentation at a later stage. Start with voluntary compliance with a transition period for moving to mandatory within 6 months of release of the guidelines. Expanding the existing powers for making codes of practice in the Building Act to extend to building approval documentation and guidelines. Powers to make guidelines included in Bill. New guidelines for documentation requirements developed in consultation with industry specialists, and made under the Building Act (EPD to lead). Consequential amendments to the building approval form. Changes incorporated into initial completeness checks, auditing processes for building approvals and enforcement policies New educational materials including: checklists for people preparing and submitting building approval applications. Expand the guidelines to all classifications of building. Medium term explanatory information for designers, applicants, certifiers and auditors. updated consumer guide to building or buying. Develop sample plans and specifications (resources dependent). Establishing data recording and collection requirements to support monitoring, evaluation and analysis. 1.2 Review of applications and approvals A design review process to provide an independent review of proposed plans for apartment and complex buildings before a building approval application is made: Allowing regulatory and building experts to highlight issues that need to be resolved Feedback sought on: Government run or external model Mandatory or use of incentives/regulatory price signals Reviewers/review panel Limited support as either or a voluntary or mandatory scheme. While some people saw a benefit in having a voluntary or mandatory review, half of all respondents to the relevant questions in the survey indicated they would not use a government review panel even if incentives were provided. Do not pursue at this stage. Instead: Consider including some aspects of advice on high risk building elements (e.g. balconies over habitable spaces) in the existing pre DA process to alert people to high risk features and things that may be incompatible with building laws, with a view to expand the range of issues as resources and skills increase. Monitor the effectiveness of improved documentation and certification standards (which will include documentation requirements for alternative solutions) through risk based auditing, including a genuine completeness check on new approvals. No Develop parameters that would trigger the involvement of building officers (e.g. identification as a class 2 with certain proposed elements (e.g. balconies over habitable spaces). Commencing with a small subset of building elements and expanded as resources permit. The process does not delay a decision on a DA. Standard information, linked to new minimum documentation requirements and including information on prevention of common defects, for provision to proponents at DA stage. Monitoring and evaluation will be carried out under item 1.1 Minimum Design Documentation. Primary concerns are slowing down gaining an approval, competitive disadvantage for people volunteering, availability and competency of reviewers, and interaction with formal BA process. Alternative solutions Complementary Changes to the pre DA process implemented by EPD provide a good mechanism for providing information and discussing impacts to project proponents. There was a higher level of support for review of complex alternative solutions (for example, 70% of survey respondents on the relevant questions). Stage inspection and on site supervision 2.1 Critical stages of work Page 1 of 8

Guidelines for builders describing standard hold points at critical stages and the types of inspections, tests and verifications the builder should carry out at these stages (with documentation generated provided to the certifier for holding on the building file). Guidelines for supervision of work (including outside of critical hold points) based on the risk, size and complexity. Well supported, including moderate support for mandatory guidelines/codes. Of those that did not support, there was frequently an assumption the proposal was builders self certify their own mandatory stage inspections. This is not the proposal. Develop the guidelines for builders for supervision and critical hold points in the short term with the intention they will be adopted as codes of practice under the Building Act. No, but will be supported to changes in provisions for codes of practice and declarations in COLA and the Building Act. New codes developed in consultation with industry specialists, and made under the Building Act (EPD to lead). Requirements incorporated into document completeness checks, auditing processes for building work and enforcement policies New educational materials including: checklists and guides for builders. explanatory information for designers, owners, certifiers and auditors. updated consumer guide to building or buying. Establishing data recording and collection requirements to support monitoring, evaluation and analysis. 2.2 Mandatory stage inspections More clearly outlining in guidance materials and legislation (this could include relevant codes): The building certifier s responsibility in relation to stage inspections The purpose and scope of stage inspections The types of certificates and information a certifier may request at each stage. Practice guides for certifiers, builders and other people providing certificates to demonstrate compliance with the Act. Very high degree of support. In addition, many responses in relation to government inspections and auditing highlighted the lack of understanding of the certifier s role. Develop new provisions in the Building Act outlining the functions of the certifier under the Building Act and the purpose and scope of stage inspections, and supporting codes of practice under the Building Act. It is further recommended that regulations to require stage inspection information sooner (head of power included in a previous Bill exists). New section, Functions of building certifier in the Building Act. Some amendments to wording