Reforming Building Laws in NSW

Submission to the Department of Customer Service
Reforming Building Laws in NSW

25 November 2022
ABOUT THE HOUSING INDUSTRY ASSOCIATION ..........................................................................................................2
1. EXECUTIVE SUMMARY ........................................................................................................................................2
2. PART 1 – WHO CAN DO THE WORK .....................................................................................................................8
3. PART 2 – WHAT WORK CAN BE REGULATED ...................................................................................................... 31
4. PART 3 – BUILDING COMPLIANT HOMES ........................................................................................................... 52
5. BUILDING COMPLIANCE AND ENFORCEMENT BILL 2022 ................................................................................... 80
6. THE AMENDMENT BILL ...................................................................................................................................... 91
Housing Industry Association contacts:
David Bare Jasminne Muliadi

Executive Director – NSW Manager Workplace Services
Housing Industry Association Industrial Relations and Legal Services
4 Byfield Street j.muliadi@hia.com.au
North Ryde NSW 2113
Email: d.bare@hia.com.au
-i-
ABOUT THE HOUSING INDUSTRY ASSOCIATION
The Housing Industry Association (HIA) is Australia’s only national industry association representing
the interests of the residential building industry.
As the voice of the residential building industry, HIA represents a membership of 60,000 across
Australia. Our members are involved in delivering more than 170,000 new homes each year through
the construction of new housing estates, detached homes, low & medium-density housing
developments, apartment buildings and completing renovations on Australia’s 9 million existing
homes.
HIA members comprise a diverse mix of companies, including volume builders delivering thousands
of new homes a year through to small and medium home builders delivering one or more custom
built homes a year. From sole traders to multi-nationals, HIA members construct over 85 per cent of
the nation’s new building stock.
The residential building industry is one of Australia’s most dynamic, innovative and efficient service
industries and is a key driver of the Australian economy. The residential building industry has a wide
reach into the manufacturing, supply and retail sectors.
Contributing over $100 billion per annum and accounting for 5.8 per cent of Gross Domestic Product,
the residential building industry employs over one million people, representing tens of thousands of
small businesses and over 200,000 sub-contractors reliant on the industry for their livelihood.
HIA exists to service the businesses it represents, lobby for the best possible business environment
for the building industry and to encourage a responsible and quality driven, affordable residential
building development industry. HIA’s mission is to:
“promote policies and provide services which enhance our members’ business practices,
products and profitability, consistent with the highest standards of professional and commercial
conduct.”
HIA develops and advocates policy on behalf of members to further advance new home building and
renovating, enabling members to provide affordable and appropriate housing to the growing
Australian population. New policy is generated through a grassroots process that starts with local
and regional committees before progressing to the National Policy Congress by which time it has
passed through almost 1,000 sets of hands.
Policy development is supported by an ongoing process of collecting and analysing data, forecasting,
and providing industry data and insights for members, the general public and on a contract basis.
The association operates offices in 22 centres around the nation providing a wide range of advocacy,
business support services and products for members, including legal, technical, planning, workplace
health and safety and business compliance advice, along with training services, contracts and
stationary, industry awards for excellence, and member only discounts on goods and services.
- ii -
1. EXECUTIVE SUMMARY
In August 2022, the Better Regulation division of the Department of Customer Service released for
consultation:
• The Draft Building Bill 2022 (the Building Bill), alongside a three-part Regulatory Impact
Statement (‘RIS’).
• The Building Compliance and Enforcement Bill 2022 (the BCE Bill) alongside the relevant
Regulatory Impact Statement.
• The Building and Construction Legislation Amendment Bill 2022 and Building and Construction
Legislation Amendment Regulation 2022 (the Amendment Bill) along with the relevant
Regulatory Impact Statement.
Together this represents the most comprehensive review of home building laws in decades and
should be characterised as a wholesale rewrite of NSW’s building legislation.
HIA strongly suggests that as a first step, the entire regulatory landscape for building work should
be mapped out to ensure all parties have a common understanding of the current framework and
that opportunities to reduce confusion, complexity and red tape can be easily highlighted.
As a guiding principle, HIA would like to see the regulatory framework that applies to the residential
building industry simplified with a focus on reducing regulatory burden and red tape. Other than
measures that would see the adoption of this guiding principle, HIA does not see any pressing need
to make any changes to the regulatory framework. Any proposed changes should support the
industry, the broader economy and makes it easy for the industry to operate.
To that end, regulatory reforms related to the residential building industry must be put on pause.
While the impacts of COVID-19 appear to be dissipating the challenges of increased demand,
unprecedented delays and material and labour shortages combined with other inflationary pressures
and international uncertainties will see NSW home building activity slow over the next 12 months.
With an ebb in the cycle predicted, now is not the time to commence and seek to implement broad
ranging and significant reform.
Overarchingly HIA would express the following concerns with the reforms and Bill, the BCE Bill and
the Amendment Bill and the accompany regulatory impacts statements:
• There has been inadequate consultation.

• The RISs are also inadequate.
• There is a heavy and unsatisfactory reliance on regulations.
HIA elaborates on these matters below.
Inadequate consultation
HIA notes that altogether the consultation documents combining the proposed bills and the
accompanying RIS total over 900 pages. Taking into account not only the significance of the
Page 2 of 114 | Reforming Building Laws in NSW

proposed reforms but also the volume of documents and research needed to be undertaken to
provide responses to approximately 200 questions, there have been significant hurdles and
challenges in adequately reviewing these documents and consulting with members.
While we acknowledge that the Department has engaged in “five industry roundtables, two focus
groups and two written submission processes to support the development of the Bill” HIA has
repeatedly urged the Department to confirm the exact reforms which were being proposed. HIA
adamantly disagrees that the development of the reforms has followed ‘[d]irect consultation…with
individual stakeholders outside of the roundtables to deep-dive into their feedback on niche subject
matter issues”.
Furthermore, many other proposals have seemingly “come from nowhere”, with this being the first
time that HIA has been made aware of the specific intentions.
The net result of this is that industry has been provided a mere three months to respond to what are
lengthy, broad ranging and complex proposals.
This is obviously inadequate.
Unfortunately, while there may be proposals that are worthy of consideration more time is needed to
ensure that the proposals are fully formed.
Inadequate assessment of regulatory impacts
The regulatory impact analysis, across all three bills fails to adequately explain the rationale for the
proposed replacement of the Home Building Act 1989 (NSW) (HBA). HIA is simply astounded by the
absurd brevity of much of the analysis.
The lack of time being invested into constructing proposed reforms which are capable of being well
understood by the industry is also evident through the lack of details and an appropriate cost
analysis.
Further the RISs abjectly fail to acknowledge the level of burden and complexity that is already
imposed by the current level of regulation (especially for residential construction projects), and the
very real impacts that the proposed changes will have on the building industry which is critical to the
NSW economy.
Specifically, the RISs:
• Are riddled with brief, unsubstantiated conclusions about the benefits of the proposed changes.
Unless it supports a position, relevant data has simply been ignored, or not collected in the first
place. There are numerous incidences where the proposed change will increase overall costs.
In these circumstances there is no attempt to quantify the amount of the increase, and then the
increase is dismissed by commenting that the effect of those costs can simply be passed onto
the consumer.

• Make no attempt to genuinely engage with the negative effects of regulatory bloat upon the
building and construction industry. A largely unsubstantiated view appears to have already
formed that more stringent and all-encompassing regulations will increase compliance.
• Fail to address all aspects of the proposed reforms. Entire areas have been left completely
undiscussed. One particularly concerning example is Chapter 5 of the Building Bill (‘Insurance’).
Many of these crucial Home Building Compensation Fund (HBCF) provisions have been
rewritten, replaced or reworded, without so much as a single mention throughout the RIS.
• Includes a “new sections guide” which is of little to no assistance, and cannot be relied on as
accurate or complete for example this material:
o constantly marks provisions as having “no change”, despite the occurrence of substantial
changes;
o outrightly fails to mention those provisions of the HBA which have no equivalent at all in the
Bill;
o does not contain even the most threadbare attempt at a “section by section” breakdown of
the Bill; and
o Fails to consider the issue of regulatory overreach, let alone the notion that the industry is
being asked to respond to a Bill without any knowledge of the content of the regulations
which will underpin it. If the process was less rushed, these regulations would have surely
already been available.
Equally important is who will be paying for these costs. For example, the BCE Bill contains an
expansion of compliance and enforcement powers to all other classes of buildings, and additional
powers are proposed to be bestowed on the regulators such as the proactive audit initiative.
Ultimately, the costs associated with these activities will be passed on to the homeowners.
Reliance on regulations
Numerous contentious proposals are open to further revisions or amendments via unknown
regulations and HIA would be hesitant to support proposals that lack transparency, certainty and
clarity.
Further, placing critical aspects of regulatory arrangements in regulations is ill-advised. Matters such
as which categories of work will be captured by the proposed licensing framework should be present
in the Bill and elaborated upon with in the RIS. Doing otherwise would bypass the intended processes
of disclosure, consultation and feedback.
This approach is also indicative of an incredibly rushed approach.
1.1 THE BUILDING BILL

HIA acknowledges that the Building Bill is intended to replace the HBA and aims to consolidate and
regulate several key elements of the building and construction industry. HIA understands that if
implemented, these proposals would alter the way building regulation operates in NSW. For
example, fundamental changes to the licensing system, warranty arrangements and obligations,
supervision requirements and the way home building contracts operate.

Impact on the NSW Home Building Compensation Fund (HBCF)?
The purposive ‘question mark’ above reflects HIA’s query; has the impact of the Building Bill on the
NSW HBCF been considered?
Amongst a multitude of substantial changes to the status quo, the Government has proposed:
• Expanding the licensing framework to all types of commercial and residential building work, via
the definition of “regulated works”.
• Redefining the scope of “building work” to be captured by the legislation.
• Replacing the existing standard of “major defects” (in relation to statutory warranties) with the
definition of “serious defects” from the Residential Apartment Buildings (Compliance and
Enforcement Powers) Act 2020 (NSW) (‘RAB Act’).
Even temporarily putting aside the matter of increased compliance costs, any of these proposals
alone has the potential to completely upend the scope and costing of the HBCF scheme. These are
not consequences that can be resolved in a matter of months.
It would appear that the answer to the question is a resounding ‘no’ as there has not, within any part
of the RIS, been any real attempt to acknowledge the impact of the proposed changes on:
• the costs of HBCF premiums, or

• the frequency of claims under HBCF insurance.
By way of example, in the Part 3 RIS, the NSW Government has elected to provide a lone paragraph
which is apparently meant to address (at the same time) the HBCF consequences of:
• changes to the scope of warranties,

• changing the definition of ‘residential building work’ to ‘home building work’,
• changing the definitions of ‘owner’ and ‘completion’, and
• consideration of extending the time frame for major defect to 10 years and other defects to 3
years.
A great deal of the proposed changes have very obvious implications for the health and sustainability
of the HBCF scheme which appear to have been ignored. HIA simply cannot understand why the
NSW Government’s would elect to undermine its own ongoing “Review of the Efficiency and
Effectiveness of the NSW Home Building Compensation Fund” (to which HIA has also provided
detailed submissions in response).1
Building products and modular and prefabricated construction
It is proposed that measures be introduced to improve the regulatory framework for building product
compliance and move towards a more tailored regulation of modular and prefabricated construction.
Both of these are complex matters and have been the subject of substantial programs of work and
reviews over many years.

For example, the ABCB is currently working on a building product assurance framework arising from
the Shergold and Weir Building Confidence Report. Further HIA, on behalf of the Federal
Government, has recently released a report on identifying and analysing regulatory barriers with
modular and prefabricated construction.
Notwithstanding the extensive work already done, particularly in the building products space HIA
recommends that these areas be de-coupled from other proposals under consideration and
assessed separately.
1.2 THE BCE BILL
These reforms appear to be focused on consolidating the regulatory compliance and enforcement
powers under various NSW Acts relating to the building and construction industry.
Overarchingly, HIA supports regulatory reforms that eliminate unnecessary regulation, reduce red
tape and the administrative burden on business. However, such moves should only be made when
the outcome would result in genuine, positive regulatory reform. At this stage, HIA is yet to see
evidence that these proposals would deliver this outcome. In fact, proposals relating to having a
single suite of compliance and enforcement powers including consolidating the enforcement powers
that currently exist across different pieces of legislation, would seem to benefit regulators more so
than consumers or industry participants.
Generally, HIA supports a consistent approach, but this should only be justified where the benefits
of consistency outweigh the costs and there are no unintended consequences that flow from such
an approach. Accordingly, when attempting to align complex definitions such as ‘developer’ and
‘building work’ for a compliance and enforcement purpose, in-depth consideration of the intended
and unintended impacts must be explored.
HIA is primarily concerned with proposals that would see the expansion of compliance and
enforcement powers from class 2 buildings to other building classes including class 1 buildings. At
this stage HIA opposes this approach and recommends that should this proposal progress a proper
analysis is carried out before adopting a ‘one-size-fits-all’ approach.
Other issues of concern that require further information include:
• Notions such as who could be captured as a developer under the definition of “indirectly
facilitated or otherwise caused” and understanding the implications and unintended
consequences that might flow from streamlining the definition of ‘building work’.
• Proposals regarding remedial actions such as a ‘compliance notice’ and a ‘building work
rectification order’ which effectively results in not only additional regulatory and financial burden
to the industry, but also extends the limitation period that is currently in place.
• The proposal of a five-tier model for penalties without in-depth information being provided in the
Bill and the RIS such as the mapping out of the proposed offences and how these are compared
to the current penalties embedded in different pieces of legislation. HIA notes that such exercise
has not been undertaken and provided to the industry to allow sensible response to be given.

1.3 THE AMENDMENT BILL
HIA acknowledges that the intention of this set of reform is to hold all persons involved in building
and construction accountable for their work by amending existing legislation as well as introducing
new requirements.
Greater accountability is proposed through:
• The use of training and education as a compliance tool. HIA has always maintained its position
to not oppose the requirement for industry license holders to undertake mandatory professional
development where it is imposed on individuals by the licensing authority, if this serves as an
alternative for those who would otherwise have their builder licence cancelled, disqualified or
suspended as a result of disciplinary proceedings.
• Proposals to alter the dispute resolution process by increasing the administrative nature of these
processes or implement changes that would reduce the efficacious nature of these processes.
A cautious approach should be taken when considering regulatory change that may result in
significantly increased regulatory and administrative burden to the residential building industry.
• The introduction of an additional layer of penalty through a Penalty Infringement Notice. Prior to
adoption it is important to explore the effectiveness of such method and whether this would
achieve its intended outcome. Evidence that the current measures are ineffective should also be
provided to the industry.
• A requirement that a person must take ‘reasonable steps’ to ensure they do not enter into a
contract with a person that has illegally phoenixed or been declared a bankrupt. Without more
certainty on what ‘reasonable steps’ would be when attempting to satisfy themselves that the
person they are entering into a contract with has not illegally phoenixed or been declared a
bankrupt, HIA is opposed to the proposal.
HIA is also concerned that 6-month transition period appears to be the nominated time frame given
to the industry to adapt to the proposed changes without first establishing how this change would
impact businesses and the cost/cash flow implications. Equally beneficial is to understand what
education and preparation the Government will do for the industry to ensure that the process would
be smooth and less disruptive for businesses, as well as ensuring that this will not result in more
regulatory, administrative and financial burden for the industry.

2. PART 1 – WHO CAN DO THE WORK
2.1 KEY OBJECTIVES OF THE BUILDING BILL
1. Do the identified objectives support both the industry and regulator to be future focused, responsible
and support all people who interact with it to achieve a fair outcome?
2. After reviewing the Bill do you think that it supports these intended objectives?
No, for example the proposed objectives of the Building Bill do not include a goal of ensuring that
anyone who carries out building work is also entitled to a fair outcome. HIA would recommend that
such an objective be included in the Building Bill.
HIA obviously does not oppose the concept of attempting to ensure a “future focused, responsible”
industry and regulator intended to “support all people who interact with it to achieve a fair outcome”.
However, both the content and stated objectives of the Building Bill have been designed in a manner
which abjectly fails to acknowledge:
• The level of burden and complexity that is already presented by the current level of regulation
(especially for residential construction projects); and
• The very real impacts that the proposed changes will have on the building industry, which is
critical to NSW economic recovery, yet already beset by unprecedented levels of challenge
and uncertainty.
The Building Bill proposes numerous unjustified changes to existing building legislation.
If the intention of the Building Bill is to achieve a “fair outcome”, then each proposed change needs
to be evaluated by genuinely considering whether it is fair for members of the building and
construction industry to bear any potential additional risks and costs. Disappointingly, the approach
taken in the RIS defaults to prioritising whether changing the law could theoretically offer some
benefit or advantage to consumers.
It is worth highlighting that the additional costs of complying with new regulations will ultimately (and
inevitably) be felt by consumers. Any consumers who are “costed out” of the housing market as a
result of the flow on impacts of regulatory change will not benefit from the proposed reforms.
Amongst numerous other substantial changes to the status quo, the following is proposed:
• redefining and expanding the scope of “building work” that will be regulated, and
• replacing the existing definition of “major defects” (in relation to statutory warranties) with the
definition of “serious defects” from the RAB Act.
Impact on Home Building Compensation Fund (HBCF)
Even temporarily putting aside the matter of compliance costs, each of these proposals alone has
the potential to completely upend the scope and costing of the HBCF scheme.

Consequently, HIA is deeply concerned that, within the relevant RIS, no real attempt has been made
to numerically quantify the effects of these changes upon (i) the costs of HBCF premiums, or (ii) the
frequency of claims under HBCF insurance.
Many of the proposed changes have very obvious implications for the financial health and
sustainability of the HBCF scheme. These have effectively been ignored by the RIS.
The overall failure to consider the consequences that its proposed changes will have on the HBCF
scheme warrants an extensive response, which HIA has provided below in response to Question 34
of the Part 3 RIS.
None of the three parts of the RIS contain any genuine attempt to evaluate the impacts of changing
the definition of a “major defect” upon the viability HCBF scheme. This alone should signal that the
changes are ill-conceived.
For example, in the Part 3 RIS, the NSW Government has elected to provide a single paragraph
which, in addition to the above matter, is apparently also meant to evaluate (at the same time) the
consequences for the HBCF of:
• changes to the scope of warranties,

• changing the definition of ‘residential building work’ to ‘home building work’;
• changing the definitions of ‘owner’ and ‘completion’; and
• extending the time frame for major defect to 10 years and other defects to 3 years.
That single paragraph provides:
The cost of these proposals is that the scope of the duty is broadened, which may have an impact
on licence holders’ responsibilities as well as home building compensation scheme premiums which
may be a cost that is ultimately passed on to the consumer.
2.2 BUILDING WORK AND ITS APPLICATION IN THE BUILDING BILL

3. Does the definition of building work in Chapter 2 of the Bill capture most types of work performed in
the building and construction industry?
Firstly, HIA opposes the licensing implications which flow from the definition of “building work”
extending to commercial building work. However, these concerns are detailed below in response to
question 11 of Part 1 RIS.
HIA is unsure exactly what is meant by this question, as:
• The definition of “building work” is contained in Chapter 1, section 5 of the Bill;

• Chapter 2 does not contain a definition of “building work”; and
• Chapter 2 does contain a definition of “regulated work”, but that definition is the subject of
questions 5-6 of Part 1 RIS).

HIA therefore assumes that the question is actually referring to the definition of “building work”
contained in Chapter 1, section 5 of the Building Bill.
As to the question of what is “captured” by the definition, HIA’s view is that the definition is otherwise
largely identical to the segment of the HBA definition of “residential building work” (Schedule 1,
Clause 2(1)) which it appears to have been based upon. No additional “types” of work along the lines
of “construction”, “repairing” or “renovation” have been added.
However, s5(1)(b) of the new definition now also includes “work prescribed by the regulations”. In
HIA’s view, it is inappropriate for the definition which underpins the entire Building Bill to be capable
of being expanded at any time via regulative instrument.
HIA makes the observations that:
• The primary functions of this new “building works” definition are different from the HBA definition
of “residential building works”. In the Building Bill, “building works” appear to be intended to:
o Outline the scope of works that a certifier will be required to inspect, and
o Exist as one of the many new categories of licensable “regulated work” under Chapter 2
of the Bill, which are all subject to licensing requirements.
The definition of “home building works” in Chapter 3, s 49 of the Building Bill is better considered the
replacement for most of the current definition of “residential building works”.
The greater issues which flow from all “building works” being “regulated works” (and thus in turn
being capable of becoming “home building works”) will be addressed elsewhere throughout HIA’s
response.
4. What may have been unintentionally excluded or included in this definition?
The proposed definition appears to reflect the stated intention that the definition captures “most types
of work”.
However, as will be expanded upon throughout HIA’s responses to other Questions from Part 1 RIS,
HIA does not:
• Agree with the licensing implications of the proposed “building work” definition; or
• Understand the logic used in order to determine which types of works should or should not be
included. Most (if not all) of the justifications for deliberately excluding civil construction/
infrastructure from the definition (on page 66-67 of the Part 1 RIS) could have equally been
applied to the commercial construction sector.
5. Does the definition of regulated work capture the people who work in the industry?
Yes, but there is no substantive evidence to demonstrate why, in the first place, the definition should:
• “Capture” the entirety of “the people who work in the industry”; and
• No longer exclude works which are worth less than $5,000.

The need for regulation should be driven by either a market failure or the need to respond to a
particular identified risk. The need for any particular building or construction activity to be licensed
should be assessed against the level of risk involved with that specific activity.
No data has been provided regarding the licensing and statutory warranty implications of including
the following within the proposed definition of “regulated work”:
• Fire safety work;

• Commercial building work;
• Professional engineering work; and
• General building design work.
General implications for licensing:
The new definition of “regulated work” has been used to determine who must hold a license. In effect,
the proposal seeks to, without exception or nuance, “capture the people who work in the industry”
as targets for licencing under a single definition.
As with many of the other proposed changes, this ambitious approach is one that strives for
legislative “consistency”, at the expense of the following:
• Licensing regimes are complex and can have significant implications for the lives and
livelihoods of those operating in the residential building industry;
• Although there are benefits in licensing, licensing also constrains the market’s ability to
provide services. By restricting entry, license holders maintain an entrenched market position
thus reducing competition; and
• Removing compliance costs for the lower end of the market will result in lower costs, for the
business and the consumer, providing greater choice for consumers and more targeted
regulation where it matters the most.
HIA is also extremely concerned by the uncritical and complete acceptance of “[a] preliminary
outcome of the licensing review discussed in this RIS…to extend occupational licensing across the
building and construction sector.” Overall, the RIS fails to:
• Refer to evidence which substantiates the unwritten assumption that increased occupational
licensing will demonstrably improve building quality, yet alone create a significant enough
improvement to justify the cost of “blanket” occupational licensing throughout the construction
industry; and
• Address why the valid alternative of business licensing has been disregarded, especially for
categories of work which the RIS itself acknowledges to be “considered low risk”.
Occupational licensing of trades should be reserved for contractors (and subcontractors) who
undertake high risk work. It is always necessary to identify what is considered as high or low risk and
on what basis that assessment is to be made. The Part 1 RIS does not engage with this process.

Serious consideration should be given to business licensing as a viable alternative. On numerous
past occasions, HIA has expressed broad support for business licensing in relation to builders
undertaking:
• Domestic building work;

• Multi-residential building work, with domestic, multi-residential and high rise licenses being
separate categories; and
• Commercial and other building work, with non-residential licenses being a separate category
from a residential builders’ license.
HIA also supports business licensing for trade contractors where they are:
• Engaged (contracting) directly with consumers (subject to a monetary threshold); or

• Engaged (contracting) directly with ‘commercial’ consumers.
If the proposed scheme of “regulated works” proceeds, it is inevitable that numerous subsets of the
industry will pass on the additional costs of complying with poorly tailored, unnecessary licensing
requirements.
For example, there can be little justification for requiring occupational licensing for trade contractors
who work exclusively for builder/principal contractors.
Removal of the $5,000 threshold
HIA takes issue with the proposal to remove the current $5,000 threshold, above which a license to
carry out residential building work is required. HIA opposes this proposal. The comments made in
the Part 1 RIS represent a fundamentally incorrect starting point from which to consider whether
additional licensing is necessary or beneficial:
“Existing minimum contract monetary thresholds for some licence categories will no longer
apply (currently $5,000 in NSW). This means that more people will need to undergo minimum
qualification and suitability checks before doing regulated work in NSW. This provides greater
surety for consumers who want to have building work done. Residential customers will also
enjoy clearer contracting arrangements, outlined further in chapter 2 of the Building Bill RIS
Part 3” [emphasis added]
As was expressed above, the need for a trade activity to be licensed should be assessed against
the risk involved. Even putting aside the matter of placing a fair level of regulatory burden upon low-
risk activities, consumers will become more hesitant to purchase building services if they become
too expensive.
“Low value” building services will not remain so if every builder must now pass on licensing costs,
let alone the compliance costs of the stricter contracting arrangements which are outlined in Chapter
3 of the Building Bill / Part 3 RIS (for which HIA has also provided detailed feedback).

The removal of the $5,000 threshold will cause a myriad of other practical problems which are further
discussed below in response to Question 34 of the Part 1 RIS (in regard to the types of works which
should be able to be performed without a license).
Expansion of the application of HBCF and statutory warranties
HIA notes that the Building Bill’s consumer protection framework (e.g. mandatory insurance and
statutory warranties) uses the definition of “home building work” from Chapter 3, section 49.
This definition specifically includes “regulated work carried out in, on or for a home…”. As far as HIA
can ascertain, this means that it is fully intended that, under the Building Bill, all types of “regulated
work” carried out on a home will now be subject to statutory warranties (and require mandatory HCBF
insurance if the prescribed amount is exceeded).
This represents a significant increase in coverage of the HBCF. It is therefore baffling that the
relevant RIS (part 1) makes no attempt to “cost-out”, assess or even acknowledge the impact of this
expansion.
It is inevitable that the proposed definition of “regulated work” will result in substantial increases to
HBCF premiums, at a time when:
• The HBCF has not reached a state of stable commercial viability, with no private providers having
indicated a willingness to participate in the scheme, this expansion further jeopardises any
possible interest from the private sector;
• The premiums which are being paid by builders are already at a record high, having more than
doubled within the last 10 years (as is even acknowledged within the Part 3 RIS); and
• Builders in NSW are already dealing with a variety of financial pressures, including
unprecedented increases to the price of building materials following COVID-19, continued waves
of flooding in Eastern NSW, and the consequences of the Ukraine conflict in relation to the supply
of construction materials.
The RIS attempts to characterise the work to be captured by the proposed definition and the
accompanying new licensing categories as a simple proposal to incorporate schemes from other
pieces of legislation for the sake of “a consistent approach across the construction industry”.
This is incredibly misleading. In actuality, the net effect of the proposal will be to more or less “throw”
the Professional Engineers Registration Scheme and Fire Safety Practitioner Scheme into the
expanded bundle of “regulated works” which can require statutory warranties and contribute to
reaching the prescribed amount for HCBF insurance, if performed in relation to a “home”.
The approach taken within the RIS towards the Professional Engineers Registration Scheme under
the Design and Building Practitioners Act (2020) (NSW) (‘DBP Act’) is particularly egregious. It is
proposed “to incorporate the existing Professional Engineer registration scheme from the DBP
Act….and expand the existing trade license categories to those working in the commercial sector.”
This proposal is then not elaborated on, with the RIS:

• Giving only the briefest of mentions to the fact that the Professional Engineer Registration
Scheme currently only applies to class 2 buildings; and
• Failing to acknowledge the obvious consequence that (due to the wording of Sections 9-10
of the Bill) the entire scope of “professional engineering work” over all classes of building will
now also be capable of being “home building works”.
6. What may have been unintentionally excluded or included in this definition?
HIA is not aware of any categories of work which have been “unintentionally” included or excluded,
given the NSW Government’s stated intention to “capture the people who work in the industry”.
However, HIA once again does not fully understand the logic used in order to determine which types
of works should or should not be included.
In particular, if the intent was indeed for the system to be consumer focused, then those choices do
not make sense. Many of the deliberate exclusions have the potential to be incredibly relevant to a
consumer’s experience, as well as contribute greatly to the costs/timeline of any project.
7. Are you aware of defects in non-residential work?
8. If you currently run commercial projects, what proportion of people on site hold a trade licence?
Not applicable
The specific impacts of licensing on the commercial sector are discussed below in response to
Question 11 of the Part 1 RIS.
2.3 REVIEW OF BUILDING LICENSING

9. Would any of the alternatives to licensing considered and not pursued contribute to reduced conflicts
and defects? Please provide data/evidence to support your response.
HIA proposes to individually address each of the licencing alternatives mentioned in the Part 1 RIS.
Star Rating
A “star rating” is not supported by the HIA.
Whilst the intention is to remove those who perform poor building work or workmanship, a star rating
approach presents a number of problems, including but not limited to:
• It would create an unjustifiable barrier to entry for new entrants to the market who would not be
eligible for a ‘good’ rating but must compete with those who have already achieved a ‘star rating’;
• The rating would inevitably lose its value once those with a ‘low’ star rating are eliminated from
the market;
• A lack of clarity regarding how a star rating is improved. The RIS provides no indication regarding
how an industry participant could improve their rating; and
• A lack of transparency regarding the matters to be taken into account in determining the rating.
HIA questions who would be the arbiter of what is ‘important’ to a consumer when making a
decision, which matters are “worthy” of including when determining a rating, and how much
weight would/should be attributed to certain factors.

