A new report by Equity Economics reveals the looming crisis in Australia’s construction industry with remediation costs for major building defects and the escalating flammable cladding issue estimated to cross $6 billion.
Commissioned by the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU), the report titled ‘Shaky Foundations: The National Construction Crisis’ exposes the staggering scale of failures in the Australian construction industry, which include flammable cladding, cracked building towers, water leaks and fire safety damage.
The report warns of dire financial consequences with the piling economic costs of these failures ranging from steep increases in professional insurance fees to general cost blow-outs and delays slowing down the productivity gains that flow from infrastructure investment. Very importantly, the cost of remediation – to rectify structural and safety defects in buildings – is conservatively estimated at $6.2 billion.
Independent research conducted by Equity Economics for the CFMEU has identified 3461 residential apartment blocks across the country with potentially flammable exterior cladding – this figure covers more than 170,000 apartments mostly constructed in the last 10 years.
Hundreds of buildings in NSW are potentially affected with the Berejiklian Government under pressure to provide more support and funding for remediation. The taskforce set up by the NSW Government has identified 553 high-risk buildings across the state with non-compliant cladding including 154 residential apartment buildings.
The problem is particularly serious in the City of Sydney with 350 buildings identified by the taskforce. These include 174 buildings in Parramatta, 87 in the City of Canterbury Bankstown, and 71 in Bayside Council.
The current crisis in Australia’s construction industry, according to the report, has resulted from the Government’s failure to adequately enforce existing building standards or ensure they keep pace with evolving building practices; loss of public sector skills and capability leading to poor project scoping and design; and outsourcing of building approvals resulting in increased conflicts of interest and lack of oversight.
Calling for a national approach to address this crisis, CFMEU Construction advises application of “the strictest standards practical to new builds so as to remove doubt as to their quality, even to the extent that new builds become the preferred choice for aspiring homeowners”; introduction of “maximum transparency on Australia’s existing housing stock in order to reduce uncertainty in the secondary market and preserve liquidity and ultimately value for good quality assets”, and providing “appropriate financial support... for removing combustible cladding or reducing its associated risks”.
These steps will help restore the necessary confidence to strengthen this vital part of Australia’s economy, says the report.