in Act and Reg and new reg making powers re stages of work Relocating the existing provisions for the dampproof course inspection in s 43(2) to the regulation and clarifying for buildings that do not have a damp proof course (design and siting) New code developed in consultation with industry specialists, and made under the Building Act (EPD to lead). New forms/approved format for notifying a stage inspection to be developed allowing confirmation the code has been followed for all critical stages and identifying relevant documentation. New requirements incorporated into auditing processes for building work and enforcement policies (i.e. when action is taken in relation to non compliance). New supporting and educational materials including: checklists and other tools for people undertaking and submitting information on stage inspections. explanatory information for designers, owners, certifiers and auditors. updated consumer guide to building or buying. Process for capture and storage of relevant information in for monitoring, evaluation and analysis. New regulation for lodgement of stage inspection information developed in consultation with certifiers, to commence at the same time as the Bill. New administrative procedures to support quick completion and upload of documentation and ready identification of issues that may require a response or follow up under a risk based auditing/inspection system. 2.3 Government auditing and inspections Implementing an expanded and integrated inspection/audit system based on the risks associated with different types of project e.g. Low risk work subject to random inspection Medium risk work subject to a higher level of on site visits High risk subject to random and targeted inspections, or assigned a designated inspector. High degree of support for risk based auditing. Moderately less support for the designated inspector amongst industry respondents but high support from building owners. Primary issues/concerns are conflict with building certification role (although there is considerable confusion about the breadth of this role), the resourcing of the program, the competency levels of inspectors Medium term A risk based model, including the designated inspector for high risk projects which is a natural extension of this system, is recommended. Establishing an effective risk based government auditing and inspection system for regulated building certification and building work is a high priority and fundamental to the effectiveness of the. initial amendments. Revisions to provisions for powers of building inspectors amended to align with inspectors under other related Acts appointment powers to require the Registrar to be satisfied an appointed inspector can carry out Finalise risk framework for building types and high risk elements and factors. Align skills, capabilities and audit/inspection requirements to corresponding risk levels and building classifications. Revisions to ICT and administrative systems to support roll out of system, including for improved capture and storage of relevant information for monitoring, evaluation and analysis. Potential changes to public documents outlining functions and expectations in relation to building regulation. Page 2 of 8

reforms. Work is already underway to move to this model, however establishing the necessary technical capacity to fully incorporate high risk and complex buildings is a longer term project. their functions under the appointment. Builders and building surveyors licensing 3.1a Builders licensing formal qualifications Removal of non building and construction qualifications (e.g. architecture and engineering) from the mandatory qualifications declaration. High level of support, including from engineer and architect respondents. Remove architectural and engineering qualifications from the mandatory qualifications schedule, with a transition period for new applicants. The existing instrument will be remade on commencement of relevant provisions in the Bill. Amendment to mandatory qualifications made effective from 1 May 2016, with a transition for applications already in the system. Explanatory information for applicants to be amended. Revision of operational policies for assessing an application and for lifting a condition. 3.1b Builders licensing experience Excluding new A and B licensees from working unsupervised on residential buildings if they do not have experience on residential projects Demonstration of experience across all critical stages of a project Potential for use of external verification systems e.g. AIB Allowing the Registrar not to consider: References from builders with a poor compliance history or with relevant restrictions and conditions Experience on substantially defective buildings, if the work does not include rectification work High level of support from the community respondents, medium level of support from industry respondents. Concerns were definitions of critical stages and view that if you can build one building you can build anything, which is not necessarily supported by the findings of the review. Implement conditioning system for applicants with insufficient experience on residential buildings and revise mandatory qualifications in relation to evidence, critical stages and external verification of experience (after further consultation). Revise mandatory qualifications to give Registrar discretion as proposed., if conditioning system is made permanent. Powers relating to making of mandatory qualifications only. New mandatory qualifications declaration developed and enacted. Conditioning criteria formalised and included in regulation or administrative and administrative guidelines as appropriate. Revision of operational policies for assessing an application and for lifting a condition. New application form and explanatory information for applicants. Capacity to record and report on qualifications held by applicants. Consult on findings of the review in relation to licence categories. 