HIA is particularly concerned by the references in the Part 1 RIS to cooperation with Equifax to
develop the “iCIRT ratings tool”. Specifically, if the iCIRT is intended to be used as a rating tool:
• How will the costs of the system be funded, and will they be passed onto builders?
• Has consideration been given to the inherent issues with a single entity (Equifax) effectively
operating a monopoly over a mandatory (or even Government endorsed) ratings tool?
• Are there any long-term plans for maintaining the system with a single provider? What evidence
is there to suggest that this would be feasible?
Further utilizing the principle-based approached in the Australia Consumer Law and Work Health Safety
This proposal is underdeveloped making it difficult to respond to. In theory a principle-based
approach has some advantages and offers some flexibility, however it is unclear how this would
operate in the current context.
Using financial assurances on projects
HIA opposes this proposal, and remains of the view that “financial assurances” (including bonds and
retention funds) should not apply to residential construction projects.
There has been no evidence, analysis or cost assessment presented to justify this proposed change.
The imposition of financial assurances will not stop insolvencies, nor will it guarantee payments to
subcontractors. They will however impose additional costs for residential building work that will
impact housing affordability.
Builders in the residential building industry typically fund their projects by way of debt financing.
Revenue is derived from client payments which occurs in a highly regulated system and cannot be
received until after the completion of work and the incurrence of building costs.
The maintenance of cash flow for builders in the residential building industry proves to be a constant
challenge given the prevalence in the industry of a negative cash flow model. Whilst a trade
contractor is typically paid for work in arrears and must finance this cost, this is also the case for
builders who are required to essentially ‘finance’ an owner’s costs (at least in the short term).
HIA continues to strongly advance the position that the residential building industry represents a
distinct and unique component of the construction industry and that financial assurances should be
excluded from this sector.
Open data
HIA has broad concerns with this alternative, but notes that the RIS does not contain any further
discussion, specific proposal, or indicate “how far” this type of policy would be pursued.
HIA would question the ability of an “open data” system to adequately balance the issues
surrounding confidentiality, privacy and the commercial value/desirability of such data.

Negative licensing
HIA notes that negative licensing is only briefly discussed in the RIS, and is ultimately not something
which the NSW Government has proposed to use in the construction sector “because it is considered
too high-risk”.
HIA would also add that the concept of negative licensing is impractical and confusing.
Stronger reliance on technology to identify risk
HIA would require a specific proposal and more details in order to provide feedback.
However, in principle, HIA does not oppose a stronger reliance on technology to identify risks, to the
extent that it reduces regulatory burden and does not add more compliance costs.
Demerit points scheme
HIA opposes the implementation of demerit point systems in the residential building industry.
A significant issue with a demerit point system is its potential to impact directly on the licensee’s
livelihood. In HIA’s view, the reasons for the development of the demerit point system relate more to
easing the administrative effort of regulating bodies than effectively combatting matters of significant
non-compliance.
Demerit points are imposed administratively (subject to appeal) for specified (often low grade)
offences. When the licensee’s demerit points reach a certain threshold, the consequences are
automatically triggered –in the case of the present system in Queensland–without further right of
appeal.
Based on the Queensland approach, a person may have a licence cancelled or suspended based
on the mathematical formula without the regulatory body having to show that the licensee is, in fact,
not fit and proper to hold a licence.
There are numerous problems with demerit point systems including:
• All licence holders are normally provided with the same number of points, regardless of work
activity and work volumes. A larger volume builder could reach the demerit point threshold more
readily than a lower volume builder. For example, demerit points incurred for the same, albeit
minor, matter repeated on several projects could multiply against the licensee;
• The offences for which demerit points will accrue appear to be chosen as objectively simple to
prove. This reduces the scope for review of the actions of the regulating body and, unless
appropriate safeguards are in place, makes it easy for a person’s livelihood to be adversely
affected through a succession of minor offences;
• A builder’s clients can use the threat of a complaint relating to an activity that incurs demerit
points against license holders in an effort to achieve commercial advantage;
• The threat to a license holder’s livelihood is not a balanced and proportional response when
compared with the offences for which points accrue; and
• The builder as principal contractor is responsible for the workmanship of their trades and it is
unclear how a demerit point system would work in those circumstances.

Co-regulation
The RIS contains a more specific proposal for co-regulation at questions 41-42, to which HIA has
provided a detailed response.
In general, HIA opposes the use of co-regulation in a licensing framework for home building work.
10. Are there any other costs or benefits to the proposed licensing framework that are not detailed here?
Please provide data to support your response.
It was HIA’s assumption that, prior to proposing a new licensing framework, a detailed analysis of all
costs, benefits and detriments of the proposed framework would have already been conducted, as
opposed to requesting this data as a part of individual submissions.
The RIS itself does not provide any evidence that there will be positive cost/benefit outcomes if all
building work is subjected to a requirement to hold a license. It is also largely pointless to cite/explore
the average costs of defect rectification (as has been done on page 34 of the RIS), without also
empirically demonstrating that the scheme will either:
• Reduce the occurrence of defects; or

• Reduce the average cost of defect rectification.
A proper assessment of the risks involved for each building type should have been undertaken
before determining what types should be captured. From the RIS, HIA can only assume that a view
has been formed that more regulation will result in less defects. This is an oversimplification and has
not been substantiated.
Outside of commercial construction, the RIS does not even attempt to discuss the long-term effects
of the changes upon a number of categories of newly “regulated work”. For example, no meaningful
evidence/data has been provided in relation to the amount of licensing costs that will be incurred by
workers who previously did not require a license due to only performing non-specialist works under
$5,000.
HIA further notes that data has been requested with all stakeholder responses even though the
figures in the RIS appear to have virtually come from nowhere.
The RIS contains a particularly concerning reliance on a claim that “[r]egulatory compliance activities
such as record keeping and continued professional development (CPD) activities are estimated at
$118/hour and it is estimated that these activities will on average, take around 70 hours per license
holder.”
These figures that are not insignificant, especially being a starting point that will only inevitably
increase in time and HIA argues that:
• Taken entirely at face value, that amount would already be $8,260 per annum, per license holder,
which is already a substantial burden;
• Even if those monetary values were correct, they are completely irrelevant in terms of estimating
the additional, uncalculated hours of compliance costs that will be added by the proposed
changes.

Regardless of whether these expenditures are “one-off implementation costs” or not (which is not a
position that HIA agrees with), these costs are being proposed at a time when members of the
building industry are already facing unprecedented levels of financial difficulties.
HIA is incredibly concerned with ensuring housing availability/affordability. No allowance has been
made for impact that will be caused by builders inevitably being required to pass these costs onto
the consumer.
11. Will a licensing framework combined with regulatory oversight contribute to better quality, safer and
more compliant buildings? Please provide rationale/evidence to support your response.
No. HIA disagrees with the general proposition that more onerous licensing results in, or is required
to, ensure better quality, safer and more compliant buildings. As was stated in HIA’s response to
Question 5 of the Part 1 RIS, the Department must first provide rationale/evidence for its own position
(which is reflected in the proposed changes)
HIA repeats that its assumption was that, prior to proposing a new licensing framework, a detailed
analysis of the potential effectiveness of the scheme in providing better quality, safer and more
compliant buildings would have already been conducted, as opposed to requesting this data as part
of individual submissions.
HIA proposes to individually address each of the aspects of the licensing framework which were
mentioned in the RIS below.
“License to do the work”
It is clear from the RIS that a view has been formed regarding the desire to license all building work
under a single unified legislative definition of “regulated work”. However, “aligning” the categories of
work for consistency’s sake is not a worthy goal if doing so requires ignoring the consequences of
extending licensing requirements onto every builder and contractor.
The RIS simply does not contain evidence that there are sufficient risks involved with contractors
performing non-specialised works under $5,000 to justify the inclusion of these contractors within
the licensing framework.
The exact same comment applies to the broader attempt to justify this change as part of a “shift from
a ‘licence to contract’ to a ‘license to do work’” that is “necessary to create buildings that are reliable,
safe and fit for long-term use”.
Such a claim cannot hold any merit when faced with a RIS that:
• Fails to demonstrate any regard for the different levels of risk posed by different categories
and monetary values of work; and
• Does not then go on to explain how it is suggested that the proposed high-level, definitional
change will go towards meaningfully improving the reliability and safety of NSW building
work.

Reducing license categories
HIA generally supports the proposal to simplify contractor licensing categories, by having a single
license replace the contractor license, endorsed contractor license, supervisor certificate and
tradesperson certificate, to the extent that this would reduce regulatory burden, unnecessary red
tape and that unintended consequences have been thoroughly identified.
HIA’s support is subject to the charging of reasonable fees and minimal changes being made to the
current application requirements.
Commercial Licensing
From the outset, HIA strongly opposes the idea that the provisions of the HBA (including the licensing
framework which has been transferred into the Bill) should be directly applied in a commercial
context.
HIA is especially critical of the specific proposal to effectively “combine” licencing for the commercial
and residential sectors.
HIA supports business licensing for builders undertaking domestic building work, commercial and
other building work. However, the exact nature and requirements of that licensing must reflect the
related risks of the actual work being performed, and therefore contemplate the relevant skills,
competencies, knowledge and levels of experience that are appropriate for each setting.
Prior to the introduction of commercial builder licences, the proposal should be thoroughly analysed
to determine whether it is justified according to the risk identified for each of the listed building
classes. For example, the risk of a multi-rise residential building or public or institutional building is
very different to a single storey shop or factory/warehouse.
At a very high level, the practice and paradigm in the residential building industry differs significantly
from those businesses operating in commercial construction. The terms and conditions for
commercial builders and those engaging in government contracts are significantly different from the
conditions a builder faces when working on a residential job.
For example, commercial projects and government works are generally characterised by:
• A tendering process that often forces negative margins with the hope that future variations will
cover the shortfall;
• The use of retentions;
• Longer payments terms (up to between 45 and 60 days compared to 21 days in residential);
• Limitations on a builder’s ability to select subcontractors;
• Contract administration by a superintendent/ architect;
• Significant amounts for liquidated damages; and
• Long defect liability periods.
These elements are not typically present in the residential building environment, which faces equally
as challenging yet different factors such as:

• The homeowner, whose significant emotional and financial investment places additional
pressures on the builder and trade contractors;
• Quasi regulation of payment terms through the involvement of financial institutions;
• Ineffective, time consuming and often litigious methods of recouping late payments;
• Demanding terms of trade from suppliers; and
• Significant exposure to uncontrollable events such as inclement weather and fluctuations in
supply of building materials.
Furthermore, any moves that seek to ‘protect’ one business at the expense of another is at odds with
a competitive market, is counterproductive and will aggravate the difficulties faced by business:
• The current competition laws set the appropriate standard for businesses in their dealings and
provides protection for businesses with prohibitions on, for example, misleading conduct, anti-
competitive conduct and unconscionable conduct.
• Businesses recognise there are risks involved with all commercial activities and that it is up to
them to assess these risks before proceeding. Only where there is an overwhelming case for
regulation, such as clear evidence of market failure, should governments interfere in commercial
arrangements between contracting parties.
To that end, HIA supports limited government intervention in commercial arrangements. Commercial
parties should be free to contract and agree upon their own terms and conditions of engagement.
These parties have the wherewithal to allocate and negotiate risk to ensure the party best able to
manage that risk bears its burden.
2.4 PROPOSED CHANGES TO BUILDER LICENSES

12. Do you think the proposed builder licence levels strike the right balance? Should other descriptions
such as floor space or building height be considered?
13. Do you think that a single class of builder licence should be considered? Why or why not?
HIA does not believe that a single class of builder licence should be considered.
From a consumer protection point of view, the grading of licenses assists market choice by indicating
the most appropriately qualified builders for a client’s given needs. The Part 1 RIS also correctly
notes that a single license class may cause difficulties for builders seeking to attain mutual
recognition when working in other jurisdictions.
As for whether the proposed licence grades “strike the right balance”, HIA will require more
substantive details to be provided in order to be able to engage in consultation with members and
provide meaningful feedback.
Based on the limited amount of detail which has been provided, HIA would express concern with the
overall concept of using the NCC building classes as a means of delineating licence classes. HIA
would suggest that the complexities of tailoring license classes to different levels of risk be taken into
account the, and consideration given to whether the proposed system will actually serve this
purpose.

Whilst it may appear logical to simply “follow” the existing NCC classes, that approach is unlikely to
allow for flexibility or facilitate a nuanced approach, tailored to the description of the actual work
being undertaken.
For example, HIA has serious concerns that, under the proposed system, a builder who can currently
work on any site would have their movements significantly restricted (e.g. on tier 3 sites), without
any substantive evidence that this is necessary or will result in a net benefit for that class of work.
The complex nature of the NSW licensing system is evident through the unintended consequences
relating to the implementation of the DBP Act and Regulations which has had significant impacts on
all businesses but particularly small businesses in the residential building industry. For example, the
RIS does not consider how many industry participants will be impacted as a result of the additional
registration requirements to work on class 2 buildings.
2.4 REGULATORY COSTS AND BENEFITS OF CHANGES TO BUILDER LICENCES

14. Will there be any other costs or benefits associated with this proposal?
HIA refers to its response to Question 10 of the Part 1 RIS.
The RIS makes little attempt to genuinely assess the additional costs of regulatory compliance, or
their effects (to builders individually or housing affordability generally).
HIA assumed that, prior to proposing a new licensing framework, there would have been a detailed
analysis of all costs, benefits and detriments associated with the proposal.
15. Do you agree that builders should have their compliance record listed on the NSW licence register?
HIA’s view is that the current level of available information is appropriate.
2.5 CORPORATE LICENCE HOLDERS AND NOMINEE SUPERVISORS

16. Will the proposed changes to corporation and partnership licence holders improve the oversight of
work? Please provide evidence or data to support your view.
17. Do you think any additional responsibilities are required for either the corporation/partnership or
nominee supervisor?
The additional regulatory burdens proposed to be imposed by the changes are unnecessary and
unjustified.
The Building Bill appears to simply replace one set of red tape with another (arguably more onerous)
set of red tape.
Section 53(1) the HBA, provides for “improper conduct” (warranting disciplinary action) if, a
nominated supervisor:
(a) Fails to comply with the requirements applicable to the work under the HBA or any other Act;
(b) Breaches a statutory warranty in the course of doing the work; or

(c) In the case of specialist work, carries out work otherwise than with due care and skill or use
unsuitable materials.
All of these existing requirements are effectively retained in s48 of the Building Bill (“Duties of
nominee supervisor”). However:
• A corporation/ entity must now also comply with Section 47 of the Bill, by keeping detailed policies
and procedures regarding the management, role and communication with each nominee
supervisor any building work underway;
• Section 48(3) of the Bill requires nominee supervisors to actively engage with the new
requirement that, if they believe that the contractor is not complying with the Building Bill, the
NCC or the BCE Bill, the contractor themselves must directly report those issues to NSW Fair
Trading, at the risk of loss or license or penalties.
The Building Bill offers no practical guidance regarding how, in practice, a supervisor is expected to
engage with this difficult conflict of interests. For example, should a supervisor report any non
compliance immediately? How many chances should they give the contractor to follow their advice
and remedy the issue? Is a nominee supervisor now expected to seek frequent legal advice
regarding whether their reporting obligations have been triggered?
The RIS again “falls back” on an unhelpful and unsubstantiated estimate that regulatory compliance
activities currently cost $118/hr and take 70 hours per license holder. The RIS makes no attempt to
estimate how much additional work will be imposed by the changes.
These additional requirements for nominee supervisors have also been proposed alongside an
entirely separate BCE Act, which is already intended to target compliance.
While HIA understands that there might be merit in the licensing reform in general, HIA is also
concerned that this proposal would effectively result in mandating an increase of the number of
nominee supervisors which would be challenging in the current climate and that the process to be a
nominee supervisor is not a simple, straightforward one and requires time. The current skill
shortages should also be considered.
HIA will be open to a discussion regarding how to develop best practices for site supervisors/foremen
on site.
2.6 ‘CLOSE ASSOCIATES’
18. Is there a better way to determine who is a close associate?
19. Should additional elements be incorporated into the definition of close associate?
Yes, but the entire endeavour of “close associates” is poorly conceived.
HIA opposes the whole concept of denying builders a license on the basis of a perceived association
with another person. If there is a desire to deny a license, there should be requirement to form an
actual opinion that the applicant is not fit and proper.

In particular, the Building Bill provides no guidelines as to how (or to what standard) NSW Fair
Trading should use to form an opinion that a close associate has a “significant influence” on the
applicant. The term itself is not even defined in the Bill (as opposed to a “relevant financial interest”).
20. Should broad terms of family or personal, employment, or business associates be used to determine a
close associate?
21. Is it better to itemise the relationships to be clear in law?
No.
If the concept of “close associates” must be retained, then the only overarching criteria that should
be considered is whether, in fact, the person exercises a significant influence over the applicant’s
business. The test and relevant factors for a “significant influence” should be clearly defined.
It is completely inappropriate to use “broad terms” as a means of defining what are effectively
categories of “deemed” close associates. Doing so will allow for unfounded assumptions about an
applicant’s relationship with family members or former spouses (which the RIS indicates an intent to
include as categories within the regulations).
Itemized categories are similarly unhelpful and likely to lead to incorrect/unfounded/prejudicial

conclusions, especially insofar as familial relationships are concerned. If the effect of an applicant’s
relationship with an associate is considered, then the Secretary’s conclusions should be based upon
the facts that are relevant to that specific application.
Furthermore, both the RIS and Section 6(1)(h) of the Bill indicate a proposal that some of the
suggested relationships (e.g. “child, grandchild, sibling”) could be added later via the regulations to
the Bill. This is an area where changes in the law could have substantial effects on the livelihoods of
licence holders, and is not an appropriate for it to be the subject of regulations.
2.7 CHANGES PROPOSED FOR SPECIALIST TRADES
22. Have you experienced any difficulty in accessing existing courses to complete trade skills. If so, where
are you located?
Yes. Unfortunately, this is most predominant in the apprentice cohort and in regional areas.
Further, recent feedback has suggested that TAFEs do not have the capacity to take on more
students. This is particularly critical in regional areas where there are limited opportunities for
industry-based private offerings.
23. Do you agree that waterproofing should be a specialist category of licence (ie. needed regardless of
the size of the job)? Please provide data/evidence to support your answer.
HIA supports:
• Waterproofing standards required by the Building Code of Australia are adhered to by contractors
carrying out waterproofing – limited to work on class 2 buildings; and
• Occupational licensing of subcontractors who undertake high risk work.

Further research should also be undertaken to better understand the impact any changes to
waterproofing licensing will have on availability of trades. NSW is already experiencing significant
shortages of skilled trades and care must be taken to ensure there are no unintended consequences
which would lead to exasperating the skills shortages.
24. Do you think that any existing categories of specialist work should be deregulated? Please provide
data/evidence to support your answer.
No comment at this stage.
2.8 BUILDING DESIGNERS
25. Do you support licensing building designers and interior designers?
Not as proposed in the RIS and Building Bill. HIA has previously indicated a willingness to participate
in discussions targeted at the proposal of licensing building designers.
However, by proposing that all “regulated works” will be (i) “regulated work” that is subject to
occupational licensing, and (ii) if performed in relation to a home, “home building work” that is subject
to statutory warranties, HBCF insurance, and “form of contract” requirements, the proposals move
well beyond what HIA understood was being considered.
HIA does not support the approach of capturing everything into “regulated work” to licensing building
designers/interior designers, or licensing in general. HIA’s position on the correct approach to
licensing was discussed above in detail in response to Question 5 of the Part 1 RIS.
26. What scope of work should building designers and interior designers be able to do?
27. How would this licensing scheme interact with the Architects Act, which restricts “architectural
service” to registered architects?
HIA expected a detailed explanation of how the new licensing scheme would interact with existing
legislation.
The scheme described in the RIS appears to have the absurd outcome that:
• The work of a building designer can be “home building work”, which will attract statutory
warranties if performed in relation to a “home”; but
• The exact same work will not be “home building work” if it is performed by a person holding
themselves out as a qualified architect.
The Part 1 RIS correctly notes that there is currently not any consistent approach to the regulation
of building designers across Australia, but has omitted (from the included summary table) any
mention of the various states which currently do not require such licensing at all.
HIA would suggest that this reflects that it is currently unclear whether, based on the level of risk
involved, requiring “blanket” licensing for all design work is either necessary or practical.
Finally, it is unclear why the approach to the licensing of building/interior designers is being conflated
with the existing licensing scheme for architects under the Architects Act.

2.9 FIRE SAFETY
28. Do you support combining existing licensing and registration requirements for fire safety
practitioners into a single framework or should the schemes be kept separate?
29. What are the likely impacts on existing business practices if all practitioners involved in fire safety
systems would need to be licenced?
HIA does not support the combination of these requirements as proposed in the Building Bill.
HIA is open to considering the merits to combining the registration frameworks for the Fire
Practitioner Accreditation Scheme (under the Building and Developers Certifiers Act 2018 (NSW)
(‘BDC Act’)) and the qualifications of Fire Safety Engineers (under the DBP Act), in the interests of
decreasing the overlap/complexity of the current regulations.
However, the RIS has not laid out sufficient details to allow HIA to determine whether the new class
of proposed licence in the Bill would unduly restrict those who are currently performing work which
is covered under the BDC Act (either though additional cost or experience requirements).
Fire safety engineers under the DBP tend to more engaged with class 2 projects, or larger class 1
projects. The minimum experience/competency requirements may not “line up” neatly with what is
otherwise appropriate for a practitioner under the BDC Act.
HIA also notes that that the statistics cited regarding defects (page 64 of the RIS) refer to audits
conducted on Class 2 buildings only. No evidence has been provided of significant rates of defects
in Class 1 buildings.
Moreover, HIA opposes either of these schemes requiring licenses under the proposed licensing
framework of the Bill, which will subject all newly defined “regulated work”/ “home building work” to
statutory warranties/ HBCF insurance.
HIA’s position on the correct approach to licensing was discussed above in detail in response to
Question 5 of the Part 1 RIS. New license categories of licensed work are certain to contribute to
ever-increasing HCBF premiums. The NSW Government needs to demonstrate that these license
categories will actually reduce the current risk of defects.
30. What consideration should be given to dealing with the cross-over of fire safety systems with electrical
wiring work and plumbing work? What changes to current licences would be required to ensure a
practitioner is competent in fire safety work and the other specialist trade area?
Based on HIA’s understanding of how the system will work once the fire reforms are implemented,
it does not appear that there is a need to change any current licensing.
Arguably if the initial installation (or modification to the system) is being designed up front by a
qualified person (e.g. for Class 2 an appropriately registered designer under the DBP Act), and then
any work on the system requires inspection afterward by an accredited fire safety practitioner, HIA
queries whether the person doing the physical installation of the electrical or plumbing needs to be
licensed/accredited for fire at all.

At most, if there is a need for some specific training in fire safety for electrical or plumbing, a ‘micro-
credential’ may be appropriate rather than having to carry two separate license classes.
2.10 BUILDING INSPECTORS
31. Do you agree that building inspectors should be licenced?
HIA supports the proposal “that building inspectors who carry out pre-purchase inspections or defect
report inspections should be included in the licensing framework…Other occupations may be
included as necessary and appropriate”.
Their influence on both the payment claim process and a client’s confidence (state of mind) can be
substantial, despite many not having appropriate qualifications or experience in a relevant building,
construction or engineering trade or profession.
Additionally, when NSW deregulated pre-purchase property inspections in 2009, this was done
largely because NSW was presently the only state with this type of license, it was envisaged that
more nationalised building licensing would occur. As this has not occurred, reregulation is
appropriate.
However, HIA cannot help but note that, within the Bill itself, there is not yet any mention of “building
inspectors”. Based on the Part 1 RIS, HIA had expected that “building inspectors” would also be a
category of “regulated work” within section 9(1) of the Bill.
The Part 1 RIS states that “[t]his will be the subject of further consultation as part of Regulation
making process, however feedback is welcome about what occupations may be considered suitable
[sic] hold building inspector as an additional class.”
HIA takes this to mean that it is intended that “building inspectors” will only be included as “other
work prescribed by the regulations” (s9(1)(f)), and not until further consultation has been undertaken
about the inclusion of other occupations.
In HIA’s view, this is completely unnecessary. A view has already been formed that there should be
a category for “building inspectors who carry out pre-purchase inspections or defect inspections”.
That category should be specifically included in the legislation now, and those “other occupations”
can still be consulted on.
HIA is also concerned that, despite specifically identifying building inspectors as a “high-risk area
with serious repercussions for consumers”, the RIS instead only now chooses to highlight:
• The negative impacts that licensing may have on the availability of qualified providers; and
• The requirement for services to comply with Australian Standards, alongside the ability of
consumer to rely on breach of contract, negligence or misleading and deceptive conduct under
the ACL.
The above factors are obviously far more relevant to other “lower risk” categories of work that will
not be excluded from the definition of “regulated works”. For example, contractors performing

building work under a threshold value of $5,000. The Building Bill has effectively proposed for any
and all “regulated work” to be licensed, regardless of the level of risk entailed.
HIA does not then understand why, throughout an entire RIS discussing a new licensing framework,
the only genuine acknowledgement/discussion of these factors occurs for the benefit of building
inspectors, who regularly assume a great deal of influence of the handover of new dwellings which
are worth at least several hundred thousand dollars in total.
When compared to the overall approach towards licensing which has otherwise been pursued in the
Bill, the “cautious” approach towards the inclusion of building inspectors is baffling.
32. Which current construction industry occupations could hold a building inspector licence?
HIA supports the licensing of any building consultants, building inspectors or other individuals
providing the services of a building, pre-purchase and/or handover inspection including:
• Carrying out residential building inspections;

• Preparing inspection, pre-completion, defect or similar reports; or
• Providing advice on remedial/rectification work/costs.
2.11 WHAT WORK CAN BE DONE WITHOUT A LICENCE?
33. Should any regulated work be carried out without a licence? Why or why not?
Yes. HIA refers to the above answer to Question 5 of the Part 1 RIS, which contains a detailed
explanation of HIA’s position on licensing. The need for licensing of any particular trade activity
should be assessed against the risk involved. If licensing is justified according to risk, an important
task is to identify those risks that require regulation.
In particular, HIA does not support licensing of trade contractors (or subcontractors) who work
exclusively for builder/principal contractors, outside of occupational licensing of trade contractors
who undertake high risk work.
34. Do you consider a monetary threshold an appropriate way to exempt occupations from licensing
requirements? Should the value vary by occupation?
At this stage yes, unless there are concrete alternatives to be considered.
HIA refers to the above response to Question 5 of the RIS, which contained a detailed outline of
HIA’s position on the retention of the monetary threshold (currently $5,000).
The RIS does not contain evidence that there are sufficient risks involved with contractors performing
non-specialised works under $5,000 to justify the inclusion of these contractors within the licensing
framework. Until such time, licensing is inappropriate.
35. Should some professional work such as project managers and estimators be exempt from holding a
licence?
36. What licences should be prescribed in the Regulation?
HIA disagrees with the premise of Question 35. It is not a matter of whether certain professions
should be “cherry picked” and exempted from the proposed definition of “building work”.

