Highlights from the proposed NSW building regulation reforms
The NSW government is consulting on an enormous package of reforms to over eight Acts and regulations. The reforms also propose the creation of three new Acts.
Firstly, I take my hat off to all those involved in preparing the hundreds of pages comprising seven regulatory impact statements, two draft bills, three draft sets of regulations and draft guidance material that has been released for consultation. This includes the team at the Department of Fair Trading (FT) and all the industry bodies and stakeholders that have attended consultation meetings and are no doubt busily working up submissions for the public consultation process.
I have prepared a summary of the reforms for those looking for more detail – see NSW Proposed Reforms 2022 – 7 November 2022. For those that just want the ‘highlights’ (as determined by me) my top eight are set out below. It is important to understand that these are proposed reforms under consultation. The final decision on what will be introduced into Parliament is yet to be made.
- Extending the application of the Design and Building Practitioners Act 2020 to class 3 and 9c buildings. In essence this Act requires lodgement of ‘declared designs’ for class 2 buildings by registered design and engineering practitioners. This is a logical extension to classes of building where people sleep which was envisaged when the DBP Act was introduced. Hopefully this won’t be the last time this Act will be extended to cover more classes of buildings.
- Extending the requirement for engineers to be registered for work on all classes of buildings. Currently engineers are only required to be registered when providing engineering services for class 2 buildings. Relevant provisions for the scheme will sit in the proposed new Building Act. Following recent announcements by two other jurisdictions that they will introduce registration for engineers involved in the building industry (WA and ACT), this will mean that only SA does not have registration for engineers.
- Fire safety reforms. The workload for Fire Rescue NSW (FRNSW) is about to get much bigger. It is proposed that any design that proposes the use of performance solutions for prescribed fire safety performance requirements will need to be referred to FRNSW three times namely, as part of the preparation of the design brief, prior to the issue of a construction certificate and prior to the issue of an occupancy permit. FRNSW will have statutory time limits to notify whether it intends to provide a report on these referrals. Commissioning of installed fire safety systems will need to be certified by an ‘accredited person’ expanding the accreditation framework for fire safety practitioners. Whilst the accredited person must be ‘independent’ from the installer, they may be employed or engaged by the same company as the installer. The proposal is also to (finally) legislate the requirement for essential safety measures to be maintained in accordance with AS 1851-2012.
- A new Building Act is proposed. (Michael Lambert will be clapping!). The building and subdivision approval processes currently required under the Environmental Planning and Assessment Act 1979 will be brought across to the new Act. More importantly, the new Act will provide for licensing/registration for those undertaking the design and construction of all classes of buildings. Yes, that means commercial buildings too! The goodies in this Bill are extensive. They include:
a. Introducing licensing for building inspectors doing pre-purchase and defect inspections;
b. Graduated license/registration types for builders and designers;
c. Co-regulation with industry associations who can seek approval to conduct assessments of qualifications and experience for new entrants (with those bodies operating an approved professional standards scheme preferred);
d. Increasing controls on owner-builders to prevent owners from making commercial gains by tightening the process for obtaining a permit and narrowing the work that may be physically carried out by an unlicensed person;
e. Publishing a suite of new practice standards with two main objectives:
i. To impose obligations on licensees to perform their work in accordance with relevant standards and codes; and
ii. To increase controls for appropriate supervision of apprentices and unlicensed persons, including setting out ratios of licensed to unlicensed persons for different levels of supervision;
f. Introducing waterproofing work as a specialist license category with licensed waterproofers required to lodge compliance certificates with FT (i.e. comparable with electric and plumbing work);
g. Extending the application of the Act to pre-fabricated building products and systems. This will cover more complex systems such as kit homes, bathroom and kitchen pods. Those constructing these products will need to be licensed, their work will require independent certification during off-site construction and implied warranties will apply where the products are used in home building;
h. Extending the time limits for bringing claims for breaches of implied warranties (applicable to home building) to ten years for ‘serious defects’ (to replace the definition of major defect) and three years for minor or non-serious defects;
i. Enhancing the free dispute resolution process offered by FT to encourage owners to seek the assistance of government to resolve disputes earlier and avoid the courts.