3.1c Builders licensing Pre licence assessment Assessment of an applicant s knowledge and understanding of things directly related to their licence: Obligations and rights under their licence Building and related standards and practices Quality management and supervision processes Capacity for assessment to be applied at renewal and as part of a skills assessment. High level of support Many respondents preferred a mix of written, verbal and on site assessment. Expand the written assessment prepared for the Access Canberra pilot to incorporate additional subjects, and include random result validation. Written assessment would require changes to mandatory qualifications only. Powers relating to making of mandatory qualifications only. New assessments developed for class A and B licensees. Existing assessment for Class C expanded to incorporate management, supervision and other obligations. New mandatory qualifications declaration made under COLA. Consider interviews conducted by the regulator for applicants that either do not meet the mandatory qualifications or have marginal results in the assessment only. New fee instrument for builders licensing. New application form and explanatory information for applicants and people currently in training, including sample/practice questions. New mechanism to record and report on assessment results against applicants. Consider introduction of other forms of assessment after review on 6 months of operation of the written assessment if required. Revision of operational policies for assessing an application. Research and previous ACT experience indicate verbal assessment/interview can be a high cost tool with limited effectiveness. Page 3 of 8

3.1d Corporation and partnership licenses The directors or partners either collectively or at least one individually should meet the same mandatory qualifications as individual licensees. Nominee be required to be a director or partner in more direct control of the corporation Nominee s actions more closely linked to the corporate/ partnership licence e.g. by both licences being issued demerit points Licensing legislation to more clearly define the role of the nominee in relation to decisions made by the corporate/ partnership licensee. High level of support in survey response. Mixed support in written submissions but few specifically responded to the proposals. Primary concerns and issues include whether corporations should be licensed at all, the effect on larger corporations of requiring directors to hold qualifications, whether the corporate licence exists only for covering financial liability. The comments support one of the findings of the review, which is that there is considerable of misunderstanding of the role of the builders licence under ACT law as opposed to other jurisdictions laws. Amendments to existing provisions for corporations, partnership and nominees eligibility to clarify their roles. Expanding the scope of the existing power to declare mandatory qualifications for individuals in a notifiable instrument to include qualifications for all entities that may apply for a licence i.e. corporations and partnerships as well as individuals. Requiring additional information in relation to the nominee at the time of application. Operational policies and educational materials to reflect the intention of the law in relation to the corporation/partnership s responsibility to supervise their nominees. Medium long term Consult on findings of the review in relation to builders licensing and contracting as a scope of work. This also relates to Item 4.4 Accountability for contractors. Implementation of mandatory qualifications for corporate and partnership licences, potentially including financial assessment. Providing that the corporation/ partnership has a sufficient number of nominees at all times to adequately supervise the relevant services. Outlining that to carry out the functions of a nominee, the nominee must be able to attend locations where construction services the nominee will be responsible for supervising are being carried out. More clearly stating the nominee s appointment for a construction service, occupation or occupation class automatically ends in prescribed circumstances. Including a new automatic suspension provision for a corporate or partnership licence, if the licensee has no eligible nominee. Shorter reporting timeframes for loss of a nominee. Expanded mandatory qualifications powers. Legislation changes to Act made in Bill. Revised application forms, declarations and new applicant information for corporations and partnerships and nominees. Revision of operational policies for assessing an application.. 3.2a Building surveyors licensing pre application assessment Assessment of an applicant s knowledge and understanding of things directly related to their licence: Obligations and rights under their licence Building codes and related standards and practices The ACT certification system, its application and interaction with other ACT legislation High level of support, including amongst building surveyors. Develop and implement a pre application assessment for building surveyors licence applicants and for licensees who have transferred from other jurisdictions. No, any changes can be made by instrument. Powers relating to making of mandatory qualifications only. New assessments developed for each licence class. New mandatory qualifications declaration made under COLA. New application form and explanatory information for applicants and people currently in training, including sample/practice questions. New mechanism to record and report on assessment results against applicants. Capacity for assessment to be applied at renewal and as part of a skills assessment. Expand mandatory qualifications for new building surveyor licence categories to include completion of the online course. Revision of operational policies for assessing an application. 3.2b Building surveyors licensing on line course A self paced on line course on the ACT building regulatory and certification system, which could also be used in directed training and noted on the licensing register. High level of support Develop and make available an online course for building surveyors. No, any changes can be made by instrument. Development of course modules and content based on legislated roles and responsibilities. Deployment of course on an online training platform. Page 4 of 8