The fact that the matter is even being considered in these terms is indicative of the definition being
designed to ensure some high level “consistency”, at the expense of all other practical cost/benefit
considerations.
As is indicated in the RIS (albeit in a roundabout way), no evidence has been received which justifies
a position that other occupations should be subjected to occupational licensing. Until such evidence
is provided, this should be both the beginning and end of the discussion.
HIA also does not agree that any license classes should be prescribed at a later time via the
regulations to the Bill. Those operating in the building/construction industry should not be subjected
to an uncertain possibility that their activities will suddenly be subject to a suite of licensing
requirements; it is simply not appropriate for the regulations to deal with this matter.
37. Are the current licensing levels in civil construction appropriate?
Not applicable.
2.12 WHY ARE WE KEEPING OTHER BUILDING PROFESSIONALS SEPARATE?
38. Do you support registering and oversight of these practitioners under separate pieces of legislation,
or should they be brought into a whole of industry Bill?
39. If they are kept separate, what measures should be introduced to ensure consistent obligations apply
to all involved in building work in NSW?
40. If they are not kept separate, and incorporated into the Bill, what parts of the Bill should change to
make this transition effective and consistent with the broader intent of the reform?
The role of certifiers is inherently very different to the rest of the building supply chain. Certifiers are
in essence performing the role of a regulator, under contract. Thus, it makes sense for the regulation
of certifiers to remain separate. However, Architects who are designing buildings do play a role in
the delivery of a building and should be subject to the same regulations, although potentially applied
in a more targeted fashion.
The Architects Act does little more than protect the name 'architect'. For example, it lays no
responsibility on an architect to design a building which complies with the NCC. This is evidenced in
tertiary architecture courses which by and large do not include compulsory training on the NCC. To
rectify this, architecture should be included in the Bill, which already captures the majority of the
building delivery supply chain.

2.13 CO-REGULATION
41. Do you support allowing professional bodies to play a role in accrediting practitioners?
42. What are the risks of this model?
43. What other functions do you consider appropriate to give these bodies when they are operating as a
co-regulator with Government?
No. HIA opposes the use of co-regulation in a licensing framework for home building work. This
approach has been attempted and failed previously in relation to the regulation of certifiers, which is
what lead to the formation of the Building Professionals Board.
Co-regulation schemes often require that the provider or professional bodies charged with licensing
and registering businesses and individuals are required to discipline their own customers, presenting
an inherent conflict of interest.
No aspect of the RIS or the Bill contains any novel precautions which differentiate this attempt at co-
regulation from previous attempts. Therefore, HIA continues to oppose the concept of allowing
professional bodies to operate as a co-regulator with the Government.
2.14 OWNER-BUILDER PERMIT SCHEME

44. Do you think there needs to be more regulation of the current owner-builder permits scheme?
Yes. HIA has broad concerns with work carried out by owner builders and has seen issues with project
management of owner builder work by builders and license lending.
HIA is pleased that a move towards the right direction has been proposed with respect to this matter
and HIA looks forward to this reform being formalised.
45. How do we ensure that owners are able to complete works on their home without risking defects and
safety to subsequent owners?
HIA always argues that owner builders should be liable for defective work, engaging licensed
contractors as appropriate and ensuring a safe workplace.
It is therefore important that owner builder should be required to undertake nationally recognised
training prior to being issued with a permit to carry out residential building work. Further, owner
builder permits should be issued by the builder licensing body which will maintain a central register.
There should also be limits on the type and scope of residential building work that can be carried out
by these owners.
HIA always maintained its position that owner builders should be regulated and monitored by the
relevant consumer protection agency.
Consequentially, an owner builder who commences work without the appropriate permit should face
significant penalties. This is to ensure that there is a measure in place to emphasise the seriousness
of risking defects and safety to not only themselves and their contractors on site, but equally to
subsequent owners.

46. What exempt building work should be allowed to be completed without a licence?
47. Should dual occupancy dwellings be allowed under the scheme?
HIA has no further comment.

3. PART 2 – WHAT WORK CAN BE REGULATED
3.1 KEY OBJECTIVES OF THE BILL
See response to questions part 2.1.
3.2 QUALITY AND BUILD STANDARDS

3. Do you agree that a licence holder should have a condition on their licence that requires them to
carry out work to a required standard?
No.
Insofar as it is targeted towards “head-contractor” builders, the proposal is inappropriate. HIA is

concerned that the changes will (i) overcomplicate a contractor’s list of license conditions, and (ii)
further increase the vulnerability of contractors to unscrupulous clients who might rely on the threat
of a complaint to achieve a commercial advantage.
In particular:
• The Part 2 RIS itself notes that these conditions would only be “replicating” existing requirements,
such as the requirement under the EPA Act for work under a Complying Development Certificate
to meet the NCC provisions; and
• The Part 2 RIS contains a dubious claim that “[r]eplicating this requirement as a condition of
licence seeks to strengthen the obligation and include stronger repercussions for failing to
comply, such as disciplinary action.”
Existing arrangements more than adequately allow for disciplinary action to be taken against a
builder who routinely ignores relevant standards and/or performs work that is not fit for purpose,
taking into account all relevant standards.
Alternatively, if this proposal is progressed, the proposed BCE Bill could easily provide for adequate
disciplinary action, without any need to rely on the implementation of duplicative and unnecessary
license conditions.
Frankly, it would be absurd and unworkable if, throughout an ongoing project, each individual failure
to meet an NCC provision could be treated as a breach of a license condition. The RIS fails to
acknowledge the reality that issues can and do occur throughout residential building work which are
promptly rectified.
If a builder refuses to rectify defective work to the extent that their building work remains non-
compliant, then disciplinary action would be appropriate.

However, often disputes arise regarding the determination of building work as ‘defective’. It is
inevitable that, in some cases, clients will simply have unrealistic standards and expectations.
Within this context, there does not appear to be any justification for further placing builders in the
completely untenable position of having to calculate whether any given refusal to capitulate to a
client’s unreasonable position will result in, for example, the imposition of a restrictive license
conditions and disciplinary action.
Nevertheless, the core of HIA’s objection rests on the matter of how exactly the regulator intends to
enforce these new conditions, which is not set out within the Part 2 RIS.
If the goal is to increase accountability, then allowing a head-contractor builder to lodge a complaint
against a subcontractor for substandard work could address a current “gap” in the disciplinary
framework.
As was outlined above, a builder who routinely performs substandard work will directly attract the ire
of their client homeowner. Once practical completion is reached (and the contractual defect liability
period is completed), clients can and will pursue a builder directly via a statutory warranty claim. If,
at that point, it is evident that the builder’s work was non-compliant, complaints will be made against
their license as a matter of course.
In contrast, a builder’s only practical recourse against a subcontractor is often limited to refusing to
hire that subcontractor again in the future. The costs of rectifying the issue will rarely justify legal
proceedings, and the builder remains (in any event) liable for providing the end-client with a
compliant finished home. The aggrieved end-client may never even directly interact with the
subcontractor.
In other words, substandard contractors can often continue for as long as they can maintain their
reputation. The ability for a builder to make a licensing complaint against a subcontractor would
safeguard builders in a way that can currently only be practically be achieved by “word of mouth”
amongst building professionals.
As such, if providing recourse against subcontractors was the intent of the proposal, then HIA would
invite a more detailed proposal, confirming how the new requirements are intended to be enforced.
Codes other than the NCC
Moreover, HIA also has some concerns with the degree to which the RIS appears to assume that
the NCC provisions will cover all design requirements (outside of specialist works).
The discussion in the RIS does not actually explore specifying any code other than the NCC as the
“minimum required level” of compliance.
Section 23 of the Building Bill is actually drafted so that the “conditions of a licence may require the
licence holder to carry out regulated work in accordance with specified codes, standards or
methodologies, including codes, standards or methodologies prepared by the Secretary”.

The implication of this is that the NSW Fair Trading can, at any time without the need for legislative
consultation, prescribe selected codes, standards, codes and methodologies “as they see fit”. As
with the NCC, it is almost inevitable that the specific codes that are selected by Fair Trading will not
be suitable for every project undertaken by a single classification of contractor.
The ability to create a license condition to the effect that contractors must follow a specific code is
needlessly prescriptive and could penalise builders who have otherwise completed work that is
entirely fit for purpose, which is the ultimate end point for any project.
The existing legislative framework already contemplates that a number of different (and sometimes
conflicting) standards may all simultaneously be relevant to various projects.
This is demonstrated by the fact that the HBA statutory warranties do not prescribe specific codes.
The warranties instead have broad criteria such as that materials will be “good and suitable for the
purpose for which they are used”, or that work to a dwelling will result in a dwelling that is “reasonably
fit for occupation as a dwelling”.
Overall, and in accordance with the current regulatory arrangements builders should be expected to
follow the most appropriate code or standard in all of the circumstances (as per industry standards
and individual expertise). The RIS does not demonstrate that a license condition will assist this
process.
On the contrary, unless the regulator is hyper-vigilant about exercising the proposed power (under
s23), it is inevitable that some contractors will be left in the difficult position of choosing between
utilising the code, standard or methodology that is truly appropriate in all of the circumstances, or
instead using the set of documents that has technically been prescribed for use by their license
class.
4. Are any changes required to other legislation to support clear expectations on the standard of work
licenced people must carry out?
No. Standards (such as the “Guide to Standards and Tolerances”) provide guidance on the
acceptable standards and tolerances and can support “an uplift in industry behaviour” insofar as they
are genuinely understood and normalised within the building industry.
This is area that will best be served by continuing education for building professionals.
The RIS does not provide any evidence that mandating a standard will assist this process. Further
any attempts to do so would be especially problematic for standards which do not universally “suit”
all building work.
5. Do you support the expansion of a certificate of compliance to waterproofing work?
Yes, in principle this idea is supported. However, we would welcome further consultation on the final
form and content of the certificate of compliance.
6. Do you support pre-notifying electrical installation work to the Regulator?
No.

Pre-notification of electrical installation work is being introduced to “allow NSW Fair Trading to have
advance notice of work that is subject to an inspection under the Building Compliance and
Enforcement Bill.”
This is yet another inspection-point for a category of works that is already heavily regulated and
required to submit certificates of compliance.
In terms of striving for housing affordability, it is wholly inadequate for the RIS to simply note that the
time cost of the additional regulatory burden “will likely be passed on to the end consumer at the end
of the service.”
The Part 2 RIS contains a suggestion that a key purpose of introducing pre-notification is to “enable
disciplinary action to be taken against license holders who falsify certificates”. If this is the case, then
it is incumbent to first provide evidence that falsification of certificates is a significant problem
amongst electricians.
7. Given the diversity in the types of buildings in the sector, how can the Bill ensure the whole of the
industry is captured?
8. How can we introduce a robust regulatory scheme for pre-fabricated building work that will not
unfairly disadvantage manufacturing and supply to NSW?
9. How should pre-fabricated building work be defined? How can this be differentiated from the
installation of a product (such as pre-fabricated doors, windows, and trusses) under the Product
Safety Act?
10. Do you feel that all building work should be carried out by licensed practitioners?
11. How could building work done off site be certified as compliant with relevant standards?
12. How do we ensure that any certification process is scalable to the industry, noting the differences
between those engaged in manufacturing discrete parts of a building against those who produce
entire buildings off site?
13. How do we ensure that pre-fabricated building work completed outside of NSW can be regulated?
14. Should manufacturers be able to self-certify pre-fabricated buildings? Why or why not?
All of questions 7-14 are, in one way or another, centred upon an attempt to incorporate “pre-
fabricated building work” within the Building Bill.
While HIA understands that there may be a desire to explore this area further, HIA cannot overstate
the need for extreme caution to be exercised in this area due to its complexity. HIA understands that
concerns have been identified to the effect that manufactured homes do not provide consumers with
the same guarantees and protections which are attached to “traditional” homes (i.e. the statutory
warranty and HBCF schemes).

HIA refers to the HIA Final Report: Regulatory barriers associated with prefabricated and modular
construction (Report)2, which was published in October 2022, and contains the detailed findings and
a suite of recommendation to address regulatory matters, which were based on extensive research
and stakeholder consultation.
The Report was commissioned by HIA on behalf of the Advanced Manufacturing Growth Centre
(AMGC) Prefab Innovation Hub, in order to ’develop a report that identifies and analyses the
regulatory barriers for off-site construction.’ The Report addressed many of the matters raised in the
RIS and encourages those involved in this reform process.
HIA encourages the Department to explore the full content of the Report, as HIA’s references/
summaries are no substitute for the Final Report’s:
• Examination of stakeholder feedback regarding the primary regulatory barriers and related
issues which were identified as hindrances for the uptake of prefabricated and modular
construction;
• Comparative analysis of the existing regulatory frameworks in countries which presently compete
as world leaders in prefabricated and modular housing (e.g. Japan); and
• Exploration of viable paths for regulatory reform of the prefabricated/modular construction sector
within Australia, including a detailed preliminary proposal of the definition of terms (e.g.
“prefabricated product”, “2D (planar) prefabricated product”).
HIA would encourage a separate focused working group with peak bodies to be set up so we may
work through all the issues collaboratively to ensure that the regulatory landscape functions
appropriately for prefabricated works while still producing compliant buildings.
Defining “pre-fabricated building work”
It is obviously not possible to “introduce a robust regulatory scheme for pre-fabricated building work”,
without that scheme being underpinned by a robust set of functional definitions which clearly identify
the exact bounds of the scheme.
The proposed solution to this issue is effectively to provide no solution at all.
Question 9 of the Part 2 asks “[h]ow should pre-fabricated building work be defined?”. This
misrepresents the fact that the Bill contains no definition whatsoever of “pre-fabricated building work”
for HIA to comment on.
In the four instances that the Bill does actually use the term “pre-fabricated buildings”, (i) that term
is not defined, and (ii) the term is only ever used in relation to “form of contract” requirements or the
ability of an owner-builder to coordinate the installation of a pre-fabricated building.
It is not entirely clear, but HIA can only surmise that this is because the Department believes that
the proposed definition of “building work” in section 5 of the Bill does not require such a definition in
2
Final Report: Regulatory barriers associated with prefabricated and modular construction
https://hia.com.au/-/media/files/our-industry/regulatory-barriers-with-modular-and-prefabricated-construction-final-report.pdf

order to function, by virtue of being “intended to be location-neutral when prescribing what building
work is…This will include buildings constructed off-site”.
One of the nuances of the pre-fabricated sector is that there is no one single “type” or “degree” of
prefabrication. On page 36 of the Part 2 RIS, it is recognised (albeit to a very limited extent) that:
• “Traditional builds use a range of pre-fabricated products within the construction of a home”,
giving the examples of “pre-fabricated doors, windows, and trusses”; and
• These prefabricated “products” are not the target of the proposals, and are intended to “remain
within the current regulatory framework within the Product Safety Act”.
Although it is not discussed within the RIS, HIA assumes that this is the reason that the Bill contains
the definition that “pre-fabricated component means a part of a building that has been fabricated
off-site, and excludes items prescribed by the regulations”.
In other words, it appears that it is intended that all prefabricated products or “components” will fall
short of the definition of “building work”, and therefore only be a “building good” (i.e. material or
product) for the purposes of dispute resolution under Chapter 4 of the Building Bill.
This is both misguided and undersells the complexity of the pre-fabricated building sector. The RIS
plainly acknowledged that:
“While the size of the industry is small in comparison to traditional homes, the span of the
industry is vast. There are 26 types of pre-fabricated homes, varying from the common
modular construction to shipping container homes, and tiny homes. Therefore, there is a
complexity in the scale of differences between different forms of pre-fabricated buildings and
their construction methods”.3
The Report illustrates that this “complexity” extends even further:
2.1 Type and levels of prefabrication
Classification can be used to determine the type and level of prefabrication (i.e., the extent
of offsite construction work) as shown in Figure 3.
There are three basic types of prefabricated components
• Simple linear components (1D prefab): most components in construction involve

some form of prefabrication for ease of on-site erection, for example steel beams and
columns manufactured to be easily bolted on site.
• Panelised components (2D prefab): assemblies of components designed for ease of

transport and erection. Panelised systems vary from basic system design to serve a
3 Part 2 RIS, page 32.

specific purpose such as structural panels for roofs, walls and floors, internal/external
cladding system to complete panel systems to serve multi-purpose. ⎯
• Modular components (3D prefab): this term is often reserved for pre-assembled three-
dimensional products varying from single utility units such as bathroom pods or prefab
classrooms to a full residential unit (an apartment or a house).
From regulatory perspective, a definition or classification enables appropriate and effective

measures necessary for each class of products to achieve compliance and quality assurance.
…Furthermore, the classification in terms of the source of fabrication may also be important.
Products that are manufactured overseas face another layer of regulatory barriers associated
with imports, in addition to the building control measures for locally product building products
which is already difficult to navigate.
‘Therefore, the need for clear set of agreed definitions is critical in developing specific
regulatory triggers or tailored building or planning systems and standards requirements.4
Taking the above into consideration, the “product” examples given in the RIS are a mixture of 1D,
2D and 3D components which are all at the lower levels of pre-fabrication (e.g. trusses). This will not
always be the case. Examples of similar products would include panelised wall systems and cassette
flooring.
HIA would ask, how, for example, the proposed Bill would affect an enclosed, 2D “panelised” wall
component, bearing in mind that this wall may contain internal elements (e.g. insulation, electrical
wiring. plumbing, etc.) which could only be tested destructively, once outside of the factory. Under
4
Final Report: Regulatory barriers associated with prefabricated and modular construction, page 4.

the proposed definition in Schedule 3, Section 3, “building includes part of a building”, and no clear
division has been made between “building product” and “part of a building”.
These are not small matters which can be dealt with in the regulations at a later point.
Are these components (i) free from the scope of the Bill, or (ii) now subject to certification, statutory
warranties and potentially even HBCF insurance at a component level?
If there is a genuine desire to introduce “a robust regulatory scheme…that will not unfairly
disadvantage manufacturing and supply to NSW [emphasis added]”, which HIA is not opposed to,
then these matters must be “designed into” the fabric of the scheme from the very outset. A failure
to do so will disrupt the industry, and leave the most innovative manufacturers of prefabricated
products in untenable positions.
HIA has also discussed the chosen definition of “home” (taken from the RLLC Act) further below in
response to questions 18-29 of the Part 3 RIS, wherein specific feedback is requested on that
decision. As is noted in that portion of HIA’s response, HIA has further concerns that the Department
has contradicted its stated intentions by proposing to import a definition which would explicitly include
caravans (and other types of portable devices).
For now, HIA wishes to respond separately to the Department’s indication that “The Department is
proposing to capture manufactured and relocatable homes as pre-fabricated buildings in order to
protect owners and subsequent owners through consumer protections, and cover under the home
building compensation scheme.”
“Moveable dwelling” and “manufactured home”
It is indicated in the Part 2 RIS that the Department intends to rely on the part of the definition of a
“moveable dwelling” from the Local Government Act 1993 (NSW) in order to ensure that “genuinely
moveable dwellings, such as caravans” will not be captured by the proposal:
"moveable dwelling" means—
(a) any tent, or any caravan or other van or other portable device (whether on wheels or not),
used for human habitation, or
(b) a manufactured home…
The crux of the proposal seems to be that “moveable dwellings” which are not a “manufactured
home” will be pre-fabricated buildings for the purpose of the Bill.
Firstly, the LGA is obviously not a piece of building legislation. This broad definition may function
well within the LGA as part of the framework of local Government for NSW. However, it is not
appropriate to simply “transfer” this definition into the Bill; HIA has criticised this general approach of
favouring inter-legislative “consistency” above all else at numerous points through its responses to
each part of the RIS.

In particular, it is stated in the RIS, “Amendments to this definition are therefore necessary to
differentiate between these portable devices uses for habitation as compared to a relocatable home
as moveable dwellings”. No such amendments appear to have been proposed.
Secondly, HIA would point out that nothing in the Bill addresses or clarifies the RIS’s position on
“moveable dwellings”. Despite the impression given by the Part 2 RIS, in the entire Bill, the term of
“moveable dwelling” is only ever used three times within:
• Section 230(3) (“Regulations—smoke alarms in buildings providing sleeping accommodation"),

as part of a definition of “building” for that section:
In this section—
building includes a manufactured home, moveable dwelling or associated structure within the
meaning of the Local Government Act 1993.
• The definition of “kit home”, in order to set out that a kit home includes “a set of components for
the construction of a moveable dwelling”; and
• The actual definition itself, that “moveable dwelling means a tent, or a caravan or other van or
other portable device, whether or not on wheels, used for human habitation and includes a
conveyance, structure or thing prescribed by the regulations”.
HIA would also add that, contrary to the RIS and the LGA, it appears that tents have been included
within this definition.
In essence, for every other part of the Building Bill (including Chapters 2-3), “moveable dwellings”
are a non-factor, and the content of the Bill simply does not match the RIS. The only useful guidance
that appears to have been provided is the definition in Chapter 3, section 49(2) confirming that:
In this section—
home means a building designed, constructed or adapted for use as a residence, but
does not include the following—
(a) premises not intended to be used for permanent habitation…
However, s49(2) still completely fails to provide any certainty about where the line will be drawn
between a “home” and a “premises not intended to be used for permanent habitation”.
The proposal from the Part 2 RIS that the Bill will captures “manufactured homes” from the Local
Government Act 1993 (NSW) is similarly unhelpful:
manufactured home means a self-contained dwelling (that is, a dwelling that includes at least
one kitchen, bathroom, bedroom and living area and that also includes toilet and laundry
facilities), being a dwelling—
(a) that comprises one or more major sections, and

(b) that is not a motor vehicle, trailer or other registrable vehicle within the meaning of the
Road Transport Act 2013,
and includes any associated structures that form part of the dwelling.
For example, is it intended that importers of cheap, strictly temporary crisis housing from overseas
manufacturers will now need to find a way to comply with the Bill’s certification requirements? Or are
those manufactured buildings which are not “homes’ because “not intended for permanent
habitation”? If that is the case, what actual purpose does the definition of “manufactured home” have
within the Bill?
Such products are not presently manufactured in sufficient quantities within Australia and, moreover,
simply do not require the “protections” which the Government is seeking to extend to consumers. In
all likelihood, these businesses will simply need to cease importing these products at all.
In one recent example a HIA member reported on their experience working with an importer trying
to obtain compliance for prefabricated emergency accommodation units, so they could be brought
in to assist post-bushfire and post-flood. These units are self-contained 1-2 bedroom pods, self-
sufficient with built in solar power, and arrive either flat-pack or fully assembled. They only require
some assembly (if flat-pack), and then electrical and plumbing completed locally by licensed
contractors. The landed cost for the units is between $25,000 and $40,000.
These structures are poorly reflected in NSW Building and NSW Planning legislation, and within the
National Construction Code (NCC). The NCC performance requirements for dwellings are designed
to deliver acceptable performance for permanent habitation and building life expectancies measured
in decades rather than months or years – clearly an inappropriately high bar for temporary
emergency needs.
Capturing these structures within the full building compliance framework, for example under the
proposed definition of ‘building work’, would make these products unviable through added
compliance costs.
To illustrate this point, the same member provided feedback on another project involving locally
manufactured prefabricated 2-bedroom accommodation units, transported as two separate pods put
together onsite. These were of a higher quality and manufactured to meet NCC requirements.
However the purchase cost for these was $200,000 per unit. Site costs and consultancy then
increased the total cost to $330,000 for each unit in the project. Clearly unviable as an option for
temporary emergency accommodation.
Alongside caravans and other moveable dwellings, consideration must be given for how temporary
emergency accommodation can be excluded. This will help to keep individual unit costs, and
consultancy and site costs to a minimum.
This consideration should also be extended to associated temporary worker accommodation, as

flood and fire recovery is often hampered by ability to accommodate the required workers within the
affected regions.

By failing to develop a well-considered, nuanced definition of “manufactured home”, it is open for the
Bill to capture matters which go well beyond the depth of the RIS’s discussion.
The fact that the proposal does not contain these types of nuanced definitions from the outset is
itself an indication that it is too early for the Bill to proceed in this form. It is crucial that a substantial
degree of research and consultation be undertaken prior to proposing a change of this magnitude.
In contrast to the Report, the Part 2 RIS’s single page outline of the issue of defining pre-fabricated
confirms that a robust proposal has not been presented and therefore, meaningful feedback cannot
be provided. HIA cannot request that its members effectively design the definition themselves, along
with answering the question of where to draw the line between “building product” and “pre-fabricated
building”.
HIA would encourage this issue be revisited by considering the more robust definitions and
categorisations of pre-fabricated works that are laid out in the Report:
Preliminary proposal of definition of terms
Buildings: results from construction operation that has the provision of shelter for its
occupants or contents as one of its main purposes (adapted from ISO 6707-1). The term can
also be used in singular form as an adjective to distinguish from other kinds of civil
engineering construction.
Building works: on-site construction works performed by builders to create buildings.
Builders: entities responsible for building works.
Prefabricated and modular manufacturers: entities responsible for manufacturing

prefabricated products, including modular components.
Prefabricated product: a product that is manufactured (in whole or in parts) at a site/s where
the product is not intended to be installed and is intended to be transported to another site
for installation. It is not relevant if the site for installation is unknown at the time of manufacture
and if some assembly work is required on-site (adapted from New Zealand Government
(2022a)).
1D (linear) prefabricated product: is a prefabricated linear open or enclosed structural

component. It is intended to be used as, or contribute to the structural performance of beams
or columns in a building.
2D (planar) prefabricated product: is a prefabricated open frame or a truss, or an enclosed

fame or panel, with or without elements associated with fire, thermal, acoustic, and
weatherproofing, and mechanical, electrical, plumbing or other systems. It is intended to be
used as, or contribute to the structural performance of the roof, floor, or wall of a building
(adapted from New Zealand Government (2022a)).

3D (volumetric) prefabricated product: is a prefabricated volumetric structure that consists
of one or more 2D prefabricated products, and is intended to be used as, or contribute to the
structural performance of two or more of any of the roof, floors, or walls of a building (adapted
from New Zealand Government (2022a)).
Whole building prefabricated product: is a whole building that is a prefabricated product,

where the term whole building excludes site work, such as foundations and connections to
services (adapted from New Zealand Government (2022a)).
Modular component: is a prefabricated product, and can include 1D, 2D, 3D, and whole
building prefabricated products. This term is typically used for 3D and whole building
prefabricated products.
Referencing the above definitions from the Report, the proposed reform should focus only on Type
2 and Type 3 Level 3 and Type 4 prefabricated products. These are the panel and volumetric
products with a high degree of finish that cannot be easily inspected onsite once incorporated into a
structure, and whole of building prefabrication.
Lower levels of prefabrication would typically feed into onsite construction under a licensed builder,
and lend themselves more easily to traditional onsite inspection and certification processes.
For completeness, HIA would also note that it is not sufficient that s228(1)(g) of the Bill allows for
regulations “exempting manufactured homes or temporary structures from requirements relating to
5 Final Report: Regulatory barriers associated with prefabricated and modular construction, page 37-38.

construction certificates or occupation certificates”. These matters are far too important to be dealt
with later by way of regulations.
Scope of the “prefabricated sector” / models of regulation
From the Part 2 RIS, it appears that the following position has been taken that:
“It is intended that by incorporating pre-fabricated and manufactured homes into building legislation,
there can be greater oversight of consumer and manufacture protections, certification, and quality of
these methods of construction while having a minimal impact on the home building compensation
scheme.” [emphasis added]
No evidence has been provided for these unsubstantiated conclusions --- especially the puzzling
conclusion that altering the scope of home building work to now include an innovative, developing
and distinct sector (which accounts for an additional 5% of Australia’s building/construction industry)
would have a “minimal impact” on the HBCF scheme.
HIA wishes for greater transparency. For example, has the department undertaken any serious data-
collection or projections regarding the effects that the inclusion of prefabricated homes will have on
the overall viability of the HBCF scheme? Why are these changes being proposed outside of the
ongoing Review of the NSW Home Building Compensation Fund?
As for the matter of there being “greater oversight of consumer and manufacture protections,
certification, and quality of these methods of construction”, HIA submits that the discussion of this
matter in the RIS is inherently defective and incomplete.
Effectively it is proposed that, for pre-fabricated buildings, the Bill would now require all of this work
to be overseen by an independent certification process that is identical to “stick-built” projects,
despite the respective workflows being entirely different. The RIS even concedes that:
“This would impose a new burden on manufacturers requiring them to:

• hire additional licenced practitioners (despite many already meeting this requirement, some
parts of the sector do not have licenced practitioners undertaking this building work)
• stop construction while work is independently certified…” [emphasis added]
HIA requests further explanation as why it is only now, after a proposal has already been made, that
“[f]eedback is sought, particularly from participants in this sector, on how to protect the efficiency of
this construction method while also giving increased assurance over the end product”? The process
of seeking feedback should have been completed well before the presentation of a draft Bill.
Many aspects of the current HBA and EPA simply cannot be applied (without modification) to certain
forms of off-site construction. As is detailed in the Report, stage inspections are a prime example:
Inspection and approval process: For a closed panel system, it is not possible to complete
a framing inspection on site. It is also difficult to complete in the factory because generally,
only one panel will be under construction at any point in time6.
6 Final Report: Regulatory barriers associated with prefabricated and modular construction, page 6.