- Modernised and consolidated investigation and enforcement powers will be contained in a new Building Compliance and Enforcement Act. The powers from the Residential Apartment Buildings (Compliance and Enforcement) Powers Act 2020 (including to prevent the issuing of an occupancy certificate until serious defects are resolved) will come across to the new Act and be able to be used for all classes of buildings. Where an authorised officer takes one of the very broad range of actions available to them in response to non-compliance, it will be published on the FT website providing transparency to the public. There will be a demerit points scheme for licensed persons, increased maximum penalties for offences and a new and novel power for authorised officers to issue an ‘education and training notice’ which requires a person to undertake a specified course within a specified time. The education and training notices will be an alternative to penalty notices with the cost of completing a course less than the cost of a penalty notice. Of course, this will feed into the micro credential courses developed by the NSW Construct/TAFE partnership over the past 18 months which have had over 23,000 enrolments so far. Notably, the Act will provide for the appointment of a Building Commissioner making this the first statutory recognition of the Building Commissioner position (not that this has stopped David Chandler from making an enormous impact on the NSW building industry so far!).
- Plenty to sharpen the minds of directors and developers. For directors of corporate licensees and developers there are numerous reforms intended to strengthen the government’s resolve to place as much responsibility and accountability squarely on those that influence building outcomes the most. In addition to ensuring directors can be prosecuted for offences committed by a company, they will be personally required to ensure that nominated supervisor are effectively supervising building work. There will also be a mandatory obligation to report non-compliances directly to FT or risk losing their license or face heavy penalties. Those directors found to have been involved in ‘intentional phoenix activity’ (a term that will be defined) may find themselves deemed ‘unsuitable’ to be licensed together with anyone with whom they are considered to be a ‘close associate’. Further, all licensed and registered practitioners will have a duty to take ‘reasonable steps’ to ensure that they do not employ, enter into contracts with, or have a ‘business association’ with someone who has engaged in an ‘intentional phoenix activity’. In other words, if you are a director found to be engaging in ‘intentional phoenix activity’ you will not be welcome in the NSW building industry.
- Building product supply chain laws feature in the reform package. Some will remember the proposal to introduce similar laws back in 2017 was abandoned and it’s good to see this back on the agenda again. Manufacturers, importers, suppliers, designers and installers will have a duty to ensure building products they are involved with are not ‘non-conforming’, ie fail to meet the NCC, applicable standards or legislation; do not possess the characteristics they are represented to have; or are not suitable or safe in relation to a particular use. These supply chain participants will have to ensure products have specified information, are fit for purpose and meet relevant performance requirements. The Secretary would have powers including to issue building product supply or use bans, warning notices and recall notices. The laws have been developed having regard to the Qld chain of responsibility laws and how they have operated since they were introduced in 2017. Having NSW and Qld aligned on this will add strength to product safety reform in Australia, let’s hope the other jurisdictions fall into place behind these two large jurisdictions very soon.
- Certifiers are being given broader powers to take action in a move said to impose greater responsibility on them to resolve defects earlier. They will be able to issue written direction notices where ‘serious defects’ are identified and a copy of any such directions are to be provided to FT. Whilst the reform is directed at certifiers doing more, this will redistribute the workload for FT and local councils. In the case of FT, the express intention here is to reduce reliance on it to intervene toward the end of projects which has been occurring under the OC Audit program. For local governments, they will be recipients of notifications where the direction notices are not complied with, increasing their workload to escalate enforcement. The relationship between these three ‘regulators’ with statutory responsibility for overseeing the system will continue to be a complex one. The jurisdictions that can find the key to making these three groups work together respectfully and collaboratively will unlock the potential for efficient and effective regulatory oversight of the whole system.