Expand mandatory qualifications for new building surveyor licence categories to include completion of the course. 3.3 Renewals and ongoing eligibility Improving the links in licensing legislation between general licensing requirements, such as financial or insurance status, and ongoing eligibility. Few specific comments on the proposal. Amending section 55(1) of the COLA to provide a new ground for occupational discipline that the licensee is, or has become, ineligible to hold a licence. Legislative changes enacted through the Bill. Operational policy amended to incorporate new changes, including new mechanisms to record reported information and related suspensions. New educational materials for licence holders. Ensure section 18 of the Act is sufficient to include a regulation that prescribes eligibility requirements for renewals that may be different to those for initial applications. Amend provisions for automatic suspension so that they continue as long as the ground for the suspension exists if the ground has not been reported to the Registrar. Expand licence renewal assessments to include checking of eligibility. 3.4 Professional Indemnity (PI) insurance Requirement for builders to hold the same level of PI Insurance as building surveyors and building assessors (minimums of $1,000,000 for single claims and $1,000,000 for all claims in the insurance period). Moderate support for principle if builders are providing advice that could be subject to PI insurance. Conduct broader consultation on the findings of the review in relation to insurance and practitioner accountability. Not at this stage. An insurance requirement on licensed people could be imposed by regulation. Contracts for residential buildings and building work 4.1 Standard contract provisions Standard contract provisions, particularly: Using standardised terms and descriptions for stages of work and changes to the building design or materials Separating an agreement for a builder to appoint the certifier from a contract for building work Requiring people entering into contracts for building work to provide standard information on rights and obligations High support for standard terms, and provision of mandatory information. Moderate support for separating agency agreements. Low support for standard variations. Amend the Building Act to allow regulations to prescribe requirement for contracts for residential building work. Enact a regulation under new powers to delineate agency agreements from building contracts. Develop and consult on standard terms, and standard information for a building contract including explanations of common variation clauses and their meaning., head of power for regulating contracts. Develop and consult on: standard terms for describing common stages of work related to residential building contracts. standardised information for people entering into a contract for residential building work Enact new regulations once content is finalised. Draft and consult on regulation and new approved form for separate agency agreements in relation to certain residential building work. Enact new provisions to coincide with commencement of amendments in Bill if supported by regulatory impact analysis. Changes reflected in codes of practice for licensed builders and certifiers. Consult on the findings of the review in relation to building contracts. Changes to auditing processes for building approvals (agency agreement) and recording of compliance information relating to contracts. Page 5 of 8

4.2 Statutory warranties Expanding the existing statutory warranties for residential buildings three storeys or below to: All class 2 residential Class 3 serviced apartments High degree of support for extension to all residential buildings, although many community respondents also requested extension of builders insurance against which a claim can be made in the event of death, disappearance or insolvency. Amend the Building Act to expand the warranties to apply to all contracts for new work entered into after the commencement. Legislative amendments enacted in the Bill. New educational material for developers, builders, legal practitioners and purchasers of residential buildings, including revisions to the current consumer guide. Contracts are taken to include the warranty even where it is not written into the contract so there is initially few implementation requirements for industry. Consult on the findings of the review in relation to the residential building insurance system in the ACT. 4.3 Maximum progress payments Potential for prescribing maximum payments (for example by amount or percentage) High level of support for restrictions on claims to only for work completed, however most respondents also noted the practice of frontloading contracts to cover ongoing project costs. Low level of support from contractors and their representatives for capping payments at a dollar amount, or linking to the minimum level of building insurance cover, although many homeowners supported this. Amend the Building Act to include a head of power for prescribing the content of contracts in a regulation. Consult further in relation to specific regulations for a model based on payment only for work completed. Amendments to the Building Act made in the Bill. Develop and consult on regulations for a model based on payment only for work completed and associated regulatory impacts. New educational material for builders, legal practitioners, owners/applicants, certifiers and other parties in relation to stages and associated payments, including an update to guide to building or buying. 