Similarly, an inspection of services is difficult when they are hidden in walls, etc, and becomes more
challenging when the product is built in a different local authority to the site where it’s going to be
installed. It was noted that if the mandatory stage inspections can be satisfactorily undertaken both
within the pre-fabrication process and on-site, the regulatory framework can remain similar and
compliance with the same building codes for prefab and on-site construction can be achieved.
Some also note that modular projects currently appear to get around traditional legislation and that
specific legislation is required to rectify this issue. It was suggested that a new type of inspector is
required during construction that can certify each as-built building (engineers and certifiers) in the
factory and then re-certify once on site.
Put broadly, one of the major strengths of enterprises which specialise in off-site construction is the
ability to rely on efficient, undisrupted factory processes in order to provide a cost-effective solution.
The RIS completely fails to justify why the only model of regulation that it will seriously consider is
one that crudely aligns the requirements of pre-fabricated work with that of other building work,
regardless of the obvious unsuitability of doing so.
The RIS merely “acknowledges that changes to the regulation of pre-fabrication may make supplying
this building method in NSW more difficult due to the potential increase to the cost of manufacturing”.
This is not an acceptable approach or adequate replacement for actually designing a regulatory
system that is tailored to the unique workflow and challenges of off-site manufacturing.
Based on the RIS, the only alternative regulatory models which were considered were requiring
compliance “at the point of installation of site”, or establishing a “voluntary self-certification process
for engineers” (as in New Zealand). Understandably, the Government is somewhat concerned by
perceived issues such as the potential for conflicts of interest amongst self-certifiers, or the low-
incentive for smaller businesses to expend the resources required to comply with a voluntary
process.
However, HIA is certain that the Department would be aware of the possibility of mandatory third-
party certification. For some reason, this alternative is not discussed or even noted in the at all within
the RIS. This is particularly perplexing because:
• The relevant portion of the RIS opens with references to the larger market share for pre-
fabrication in market-leading countries (e.g. Sweden and Japan) which have successfully
implemented mandatory, third party inspections of factory production processes and capabilities,
carried out by government-sanctioned bodies; and
• The Part 2 RIS contains states that the proposal has followed “[e]ngagement with pre-fabrication
and modular construction operators and peak bodies”. Given the popularity of “Japanese-style”
or “Swedish-style” third-party certification amongst those bodies, the topic must have at least
been canvassed.
There must be consideration of the likelihood that the pre-fabricated sector in Australia could already
be more prevalent if the regulatory framework was more navigable. As is noted in the Report, “[m]any

Japanese companies have sought to replicate their construction methods in Australia but ultimately
have elected to follow ‘the Australian way’ due to the inability to navigate our complex regulatory
environment.”
Third-party certification is a cornerstone of the regulatory systems of many market-leading countries,

and can deployed alongside other mechanisms (e.g. self-certification and the development of codes
and standards) in order to alleviate the concerns. Sweden’s approach (as described in the Report)
is particularly illustrative:
3.2 Sweden
Sweden, similar to Japan, is also considered to be a leader in prefabricated and modular

buildings due to its high rate of adoption compared with other countries. However, success
is related to a highly-skilled workforce that has valued research, training and understanding
of new systems instead of technological advances and automation (Manley & Widén, 2019).
Leading firms initially started with providing single-family homes and now predominantly
focus on affordable multi-unit housing (Modular Building Institute, 2019).
Sweden’s volumetric modular construction is governed by conventional building codes

(Modular Building Institute, 2019). It has a national type approval system for assessment and
verification of construction products with requirements in the Swedish building regulations.
Type approvals are provided for products which are not covered by harmonised standards
and European Technical Assessments (ETAs) (Boverket, 2021). As part of the validity of the
approval, the manufacturing process is inspected regularly by a third-party (Research
Institute of Sweden (RISE)).7
The study conducted by Chang-Richards et al. (2019) demonstrated that self-certification (supplier
declaration) is the primary mechanism used for quality assurance.
This is then followed by third-party inspection and certification of factory production process and
factory facilities/capacity. The high-quality focus seems to be a norm due to the high uptake of
prefabrication in the housing sector and hence requires less regulatory interventions.
All of these different mechanisms complement each other, in a way that is tailored to the workflow
of pre-fabricated/ modular buildings. For example, there is much less reason to be concerned about
the possibility of fraudulent self-certifications of an individual home, if those actions are liable to be
discovered during random, independent third-party inspections of the factory process. It also means
that innovative products that are not captured under traditional product or building standards have a
clear compliance pathway.
In a sense, the ‘Type approvals’ under the Swedish model reflect an assessment of the design
compliance of the proposed prefabricated product. The third-party inspection then complements the
7 Final Report: Regulatory barriers associated with prefabricated and modular construction, page 9.

manufacturer self-certification and quality systems to ensure the products are made in accordance
with those Type approvals.
The Type approvals also bypass the need for a ‘construction approval’ to be granted for a project
before a manufacturer can begin producing the components. The need for a construction approval
to be granted on a project before any prefabrication work can begin is implied within proposed
changes made in s193(2) of the Building Bill, particularly the deletion of a reference to the ‘land to
which the building relates’.
Requiring construction approval before work can commence on a prefabricated product or structure
will be excessively disruptive to factory-based processes, which rely heavily on volume and
repeatability to achieve economy and productivity.
Put simply, the regulatory system should be aimed towards certifying that the “factory-line” of off-site
construction businesses are equipped to produce compliant homes based on compliant designs.
This is the only way that the Department can “best implement a robust regulatory system for
prefabricated work that is compliant and offers consumer protections, but also does not burden the
production of off-site manufacturing both within NSW and overseas”.8
Licensing
The volume-based and repeatable processes within off-site manufacturing should also be
considered one of the strengths of that model, as they lend themselves to less variability and
unexpected deviation from the defined designs and specifications, and to more effective quality
control and supervision within the manufacturing facility.
Therefore, these models of off-site prefabricated construction also lend themselves towards better
utilisation of a wider range of potential labour sources than onsite construction. In-house training on
the specific job tasks and processes related to the individual’s role are more suitable in off-site
prefabrication than requiring individuals to possess trades licensing (except where that trade is an
identified specialist trade).
To maintain these benefits of offsite prefabrication, the licensing requirements should be kept to a
bare minimum. At most, one position with supervisory responsibility should possess a builder’s
license (this could be for example the production supervisor, quality manager or similar – at the
discretion of the individual business). This person may also be involved in the self-certification and
third-party accreditation process.
Where the organisation carries out installation of plumbing and electrical services (or any other
specialist trade work), then a supervisor with the appropriate trade license may be needed for those
parts of the manufacturing process.
The above analysis clearly indicates that the regulation of modular and prefabricated construction,
is a complex matter and while HIA is supportive of improvements to regulatory framework to enhance
and streamline acceptance of this emerging area of construction.
8 Part 2 RIS, page 35.

However, it is recommended that these proposals be subject to their own detailed consideration and
the forming of a separate focused working group with peak bodies to be set up to work through all
the issues collaboratively to ensure that the regulatory landscape functions appropriately for
prefabricated works while still producing compliant buildings.
This can be done based off the findings of the HIA Report into regulatory barriers with modular and
prefabricated buildings, this initial analysis in the proposals contained herein and comparable
international regulatory frameworks.
3.3 BUILDING APPROVALS AND DUTY OF CARE

The clear separation of planning codes and policies from technical building requirements is a key
principle of a good planning system, as it helps provide clarity for industry. HIA therefore generally
supports the building certification process being moved out of the Environmental Planning and
Assessment Act 1979 (EP&A Act).
HIA does note changes to the provisions have been made during the transition. Some provisions
have not made it into the Building Bill at all, and it is unclear if these are deleted or left within the
EP&A Act. The Bill also significantly reworded and restructured provisions even where there are
stated to be no changes, making it difficult for industry stakeholders to identify where a technical
change has occurred.
Many of these have not been called out within the RIS.
Any proposed change to the provisions should be clearly put forward to industry with the
accompanying rationale to foster discussion and awareness, even where seemingly minor. If there
is no intent to make changes to the operation, or if certain sections are being left within the EP&A
Act then this should also be clarified for industry.
One change we have identified within the Building Bill is that s193 (2) removes the condition of “on
the land to which the development relates” from the provision regarding invalidity of a construction
certificate if building work commences prior to its issue.
This presumably relates to proposed reform around prefabricated construction but assumes that it
is appropriate to apply a building approvals process to prefabrication in the same manner as
traditional construction. It may be the case that different regulatory processes are required for prefab
compared to traditional construction methodology.
Prior to making changes to the operation of construction approvals in an attempt to capture

prefabricated construction, the prefabricated manufacturing discussion needs to be much more
advanced.
Within the transfer, changes are also proposed to the penalties associated with building certification.
HIA is opposed to any changes to penalties at this time.
Other changes identified that require further clarification and discussion include:

• Building Information Certificates are not within the draft Bill, and no reference to these is made
within the RIS so it is unclear where they will sit in future;
• Amended provisions related to direction notices and addition of non-compliance notices are
included under Building Bill s188;
• Changes to insurance information requirements to be provided under Building Bill s190(2) and
(3);
• Removal of reference to compliance certificates for items like swimming pools under s 194.
• Removal of the words “or part of a new building” from s 195 regarding restrictions on issue of
occupation certificates;
• Deletion of the concept of partial land subdivision from s 201 (3), which is replaced instead by a
condition for subdivisions to comply with any additional requirements prescribed in regulation;
and
• Apparent deletion of EP&A Act 6.32, regarding court orders related to validity of certificates
15. Do you support the proposed shift of the certification system from the planning system into the Bill?
HIA supports the move. Moving the building certification process out from the EP&A Act and into
Chapter 6 of the Building Bill will help disentangle the technical building requirements from the
planning regime while also clarifying the administrative responsibilities.
A clear separation of planning regulations from the technical regulation of buildings is a fundamental
aspect of a good regulatory system and provides increased clarity for industry.
HIA strongly supports complying development as a critical pathway for efficient delivery of approvals
for simple forms of residential construction. Retaining complying development within the EP&A Act
while referring applicants to the technical compliance requirements of the Building Bill as proposed
should adequately address the retention of complying development as a viable pathway in NSW.
16. What additional regulatory burden, if any, do you consider should be taken into account by this
proposed change?
If no significant changes are intended to the operation of building approvals and subdivisions as a
result of the transfer of these from the EP&A Act into the Building Bill, then minimal regulatory burden
should result in terms of day-to-day operation within the industry.
There are likely to be a large number of existing standardised forms, templates and other documents
used within industry that refer to the EP&A Act provisions that would all require updating. This could
take some time and resources to complete.
To assist with the transition, where there is no change to the intended operation of the building and
subdivision approvals process industry should have the opportunity to retain reference to the original
EP&A Act clause numbers. This could be assisted by having a cross-reference to the former clause
numbers outlined within the new legislation, with a note confirming retention of validity in existing
documentation.
Several changes have been identified which were not presented within the RIS, as outlined above.
The intent of these changes is unclear.

For example if the intent of the change within s 201 (3) is to disallow partial land subdivision, this
could have a significant impact on the ability to deliver a steady supply of buildable land to the
construction industry and needs further industry consultation.
17. What information do you think should be contained in a building manual?
The suggestion of the Part 2 RIS for a building manual to be prepared is based on a fundamentally
incorrect explanation that “[f]or new buildings, the occupational certification is often the point that
settlement occurs, with responsibility for dealing with defects shifting from the developer/builder to
the new owner”.
On the contrary, it is entirely standard for the builder, under a residential building contract to have
no contractual obligation to apply for or obtain a final/occupation certificate.
If builders are required to prepare a “building manual”, that manual will need to be treated the same
way as the keys, miscellaneous certificates and other documentation that the builder is not obligated
to hand over to the client until receiving payment in full.
It is difficult to see what, if any, impact such a manual could have on the resolution of defects, outside
of matters that are already routinely addressed by a combination of contractual defect liability periods
and statutory warranties.
The building manual will likely be little more than an additional expense for the builder (and, in turn,
the client); all for the purpose of preparing a document that will be almost entirely comprised of
matters that a certifier must already be satisfied of, prior to deciding to issue an occupation certificate.
Further, the Building Confidence Report recommendation 20 suggests building manuals for
commercial buildings, and we support the notion that they are not a requirement for Class 1 buildings.
Different building types and scales may have different information needs, so establishing a detailed
prescriptive list may be difficult. It would be beneficial to start only with the most obvious and critical
items, and review the effectiveness of the building manual in a few years post implementation.
If this proposal is progressed, HIA recommends commencing the requirement with only those
buildings captured within the DBP Act:
Building approval and certification documents, as well as the fully declared and as-built plans (which
covers the critical building elements and any performance solutions) would already available within
the Planning Portal, and should be accessible to the owner corporation and/or strata managers from
there.
These buildings will also already have a comprehensive fire safety schedule and maintenance
requirements for the fire safety system per the proposed fire safety reforms.

The only other additional information that might be of use within a building manual would then be
any routine maintenance items not captured under the DBP Act or Fire Safety Regulation, with
information on where, when and how to maintain these items.
This could include information on any accreditation or licensing requirement for the maintenance
practitioner, and information on provisions available within the building for safe access to the item if
necessary (e.g. roof access, anchor points etc)
For building types captured within the DBP Act, consideration should also be given to developing
standard guidance material outlining how repair and maintenance of buildings operates within the
DBP Act and Regulations.
For example, what types of routine repair and maintenance work will or will not require registered
design declarations and building compliance declarations. Owners corporations and strata
community members are less likely to be familiar with what constitutes ‘exempt development’ for
example, so additional guidance would be beneficial for these parties.
18. Do you support the duty of care provisions under the DBP Act and EPA Act being consolidated in the
Bill?
19. How do you feel the duty of care provisions in the DBP Act have been working since they commenced
on 10 June 2020? Do you consider any changes should be made to make them more effective?
HIA opposes any changes to the duty of care provisions under the DBP Act and EPA Act at the
present time, regardless of whether or not those changes are marketed as a mere “consolidation”.
There have been several unintended consequences during the implementation of the DBP Act. HIA
has been working closely with the Better Regulation Division (BRD) to resolve these issues and will
continue to do so.
HIA continues to receive calls from members who carry out relatively minor renovation work on class
2 buildings but have found themselves captured by the DBP Act. This includes works carried out
under the National Disability Insurance Schemes (NDIS) for things such as door widenings in older
apartments for people with disabilities. While an engineer had previously been engaged to specify
how the work should be carried out, the additional processes required under the DBP Act often mean
the project is delayed or cancelled altogether because the small businesses doing the work do not
have the resources to become registered and the NDIS funds available for such work will not cover
the additional costs required.
This type of situation will worsen significantly if the DBP Act is extended before adequate time has
passed for all of these types of unintended consequences to come to light and be dealt with. HIA
has no confidence that transferring these duties to the Bill will not make any substantive changes to
the duty of care requirements already in place.
For example, Part 4 of the current DBP Act states (in section 36) that:
"building work" includes residential building work within the meaning of the Home Building
Act 1989”.

However, the very beginning of the proposed Chapter 6, Part 8 of the Bill (which will house the DBP
duty of care) sets out (in section 215) that:
In this Part---
…
building work includes---
the design or inspection of building work, and
the issue of a complying development certificate under this Chapter for building work.
Therefore, s215(1)(a) of the Bill makes the substantive change of adding additional categories to the
duty of care, beyond the definition of “building work”. HIA’s concern is that many more such changes
will become apparent, following litigation on the transferred provisions.
HIA accepts that the drafting of the transferred EPA and DBP provisions is obviously intended to be
relatively familiar and not result in substantial changes. However, that simply cannot be guaranteed.
In particular, the full scope of the DBP duty is not yet particularly well litigated or understood in its
current form, so even minor alterations could result in significant levels of confusion.
Moreover, the potential benefits of these “transferrals” are completely out of proportion with the
potential consequences. At best, the proposed changes will somewhat simplify the existing
legislation for the sake of achieving consistency.
However, at worst, the changes will cause an unintended expansion of the existing duties at the
exact same time that builders will already be attempting to understand and ensure compliance with
the expansive suite of legislative changes which have been proposed for the NSW building sector.
HIA’s view is that this outcome must be avoided at all costs.

4. PART 3 – BUILDING COMPLIANT HOMES
4.1 KEY OBJECTIVES OF THE BILL
See response to questions 2.1
4.2 HOME BUILDING WORK IN THE BILL

3. Do you support excluding the listed premises from home building work?
4. Should any other types of buildings be excluded? If so, why?
No.
However, prior to answering the questions contained in the RIS, HIA notes and wishes to address
the fact that the Part 3 RIS does not contain any question to the effect of “does the existing definition
need to be changed?”.
Lack of Justification for the Proposed Changes:
The proposed replacement of the existing HBA definition (“residential building work”) with the new
definition of “home building work” represents a complete redesign and upheaval of the scope of
works that are to be captured by the consumer protection framework.
The two definitions are not even close to being equivalent, yet the RIS appears to downplay the
extent of the proposed changes by exploring the topic less in than a page and a half.
Further explanation is required regarding how such limited consideration could ever be seen as an
appropriate way to propose altering a foundational definition which underpins the operation of NSW’s
legislative framework for residential building work.
HIA objects to any suggestion that changes of this magnitude can be justified by a, completely
unsubstantiated claim that “[i]n the past, the extensive definition of residential building work may
have been confusing to some industry participants and consumers, who may be unclear about their
rights and responsibilities”. On the contrary, HIA submits that:
• The current definition is appropriate, well understood and carries a long- and well-established
history; and
• Over time, there has also been clear rationale developed regarding the inclusion and exclusion
of certain works, mostly related to risk levels and the overall adoption of a “common sense”
approach. For example, amendments to the HBA in 2015 excluded stand-alone contracts for
internal painting, concrete tennis courts, ornamental ponds and water features on the basis that:
‘Consumers will remain protected by the Australian Consumer Law for these kinds of work. The
Liberals and Nationals Government is committed to reforming the home building legislation to

ensure that it takes a balanced approach to regulating the industry by providing appropriate
protection for home owners without imposing unnecessary red tape on industry’.9
HIA submits that the current approach remains sensible and should continue to be adhered to. There
is significant familiarity and commentary on the term ‘dwelling’ and consideration should be given to
those matters when determining the definition and any exclusions.
In the above response to Question 5 of the Part 1 RIS, HIA has already outlined its concerns
regarding the effects that the proposed definition of “regulated works” will have on the viability of the
HBCF scheme.
Nevertheless, those concerns bear repeating, as it is also inevitable that the introduction of the
proposed definition of “home building work” will result in increases to HBCF premiums, at a time
when:
• The HBCF has not reached a state of stable commercial viability, with no private providers having
indicated a willingness to participate in the scheme;
• The premiums which are being paid by builders are already at a record high, having more than
doubled within the last 10 years (as is even acknowledged within the Part 3 RIS); and
• Builders in NSW are already dealing with a variety of financial pressures, including
unprecedented increases to the price of building materials following COVID-19, continued waves
of flooding in Eastern NSW, and the consequences of the Ukraine conflict in relation to the supply
of construction timber.
The overall lack of consideration to the consequences of the totality of this proposed change on the
HBCF scheme warrants an extensive response, which HIA has provided below in response to
Question 34 of the Part 3 RIS.
Inclusions and Exclusions from “Home Building Work” in the Bill:
For the sake of completeness, HIA acknowledges that Section 49 of the Bill does contain a brief list
of specific exclusions to a “home”. Each and every one of those items (e.g. correctional complex)
would already be well understood as falling outside of the accepted HBA definition of a “dwelling”.
However, HIA notes that the RIS omits any mention of the fact that the current lists of specific
inclusions and exclusions (to the definitions of ‘residential building work’ and ‘dwelling’) have not
been maintained in the Bill.
As is outlined above, the current lists of exclusions are particularly important, having been developed
over a long period of time, alongside a common-sense approach towards certain low-risk activities
which would otherwise be captured.
Further the RIS does not draw any attention to the fact that the proposed definition of “home” will
replace the well understood term of “dwelling”, which underpins the current definition of “residential
building work”.
9
Second Reading Speech Home Building Amendment Bill 2014 14 May 2014

Also, the Bill contains no equivalent for the following items which, in the HBA (schedule 1), are
specifically included within the definition of ‘residential building work” and “dwelling”:
2 Definition of "residential building work"
(2) Each of the following is included in the definition of

"residential building work" –
(a) roof plumbing work done in connection with a dwelling,

…
(c) work concerned in installing in a dwelling any fixture or fixed apparatus that is designed
for the heating or cooling of water, food or the atmosphere or for air ventilation or the filtration
of water in a swimming pool or spa (or in adding to, altering or repairing any such installation).
3 Definition of "dwelling"
(2) Each of the following structures or improvements is included in the definition of

"dwelling" if it is constructed for use in conjunction with a dwelling--
a) a swimming pool or spa,

b) parts of a building containing more than one dwelling (whether or not the building is
also used for non-residential purposes), being stairways, passageways, rooms, and
the like, that are used in common by the occupants of those dwellings, together with
any pipes, wires, cables or ducts that are not for the exclusive enjoyment of any one
dwelling,
c) parts of a building containing one dwelling only (where the building is also used for
non-residential purposes), being stairways, passageways and the like which provide
access to that dwelling,
d) if non-residential parts of a building containing one or more dwellings give support or
access to the residential part--the major elements of the non-residential parts giving
such support or access,
e) cupboards, vanity units and the like fixed to a dwelling,
f) detached garages and carports,
g) detached decks, porches, verandahs, pergolas and the like,
h) cabanas and non-habitable shelters,
i) detached workshops, sheds and other outbuildings (but not jetties, slipways,
pontoons or boat ramps and any structures ancillary to these exceptions),
j) concrete tennis courts and the like but only if the work involved is to be done under a
contract to do other work that is residential building work,
k) driveways, paths and other paving,
l) retaining walls,
m) agricultural drainage designed or constructed to divert water away from the footings
of a dwelling or a retaining wall,
n) fences and gates,

o) ornamental ponds and water features, and other structural ornamentation, the
construction or installation of which requires development consent but only if the work
involved is to be done under a contract to do other work that is residential building
work,
p) any other structure or improvement prescribed by the regulations.
In addition, and perhaps more troublingly, the following specific exclusions from the definitions of
“residential building work” and “dwelling” (contained in HBA schedule 1) have no equivalent within
the Bill:
2 Definition of "residential building work"
(1) Each of the following is excluded from the definition of "residential building work" –
(a) any work (other than specialist work) the reasonable market cost of the labour and
materials involved in which does not exceed the amount prescribed by the
regulations,
g) internal painting work, but subject to subclause (5),
(i) the supervision only of residential building work--

(i) by a person registered as an architect under the Architects Act 2003 , or
(ii) by a person supervising owner-builder work for no reward or other consideration,
or
(iii) by any other person, if all the residential building work is being done or supervised
by the holder of a contractor licence authorising its holder to contract to do that
work,
(j) demolition work,
(k) any work involved in the installation of any material that forms an upper layer or
wearing surface of a floor (even if installed as a fixture) and that does not involve any
structural changes to the floor, but not including work involved in the installation of
floor tiles unless the regulations otherwise provide,
(l) any work that involves the installation or maintenance of any fixed apparatus such as
a lift, an escalator, an inclinator or a garage door by means of which persons or things
are raised or lowered or moved in some direction that is restricted by fixed guides.
3 Definition of "dwelling"
(3) Each of the following is excluded from the definition of “dwelling”--

a) a boarding house, guest house, hostel or lodging house,
b) all residential parts of a hotel or motel,
c) any residential part of an educational institution,
d) accommodation (other than self-contained units) specially designed for the aged,
persons with a disability or children,
e) any residential part of a health care building that accommodates staff,
f) a house or unit designed, constructed or adapted for commercial use as tourist,
holiday or overnight accommodation,
g) any part of a non-residential building that is constructed or adapted for use as a
caretaker's residence,
h) a moveable dwelling (with or without a flexible annexe) within the meaning of
the Local Government Act 1993 that is, or is a vehicle of a kind capable of being,
registered within the meaning of the Road Transport Act 2013 (such as a caravan or
a motor home),
i) a residential building for the purposes of which development consent can be granted
only because of State Environmental Planning Policy No 15--Rural Landsharing
Communities ,
j) concrete tennis courts and the like, except as expressly included under subclause (2),
k) ornamental ponds and water features and other structural ornamentation, except as
expressly included under subclause (2),
l) a building or portion of a building that is prescribed by the regulations as excluded
from the definition.
HIA can only surmise that one of the following decisions has been taken:
• There is an intention to include these lists within the regulations to the Bill. This is an undesirable
approach;
• These inclusions and exclusions will be omitted from the Bill and clarified later through
Regulations. At this moment it appears that the definition of home building work will be broader;
or
• The Department has made the (completely unfounded) assumption that Courts will, even if the
absence of a list of specific inclusions, still interpret the proposed definition of “home” as including
all of items currently contained in HBA schedule 1, clause 2(2), whilst excluding all of the items
currently contained in HBA schedule 1, clause 3(2).
This approach would effectively discard decades of progress in this area, in favour of leaving the
industry to “guess at” the exact scope of “home building work”, prior to litigation on the issue (which
will be inevitable).
None of the above situations are tenable, and only further amplify HIA’s concerns that the entire Bill
has been proposed without evaluating the impact on
• the overall scope of “home building work”, or

• the HBCF scheme as a whole.

Section 49 of the Bill will not, in any way, serve as an adequate replacement for the missing lists of
HBA inclusions and exclusions.
5. Do you support restricting consumer protection guarantees to home building work, or should some of
them be extended to other kinds of work?
Consumer protection guarantees should not extend beyond residential building work and should be
confined to their intended target i.e. consumers.
As was submitted in response to Question 11 of the Part 1 RIS, HIA supports limited government
intervention in commercial arrangements. Commercial parties should be free to contract and agree
upon their own terms and conditions of engagement. These parties have the wherewithal to allocate
and negotiate risk to ensure the party best able to manage that risk bears its burden.
Definition of a ‘Developer’
6. Do you think the definition of a developer should be broadened to capture more of the industry?
7. How can we ensure that people responsible for building work meet their consumer protection
obligations?
No.
HIA opposes any changes to the definition of ‘developer’, and has consistently given feedback to the
effect that there cannot be any single, accepted, industry-wide definition of “developer”. This is
because the concept of establishing whether a given entity is or is not a “developer” is inherently
nebulous.
The different definitions of “developer” contained within RAB Act and HBA were never intended to
be “consistent” or all-inclusive, and have instead be been ‘purpose built’ to serve completely distinct
purposes. Such proposed attempt at “aligning” the definitions has fundamentally undermined the
coherency of the Bill.
Contrary to the apparent intention of such proposal, the brief case study provided in the RIS (on
page 22-23) is actually demonstrative of why there is no need to make the definition in the Bill
‘consistent’ with the definition in the RAB Act.
On the information provided, if similar facts arose again, the owner’s corporation would have access
to the protections in the RAB Act. In that specific instance, the Building Commissioner would receive
the opportunity to examine the facts, and determine whether the company that entered into the
development agreement should be the subject of compliance/enforcement action.
HIA wishes to emphasise that the Building Commissioner’s powers are wholly discretionary, and that
the incredibly broad definition of “developer” which exists within the RAB Act is tempered by this the
existence of this discretion.
Only in some instances will an entity that “arranged for, or facilitated or otherwise caused, whether
directly or indirectly, the building work to be carried out” be the appropriate subject of enforcement
action. It cannot be overlooked that there will also be numerous instances where this is not true (e.g.

a bare financier of a project), leading to appropriate result of the Commissioner simply refusing to
exercise their vast powers.
Transplanting that specific definition of “developer” straight into the Bill’s consumer protection
scheme results in the situation that every entity who fits that incredibly broad descriptor of a
‘developer’ will now be responsible for providing statutory warranties, without discretion and even if
that entity’s involvement or facilitation of the project was very indirect. This is simply how the RAB
Act’s definition of a “developer” is intended to function.
HIA has serious concerns that, within such a legislative framework, entities (particularly financiers)
would simply refuse to participate due to unacceptable levels of uncertainty and risk.
HIA opposes the proposed changes, reiterates that the role of a developer is a very complex issue
which requires targeted consultation, and must also, once again, question whether any genuine level
of analysis has been conducted as to the effect that expending the number of “developer” entities
would have on the number/value of HBCF claims
8. Should the threshold for developers be lowered to 3-dwelling homes? Why or why not?
No. Based on the limited attempts at justification made within the Part 3 RIS (on page 23), HIA can
only conclude that the proposed change from 4 dwellings to 3 dwellings is largely arbitrary.
The RIS contains no evidence which suggests that this change is necessary.
9. What other costs or benefits should the Department consider before progressing with a definition of
developer?
HIA refers to the above answers to Questions 6-7 of the Part 3 RIS.
Contracting to do home building work (Prescribing progress payments, variations and standard
contract)
10. Do you agree with the maximum progress payment provisions? If not, why not?
11. Do you agree with the variation requirements? If not, why not?
12. Do you think a standard contract should be prescribed or do the current changes provide enough
support to the contracting parties?
The RIS fails to acknowledge that the current HBA does already, in a number of ways, “[b]ake
defaults into system to reduce onus on contracting parties”.
The contracting proposals which are outlined in the RIS can largely be described as overly
prescriptive versions of existing requirements, which:
• Restrict the ability of parties to freely contract and agree to terms; and
• Are not accompanied by sufficient evidence that this approach would even improve a consumer’s
experience. Even in the limited circumstances where the RIS has attempted to source its claims,
HIA is particularly concerned by the Department’s interpretation of the recommendations of the
IPART “Review of the NSW Home Building Compensation Fund”.

Furthermore, if the “NSW Behavioural Insights Unit has provisionally identified that the average
customer is generally unlikely to read their contract in full and in depth before signing”, HIA would
submit that there is little reason to think that the same consumer would suddenly become well-versed
in any “default terms” contained within building legislation.
It appears that such proposal has taken a factor that is largely already “out of the control” of a builder,
and responded by proposing a series of measures that will further curtail the builder’s ability to tailor
their contractual affairs to suit their business needs. NSW builders have a legitimate interest in this
ability, which is a routine feature of nearly every other sector of the economy
Maximum Progress Payment Provisions
HIA opposes the mandatory adoption of restrictive, maximum progress payment provisions.
Furthermore, whilst it is correct that IPART did recommend some changes to the maximum deposits
and progress payments in their review of the HBCF, it does not appear that those recommendations
have been referred to when drafting the Bill.
In fact, the RIS’ citation refers to IPART recommendations (No.4-5):
4. That the NSW Government amend section 8 of the Home Building Act to cap the deposits
for residential works over $20,000 at 5%.
5. That the NSW [sic] amend section 8A (2)(a) of the Home Building Act so that the value of
progress payments paid upon the completion of specified stage of work (as a proportion of
the total value of the contract) must reflects [sic] the costs of completing that stage of work
(as a proportion of total costs).10
Nowhere in the review does IPART suggest that the legislation should contain (i) standardized
progress stages, or (ii) mandatory percentage caps for any progress stages. The RIS contains no
explanation as to how such a solution has been decided.
Even if those inconsistencies were overlooked, no effort has been made within the Part 3 RIS to
explain why IPART’s opinion has been accepted as definitive.
As was outlined in the “HIA Summary Response to Recommendations of the IPART Review of the
NSW HBCF Final Report”, IPART’s findings (that deposit amounts and higher progress payments
are “driving higher costs of non-completion claims” within NSW) were inaccurate and
unsubstantiated.
IPART focused on (i) data reflecting that non-completion claims are, on average more prevalent and
more expensive in NSW than other states, and (ii) the observation that the rules about collecting
payment “are more flexible in NSW Compared to other states…This can lead to higher costs for non-
completion claims”.11
10 IPART “Review of the NSW Home Building Compensation Fund”, page 8.


Later in the Review, IPART then elaborated that:
“Unlike in other states, NSW does not require progress payments to reflect the value of the
work performed (Table 4.1)…In addition, the cap on deposits in NSW was increased from
5% to 10% in 2015, while it remains at 5% in other states.
This is likely to partly explain the higher construction period claims costs in NSW compared
to other states”. 12
Now that this aspect of the IPART Review has been specifically relied on, HIA would like to take the
opportunity to oppose it in more detail.
It was fundamentally misleading for the IPART review to suggest that NSW’s legislation is unlike
“other states”. Tellingly, the table referred to by IPART (“table 4.1”) only includes a summary of the
requirements in NSW, Queensland and Victoria.13
In truth, only Queensland and Victoria have placed restrictions on progress payments and
implemented a maximum deposit of 5%. If IPART had included a summary of the requirements in
any other state, it would have quickly defeated their own argument.
IPART has not attempted to explain why insurance claims are also cheaper and less frequent in
these other (less regulated) states because they cannot do so without engaging with the possibility
that it has little to do with the strictness of payment collection rules.
As was outlined in HIA’s initial response to IPART’s Draft Findings and Recommendations, IPART’s
findings about the value and incidence of claims in NSW simply point to the long-term
mismanagement of the scheme and the failure to take appropriate steps towards real reforms. The
reluctance to address the (at least) decade long position that the scheme has been operating at a
loss has left the only lever to improve the financial sustainability of the scheme as one that focuses
on increasing premiums.
HIA also argues that further exploration and consultation need to be conducted with the financial
institutions (banks, lending bodies) who tend to dictate or query HIA member progress payment
schedules. Further investigation needs to be undertaken to gauge whether these financial institutions
would continue to service the industry with the proposed prescribed progress payment stages.
Additionally, it does not appear that pre-fabricated buildings have been “carved out” or otherwise
excepted from the Bill’s progress payment provisions. Smaller companies in this sector cannot
typically handle the financial risk associated related to the cash flow of a more traditional builder, so
instead request the majority of payment upfront, prior to delivery. The progress payment system has
the potential to cause a massive disruption to these existing business models.

HIA also seeks further analysis and consideration to be provided on how this would impact on cash
flow management across the industry, particularly in the current climate where the industry is already
facing price increases and labour and material shortages in conjunction with the pre-existing
scenario that most in the residential building industry operate under a negative cash flow model for
most of a project.
Variation Requirements
The proposal for additional variation requirements is unnecessary.
For variations specifically, section 7E of the HBA already ensures that every contract is taken to
include a term to the effect that “Any agreement to vary this contract, or to vary the plans and
specifications for work to be done under this contract, must be in writing signed by or on behalf of
each party to this contract.”
The RIS contains no evidence that prescribing additional details will meaningfully improve consumer
experiences. On the contrary, there is little evidence that the changes will do anything other than
increase compliance costs for builders (who must then in-turn pass on those costs to the consumer).
Interactions between the proposed requirements and Section 70 of the Bill:
Additionally, HIA is concerned by the intent/effect of the proposed s70 (‘enforceability of contracts
and other rights’), which will operate alongside all the proposed new “form of contract” requirements.
HIA notes that the Part 3 RIS does not even offhandedly mention the change of wording which has
occurred via section 70, yet alone make any attempt to justify its occurrence.
The current equivalent of Section 70 of the Bill is Section 10 of the HBA.
S10 of the HBA sets out that:
(1) A person who contracts to do any residential building work, or any specialist work, and
who so contracts ---
(a) In contravention of section 4 (Unlicensed contracting), or
(b) under a contract to which the requirements of section 7 apply that is not in writing or that
does not have sufficient description of the work to which it relates (not being a contract
entered into in the circumstances described in section 6(2)), or
(c) in contravention of any other provision of this Act or the regulations that is prescribed for
the purposes of this paragraph, is not entitled to damages or to enforce any other remedy
in respect of a breach of the contract committed by any other party to the contract, and
the contract is unenforceable by the person who contracted to do the work.”
(4) This section does not affect the liability of the person for an offence against a provision
of or made under this or any other Act.

Section 10 is a well understood and litigated provision which has been confirmed to not defeat a
builder’s quantum meruit claim (as contrasted with section 94 of the HBA).14 I.e. The legislative
history of the section ought to have made it clear that exact wording is critical to the operation of this
type of provision.
Despite this, S70 of the Bill instead set outs that:
(1) This section applies to a person (a non-compliant person) who enters into a contract to carry
out home building work ---
(a) otherwise than in accordance with a license authorising the person to carry out the work,
or
(b) under a major work contract that does not comply with a requirement imposed by or
under this Act, or
(c) in contravention of another provision prescribed by the regulations.
(2) The contract is unenforceable by the non-complaint person.
(3) The non-compliant person is, in relation to a breach of the contract committed by another
party to the contract, not entitled---
(a) to damages, or
(b) to enforce another remedy.
The overall “reworded” phrasing of the proposed s70 introduces a level of uncertainty that is
completely unnecessary. Prior to litigation, there will be no way of confirming whether the new section
has a broader application.
Additionally, the Bill has made another troubling change which is not even canvassed or discussed
in the RIS. That is, the Bill does not contain any direct equivalent of section 94 of the HBA (“Effect
of failure to insure residential building work).
In short, s94(1) is well understood to prevent a builder from making non-contractual claims (e.g.
quantum meruit), unless they establish an entitlement to leave under s94(1A) by establishing that
this would be “just and equitable”, despite their failure to obtain insurance.
Because the Bill lacks a specific equivalent of s94, HIA can now only speculate that those types of
claims now also fall within the purview of s70(1)(b). This would mean that either:
(a) Section 70 now permits quantum meruit actions for any failure that would have previously
fallen within HBA s10 or s94. This means builders who (perhaps even deliberately) fail to
obtain HBCF may now have access to quantum meruit relief, without needing to specifically
justify their failure to insure (notwithstanding the usual prerequisites for seeking an equitable
remedy); or
14See Davenport, Philip --- "NSW Home Building Act - Builders' Quantum Meruit Action Barred" [1997] AUConstrLawNlr
41.

(b) Alternatively (if somewhat less likely), any builder who breaches any requirement of the Bill
cannot recover in any way (quantum meruit or otherwise), and has no clear avenue to seek
the leave of the court for an exception.
Neither of these outcomes is acceptable.
The history of litigation in this area should have made it abundantly clear that amendments should
not have been approached without significant justification.
Requiring a Standard Contract
No. Overly prescriptive contracts are inflexible in the face of a changing building industry.
In the absence of definitive evidence suggesting that they are of sufficient benefit to justify neutering
freedom to contract, ‘standard contracts’ should be avoided.
4.3 WHAT HAPPENS WHEN SOMETHING GOES WRONG

13. Do you support the changes to statutory warranty duties? If not, why not?
No. HIA opposes the expansion of the statutory warranty provisions.
More specific answers are given below for proposed changes which are not also the subject of a
later question in the RIS.
Changes to the scope of warranties:
The consideration and discussion of proposed changes to the statutory warranties is inadequate.
The statutory warranties underpin the functioning of the entire HBA, and each alteration contained
within the Bill should have been the subject of extensive consultation and discussion.
As for each individual subclause of s75 of the Bill:
• Section 75(a – b) --- HIA accepts that no significant changes have been proposed to the warranty
that work will be done with due care and skill.
• Section 75(c) --- The significant change to the warranty that materials supplied will be good,
suitable and new (unless otherwise stated) is that it now applies to “whether assembled on-site
or off-site”. HIA refers to the above answers to Questions 7-14 of the Part 2 RIS, which discuss
the issues with attempting to capture prefabricated work within the Bill.
• Section 75(d) --- HIA accepts that no significant changes have been proposed to the warranty
that work will be carried out in accordance with this or another law.
• Section 75(e) ---- The significant change to the warranty that work will be done with due diligence
and within time is that the warranty no longer refers to the time “stipulated in the contract”. The
RIS confirms that this is part of an attempt to ensure “the warranty will be tied to the work and
not the contents of the contract”. This is the subject of Question 15.

• Section 75(f) --- HIA notes the core aspect of the changes to this warranty is the introduction of
the requirement that the work must “result in a home that is reasonably fit for habitation”. The
introduction of this test is the subject of Question 14.
• Section 75(g) --- The most significant change to the warranty that the work and materials used
will be reasonably fit for the specified purpose or result is that, unlike the equivalent s18B(f) of
the HBA, the provision in the Bill does not only take effect:
“…if the person for whom the work is done expressly makes known to the holder of the contractor
licence or person required to hold a contractor licence, or another person with express or
apparent authority to enter into or vary contractual arrangements on behalf of the holder or
person, the particular purpose for which the work is required or the result that the owner desires
the work to achieve, so as to show that the owner relies on the holder's or person's skill and
judgment.”
HIA is uncertain of any rationale or justification for removing this qualifier, as the Part 3 RIS simply
does not address the issue.
In HIA’s view, the current form of s18B(f) is entirely reasonable. HIA seeks to understand whether
the intention of this proposal is that a contractor should potentially now be responsible for a specified
purpose that a contactor is not made expressly aware of, or which does not specifically relate to an
exercise of that contractor’s judgement of skill?
HIA requests clarification regarding why this change has occurred.

Including pre-fabricated component:
Please refer to responses to Part 2 RIS, question 7-14 with regard to Pre-fabricated building work.
14. Do you think that fit for habitation is a more appropriate legal test compared to fit for occupation? Do
you think fit for habitation should be a defined term?
No.
Firstly, the Part 3 RIS appears to outrightly admit that this term has been selected without any
thorough evaluation or clear understanding of the impact that changing the definition will have upon
the HBCF scheme. This is not an acceptable approach to amending home building legislation.
At best, indication has been given towards a general hope that habitation is “likely a lower bar” than
occupation. Even putting aside the issue the RIS has not justified why it is necessary or beneficial to
“lower the bar”, HIA is not of the view that “fit for habitation” is a better test.
In common usage, “habitation” and “occupation” are synonyms. No grounded suggestions have been
made that:
• Courts have had any difficulty interpretating the phrase “fit for occupation”; or
• Occupation is not the most appropriate word, especially in light of the existence of the process
of obtaining a certificate of occupation.

Instead, the RIS all but admits that the goal of the proposal is to tempt courts to begin to conflate the
concepts of tenancy law with construction law.
A builder is not liable under statutory warranties for an issue which is not a “defect”. I.e. A problem
arising from issues with the quality of materials used, faulty methods of construction or failures to
follow required specifications or standards. In the same vein, an issue caused by lack of maintenance
by the owner is not a defect.
Nevertheless, builders are already expected to spend significant amounts of time and money
addressing these types of claims. HIA’s experience is that owners are frequently told (especially by
insurance companies) that the builder should be pursued for these types of issues.
In the first instance, owners (and insurance companies) often simply assume that the builder is liable,
without regard for the source of the issue and whether it can rightfully or legitimately be attributed to
the fault of the builder.
In contrast, a landlord has an ongoing legal obligation to provide a tenant with peace, comfort and
privacy.15 This obligation can extend to the maintenance, repair and upgrading of a property over
time, to accepted standards and with the understanding that the landlord bears the financial
responsibility for any fair wear and tear.
Obligations under a tenancy contract are not directly comparable to obligations under a construction
contract. The proposed “fit for habitation” test is not fit for purpose, and will only encourage
unmeritorious claims against builders.
To illustrate this point further, how would ‘fit for habitation’ be measured if a builder was to build a
deck, and how do you determine 'comfort' for a deck when it is non-habitable.
15. Do you agree that linking statutory warranties to home building work, as opposed to having a
‘contract’, achieves a better outcome? If not, why not?
No.
Furthermore, HIA disagrees that the changes proposed to the tests in sections 18B(1)(e-f) of the
HBA can be fairly described as “linking statutory warranties to home building work, as opposed to
having a contract”.
The proposed changes are better described as completely disconnecting a builder’s liability from any
rational relationship to the contractually agreed scope of works.
HIA views the choice to support these changes by referring to the case of Oikos as, at best, incredibly
confused. At worst, the RIS appears to misleadingly imply that, if a builder actually performed work
outside of the agreed contractual scope, the builder’s work would not be captured by the scope of
the statutory warranties in the current HBA.
15 Residential Tenancies Act 2010 (NSW), s 50(2).

In Oikos, the builder escaped liability for water damage which occurred as a result of the builder not
undertaking protective works which were simply not part of the builder’s agreed scope of works under
the contract.16 If those works had been expressly included in the contract, or the owner had disclosed
a particular purpose or result that the works were to satisfy (i.e. complete rectification of
waterproofing), the builder would have almost certainly been liable.17 The Court instead accepted
that the builder had been contracted for a partial rectification only. The case is unproblematic and
justifies no change at all.
Purpose of introducing “Deemed Contracts”
Furthermore, statutory warranties can already apply “[t]o include otherwise unlawful oral variations
and work outside of the schedule of works of a contract”. Any suggestions to the contrary are either:
• Outright incorrect; or
• Misinterpreting the consequences of a builder’s failure to comply with legislative requirement for
a ‘written contract’ or ‘variations in writing’. Such a failure has no effect on the owner’s continuing
ability to enforce an oral contract (or variations) as against the builder.
Despite anything in section 10 of the HBA (‘Enforceability of contract and other rights’), section 11
makes it exceptionally clear that “[t]his division does not affect any right or remedy that a person
(other than the person who contracts to do the work) may have apart from the Act.”.
For example, an owner can already take action in relation to an oral building contract and unlawful
variations (or as the RIS describes them, “works outside the schedule of works of a contract”). HIA
notes that, whilst it is not addressed or explained by the RIS, section 70 of the Bill appears to
preserve these outcomes.
To HIA’s knowledge, the machinery in the Bill designed to address the possibility of “deemed
contracts” (which is not a term that is actually used or defined within the Bill) would only have a role
to play in situations where the facts provable by the owner fall short of establishing a legal contract
(e.g. due to a lack of consideration).
HIA would not necessarily oppose this. However, HIA understands from the RIS that whatever is
suggested by the actual drafting of the provisions, their true intent is to allow a Court to hold a builder
liable for works which clearly fall outside of the contractual scope of works. This is unjustifiable, for
a developer or any other builder.
16. Do you agree that the person responsible is the person who enters into a contract with the owner of
the land if there is no contract, the person who contracts or arranges for, facilitates or otherwise
causes, whether directly or indirectly, the work to be carried out? If not, why not?
No. This question also sets out what is effectively the definition of “developer” from the RAB Act.
HIA refers to the above answer to Question 6 of the Part 3 RIS. This definition is not suitable for use
within the HBA or Bill.
16 Oikos Constructions Pty Ltd t/as Lars Fischer Construction v Ostin & Anor [2020] NSWCA 358 [83]
17 Oikos Constructions Pty Ltd t/as Lars Fischer Construction v Ostin & Anor [2020] NSWCA 358 [130].

Changes to the definition of ‘owner’
17. Do you agree that the new definition of ‘owner’ is fit for purpose? If not, please provide reasons and/or
recommendations for change?
No. The current definition of “owner” is largely fit for purpose.
HIA would be open to giving feedback on changes to address the specific issue which has been
identified by the RIS in relation to leasehold properties. However, there is simply no need to
overcomplicate the provision to the extent proposed.
18. Do you agree that a ‘home’ within the Residential (Land Lease) Communities Act 2013 should be
included within the definition of ‘owner’?
19. Do you support including caravans and other moveable dwellings in the definition of home for the
purposes of statutory warranties?
From the outset, HIA is incredibly concerned by this confusing proposal. HIA is unsure whether a
mistake has been overlooked, or there is a genuine lack of clarity regarding the intended proposal.
Caravans:
Part 2 of the RIS (which contains the majority of the discussion regarding the inclusion of
prefabricated works) explicitly states that:
Further, the Department does not propose to capture genuinely moveable dwellings, such as
caravans, under the definition of pre-fabricated buildings. The Local Government Act 1993 (LG Act)
currently prescribes that a “moveable dwelling" is:
a) any tent, or any caravan or other van or other portable device (whether on wheels or not),
used for human habitation, or
b) a manufactured home.
Amendments to this definition are therefore necessary to differentiate between these portable
devices used for habitation as compared to a relocatable home as moveable dwellings. The
Department is proposing to capture manufactured and relocatable homes as pre-fabricated buildings
in order to protect owners and subsequent owners through consumer protections, and cover under
the home building compensation scheme.
Even putting aside HIA’s disagreements with this justification, the Department’s own statement
obviously cannot be reconciled with the proposal of “incorporating the meaning of ‘home’ in the
Residential (Land Lease) Communities Act 2013 (RLLC Act), which the Part 3 RIS directly
acknowledges would include a caravan.
HIA requests clarification on whether the inclusion of caravans is intended to be part of the proposal
or whether this is not the case.

HIA suspects that this inconsistency may have yet again resulted from the Department’s desire to
simply ‘import’ a definition from another piece of legislation, instead of designing a suitable definition
which is tailored to suit the purposes of the Bill.
RLLC Act definition of ‘home’
Secondly, has there been any consideration of the consequences that will follow from the transferral
of the RLLC Act definition of ‘home’ into the Building Bill?
The notion that “[t]he Bill also proposes to include pre-fabricated buildings into statutory warranties”
was already explored in relation to the Part 2 RIS. That introductory statement does not at all explain
why the Department has proposed the RLLC Act definition of ‘home’ as its mechanism for doing this.
In fact, the Part 3 RIS does not offer up any reasons at all for this decision and HIA can only assume
that this is another misguided attempt to ensure “consistency” between wholly disparate pieces of
legislation.
The proposal appears to be completely at odds with the stated intentions, as described in the Part 2
RIS (and extracted above). Putting aside HIA’s desire for clarification regarding what is meant by
‘genuinely moveable dwellings’, there appears to be a desire to try to distinguish between ‘portable
devices used for habitation’ and ‘a relocatable home’.
HIA is perplexed as to why a definition has been proposed that obviously contains none of those
nuances or distinctions. In short, the RLLC Act definition will capture any habitable structure that is
not a tent.
The RLLC Act is intended to allow for governance of residential communities, via setting out the
rights and obligations of members/operators of those residential communities. It should have been
obvious from the outset that any definition of “home” from the RLLC Act would be deliberately very
broad in scope, and entirely inappropriate to transfer over to the Bill.
Changes to the definition of ‘completion’
20. Are the current definitions of completion fit for purpose? If not, why not?
Yes.
However, HIA refers to section 50(3)(b) of the proposed Bill and the contemplation “if the work is not
completed under a contract”. This effectively expands the statutory warranties to “deemed contract”
type situations, where there would otherwise not be an oral or written arrangement that goes far
enough to be a “contract”. HIA would oppose any expansion of such scope.
21. Should completion be remodelled to relate to the latest date of certain listed scenarios?
No. Under current residential contracts, the outcome of this proposal would be abhorrent.
HIA would, once again, stress that, in residential contracts, it is completely typical for the builder to
have no contractual obligation to apply for or obtain a final/occupation certificate. Practical
completion is not dependent on whether or not the owner chooses to promptly apply for an

occupation certificate (using the documentation handed-over by the builder upon receipt of final
payment).
HIA questions why the Government would even consider benefiting “the consumer by shifting the
time for the application of the statutory warranty period, to a later date”, if that benefit would require
leaving most builders at the complete mercy of a client who does not immediately take steps to
obtain an occupation certificate.
Statutory warranties place substantial obligations on builders. It remains completely fair for the
limited period of those warranties to commence as soon as a builder has completed their contractual
obligations, or otherwise upon the occurrence of the earliest identifiable “trigger” for completion under
the legislation.
22. Do you think that the definition of completion for new strata buildings should incorporate occupation
certificates for a part of a building? Does the current definition reflect this?
Yes, such definition should incorporate occupation certificates for a part of a building.
It is HIA’s view is that the occupation approval for partially completed buildings must be retained or
available where that part of the building is suitable for habitation.
23. Do you agree that completion occurs for a ‘deemed contract’ when the last person on site completed
the work before a complaint for a statutory warranty (see clause 50(3) of the Bill)?
HIA is somewhat confused by the phrasing of this question, which seems to contradict the
substantive content of Section 50(3) of the Bill, as well as the RIS’s explanation of that provision.
“Deemed contract” is not a term used in the Bill, so HIA has assumed that the question is using the
meaning/explanation given much earlier on page 33 of the Part 3 RIS:
“If there is no contract for home building work, then there is a ‘deemed contract’. It is intended
that statutory warranties can apply:
• If there is no contract
• To include otherwise unlawful oral variations outside of the schedule of works
of a contract.”
Section 50(3)(b-e) of the Bill clearly sets out the priority of events which constitute “completion” dates
when there is some agreement between an owner and a builder that is not otherwise a contract (i.e.
A “deemed contract”). These are:
b) if the work is not carried out under a contract --- the day the work is completed without defects
or omissions, other than minor defects or omissions that will not unreasonably affect the
intended use of the work,
c) the day on which the license holder hands over possession of the work to the owner,
d) the day on which the license holder last attends the site to carry out work, other than work to
remedy a defect that does not affect practical completion,
e) the day on which an occupation certificate is issued for the building to which the work relates.

If the question is supposed to be asking whether, when there is no contract, the first possible date
or completion should be the date that a person on site completes the works without defects or
omissions, then HIA agrees that this is appropriate and is reflected by the content of s50(3).
However, the question uses the confusing language of “when the last person on site completed the
work before a complaint for a statutory warranty”, which is ambiguous could be a reference to either
s50(3)(b) or s50(3)(d).
For completeness, if the question is instead meant to be a reference to the circumstances described
in s50(3)(d), then HIA would submit that (i) the answer is “no”, and (ii) the content of the RIS does
not canvass such a change.
Aligning the current definition of ‘major defect’ with ‘serious defect’
24. Are there any other issues with the definition of major defect? If so, please provide reasons to support
your response.
25. Do you think that the current definition for ‘major defect’ as defined in the HBA should be retained?
Why or why not?
26. Do you agree that the definition of ‘serious defect’ should be used instead of ‘major defect’ for statutory
warranties? Why or why not?
27. Do you think that providing six years cover for ‘serious’ defects and two years for ‘other’ defects is fit
for purpose?
28. Do you think that the time frame for ‘serious’ defects should be extended to ten years and three years
for ‘other’ defects?
The current definition of “major defect” should be retained.
HIA opposes the adoption of the definition of ‘serious defect’ currently contained in the RAB Act, and
submits that the current definition of “major defect” is both appropriate and well-understood.
The definition of a ‘major defect’ is critical to the operation and application of both the HBCF and the
statutory warranties under Section 18B (Part 2C) of the HBA.
The intended purpose of the definition of a “serious defect” under the RAB Act was to activate and
trigger the inherent powers of the Building Commissioner to issue building rectification orders and
prevent the issuance of occupation certificate and strata plan registrations. This is very different to
the purpose of a “major defect” under the HBA.
The broader ramifications of this type of careless “transplanting” of definitions were already outlined
above in HIA’s response to Questions 6-7 of the Part 3 RIS. HIA questions whether, putting aside
the general desire for “consistency” which permeates the RIS, there has been an attempt to predict
the changes that this “definition swap” will affect upon the scope of works that will now be a relevant
“defect” for the purposes of the Bill.
It is wholly unacceptable for these types of sweeping changes to be proposed without offering up
any data regarding (i) how the resulting broadening of the scope of the statutory warranties will affect

the overall number or claims, and (ii) what effect this will have on HBCF premiums, which will
ultimately be passed onto the consumer.
HIA further opposes any extension to the statutory warranty period. These time periods were
considered appropriate following the last HBA review.
29. Do you think that Part 3, Div 2 of the Limitation Act 1969 should extend to statutory warranties?
HIA notes that no specific proposal has been made regarding the grounds on how exactly these
“extenuating circumstances” exceptions would be integrated into the statutory scheme.
In the absence of a specific proposal (including data regarding the impact of the changes upon the
HBCF scheme), HIA is unable to provide feedback.
Dispute Procedures
30. Do you agree with proposed ‘home building work direction’ refund power?
31. What other directions would be useful as a home building work direction?
The Part 3 RIS contains only relatively brief mentions of the proposed compliance framework under
the BCE Bill, which is the subject of a separate RIS (to which HIA has also provided submissions).
Prior to addressing the issue of the proposed “home building work direction power”, HIA first notes
that s89(3) of the Bill provides that:
The regulations may make provision about the following ---

a) the procedures for mediations,
b) whether or not a mediation required under this section is binding.
It is unclear why an explanation of this provision is not part of the RIS. As you are aware, parties
“cannot take the matter to NCAT or court without first coming to [Fair Trading] to undertake early
dispute resolution”. Is there an intention to use s89(3) now make those mandatory mediation
sessions binding, such that Fair Trading can effectively decide whether or not a party can utilise
NCAT?
HIA would obviously be opposed to this outcome and the resulting denial of due process.
Furthermore, a change of this magnitude is not an appropriate subject of regulations; if mandatory
mediation is being proposed, then that should be clear from the face of the Bill and RIS, so that
adequate levels of consultation and discussion may take place.
HIA supports the use of alternative dispute resolution (‘ADR’). However, the existence of ADR should
not undercut the ability to proceed to formal litigation, where parties should ideally be able to benefit
from the expertise of a specialised, knowledgeable, independent building jurisdiction (whether that
be a tribunal or division of the courts) to deal with their domestic building dispute.
Within the industry, there remains a strong perception of institutional bias against builders. In
particular, Fair Trading building inspectors are in a position that embodies an inherent conflict of
interest. Because they are part of the consumer protection framework, they are not seen as impartial
and typically are required to act as consumer advocate in addition to playing the role of inspector.