4.4 Accountability for contractors A mechanism to prevent entities with a history of serious compliance issues (contractual and technical) or lack of compliance with the Corporations Act 2001 or the Competition and Consumer Act 2010. High level of support for Government considering this issue further. To further assist to reduce phoenixing: Expanded capacity for the Registrar to consider an applicant or licensee s history under other related licences., for short term reform proposals. Amendments to Acts made in Bill Operational policies and administrative processes for considering applications, grounds for disciplinary action and recording automatic suspension grounds. Improved information capture for monitoring, responding and analysis. Putting in place arrangements for reporting and receiving information to/from other regulators, ASIC and ATO Anti Phoenixing Taskforce. Ability for the Registrar and ACAT to consider whether a breach is relevant to multiple associated licences and take appropriate action. Increased reporting requirements for automatic suspension grounds in COLA. New educational material for builders, legal practitioners, owners/applicants, certifiers and other parties. Consider expansion of rectification and other relevant powers to allow orders to be issued to people closely associated with an insolvent or disappeared corporate licensee. Review federal inquiry findings and Page 6 of 8

associated response, with a view to fill in any gaps in the system if required. Project funding, payment claims and retentions 5.1 Retention funds/project accounts Options for securing retentions so they are readily available, and protected in the event of insolvency Options for separating progress payments so that it is available to the relevant project, and protected in the event of insolvency Better reporting to the regulator increased notification in the cases of: Entering into a winding up arrangement Having a receiver appointed Entering into a deed of company arrangement with creditors otherwise becoming insolvent being convicted of relevant offences under the Corporations Act 2001 or the Competition and Consumer Act 2010. General view amongst stakeholders that some form of intervention to protect progress payments is warranted. Highly diverse views on potential models. Responses also revealed a general view that the Security of Payments system is ineffective in the ACT and requires a more substantial review. Increased reporting requirements under COLA for licensees in relation to insolvency. Review response to federal inquiry and results of trials of various models other jurisdictions and continue targeted consultation, with a view to either conducting an ACT trial to fill in any knowledge gaps if required, or implementing changes in the ACT if Commonwealth legislation is not supported/or has insufficient coverage. Review the effectiveness of ACT procurement arrangements for security of retentions held by contractors and progress payments on government projects. Conduct trial (if agreed and required). Review the Security of Payments system in the ACT., new offence for failing to report certain financial events, including entering into a winding up or deed of agreement. Amendments relating to reporting for licensees under COLA included in the Bill. EPD to review: federal inquiry findings and existing procurement arrangements in relation to retentions and progress payments. findings of relevant trials in Australia and the UK of project bank accounts 5.2a Progress payment claims Potential for a maximum legislated contractual payment period for progress payment claims, which would not affect the default of 10 business days for contracts where a timeframe is not specified. Moderate level of support, but high variability in proposed length of payment period. Include further consultation on proposed payment period in review of security of payments legislation and its effectiveness. Not at this stage. This issue will be considered under reforms described under 5.1 Retention funds/project accounts. 5.2b Endorsement Removal of the requirement to identify a payment claim as a payment claim under the Security of Payment Act. Low level of support. Do not pursue. There are significant legal implications to removing the endorsement. A replacement form of words can be considered as part of a broader review if necessary. A replacement to the current endorsement could be developed as part of reforms for 5.1 Retention funds/project accounts if it supports the objectives of the security of payments system. Alternative dispute resolution 6.1 New dispute resolution system Creation of a new dispute resolution process(es) for building related technical and contractual disputes, potentially with elements of mediation and expert determination. Provision of information to parties to a dispute in relation to resolution of disputes and defects and dispute resolution options Expanded range of standards and tolerances Highly supported Reasonably consistent views on the desirable features of a model (i.e. does not require legal representation, expensive consultant reports or court processes) but highly variable preferences for models. Refine proposed model based on consultation and conduct a second round of consultation on the detailed model. Consider adoption of new standards and tolerances for building related disputes and complaints. Long term Implement new dispute resolution model. depending on the model may require amendments to multiple Acts. No Refine proposed model based on consultation feedback Conduct further consultation on the detailed model in two stages: Targeted consultation with a small group of stakeholders across relevant community and industry sectors Broader public consultation. Feedback on regulatory impacts of the model will be gathered during this process. Standards and tolerances review existing guides and allowances, including the guide referenced in the Building Act, for suitability for use in general building disputes and as appropriate: Revise consumer guides to reflect reasonable tolerances. Page 7 of 8

Incorporate relevant tolerances into consideration in internal complaints processes for determining if further action is warranted. Encourage use of standards and tolerances in external dispute resolution processes. Revise the version of standards and tolerances used in the Building Act. Page 8 of 8