HIA would strongly recommend that if government wishes to play a role in dispute resolution,
inspections should be undertaken by independently appointed individuals or, failing that, an agency
independent of NSW Fair Trading.
Home Building Work Direction Power:
HIA opposes the proposed “home building work direction” power. HIA does not believe that this
power is necessary or appropriate.
Many residential building disputes are intertwined with contractual disputes over final payment, oral
variations and purported terminations of the contract. HIA is seriously concerned with mechanisms
that enable parties to short circuit the judicial processes in order to avoid proper scrutiny of the
dispute, facts in issue and express content of the contract. This is inconsistent with notions of natural
justice.
The content of the Part 3 RIS does not provide the HIA with any confidence that NSW Fair Trading
will take a diligent, nuanced approach to determining whether a matter is truly “a failure to provide
building goods and services paid for by the claimant”, as opposed to a legitimate contractual dispute.
HIA’s concerns are not assisted by the fact the a “home building work direction” may also be made
without application, “on the Secretary’s own initiative”.
Even if it was taken at face value that the power “is intended to apply when a person takes money
from a consumer and does not provide the promised service”, s97(1)(b) of the Bill will allow the power
to be expanded to other kinds of disputes via simple regulations. Once again, this is not an
appropriate use of regulations --- if there is any intention to apply the home building work direction
power to other types of disputes, then that should be clearly signalled.
Additionally, one of the stated aims of the scheme is to “enhance the effectiveness of intervening
early and taking a more proactive approach instead of relying on the courts…”. Therefore, if home
building work directions must be implemented, HIA simply does not understand why s98 of the Bill
does not give Fair Trading equivalent powers to direct an owner (“consumer”) to:
(i) make a payment owed to the builder (“supplier”), or
(ii) perform any other action required for the home building contract to proceed.
Despite the scheme apparently being intended to promote a “proactive” approach, on reviewing a
consumer’s claim and deciding that the supplier has asserted a valid claim for payment there is no
power whatsoever to issue a direction to the consumer, in favour of the supplier.
As with rectification orders, yet another system has been designed without a commensurate power
to compel a recalcitrant owner to hand over a disputed stage claim payment.
HIA recommends that this be remedied and that it is only fair that, if a complaint is unequivocally
resolved in a builder’s favour, Fair Trading should have the power to act accordingly. The proposed
power to issue a “home building work direction” is already subject to the Fair Trading’s discretion
(s97 – “may issue”).

HIA views this is as a simple matter of fairness and efficiency. The Part 3 RIS does not offer any
explanation as to why the power would not have been designed to function like this from the outset.
32. What will be the cost to licence holders for the changed requirements? For customers?
HIA’s expectation is, once again, that full cost assessments of the dispute resolution scheme would
have been performed, prior to any proposal would have been performed. The regulator is in the best
position by far to provide initial figures for HIA to comment/review/provide feedback in response to.
Furthermore, HIA questions how the implementation of the scheme could even have been
considered without some pre-existing understanding of the costs involved.
33. Do you agree with the amounts of the five tiers used to apply to the penalties in the Bill? If not, why
not?
34. Do you agree with the maximum penalty amounts specified in the Bill? If not, please identify the
provision, amount or approach that you disagree with and why?
On face value, the proposed five tier model appears to be fairly complex. While the list of the new
penalties have been included in the Bill, HIA requests a comprehensive comparison all the new
penalties with the old penalties to be supplied as part of the consultation so fulsome and measured
feedback can be provided. For example, further information on where these offences are allocated
under the five tier model which should then be compared with the current offences along with the
current penalty amounts attached to each of those offences for the purpose of determining the
differences.
Carrying out this exercise will provide valuable clarity and transparency in determining whether the
amounts of the five tiers used to apply to the penalties and whether the maximum penalty amounts
or any increase in the amounts specified in this Bill are appropriate.
Since this comprehensive comparison hasn’t been provided, HIA is unable to provide more at this
time. Alternatively, HIA would require more time to conduct this extensive exercise.
Equally disappointing, the RIS does not provide:
• evidence that the current penalties are ineffective or increasing penalties will achieve the
objective of deterring non-compliance;
• further data regarding the current rate of non-compliance and the effectiveness of existing
penalties; or
• justification that this type of structure would change the current behaviour.
The lack of information provided continues to act as a barrier for a sensible response.

4.4 HOME BUILDING COMPENSATION SCHEME
35. Do you have any comments or feedback about the Bill’s provisions for insurance under the home
building compensation scheme?
HIA had communicated throughout the submissions its categorical concerns with the framing of
these proposed changes as a mere “modernisation” of the existing provisions, when this is not the
case. This in particularly relevant to this section of the consultation.
Since the RIS has not provided a detailed explanation of even a single one of the new provisions
contained in Chapter 5 of the Bill, HIA has been left to attempt to interpret their impacts.
Right from the outset, in the proposed Section 106(2)(a) (‘Definitions’), an attempt has been seen to
clarify the meaning of ‘disappearance’, so that any reference to ‘disappearance’ is now also a
reference to “if the licence holder, supplier or owner-builder is a corporation --- the deregistration of
the corporation under the Corporations Act…”.
This is not something which is specified under the HBA. HIA is incredibly concerned that the Bill
seemingly makes no allowance at all for what is to occur in the event that a corporate licence holder
is improperly deregistered.
Currently, an unscrupulous director might do so through a simple application to ASIC. Is it intended

that this now immediately triggers HBCF insurance? If this is the case, how will this interact with a
later court order reinstating the company?
HIA draws attention to the fact that, in a roughly 70 page part of the RIS, a Part containing the
subheadings of “home building work in the bill”, “statutory warranties” and “home building
compensation scheme”, i.e. there is only a single page (page 53 of the Part 3 RIS) which directly
addresses that the Bill will change the scope of works that will attract statutory warranties and require
HCBF insurance.
The aforementioned page does not make any genuine, evidence-based attempt to evaluate the true
extent of the impact that these changes will have on the premiums or viability of the HBCF scheme.
This is manifestly inadequate. Chapter 5 of the Bill is riddled with “modernisations” such as described
about for Section 106(2). The idea that these changes will have no major effects on the functioning
of the HBCF scheme is absurd. The literal first section of the chapter appears to have such an effect.
At an absolute minimum, these changes will render work performed thus far in relation to the ongoing
Review of the NSW Home Building Compensation Fund completely meaningless. It appears that,
whilst drafting the Bill, those proposals have been disregarded.
Furthermore, the idea that the content of Chapter 5 is designed to “support changes made in other
parts of the Bill” is disappointing. For example, what changes have been made to account for the
fact that definition of a “serious defect” which has been imported from RAB Act is significantly broader
in scope than the definition of a “major defect” under the HBA.

As another example, has the HBCF scheme been modified to deal with the issue that, as a direct
result of the changes outlined in the Part 1 RIS, (‘Who can do the work’), every new proposed
category of licensed works (e.g. fire safety, professional engineering work, building design work) is
proposed to become “regulated works” which, in turn, will fall within the new definition of “home
building works”?
The idea that, despite the extensive changes proposed by the Bill, the language of the HBCF
provisions could simply be “modernised” is absurd. It is arguable that premiums will continue to
increase as a direct result of the changes in the Bill.
HIA further notes that, despite it not being mentioned in the RIS, the exemption from HBCF insurance
for multi-storey buildings (currently r56 of HB regulations) is completely absent from Chapter 5 of the
Bill.
HIA requests confirmation that this exemption will be considered in the Building Regulations, noting
that:
• Any change of this nature should only be considered when the impact on the scheme is
considered; and
• The Paper does not explore how this change will interact with Decennial Liability Insurance (DLI)
and the Strata Bond Scheme (a regime with a number of ongoing flaws).
Additionally, HIA understands that there has been an appetite to remove the requirement that
residential building contracts for work over $20,000 include the cost of insurance under the Home
Building Compensation Fund (HBCF).
HIA is supportive of both proposal 21 and the removal of the requirement prescribed by clause
7(2)(f1) of the HBA.
In relation to the latter, HIA have long held concerns regarding this requirement and opposed the
requirement from its inception back in 2017. Since its adoption HIA has continued to raise the
practical problems with complying with this requirement, such as, often the cost of insurance under
the HBCF is not known at the time of signing the contract as the insurer requires a copy of a signed
contract in order to provide the cost of insurance. To that end, industry has been forced to include
an estimated cost which, concerningly may not have complied with the legislative requirement.
To remedy the situation, regulatory guidance from SIRA and a statement of regulatory intent from
NSW Fair Trading was produced to ‘fill the gap’ between the regulatory requirements and the
practical realities of the situation.
Other notable Provisions in Chapter 5 (Insurance)
• S113(2) (“Insolvency or death in partnership carrying out home building work”):
S113(2) is completely new and appears to be poorly thought out:

A partnership is taken to be insolvent if—
(a) a partner in the partnership dies, and
(b) the partner was the only nominee supervisor for the licence held by the
partnership, and
(c) another nominee supervisor is not appointed in accordance with this Act
The Bill does not contain any specific requirements/process for notification of a new nominee
supervisor following the death of a partner.
It appears that what is being referred to is the eligibility requirements in s46(5); to the effect that the
old partner no longer “is” eligible to be a nominee supervisor (by virtue of being deceased).
As a result, the standard process for nominating a new supervisor in s46(3) must be followed.
The end result is that, following the death of a nominee partner supervisor, the partnership only has
7 days to submit the approved form.
If the partnership does not do so, it is taken as insolvent and any HBCF policies are triggered. As
with the example given above in relation to the new HBCF trigger for “deregistration” of a company,
this is an incredibly harsh and unnecessary result.
• S114 (“Insurance not required for persons carrying out work for contractor”)
Section 114 is missing an equivalent of HBA s98(2), which clarifies that insurance is still required to
do work on behalf of an owner-builder.
As a result, the entire Bill is fairly unclear as to whether:

i. An owner-builder is once again required to obtain HCBF insurance, or
ii. A builder contracting with an owner builder is no longer required to obtain that insurance.
To add further confusion, the Bill contains no equivalent of HBA s95 (“No insurance for owner-builder
work”). This omission is not mentioned anywhere in the RIS (including the tables of new and existing
provisions).
This presents a problem as, although it is intended that owner-builders can no longer perform
licenced works (which would usually prevent an owner builder from personally carrying out any
“major works” which require HCBF insurance), it is still intended that an owner builder (as a “principal
contractor”) can engage a licence holder to perform those works. This is clearly described on page
33 of the Part 3 RIS.
The RIS does not directly address this issue, other than to state (on page 53 of the Part 3 RIS) that:
“The provisions contained in Chapter 5 of the Bill have been re-written to modernise and
clarify the language and support changes made in other parts of the Bill.
This is not in itself expected to materially affect the operation of the scheme…

There may also be some changes to the scope of work for which businesses must buy
insurance. This is a consequence of moving from the current ‘residential building work’
definition in the HBA to the new ‘home building work’ definition in the Building Bill, and subject
to the regulations”.
This tends to indicate that no change was intended to owner-builder work in relation to HBCF
insurance (as those changes are largely unrelated to the mentioned definitions).
Upon HIA’s review of the Bill, it does appear correct that no substantive change has occurred.
However, HIA would stress this has been achieved in an absurdly “roundabout” fashion, which
leaves the matter unnecessarily unclear:
• Section 114 operates under the Chapter 5 definitions. Per those definitions, “contractor” has the
same meaning as in s52 of the Bill:
o “contractor means a party to a home building work contract who is (a) a licence holder,
or (b) the supplier of a kit home or pre-fabricated building, or (c) a developer.”
• The holder of an owner-builder permit is not technically a ‘licence holder” under Chapter 2, s8 of
the Bill.
• An owner-builder can also never be a “developer”, due to the definition excluding work carried
out on a dwelling containing less than 3 self-contained dwellings. It also appears that, under the
s8 definitions, an owner-builder is intended to be distinguished from a “contractor” by virtue of
instead being a “contracted party”:
o “[c]ontracted party means a party to a home building work contract who is…(b) an
owner builder…”
• If, under the Bill, an owner-builder is not a “contractor” (as above), the overall law remains the
same, despite the removal of the clarification provided by HBA s98(2) clarification (to the effect
that insurance is required to do work on behalf of an owner-builder).
There is simply no reason for such a straightforward matter to be dealt with in this fashion.
The drafting of the Bill all poses a number of other issues in relation to HBCF insurance and owner-
builders, but these are more relevant to other sections (and will be discussed below).
• S130 (“Regulations”):
Section 130(i) now grants the ability to create regulations about the circumstances where a
contractor will be taken to be insolvent.

HIA is concerned by this inclusion, as such additional circumstances would effectively function as
new insurance triggers. It is not appropriate for matters of that level of significance to be dealt with
by way of simple regulations.
Additionally, HIA understands that there has been an appetite previously proposed to remove the
requirement that residential building contracts for work over $20,000 include the cost of insurance
under the HBCF.
While this proposal has not been expressly included in this consultation, HIA is supportive of the
removal of the requirement prescribed by clause 7(2)(f1) of the HBA. HIA has long held concerns
regarding this requirement and opposed the requirement from its inception back in 2017. Since its
adoption HIA has continued to raise the practical problems with comply with this requirement, such
as, often the cost of insurance under the HBCF is not known at the time of signing the contract as
the insurer requires a copy of a signed contract in order to provide the cost of insurance. To that end,
industry has been forced to include an estimated cost which, concerningly may not have complied
with the legislative requirement.
To remedy the situation regulatory guidance from SIRA and a statement of regulatory intent from
NSW Fair Trading was produced to ‘fill the gap’ between the regulatory requirements and the
practical realities of the situation.
4.5 HOW DO WE TRANSITION INDUSTRY INTO A NEW SCHEME

36. How can the Department support the industry transition into the licensing new scheme?
HIA would instead ask how the Department plans to support the industry transition into the proposed
scheme.
37. Is a period of 2-5 years for transitioning into the new licensing scheme appropriate? If no, why not?
HIA submits that it is challenging to determine precise timing, when the Department has not provided
information on how the industry will be assisted/supported with the transition.
Data on the extent of the impact to the industry so that HIA, and the industry as a whole, would be
helpful when considering this question.
38. How can the Department help incentivise individuals to enter the construction industry?
Removing red tape and regulatory burden as well as ensuring the regulatory framework is clear,
reasonable and takes a sensible approach would certainly reduce barriers to entry. To that end, HIA
is not convinced that the proposed reforms achieve these outcomes.
HIA is already hearing, anecdotally, that the response of multiple experienced builders to these
reforms will simply be an early retirement, to that end proposed reforms appear to be a strong
disincentive to enter the industry.
More broadly, HIA encourages the Government to attract individuals to the construction industry via
focusing on education and training. It is critical that governments acknowledge and continue to
support this education and training pathway by recognising that:

a) Vocational Education and Training (VET) plays a key role in educating the current and future
workforce of the residential building industry;
b) An effective education and training pathway for people seeking to enter a career in the
residential building industry is critical; and
c) A career in residential building industry should be treated as equivalent to obtaining tertiary
qualifications for other careers as they provide a vital and significant service to the local
community.
39. Do you think that savings and transitional provisions for statutory warranties should be tied to when
the contract or ‘deemed contract’ was entered into? If not, why not?
In concept, yes. However, not as described in the RIS.
It is reasonable to the use the date of any “deemed contract”, but HIA assumed that this would have
been the date that the owner and builder first came to the agreement/arrangement which is deemed
to be a contract (based on the best available evidence).
The RIS instead says that “[a] deemed contract should be determined when work has been
completed or if no work has been completed when consideration has provided.” This would inevitably
result in many deemed contracts falling outside the transitionary period, despite being entered into
well before that “deadline”.

5. BUILDING COMPLIANCE AND ENFORCEMENT BILL 2022
5.1 OBJECTIVE AND RATIONALE OF THE BCE BILL
1. Do you support the concept of a single suite of compliance and enforcement powers for the building
and construction industry? Why or why not?
While HIA supports regulatory reforms that eliminate unnecessary regulation, reduce red tape and
the administrative burden on business, such moves should only be made when the outcome would
result in genuine, positive regulatory reform. At this stage, HIA is yet to see evidence that these
proposals would deliver this type of outcome. In fact, the proposal would seem to benefit regulators
more so than ‘end users’ or industry participants.
HIA is specifically concerned that the approach will:
• 'Muddy the waters’ between compliance and enforcement activities.

• Cause confusion between activities targeting consumer protection and issues between
businesses. For example, under security of payments laws. The purpose and intention of
regulatory action should be clear.
• Create a disconnect between the compliance and enforcement approach and the rules. This
increases the difficulty for those subject to the rules to understand their compliance
obligation(s).
• Require the referencing of multiple regulations to understand the legislative framework. This
is ill-advised.
Throughout this submission HIA has outlined multiple enforcement tools which are currently not
being utilised effectively, including rectification orders under the HBA and stop work orders under
the EP&A Act. It would not be wise to make significant changes to the suite of enforcement tools
until there is a more accurate understanding of how the existing enforcement tools are, or are not,
being used.
5.2 PRELIMINARY
2. Do you think the definition of developer captures the characteristics of those who participate in the
market?
HIA opposes any changes to the definition of ‘developer’.
HIA accepts that the various definitions of ‘Developer’ currently in place across NSW may be
problematic.
While such an approach is often ill-advised, these differences do highlight the challenges of
identifying a ‘developer’ for the purpose of accountability and raises questions regarding the role of
those captured by such a definition and then the appropriate regulatory response.
HIA does not oppose a consistent approach, but this should only be justified where the benefits of
consistency outweigh the costs and there are no unintended consequences that flow from such an
approach.

By and large the term ‘Residential Developer’, has become an accepted reference for an entity
(individual, company or partnership) that carries out the function of bringing the many building
professionals together to deliver a building project and acts as the owner of a building to sell the
individual dwellings.
‘Residential Developer’ is a broad term that includes sub-dividing land, building and selling property
off-the-plan, renovating for resale or knocking down and rebuilding houses. A challenge when
considering the threshold issue of whether or not residential developers require more regulation, is
that there is no single definition of who a ‘developer’ is or what they do.
On the one hand, a developer is a person who takes a financial risk with respect to the purchase,
construction, marketing and selling of real property – in this case, residential. In return, the developer
seeks a profit from the development of the land, either by selling a development or by holding the
developed property to recover a profit in return on the investment.
On the other hand, some developers are simply financial investors, who subcontract all or most of
the work out.
Some other developers form construction companies to do the work. Other developments occur via
joint venture arrangements with arm's length third party builders and appropriate construction
contracts between all joint venture parties.
Irrespective, in the residential building industry, a developer is usually considered to be an entity (or
person) who develops land through construction and who, to this end, becomes an owner of the
developed land.
The role of the developer raises equally challenging questions will depend on the profile of that
developer, the type and size of the development and their business choices in relation to the number
of functions they may perform directly as opposed to outsourcing. There are a variety of functions
that a developer may choose to undertake including:
• Acquiring and consolidate land

• Assessing development potential and feasibility
• Retaining expert and professional design, financial, planning, and engineering advice
• Developing design concept and project feasibility
• Securing or provide project finance
• Obtaining planning approval
• Procuring contract documentation
• Undertaking marketing and procure sales contracts
• Acting as builder
• Contracting for construction
• Establishing strata/ community title management structures
• Transferring (selling) lots to individual owners
• Retaining assets for investment – e.g. rental stock

A majority of the public view a residential developer as the entity that effectively project manages a
development. They sit at the top of a pyramid of building professionals and at the end of the day they
pay for the work completed. More importantly perhaps, they are the entity that contracts for the sale
of a dwelling.
The residential developer can control numerous functions. They have a key role and responsibility
for governance and management decisions. They are likely to directly appoint the building certifier,
the builder, the building designer and other experts. Alternatively, they may engage the builder using
a ‘design and construct’ contract to manage much of this work.
The current definition of RAB Act includes anyone that carries out building work in relation to class
2 buildings. Under the HBA, a developer is anyone that carries out residential building work in relation
to a building or proposed building where 4 or more of the existing or proposed dwellings are or will
be owned by the individual, partnership, or corporation.
The purpose of the definition under the RAB Act is one of compliance, the purpose of the definition
under the HBA relates more to a developer’s obligations including any insurance or statutory
warranty obligations to owners and successions in title.
There is therefore a reason why these two definitions (for example) are different. On this basis, there
is a need for significant justification to make the changes suggested.
If the NSW government wishes to explore the role of the developer with a view to taking a different
regulatory approach, focused work must be undertaken in order to ensure the right parties in the
chain are captured, regulatory overlap is reduced, and a consistent approach and message is
delivered to the industry and economy. HIA would be willing to participate in dedicated consultation
on this topic.
Furthermore, the proposal also specified that a developer includes those “who indirectly facilitated
or otherwise caused” for the building works to be carried out. It is unclear what the
boundary/parameter is for ‘indirectly” facilitated. Therefore, HIA requires more information on who
could potentially be captured. HIA is also at odds with the proposal to lower the threshold for
developers from four dwelling buildings to now being three.
On this basis, and without more, HIA opposes any changes to the definition of ‘developer’.
3. Do you think that the definition of building work should be aligned across the Building Bill and the BCE
Bill? If so, which is the preferred definition and why?
No. While HIA does not oppose a consistent approach, this should only be justified where the
benefits of consistency outweigh the costs and there are no unintended consequences that flow from
such an approach.
While the Government lauds the benefits of aligning the definition of ‘building work’ across the
Building Bill and the BCE Bill, it is rather confusing that there are various definitions of ‘building work’
not only in different proposed bills but also within the Building Bill itself as they all serve different
purposes.

For example, the RIS states that the proposed definition of building work under the BCE Bill is
different to the current definition in the RAB Act. It also differs from the two definitions of ‘building
work’ in the Building Bill. The key definition in the Building Bill (in clause 5) is used to outline what
work requires a licence. Chapter 6 of the Building Bill contains a definition of ‘building work’ which
has been carried over from the EP&A Act as it relates to the application of the certification system.
There is also no in-depth exploration on how these definitions interact with one another and what
this would mean in practice.
Further, the RIS indicates that meaning of ‘building work’ for the purposes of the BCE Bill is
deliberately broad to ensure effective regulatory powers for building work. However, there is no
further analysis or examples on how this would apply.
Without transparent and clear mapping out of the interconnectedness of these definitions and their
purpose, it will result in nothing but tremendous confusion for the industry participants who play a
pivotal role in being a catalyst for successful reform.
5.3 COMPLETION OF NOTIFIABLE BUILDING WORK
4. Do you support the expansion of the Expected Completion Notice (ECN) scheme, in-line with the
expansion of DBP obligations to Class 3 and 9c buildings? If not, why not?
HIA opposes extending the provisions of the DBP Act until the current scheme has been in place
long enough to be fully tested.
There have been several unintended consequences resulting from the implementation of the DBP
Act such as builders being unable to register as a building practitioner. The requirement to provide
recent relevant experience (5 years on Class 2, 3 or 9c buildings within the last 10 years) was
generally impossible as most of their work involved Class 1 buildings. Despite having extensive
building experience, given they didn’t fulfil this particular criterion, they were unable to register as a
building practitioner.
Expanding the ECN scheme in-line with the expansion of DBP obligations to Class 3 and 9c buildings
poses the following problems:
• This would affect builders in regional areas who operate in a different market when compared to
those that operate in metropolitan areas. Namely, they are not as large and complex. The volume
of this type of work (class 3 and 9c) in regional areas is not significant enough for regional builders
to justify spending considerable resources in becoming registered practitioners to carry out the
work and adhere to the proposed ECN requirement.
• This will impact renovation work. Minor renovation works on class 2 buildings such as works
carried out under the National Disability Insurance Schemes (NDIS) are impacted. For instance,
the additional processes required under the DBP Act result in projects being delayed or cancelled
altogether because the small businesses doing the work do not have the resources to become
registered and the NDIS funds available for such work will not cover the additional costs required.

However, if it is expanded at an appropriate time, consistency would help to make the regulatory
landscape simpler.
Furthermore, the RIS indicates that there is ‘an administrative cost impact for developers responsible
for those developments’ as well as ‘cost escalation arising from any delays in receiving an OC’.
Unless arrangements are put in place for an expediated process of receiving an OC, this may cause
significant delays and costs equating to an unreasonable regulatory burden for industry.
5 Do you think having the levy rates reviewed by IPART provides a safeguard that the regulator has
independent advice accounting for the impact on industry? Why or why not?
HIA does not oppose this proposal.
Levy rates should be reasonable and have regard to the financial health of the Home Building
Administration Fund, it should not be static.
HIA also notes that whilst the current status quo is that the levy is to be paid into the Home Building
Administration Fund under the HBA, no further information is provided on whether the arrangement
will remain the same with the HBA being replaced by the proposed Building Bill.
However before determining the frequency of such a review, it is important to analyse:
• How often the construction price increases and by how much.

• How many levy payments are made and how much funds are collected.
Placing a time frame on this might be an inflexible approach as there may not necessarily be a
pattern to guide this.
5.4 COMPLIANCE AND ENFORCEMENT POWERS
6 Do you support the consolidation of enforcement powers across the building enforcement
legislation?
See response to question 1.
The consolidation of powers from across different legislative arrangements must be carefully
considered before undertaken.
It is also worth noting that when determining appropriate enforcement tools, a number of factors
should be considered including, but not limited to, the harm that would result from a breach of the
law, the risks associated with a breach of the law and whether the focus of enforcement should be
on deterrence, prevention or even punishment.
5.5 REMEDIAL ACTIONS
7 Do you support the expansion of undertakings as a compliance tool? Should undertakings be available
for all breaches? Why or why not?
8 What limitations do you see in using undertakings that the Department should consider in designing
an undertaking power and using it in practice?

HIA does not oppose this proposal if it would serve as an alternative to penalty or
cancellation/disqualification/suspension of licence.
9 Do you think the compliance notices should be used for defects other than serious defects?
10 Do you support the proactive use of compliance notices, that is not requiring a building dispute first?
Introduction of Compliance Notices
HIA is concerned by a proposal that would see the proactive use of compliance notices, without the
need for a building dispute to be on foot in the first instance. HIA would argue that a building dispute
must have commenced before a compliance notice can be issued. The issuing of a compliance
notice is a serious step, where failure to comply would result in fairly serious consequences.
If this option is progressed HIA considers that this approach would be preferred over penalising the
builder or having their license cancelled or suspended.
Replacing Rectification Orders with Compliance Notices
The BCE suggests that compliance notice will replace the existing rectification order under the HBA
and may be issued for any building work (not only residential building work). Further, this may only
be issued for building work completed within the period of 3 years from when the Department of
Customer Service became aware of the contravention or dispute. HIA understands that it is intended
that this notice be issued in response to minor defects and not defects that are captured by a Building
Work Rectification Order (BWRO) (section 72(4) of the BCE Bill).
HIA opposes this proposal. The current rectification process works well and is sufficient at achieving
its objectives.
Audit power
The proposed new ‘audit’ power is of concern. For example, no dispute needs to be raised in order
for a compliance notice to be issued. This is different to the issue of rectification order where a
dispute needs to be raised before an investigation may commence.
This power gives rise to a fairness issue i.e. the building dispute should have the opportunity to come
to a resolution before the regulator can investigate and/or audit the works of the builder. If this audit
is undertaken proactively, this could cause further delays in the build and impede upon procedural
fairness.
Limitation periods
The operation of the limitation period is another factor that warrants consideration.
Currently, a rectification order for minor defects may be issued within 2 years from completion. The
BCE Bill notes that “A compliance notice may only be issued in relation to work that was completed
within the period of 3 years from when the Secretary became aware of the contravention or dispute”.
This change suggests that the limitation period will be longer. For example, if the contravention or
dispute in relation to the minor defect was found 2 years after completion, this would mean that
compliance notice may be issued within 3 years from that date, effectively giving 5 years altogether.
HIA opposes extending the period within which an action could be brought.

HIA’s view is that the current enforcement arrangements (such as rectification orders) in the HBA
are sufficient. The current use of these penalties are used effectively and brings about the desired
outcome.
11 Should these direction powers be expanded to all specialist work in line with the expansion of
compliance certificates in the Building Bill?
12 Do you agree with the increased penalty amounts? Why or why not?
HIA would see more merit in using educational and training as opposed to increasing penalty
amounts or expanding compliance tools.
However, if an increase is preferred, HIA would like to see the cost/benefit analysis on how much
increase would be appropriate and the justification that this would achieve the intended outcome.
5.6 RECTIFICATION OF SERIOUS DEFECTS
13 Do you support the expansion of building work rectification orders to all classes of buildings?
HIA opposes this proposal.
Our reasoning is fivefold.
First, the current investigation and enforcement powers are adequate but have not been utilised by
the regulator in the most effective manner.
Second, this expansion has not been justified, see response to question 4 regarding HIA’s position
on the expansion of powers currently exist for Class 2 Buildings to other classes of buildings.
Third, a broad brush cannot be applied to both Classes 1 and 2 Buildings as they operate differently,
with the former already being subject to an extensive regulatory framework.
Fourthly, this will inevitably cause a delay in building works and additional costs given the ‘proactive’
nature of this order.
Finally, similar to our response to questions 9 and 10 with respect to limitation period (and assuming
that the definition of ‘major’ defect is being replaced with ‘serious’ defect), currently a rectification
order for a major defect may be issued within 6 years from completion. It does not appear that there
is a limitation period for BWRO which effectively means that the limitation period not only will be
beyond 6 years but also runs indefinitely, which is unacceptable.
Further, the purpose of the audit, it is claimed, is ‘to allow earlier identification and remediation of
defects’. However, this pro-active approach will only slow the building process, adding additional
delays to the already delay-laden industry. Furthermore:
• This proposal overregulates the construction industry for it enforces additional compliance and
red tape.

• This proposal could provide for a misuse of power given that BWRO’s can be issued on a
‘reasonable belief’ and are not given as a response to a dispute but can be provided in the event
an audit is conducted.
14 What do you think the trigger for issuing an order should be? Should it be limited to serious defect of
a building element? Should it be expanded or narrowed?
Should this proposal progress a trigger for issuing an order should be:
• The existence of a serious defect that has been inspected properly;

• Failing to comply with a rectification order; or
• If the builder does not respond to a building dispute.
HIA would like to understand what the additional regulatory costs will be in enforcing this proposal
because, ultimately, it will be homeowners who will bear these costs.
5.7 DISCIPLINARY ACTIONS AND THE DEMERIT POINTS SCHEME

15 Do you think the demerit points scheme will act as a sufficient deterrent for industry players who
repeatedly contravene legislation?
16 Should demerit points apply to non-licence holders?
17 Do you support mandatory education or training as the first-tier?
18 Do you support a mandatory six-month suspension as the second-tier?
19 Do you support a mandatory 12-month disqualification as the third-tier?
20 Do you support the ability to seek removal of demerit points after 12 months?
21 Do you support the publication of a demerit points register on the Department’s website?
HIA is opposed to demerit point systems. HIA has always argued that a significant issue with a
demerit point system is its potential to impact directly on the licensee’s livelihood. In HIA’s view, the
reasons for the development of the demerit point system relate more to easing the administrative
effort of regulating bodies than matters of significant non-compliance.
Demerit points are imposed administratively (subject to appeal) for specified (often low grade)
offences. When the licensee’s demerit points reach a certain threshold, the consequences are
automatically triggered – in the case of the present system in Queensland–without further right of
appeal.
Based on the Queensland approach, a person may have a licence cancelled or suspended
established on the mathematical formula without the regulatory body having to show that the licensee
is, in fact, not fit and proper to hold a licence.
There are numerous problems with demerit point systems including:
• All licence holders are normally provided with the same number of points, regardless of work
activity and work volumes. A larger volume builder could reach the demerit point threshold more

readily than a lower volume builder. For example, demerit points incurred for the same, albeit
minor, matter repeated on several projects could multiply against the licensee.
• The offences for which demerit points will accrue appear to be chosen as objectively simple to
prove. This reduces the scope for review of the actions of the regulating body and, unless
appropriate safeguards are in place, makes it easy for a person’s livelihood to be adversely
affected through a succession of minor offences.
• A builder’s clients can use the threat of a complaint relating to an activity that incurs demerit
points against license holders in an effort to achieve commercial advantage.
• The threat to a license holder’s livelihood is not a balanced and proportional response when
compared with the offences for which points accrue.
The builder as principal contractor is responsible for the workmanship of their trades, and it is unclear
how a demerit point system would work in those circumstance.
5.8 OFFENCES AND PROCEEDINGS
22 Do you agree with the amounts of the five tiers used to apply to the penalties in the BCE Bill? If not,
why not?
23 Do you agree with the maximum penalty amounts specified in the BCE Bill? If not, please identify the
provision, amount or approach that you disagree with and why?
24 Do you agree that penalty notices are an effective deterrent to regulatory noncompliance? If not,
why not?
At the outset, HIA oppose proposals that would see penalties increased as well as adding an extra
layer of penalties by way of imposing a ‘pre-penalty’ through Penalty Infringement Notices (PIN).
On face value, the proposed five tier model appears to be fairly complex. While the list of the new
penalties has been included in the Bill, HIA requests for a comprehensive table comparing all the
new penalties with the old penalties to be supplied as part of the consultation so a wholesome
measured feedback can be provided. For example, comparing the offences in the five tier model with
the current offences (which are located under different pieces of legislation) along with the current
penalty amounts attached to each of those offence for the purpose of determining the differences.
Once these are all mapped out, this will provide clarity and transparency that will be valuable in
determining whether the amounts of the five tiers used to apply to the penalties and whether the
maximum penalty amounts specified in the BCE Bill are appropriate.
Since this comprehensive comparison hasn’t been provided, HIA is unable to provide more for the
time being. Alternatively, HIA would require more time to conduct this extensive exercise.
Section 154(2) of the BCE Bill provides that “A penalty notice offence is an offence against this Act
or the regulations that is prescribed by the regulations as a penalty notice offence”. The RIS states
that the type of offences that will be prescribed as penalty notice offences are ‘strict liability’ offences
where to issue the penalty it only needs to be established that the offence has been committed.
Neither of these documents outlined specifically what these offences are. HIA will be able to provide
further feedback if these offences can be specified.

It is also important that further consultation is undertaken to determine the appropriate dollar value
of the PIN. Right now, this information has not been provided. Industry would like the opportunity to
provide feedback on whether the PIN amount for each offence is justifiable as the offences have
also not been specified.
Equally disappointing, the RIS does not provide:
• evidence that the current penalties are ineffective or increasing penalties will achieve the
objective of deterring non-compliance;
• further data regarding the current rate of non-compliance and the effectiveness of existing
penalties;
• justification that this type of structure would change the current behaviour.
The lack of information provided continues to act as a barrier for a sensible response.
HIA urge the NSW Government to monitor the effectiveness of the current penalties prior to imposing
a PIN regime.
If, however, this proposal is implemented, a sufficient transitional period must be provided. HIA would
be willing to participate in further consultation to determine the dollar value of the PIN.
Finally, education and training is preferred over the issuance of a PIN or an increase in penalty
amounts in response to infringements and/or breaches of the regulatory framework.
25 Do you think that directors should be liable for any offence that is able to be committed by a
corporation? If no, why?
26 Should executive liability offences apply to any other offence in the BCE Bill? What evidence do you
have to support the seriousness of the offence?
27 Are there other ‘reasonable steps’ that could conceivably be taken to prevent an offence from occurring
(cl 157(7))?
28 Do you think these measures will promote better corporate compliance? If no, why?
HIA opposes this proposal.
There are a range of benefits associated with the adoption of the corporate form that could
potentially, and unjustifiable be undermined by what is being suggested.
It is a fundamental principle of company law in Australia (and elsewhere) that a company is a

separate legal person, independent of its directors and shareholders. A company is responsible for
its own debts and liabilities.
These basic principles are one of the reasons why the corporate form is favoured for the conduct of
commercial enterprise. It enables much of the entrepreneurship, investment and innovation that
facilitates economic growth.
Incorporation means an investor can share in the profits of an enterprise without being involved in
its management.

Importantly, incorporation enables a business to carry on with a perpetual existence. It is not
dependent on the life of the owner/manager. Even if the shareholders, directors, and officers come
and go, the corporation carries on. This permanency means that management can make long-term
decisions for the business. Investors also have a better chance to see a return on their money. The
majority of companies are established with a view to this permanency.
In the residential building industry, the corporate structure is adopted by many businesses as this is
the best way to enable management of the various business functions from general and financial
administration to sales, marketing, ordering, design and occupational health and safety.
Adopting a corporate structure is regarded as an appropriate risk management strategy to respond
to project and business risks.
There are a number of Commonwealth laws in place to address the behaviour of company directors.
Under the Corporations Act 2001 (Cth), directors have fiduciary duties, which include the duties to
act in good faith in the best interests of the company, to act for proper corporate purposes and to
avoid conflicts of interest. It has been held that the duty of directors to act in good faith and in the
best interests of the company includes consideration of the interests of creditors upon insolvency.
Under taxation laws, directors’ personal liability may arise where the Commissioner of Taxation
issues a Director Liability Notice (“DLN”) under s 222AOE of the Income Tax Assessment Act 1997
(Cth) to the directors at a time when the company has failed to remit tax. The objectives of these
provisions are to ensure that a company satisfies particular income tax obligations or is promptly
placed into voluntary administration or liquidation.
Equally concerning is that there appears to be no parameters or limitations in the BCE Bill regarding
this power to ‘pierce the corporate veil’. These provisions apply to any offence in the ‘building
enforcement legislation’ that can be committed by a corporation and apply regardless of whether
action is also taken against the corporation.
Similarly, any subsequent regulations made in conjunction with the proposed BCE Bill will provide
the power to prescribe the offence to which ‘executive liability offence’ applies. This lack of clarity
combined with the ability for these offences to be changed via regulations is concerning.
If this proposal is progressed, HIA:
• seeks further information and alternative options so HIA can provide well informed feedback;
• further evidence to justify that adopting this approach or piercing the corporate veil would
achieve the intended outcome; and
• is open and willing to be involved in a further consultation on this.

6. THE AMENDMENT BILL
A summary of our position is as follows:
Strata building bond and inspection regime
• HIA maintains its opposition to and, concern with the Strata Scheme building bond and inspection
regime;
• HIA does not endorse a particular timeline as to when a proposal should be enforced. Instead,
the focus should be upon what education and preparation will the Government do for the industry
to ensure the process would be smooth;
• HIA opposes any amendments to the current transitional arrangements with respect to the strata
building bond for these transitional arrangements are critical to ensure that costs and other
regulatory imposts can be appropriately catered for projects that were in train prior to the
commencement of the strata building bond and inspection regime;
• HIA supports the enforcement of penalty provisions (being a maximum of 300 penalty units) for
persons that falsely represents themselves as a building inspector; and
• Strata development should not be able to access the NSW Fair Trading dispute resolution service
before a building inspector is appointed.
CPD
• HIA requires more information with regard to the proposal for the standardisation of CPD;
• The existing CPD qualification requirements are sufficient; and
• Without adequate consultation, no changes should be made to the current responses to a
breach. However, although a cost analysis needs to be undertaken, HIA prefers education and
training notices to be issued for breaches as opposed to monetary penalties.
Security of Payment Laws
• HIA requests to review a draft of the Homeowners Notice. HIA opposes adding additional
administrative work to the Building and Construction Industry Security Of Payment Act 1999
(NSW) (SOPA) payment claim process;
• HIA opposes lowering the project value threshold for payment of retention money;
• HIA supports the right of appeal from an adjudicator's decision on errors of law and breaches of
natural justice (i.e. the Murray Review recommendation); and
• There should be a limited right of review under the security of payments laws to ensure the rapid
adjudication. Review adjudicators should be adequately qualified and possess the relevant
experience, the costs associated with seeking a review of an adjudication determination should
be certain and the person seeking the review should pay subject to the outcome of the review.
Privilege against self-incrimination for body corporates
• The Department should be limited with regard to which information can be gathered and used;
and
• There should be a separation between a company and its representative. They should be treated
as individual legal persons, and the corporate veil should not be pierced unless for exceptional
circumstances. None of which are present in the RIS.

Intentional phoenix activity
• HIA opposes illegal corporate phoenixing, but attempts to define ‘intentional phoenix activity’
should be avoided given that phoenixing is not inherently unlawful;
• HIA is hesitant to exert a position on the positive obligation on registered practitioner to refrain
from working or associating with a company or person that has engaged in unlawful conduct,
including where the practitioner knows that the person has become bankrupt and not paid a
liability for defect; and
• The existing laws provide a solid and sound regulatory framework for regulating insolvencies.
Other matters
• Without adequate consultation and further justification, no changes should be made to the
regulation of certifiers.
• HIA opposes Penalty Infringement Notices (PIN) and any other additional layer of penalty for
non-compliance without evidence that the current penalty is ineffective or that this measure would
achieve its intended outcome.
• HIA opposes bestowing additional powers to the Government without further exploration, as this
will potentially result in an over regulation of the industry.
• The appeal provisions against a written investigation cost notice presented are acceptable
however, this may prolong the litigation process and thus, be more costly.
6.1 ENSURING BUILDING PRODUCTS ARE SAFE AND SUITABLE

HIA supports moves to increase rigour in the supply chain and distribute responsibility more fairly
across the supply chain as it relates to building products conformance. Sole responsibility currently
rests with builders and certifiers at the very end of the chain, which does little to eliminate non-
conforming products from entering and making their way through the supply chain.
Within the proposals we have found areas which need clarification or adjustment, or where further
support is required to ensure effective implementation. The main points are outlined here, and further
detailed commentary and additional points is provided within the questions responses and comments
below:
• This reform must be supported by efforts to educate the supply chain about product conformance
frameworks, how to read and understand compliance documentation and product labelling, and
how to be alert for fraudulent or misleading documentation and labelling.
• Alongside more training, adoption of the reform will require substantial review and compliance
activities within the supply chain to ensure the new requirements are satisfied. This may take
substantial time to complete before the effects can flow down the chain to subsequent parties. A
24-month transition may be more realistic in ensuring these activities have been completed at
the top of the chain, before related obligations are imposed on the end of the chain.
• More clarity for the definition of the ‘person who uses a product in a building’ is desirable, as the
concept of supervision is very broad and could therefore capture parties who only provide a
general level of supervision and did not directly contribute to the product being used. It would be
preferable this definition was adjusted to more clearly capture only the people who coordinated
or directed the work, or the person who installed the product.
• There is a proposed duty to ‘ensure a non-compliance risk does not exist’. This is an
unreasonably high bar; risks will always exist unless people stop manufacturing and using

products. This duty should be reviewed; a duty to ensure non-compliance risks are adequately
minimised or controlled would be a far more reasonable requirement.
• The regulation effectively captures all building products, no matter how minor. However this will
result in a huge volume of information, especially where it comes to the duty for a builder to pass
on information to the owner. This will impose a large administrative burden on the builders; and
may also result in critical information for the owner being lost amongst the avalanche of
information on inconsequential items like skirting boards. It would be beneficial for some
limitations and guidance to be created around the expected documentation at handover, such as
only the products critical to the performance of the major building elements (e.g. per the DBP
Act), or items which require ongoing and routine maintenance not otherwise captured under the
DBP Act.
• Individual state and territory jurisdictions are limited in their powers to prevent non-conforming
products from being imported into Australia. Balance is required to ensure that any additional
regulation does not make things harder for local manufacturing while giving imported products a
free ride. The ongoing discussions nationally around product compliance frameworks and
importation requirements are vital to support and supplement the local legislation. HIA is happy
to provide further information to the NSW Government to assist in these discussions, including
copies of our submissions to the 2015 Federal Senate Inquiry into non-conforming building
products, and the ABCB Draft National Building Product Assurance Framework. Some points
are provided in the Appendices.
1. Do you support the persons included in the chain of responsibility (clause 8B) being held accountable for
non-conforming building products or for non-compliant use of the product? If not, why?
HIA has advocated for many years that amendments should be made to the Building Products
(Safety) Act 2017 to ensure that sole responsibility for the compliance of building products does not
continue to be disproportionately laid at the end of the supply chain i.e. the builder and certifier.
We support the measures aimed at increasing rigour in the supply chain to ensure that it does not
enable substandard or non-conforming products from making it onto building sites; and providing
some measure of protection to builders where they have carried out diligence to the best of their
abilities.
HIA disagrees with the following proposal under the draft Clause 8B(1)(c), as a person who uses a
product in a building:
“a person who installs, or coordinates or supervises the installation of, the product in a
building during construction”.
Coordination and supervision have been added to the existing definition used by the QBCC.
Clarification is required that it is the person who directly caused or directed the installation rather
than someone with general oversight of the project.
At the moment it could capture anyone with general supervisory responsibilities, who likely had no
direct input into the specific product installed (for example where a subcontractor installs a product
that does not match what was specified on the plans).

It is unreasonable to expect a general site supervisor to be physically present and inspecting every
product that is installed in a building, and particularly where those products are covered or concealed
after installation. The accountability under this legislation should go to the direct installer and licensed
sub-contractor responsible for that installer.
More consideration should be given to the role building managers play in the upkeep of buildings
after they are handed over and ensuring adequate maintenance is carried out.
2. Are there any other persons that should be added to the chain of responsibility and therefore be held
accountable for non-conforming or non-compliant building products? If yes, who and why?
The proposed chain of responsibility is like that used in Queensland, which appears to be having the
desired effect in prompting closer scrutiny of product compliance, with no additions required.
Some issues related to the chain of responsibility have arisen which bear consideration:
• It is uncertain how or how well the proposed legislation will capture imported non-conforming
building products from overseas. Stopping these from entering market would be best, as they
may be difficult to detect once in the supply chain. We acknowledge this is beyond the scope of
the local regulator and requires a national approach.
o Diligence in subsequent steps in the supply chain through checking of product

documentation will only go so far at reducing defective product in market if those
documents are themselves misleading. It would be questionable how well-equipped
people further down the supply chain are to detect fraudulent documentation. Where
every local step in the supply chain can demonstrate adequate diligence, there will still
be issues arising where no clear recourse is available to pursue the persons responsible
(e.g. located overseas, or the local importer has shut up shop).
o For example, there have been instances of imported engineered timber products that
have subsequently given rise to defects in buildings. These products often bear some
kind of compliance label and may be accompanied by compliance documents from the
overseas manufacturer that are incorrect or misleading. Recent examples include timber
I-beams used in suspended flooring. These beams failed after installation, and any
documentation and product labelling in place was likely misleading. By the time of the
failure the original importer has disappeared.
• To support the local reforms on product safety in NSW, the broader discussion on regulation and
compliance frameworks and imported products is vital to ensure the reforms do not make it
harder for local manufacturing while continuing to allow inferior imported products into the supply
chain. Some key points from HIAs submission to the 2015 Federal Senate inquiry into non-
conforming building products are provided in the additional commentary below.
• Training and education of the industry on what to look for in compliance documentation and
product labelling will also be critical to support the implementation of these reforms.

3. Do you support the following duties being imposed on persons in the chain of responsibility? If not, why?
a. Ensuring conforming products and compliant use of building products (clause 8E)
b. Providing information to others in the chain about a building product (clause 8F)
c. Builders and installers to provide information to the owner about the building products they use
(clause 8F(4))
d. Notifying the Secretary when becoming aware of non-compliance or safety risk of a building
products (clause 8H)
e. Notify the Secretary of a voluntary recall (clause 8J)
f. Comply with any safety notices for warnings, bans or recalls (Part 3)
g. Provide safety notices or other information to others in the supply chain, if required (clause 15I and
15J)
h. Manufacturers or suppliers may be requested to conduct a product assessment of a building
product (clause 38)
HIA generally agrees with this proposal, insofar as the comments made in our answer to Q2 is taken
into consideration. However, we have some concerns:
Duty to “ensure a non-compliance risk does not exist” under 8E(1).
This is not reasonably practicable as a concept in principle. More appropriate to require that non-
compliance risks are identified, managed, and controlled to remove or minimise the risk as far as
reasonably practicable.
It’s impossible to ensure a risk doesn't exist (given non-compliance risk is defined to capture both
non-conformance and non-compliant use), except to cease manufacturing/supplying/using building
products altogether.
For example, a supplier can tell someone what the intended and compliant uses are, and not to use
the product except for those uses. Even so there will still be a risk that an installer does not follow
the instructions, and this is outside the supplier’s control.
“Builders and installers to provide information to the owner about the building products they use (clause
8F(4))”.
Given the number of builder products used by builders in any single project, this could create an
exponential amount of admin work.
HIA supports the proposal in principle however this obligation should be contingent upon the client’s
request for this information or, if there have been safety notices for warnings, bans or recalls for that
product, or there is a specific need relevant to the ongoing operation of the building.
More clarity about the specific information a builder must handover is desirable, so that the pertinent
information for the owner is not lost in an avalanche of documents.
A modified definition of ‘building product’ captured by this regulation, or additional guidance within
regulations or supporting materials may assist with what documentation a builder must hand over to
the owner. For example, it may only be necessary to handover detailed information for the products

used in the regulated elements of a building and critical to the performance of those elements (per
DBP Act), and regular maintenance items not otherwise captured (e.g. HVAC, hot water systems).
This obligation could otherwise be overly onerous if limitations are not placed around the products
captured.
8H – Duty to notify when becoming aware of non-compliance or safety risk:
Non-compliance risk can arise if an intended use may be a non-compliant use, and the intended use
could be by any person in the chain of responsibility, not just the manufacturer or supplier.
An installer or designer may call a supplier/manufacturer with a question about clarification of the
use or application of a product, or extending application outside the manufacturers published
guidance.
In this case, the use could be considered an intended use by the builder or designer, and therefore
represent a non-compliance risk which is theoretically notifiable by the manufacturer. This is
regardless of whether the use has been acted on by the installer or not, or whether the installer has
subsequently sought out their own certification work to validate the use outside of the manufacturer
guidance (the manufacturer may have no way of knowing this has been done).
For example, a cladding product may be limited to 4 storeys height because of wind loading capacity
for the manufacturers nominated installation guidance. The installer may have called asking about a
6-storey building and been advised against by the manufacturer (‘outside the scope of our guidance
material’).
The installer may have then opted to use a different product, obtained their own
engineering/testing/certification independently, or have installed the product regardless– but the
manufacturer would have no way of ascertaining what has actually been done.
These kinds of questions about clarifications on usage, limitations and potentially extension of usage
get asked of any given manufacturer potentially dozens of times a day.
We do not believe that questions of this nature are an appropriate trigger for reporting by a
manufacturer or supplier, as they are routine and may create noise in reporting that would draw
focus away from more critical reported incidents.
4. Focusing on the duty to provide information about building products, are there any challenges
associated with persons in the chain of responsibility satisfying this duty?
In addition to our response in Q3 regarding difficulties for information provision from builders and
installers to homeowners, we also have the following comments:
• It should be sufficient that the information is made freely available on a manufacturer or supplier
website for anyone to access, as a means to satisfy the requirement to provide information down
the chain of responsibility.

This could be achieved by product labelling or packaging that links to the host page for the
relevant product information.
• Increasing the clarity of information provided along the supply chain is critical, to move away
from broad statements to specific information about intended and suitable use for a product. For
example, “meets bushfire requirements” is insufficiently clear compared to a statement the
product will satisfy “AS 3959 BAL-29 requirements when installed in accordance with … (the
relevant installation guidance material)”.
• It may take significant time for parties in the supply chain to internally review and where
necessary updated their compliance information, packaging, labelling, set up dedicated web
pages or generate any new supporting materials (e.g. point-of-sale information packs). Industry
will need adequate time to carry out these activities.
5. Do you support the following additional powers for the Secretary to manage nonconforming or non-
compliant building products? If not, why?
a. Building product warning (clause 15)
b. Building product supply ban (clause 15B)
c. Building product recall (clause 15F)
The proposed reforms do provide more flexibility for the Secretary in choosing an appropriate
pathway for managing NCBPs other than just a blanket product use ban, which is the only option
under the current Act. Additional flexibility is beneficial to ensure an appropriate level of regulatory
response is taken, respective to the overall risk.
A product warning might be suitable, for example, where there are multiple installation options
specified for a cladding product, but only one has been certified for high wind. Where the regulator
has found instances of the incorrect installation method used, banning the product overall or from
the application is inappropriate, but a warning could serve to inform the industry of the correct
installation method to be applied in that scenario.
For the purposes of trade prohibition orders under 41B, it is unclear if “supplying” is taken to include
hardware stores and intermediaries in the supply chain (e.g. distributors), or just the primary source
(manufacturer or first supplier/importer to market). Hardware stores etc carry a range of products
from a range of primary suppliers, and as a result, the effort to assess and manage risk of non-
compliance is significantly more onerous than on the primary supplier at the head of the chain who
is only concerned with their own suite of products. This power may need to be more targeted than
currently drafted.
If targeted at the primary source, then it will flow down the chain to the distributors by default, as they
will no longer have access to that primary supplier (particularly where accompanied by industry
notification about the supplier and the products triggering the enforcement action, they will also be
more informed about the product even if coming from an alternate supplier).
A similar argument to the above (point 2) could be made with respect to Section 59 (7) product safety
steps, where the requirements may be particularly onerous on the distributors, other than ensuring
their primary suppliers are providing required information with their products. In the event the

distributor is also the importer, they would have full obligation for those particular products as the
primary source in that instance.
6. The maximum penalty for breaching a building product use or supply ban or a building product recall
will be;
a. $220,000 or 2 years imprisonment, or both and $44,000 each day the offence continues; or
b. for a body corporate, $1,100,000 and $110,000 each day the offence continues.
6A. Do you support this maximum penalty? If not, what do you think the penalty should be
We do not support the inclusion of a custodial penalty.
This appears to be in excess to other penalties within similar legislation. While the monetary
penalties are less than those imposed for product bans under the Australian Consumer Law, the
imposition of a potential custodial sentence appears to go further.
7. The reforms for building products will commence 12 months from passing through Parliament and
receiving formal assent. Does this timeframe allow enough time for industry to prepare for the new
requirements? If not, what timeframe do you propose and why?
We do not think 12 months is sufficient, a 24-month transition period may be more reasonable to
allow the industry time to make the necessary changes and for those to be available from top-to-
bottom of the chain of responsibility:
• The wide range of industry practitioners captured under this reform will need help to understand
these reforms.
If this regulation places an obligation on industry practitioners to undertake more due diligence
in checking compliance documentation and passing on documentation to others, then a broader
and deeper understanding of compliance at all steps in the supply chain is required.
Before deciding on an appropriate timeframe, it is important to determine what support the

Government will provide the industry around education and preparation to ensure the process
will be smooth.
As part of the roll out, we are willing to work with government to help develop and deliver
guidance and training materials, for example supporting industry to understand the
documentation requirements, and how to review and interpret compliance documents.
• While many companies in the supply chain already have robust quality and compliance
functions, it is likely this reform will trigger all affected businesses to undertake a careful review
of their available compliance information and compliance systems, identify gaps and take steps
to close them out.
This is a large volume of compliance work that may need to be completed within the supply
chain, in some cases this could represent hundreds or thousands of products under review by
any one company.

• This will also potentially result in a period of increased demand on the limited number of
accredited laboratories and qualified practitioners available within the Australian market, to
generate or update compliance information as even minor gaps and risks are identified.
When the NCC adopted the updated AS 1530.4 fire resistance test standard, the industry was
granted a 3 year transition, and ultimately an additional 12-month extension was required for
work to be completed by industry. This timeframe was largely due to the limited supply of
accredited facilities available to the Australian market.
While this is not the same scenario since this reform is not imposing new technical requirements,
it is still likely to increase demand on a limited supply of services during the implementation
period.
• Updating labelling and packaging, generating point-of-sale materials linking to compliance

documentation, and establishing dedicated compliance web pages on company websites are
not insignificant tasks for the supply chain either, and in themselves could take 6-12 months for
a party to complete.
• Within the context of the broader reforms: Given the volume of reforms underway, the above
transition periods may still be inadequate depending on the timing of these reforms in relation
to the broader reform program. While each aspect of the broader reforms focuses on different
parts of the construction industry, almost all of them will impact business for the builders in some
way.
As many of the reforms are to take place pending assent and with varying transition times, it
is difficult for industry to currently get a clear picture for when each transition period will be
in place, and any overlaps between transition periods for the different pieces of legislation.
There is a risk that too much change occurs simultaneously.
It would be beneficial for the individual pieces of reform to be clearly mapped out with their
proposed commencement and transitional timeframes, to identify opportunities to carefully
stage the implementation of the reforms. This will also help to prioritise focus.
We are concerned that changing too much at once and too quickly is likely to result in
significant and unintended harm to the industry, due to an inability of the industry to adapt as
quickly as demanded.
It could result in large volumes of unintentional non-compliances, simply due to industry

participants missing something within the tsunami of new regulatory requirements.
Disputes and conflicts will arise between parties who are trying to all interpret the new
requirements and may land on different positions, which will result in delays to building and
construction and added cost.

• If the reforms are to be imposed rapidly, then we would expect enforcement to focus on
educational and supportive activities rather than punitive approaches, for at least the first
several years of the new regulatory regime.
Other comments on the Product Safety Reforms and related parts of the Draft Amendment Bill
Imported Products and Fraudulent Compliance Documents
HIA members have raised concern that the regulatory reform will be able to do little to impact on
importers of non-conforming product from overseas, particularly where they have made their money
and exited the scene.
We appreciate that NSW Government is in discussion with other jurisdictions on a broader national
framework to help address these issues.
HIA’s submission to the 2015 Federal Senate inquiry into non-conforming building products may
assist with these national discussions. Some key points from this submission that speak to issues of
product conformance and importation of products, and potential compliance frameworks:
The majority of building products do not require formal or statutory ‘approval’ to be placed on the
market in Australia.
There are only three mandatory compliance schemes for building products in operation in
Australia. These cover electrical products, plumbing products and water efficiency.
Whilst it is not considered necessary that all building products receive such an approval before
being offered for sale, there are many products which warrant closer consideration as to whether
such a requirement should exist, such as products affecting fire safety and the structural integrity
of a building.
A framework for mandatory and voluntary product certification schemes could be established to
set benchmarks for the type of testing and the type of certification for key structural elements that
should be provided to the market giving greater certainty at the point of sale.
Alternatively, government may see value in supporting industry to continue developing product
certification schemes and to bring these together in some formal manner to create a more holistic
product certification system. This option has been used in the European Union as a way to
effectively manage different products and different levels of certification (Section 7.2). Formal
recognition of voluntary schemes could give greater weight to the value of certification and provide
awareness across industry.
Labelling of products is also not a mandatory requirement for many products and may offer an
efficient method of providing the market with evidence of compliance, whether in conjunction with
an approval process, or potentially as a separate requirement.

s 10 Public submissions; and s 11(6) Notice of issue of a building product safety notice
The proposal empowers the Secretary to call for public submission either before or after a product
safety notice is issued. However, they are not required to give a person an opportunity to make a
submission, and this prevails over any principle of procedural fairness.
The Secretary may also give the required prior notice to the manufacturer (or Australian based
importer/supplier) by publishing the intent to issue a product safety notice on the internet, meaning
the information has already effectively gone public (at least in part) without the manufacturer
knowing.
It is worrying that information can be made public in any format, whether by request for public
submission or via notification of intent, before the parties in question have had a chance to respond.
We believe that procedural fairness should be granted in all cases. Despite the name of the Act, it
doesn't just capture safety risk but broader forms of non-compliance risk under the Act.
Persons subject to a proposed notice should have an opportunity to respond, and where possible
this should occur prior to any information regarding the matter being made public or published to the
internet. There is risk of significant damage to product or brand reputation where a regulator makes
any potentially negative information public, which will not be recovered fully even if the product is
later proven to be a suitably compliant and conforming product.
The only exception to this should be where there a significant and imminent risk to public health and
safety if immediate action is not taken.
s 13 Period a building product safety notice remains in force
The existing regulation includes bans only, and these currently remain in place until revoked. The
new definition of ‘product safety notice’ includes bans as well as other forms of notice, but now
proposes all forms of notice will expire after 2 years.
Product warnings will benefit from a default expiry however, it is not appropriate that a product supply
or use ban expires after such a short duration.
s 15K Contravening a product safety notice
Under the DBP Act, the regulated designs are declared compliant by the design practitioner; the
builder is then reliant on these designs and is supposed to follow them as provided. Where the
designer has specified a particular product which is subject to a product safety notice, the designer
has caused the product to be used just as much as the person carrying out the works.
It is unclear where a person carrying out design work may be captured within the contravention
clauses.

Section 15K covers people who “cause a building product to be used in a building”, which currently
only explicitly captures the person doing the building work. Section 15L captures people making
representations about the suitability of a product after a ban. It is not readily apparent whether a
designer specifying a product has ‘caused the product to be used’, or that by making a compliance
declaration for a design including that product they have made a representation about the product.
It would be beneficial to clarify whether specifying a product within a design is captured under
sections 15K or 15L.
6.2 ENHANCING RECTIFICATION OF STRATA BUILDINGS

8. Should the strata building bond paid by developers be extended to cover building defects identified
in the final inspection carried out 21-24 months after the building has been completed? If not, why?
9. Should the developer be given an extra 90 days to rectify defects identified in the final inspection or
should the rectification costs come directly out of the building bond?
10. Are there any issues with the strata building bond being retained for a longer period while defects
are remediated?
HIA understands that one of the options proposed is for the building bond to be used to rectify defects
identified in the final inspection report.
HIA opposes this proposal, the questions raised, and the proposal suggested, for this highlights a
number of ongoing flaws with the regime, including that it does not appear to be reducing defects in
strata developments nor does it appear to be reducing the need for further proceedings regarding
defective work; two of the stated aims of the regime.
HIA opposes the use of the building bond to address ‘new’ defects identified during a final inspection.
This effectively means that there will be multiple inspection reports, which was supposed to have
been prevented under the regime.
The proposed approach would also introduce a longer time frame for the release of the bond, or a
part of the bond, which under the current approach can be estimated to be 36 months after
completion (as outlined in the RIS). Without further time to investigate, the consequences of delaying
the release of the bond have not been fully investigated. For example, there would likely be additional
costs associated with holding this 2 percent for a longer period.
The proposal would also undermine what little certainty developers currently have in relation to the
inspection and building bond scheme.
If, however, this proposal is adopted, then yes, developers should be given an extra 90 days to rectify
defects.
11. The reforms for extending the building bond will commence 6 months from passing through
Parliament and receiving formal assent. Does this timeframe allow enough time for industry to
prepare for the new requirements? If not, what timeframe do you propose and why?
Prior to determining whether 6 months would be appropriate, it is important to first establish how this
change would impact businesses and the cost/cash flow implications.
Further understanding what education and preparation will be undertaken to support the industry to
ensure that the change of process is implemented smoothly would influence the appropriate

commencement timeframe. Based on previous experience regarding the implementation of this
scheme, HIA recommends a minimum of 12 months would be required.
12. Now that the strata building bond scheme has been in place since 2018, do you think it is reasonable
to phase out the transitional period so that it applies to more buildings. If not, why?
13. Do you think it is reasonable for developers who commence strata building work after 1 January 2023,
regardless of when contracts were entered, to have to comply with the scheme? If not, why?
14. It is proposed that all developers will be required to comply with the scheme if a construction
certificate has been issued after 1 January 2023, even if they entered into the contract before 1 January
2018. Is there another way we could achieve the same outcome to ensure that all strata developers
are required to pay the security bond?
At this stage, without further data to establish how many projects would be impacted by this proposal
and the extent of these impacts, HIA opposes any amendments to the above proposals.
Furthermore, HIA opposes any amendments to the current transitional arrangements as these
transitional arrangements are critical to ensure that costs and other regulatory imposts can be
appropriately catered for in projects that were in train prior to the commencement of the strata
building bond and inspection regime.
15. Do you support the introduction of a formal framework for the approval of APAs to improve their
accountability? If not, why?
16. The Bill will require an APA to have certain critical elements as part of the scheme to establish the
strata inspection panel (i.e. appointments process, disciplinary action and complaints handling policy,
records keeping and reporting requirements). Are there any other critical elements that an APA should
be required to have to manage the appointment of building inspectors?
It is unclear why these requirements are now necessary since, during HIA’s previous consultation,
there was much discussion regarding the role and requirements of APA’s and materials including
the Authorised professional associations information manual were released to support the
establishment of the APA’s.
Noting the limited uptake, it is foreseeable that more regulation will only act to discourage
participation on a Strata Panel.
17. Do you support that a penalty provision should be prescribed for a person that falsely represents
themselves as a building inspection? If no, why?
18. A maximum of 300 penalty units ($33,000) will apply to this offence. Is this penalty sufficient? If not,
what should it be and why?
HIA does not oppose this proposal.

19. Do you think that owners in a strata development should be able to access the NSW Fair Trading
dispute resolution service before a building inspector is appointed under the SBBIS? Why or why not?
No. Owners in a strata development should not be able to access the NSW Fair Trading (FT) dispute
resolution service before a building inspector is appointed under the SBBIS. In many cases, NSW
FT will want an inspection report done in circumstances where there is an issue of defects. Therefore,
allowing owners with this ‘right’ will only delay the resolution process. This proposal stands at odds

with the original reason for the introduction of the SBBIS, which was provide more direct and timely
dispute resolution for an owners corporations.
6.3 IMPROVING PROFESSIONAL STANDARDS AND COMPETENCIES

Flexible pathways for certifier registration
20. Do you support the proposal for approved professional bodies with a PSS to undertake competency
assessments to determine whether an applicant has the appropriate qualifications, skills, knowledge
and experience to hold registration as a certifier? Why or why not?
21. What benefits or challenges do you think arise from an approved professional body undertaking
competency assessments for registration purposes?
22. Do you consider that this pathway should be limited to bodies operating a PSS? Why?
The provisions regarding the regulation of certifiers in the Building and Development Certifiers Act
2018 (NSW) is relatively new and it is advised to give these laws time to determine their impact prior
to adding more regulation. The NSW Government has implemented various measures to ensure
certifiers are carrying out their role appropriately including increased penalties with this Act, the new
Certifiers Practise Guide, and the commitment to proactively audit a certifiers work.
Equally important is exploring whether this proposed change would achieve the intended outcome.
Continuing Professional Development (CPD)
23. Do you support the standardisation of CPD across the building and construction industry? Why or
why not?
24. Do you support extending CPD requirements to include specialist practitioners? Why or why not?
At the outset, HIA supports continuing improvement and professional development to achieve
acceptable standards of building quality delivered by a competent and skilled workforce. HIA strongly
encourages industry participants to keep up to date with industry developments.
The purpose of a continuing professional development (CPD) program is to ensure licensed

individuals hold a broad scope of knowledge that is both relevant and current. This endeavours to
ensure that each individual is able to perform their duties within the full scope of their registered area,
to protect consumers, as well as upholding the reputation of their profession and industry.
Builders have a significant responsibility to the public in the construction of safe and compliant
buildings. Requiring them to carry out CPD is one way to support them in fulfilling these obligations.
HIA’s preferred approach, however, is to only require mandatory CPD where it is imposed on
individuals by the licensing authority as an alternative for those who would otherwise have their
builders licence cancelled or suspended as a result of disciplinary proceedings.
The Amendment Bill effectively provides power to the Department to amend the way CPD operates
for different classes of registration as well as issuing CPD Guidelines. For example, activities that
may be counted towards complying with CPD requirements, requiring builders to show how they
achieved their CPD before renewing their licence, etc.

At this stage, it is unknown how the standardisation of CPD will look like and the practical implications
of such proposals are far from clear. Therefore, further information is required so HIA can provide
adequate follow up feedback.
For example:
• Whether such an approach would lead to an increase in the cost of CPD?

• What forms of training and education are proposed to be permissible CPD?
• Are more industry participants to be captured compared with the current requirements?
Regulatory changes to this area can have broad ranging implications for the housing industry and
therefore, a full discussion paper providing more detail about the proposals (how the CPD
model/guideline will be drafted and implemented) is warranted. HIA is open and willing to be engaged
on this consultation.
25. How many hours of CPD do you think the average practitioner should be required to do per year? Why?
Builders holding a residential building license under the HBA must undertake 12-points of CPD per
12-month period. For builders registered for Class 2 work under the DBP Act, 3 of these hours must
be approved courses under the DBP legislation.
At this stage, the existing qualification requirements are sufficient as outlined above.
However, if proposed changes are to be made, it is HIA’s view that:
• individual should be permitted to select training from various learning categories with no minimum
points for each category; OR
• there should be an approach to weight learning in each renewal period (3 years) towards a key
learning outcome, e.g. 1st renewal period – business skills; 2nd renewal period – technical &
legislation; 3rd renewal period – technical & safety; 4th renewal period and onwards - individual
choice from any category
Additionally, the regulator should have the ability at any time to direct a licensee to undertake a
specific category of training as the result of a disciplinary action (regardless of the renewal period
cycle). Where a regulator mandates a specific training course for all practitioners, this must be
counted as part of achieving the minimum points for a renewal period, i.e. not additional training.
However, CPD in any event needs to be introduced in a flexible range of formats across a range of
relevant topics.
Equally important is that a common sense approach should be applied to avoid a highly structured
and regimented learning process with rigorous assessment requirements and/or which are not
relevant to day to day building business needs. This approach should also reflect the intention of the
scheme in relation to license renewals and enforcement.
26. Should it be up to industry or the regulator to determine the CPD requirements for individual
practitioner types? Please explain your answer.
HIA has consistently taken a position that the content and aims of mandatory CPD should be driven
by the industry, not the regulators alone.

Importantly, mandatory CPD should address issues relevant to the builder or contractor’s business.
It should not be about training for trainings sake.
27. Are there any practitioner types that are not currently required to do CPD to be registered that you
think should be required to do CPD? If yes, please give examples of the practitioner types you think
should be doing CPD.
To provide the Government with a fruitful response, HIA seeks further information on the
Government’s intention with this proposal and whether upon the Government's finding, there are any
specific practitioner types needed to undertake mandatory CPD.
HIA is open to engage with the Government to undertake a separation consultation on CPD once
the Government has determined its intention and objective.
Training as a response to a breach
28. Do you agree that education and training notices may be more effective than monetary penalties to
fix non-compliant conduct and encourage permanent behaviour change? Why or why not?
Yes. HIA does not oppose the proposal for education and training notices measure to be
implemented in lieu of monetary penalties and as a form of early intervention disciplinary action.
29. Do you have any concerns about introducing education and training notices as a form of early
intervention disciplinary action? If yes, please explain what any challenges may be.
While HIA agrees with the education and training notices measure to be implemented, a cost/benefit
analysis needs to be conducted to assess to costs that will be incurred to implement the proposed
education and training notices and the implementation of these education and training workshops.
Otherwise, if there is evidence that monetary penalties are the most effective method, then HIA
request for this data to be supplied for further consideration.
30. Do you agree that there should be a bigger focus on early intervention disciplinary action to
proactively address non-compliance in the industry? Why or why not?
HIA supports issuing education and training notices instead of issuing a PIN as an early
intervention measure.
31. Do you think that the proposed additional PIN for non-compliance with an education and training
notice will be effective in encouraging offenders to complete the prescribed training (rather than
opting to just pay the PIN amount)? If not, please provide any suggestions for how we could better
incentivise offenders to complete the prescribed training.
Yes.
6.4 ENSURING FAIR AND PROMPT PAYMENT

Homeowners Notice
32. The reforms relating to Security of Payment will commence 6 months from passing through
Parliament and receiving formal assent. Does this timeframe allow enough time for industry to
prepare for the new requirements? If not, what timeframe do you propose and why?

Before determining whether 6 months would be appropriate, it is important to first establish how this
change would impact businesses and the cost/cash flow implications. Equally beneficial is to
understand what education and planning will be undertaken to assist the industry to guarantee that
the change of process is executed smoothly so as to influence the proper commencement timeframe.
Based on anecdotal evidence regarding the implementation of this scheme, HIA recommends a
minimum of 12 months would be required.
33. It is proposed that when a builder serves a payment claim on a homeowner under the SOP Act, the
payment claim must be accompanied by a Homeowners Notice. This proposal is not for all payment
claims made in the industry, only payment claims served on a homeowner by a builder. Do you support
this proposal? If not, why?
34. The RIS identified potential impacts of the reform and how these have been moderated (i.e. narrowing
the application and targeted education and awareness strategy). Are there any other challenges that
need to be considered for successful implementation?
35. Do you agree providing homeowners with more information, including the consequences of not
responding to a payment claim, would encourage prompt payment by the homeowner to the head
contractor? If not, why? Are there any other strategies that could be considered?
HIA opposes the proposal noted in question 33 as this adds to the already administratively
burdensome task of serving a payment claim on a homeowner under the SOP Act.
Further, it is unnecessary to prescribe an additional form as this would unduly interfere with existing
invoicing and payment arrangements. HIA also notes the SOPA Guide is already required to be
included in the majority of contracts. If reforms were to be made, the Government should consider
other ways to educate the homeowners without unnecessarily adding extra burdens upon builders.
While this proposed Homeowner Notice might serve as educational material for when a payment
claim is served, it is unnecessary for this material itself to form a mandatory part of the payment
claim. This approach simply adds additional red tape. The information surrounding how to respond
to a payment claim is readily available and accessible in NSW Fair Trading website and a
homeowner should undertake their own due diligence and educate themselves. The obligation to
comply with the law should also rest with the homeowners, especially in those cases where the
homeowners are at fault, causing a payment claim to be made by the builder.
HIA would like to see some research undertaken as to how this proposal would impact the current
construction businesses who have existing systems and processes in place for issuing a payment
claim. Keeping in mind that these systems would need to be updated to meet the proposed
requirement.
Furthermore, this proposal imports a particularly problematic concept in the payment claim process.
Namely, that a failure to attach this document would render the payment claim invalid. This
procedure is arbitrary and burdensome. If the form is easily accessible on the Department’s website,
then there should not be any problem with accessibility by the homeowner. Perhaps, consideration
should be given for the NSW Government to proactively educate the homeowners.
Further, there is also no guarantee that implementing this additional process would result in prompt
payment by the homeowner to the head contractor. As the RIS does not provide evidence of such,
further investigation needs to be conducted to justify this additional red tape.

HIA also requests evidence/data that demonstrates that homeowners’ delay in attending to a
payment claim is due to the fact that they don’t have enough information. Because, for instance,
these delays could arise for other reasons such as a dispute, or financing issue.
However, if this proposal is adopted, HIA requests to review the draft Homeowner Notice, in the
same manner in which HIA provided feedback on the SOPA Guide early last year.
Retention money for more projects
36. Currently, the SOP legislation requires a head contractor to hold a subcontractor’s retention money in
trust if the head contractor’s construction contract with the principal has a project value of at least
$20 million. It is proposed for the project value threshold to be lowered to $10 million to capture more
construction contracts (and subcontractors) and protect retention money withheld in the event of an
insolvency. Do you support lowering the project value threshold for payment of retention money? If
not, why?
37. If you do support lowering the project value threshold, do you support lowering it to $10 million? If
not, what alternative amount do you support. Why?
38. In the RIS it was noted that the costs associated with establishing and maintaining a retention money
trust account are offset by the removal of the annual reporting requirements in December 2020 (which
were estimated to cost head contractor businesses up to $10,000). Are there any other reasons for not
lowering the $20 million threshold?
HIA opposes the proposal to lower the project value threshold for payment of retention money.
In HIA’s view, little has changed since the initial proposal to reduce this amount was proposed in
2020 to substantiate such a dramatic change to this threshold.
Firstly, no analysis or cost assessment has been carried out and presented to support any reduction
and no evidence has been presented regarding the operation of the current model to justify this
change.
Secondly, HIA remains of the view that retention funds should not apply to residential construction
projects. As you may be aware HIA has consistently expressed this view since the 2012 inquiry into
the NSW security of payments laws carried out by Bruce Collins QC (Collins Inquiry).
The imposition of trust arrangements will not stop insolvencies or guarantee payments to
subcontractors. They will, however, impose additional costs for residential building work that will
impact housing affordability.
Further, the maintenance of cash flow for builders in the residential building industry proves to be a
constant challenge given the prevalence in the industry of a negative cash flow model. Whilst a trade
contractor is typically paid for work in arrears and must finance this cost, this is also the case for
builders who are required to essentially ‘finance’ an owner’s costs at least in the short term.
Builders in the residential building industry typically fund their projects by way of debt financing.
Revenue is derived from client payments which occurs in a highly regulated system and cannot be
received until after the completion of work and the incurrence of building costs.
HIA again takes the opportunity to remind the Government that relevant amendments made to the
NSW Building and Construction Industry Security of Payments Act 1999 (the Act) in 2013

(commencing in 2014) in response to the Collins Inquiries recommendations expressly excluded the
residential building industry. The Minister, in his second reading speech, noted that:
In response to concerns about the potential impact of the reforms in this bill on small
business in the residential sector, the Minister undertook to conduct additional
consultation with industry during August. As a result of this consultation, the bill provides
a limited exemption targeting small businesses operating in the residential sector … This
means that the amendments will not apply to a residential contract that is connected to
the contract between the consumer and head contractor—referred to in the bill as the
main contract.18
HIA continues to strongly advance the position that the residential building industry represents a
distinct and unique component of the construction industry and retention funds should be excluded
from this sector of the construction industry.
Adjudication Review Mechanism
39. An adjudication review provides an additional opportunity for the original adjudication determination
to be reviewed and a new determination issued (without the parties being required to go to court). Do
you support the proposal to allow a party to seek a review of an adjudication determination to be
heard by another adjudicator? Why or why not?
40. Do you think there should be any limitation on which matters can be reviewed by another adjudicator
(i.e. limited by monetary amount or type of matter) Why or why not?
It is often observed that there is a need or (desire) for decisions made through the east coast model
of security of payments laws to be reviewed. This is because of the ‘quick and dirty’ nature of rapid
adjudication where decisions are naturally susceptible to errors of law or fact. In fact, across all the
east coast model jurisdictions, nearly four out of five challenges result in the adjudicator's
determination being overturned.1
HIA supports the right of appeal from an adjudicator's decision on errors of law and breaches of
natural justice. In principle, HIA supports the Murray Review recommendation regarding the review
of adjudication decisions, noting the need for further analysis if a review process were adopted.
In order to preserve the objective of security of payments laws, that is to ensure the rapid adjudication
of payment disputes while also balancing the need for procedural fairness, there should be a limited
right of review.
41. Do you think there should be different eligibility criteria (i.e., qualifications, experience or additional
training) for a review adjudicator? Why or why not?
HIA agrees that there should be different eligibility criteria as review adjudicators should be qualified
and experienced at a level that allows them to carry out this function. It is likely that this would require
a higher level of legal expertise than that of an adjudicator. It is also imperative that the individual
has relevant industry experience which is fundamental to the proper performance of an adjudicator’s
duties.
Adjudication Powers
18 New South Wales, Parliamentary Debates, Legislative Assembly, 12 November 2013, 25328 (Matthew Mason-Cox).

42. Currently, an adjudicator has powers to request further submissions, call a conference and carry out
inspections. It is proposed to additionally allow an adjudicator to arrange for the testing of a matter
and engage an appropriately qualified person to investigate and report on any matter (unless both
the parties to the adjudication object). Do you support the additional powers recommended by this
proposal? If not, why?
43. Do you think that the benefit of the additional powers, such as a better-informed determination,
outweighs any concerns that the proposal may lengthen the time for resolving disputes? If not, why?
HIA would advise that a cautious approach be taken when considering measures that may
jeopardise the rapid nature of the security of payment adjudication process. This must be balanced
with feedback from HIA members who have expressed frustration with claims based on alleged
unfinished works.
HIA sees that where there is such a divergence of views as to the nature of the claim and works
carried (or not carried) out, the adjudicator should have the power to inquire into those matters
further. A physical inspection may, however, be a bridge too far and there may be other ways of
substantiating claims such as photographic or other visual evidence.
44. Does the legislation need to address who is required to pay for any testing or the engagement of an
expert to investigate and report on certain matters? Or should this form part of the fees of the
adjudicator to be shared by the parties in such proportions determined by the adjudicator?
HIA believes that the legislation must provide a requirement of certainty regarding the costs
associated with seeking a review of an adjudication determination. HIA suggests that the person
seeking the review should pay, subject to the outcome of the review i.e. if the decision is reversed
the applicant should be reimbursed the cost of the review.
6.5 ROBUST REGULATORY INTERVENTION

Rectifying defects early, strengthening the role of certifiers in responding to serious defects, issuing
BWROs for products failing to comply with the NCC (not limited to the BCA)
45. Do you support the expansion of certifier powers to hand out WDNs (Written Direction Notices) where
they identify a “serious defect”? Why or why not?
46. HIA does not support the expansion of certifier powers to hand out WDNs where they identify a
“serious defect”. See answer to question 20, above.
47. HIA also seeks further information on whether there has been any consideration regarding increasing
the fees chargeable by certifiers, and whether these costs will ultimately be passed on to the
homeowners, exacerbating the house affordability issue that NSW continues to face. And if so, what
are the implications of this?
48. Do you agree that BWROs should be able to be issued where non-compliance with the PCA is
identified? Why or why not?
No comment.
49. Do you think the expansion of the application of BWROs will improve the way in which prefabricated
products are regulated? Why or why not?

No. The regulation of prefabricated products is still at its infancy and currently being consulted in the
Building Bill. Further, there has been no assessment of the unintended consequences of this
proposal. A careful study should be taken to assess these consequences.
Please also see HIA’s responses to questions 7 – 14 of the Building Bill RIS (Part 2) regarding
prefabricated products.
If this proposal is to be adopted further consideration must be given to for example, how BRWO
would be issued if the prefabricated products are constructed overseas. HIA envisages there are
further examples of scenarios that would impact the issuing of BWROs on prefabricated products
that should be explored.
No privilege against self-incrimination for body corporates
48. Do you support that information gathered by the Department should be able to be used as evidence
against a corporation? If no, why not?
49. This reform will also apply to individuals in their capacity as a representative of a corporation such as
a director of the company. Should the information collected from the representative be able to be used
against the corporation in criminal proceedings? If not, why?
HIA does not support that information gathered by the Department should be able to be used as
evidence against a corporation.
In any event, should this progress there must be limitation on the information gathered and used
otherwise, this would simply become a ‘fishing expedition’.
It is a fundamental principle of company law in Australia (and elsewhere) that a company is a
separate legal person, independent of its directors and shareholders. A company is responsible for
its own debts and liabilities.
These basic principles are one of the reasons why the corporate form is favoured for the conduct of
commercial enterprise. It enables much of the entrepreneurship, investment and innovation that
facilitates economic growth.
Incorporation means an investor can share in the profits of an enterprise without being involved in
its management.
Importantly, incorporation enables a business to carry on with a perpetual existence. It is not
dependent on the life of the owner/manager. Even if the shareholders, directors, and officers come
and go, the corporation carries on. This permanency means that management can make long-term
decisions for the business. Investors also have a better chance to see a return on their money. The
majority of companies are established with a view to this permanency.
In the residential building industry, the corporate structure is adopted by many businesses as this is
the best way to enable management of the various business functions from general and financial
administration to sales, marketing, ordering, design and occupational health and safety.
Adopting a corporate structure is regarded as an appropriate risk management strategy to respond
to project and business risks.
There are several Commonwealth laws in place to address the behaviour of company directors. For
instance:

(i) Under the Corporations Act 2001 (Cth), directors have fiduciary duties, which include the
duties to act in good faith in the best interests of the company, to act for proper corporate
purposes and to avoid conflicts of interest. It has been held that the duty of directors to
act in good faith and in the best interests of the company includes consideration of the
interests of creditors upon insolvency.
(ii) Under taxation laws, directors’ personal liability may arise where the Commissioner of
Taxation issues a Director Liability Notice (“DLN”) under s 222AOE of the Income Tax
Assessment Act 1997 (Cth) to the directors at a time when the company has failed to
remit tax. The objectives of these provisions are to ensure that a company satisfies
particular income tax obligations or is promptly placed into voluntary administration or
liquidation.
For these reasons, this reform should not apply to individuals in their capacity as a representative of
a corporation such as a director of the company. Therefore, no information collected from these
representatives should be admissible against the corporation in criminal proceedings.
To address the second part of this question, see response to question 48. HIA seeks clarity on what
type of information will be used as evidence against a corporation before a position can be reached.
In any event, there must be limitation on which information are gathered and used otherwise, this
would simply become a ‘fishing expedition’.
Promoting accountability to deter intentional phoenix activity
50. Do you support the proposal to place a duty on a registered practitioner to take reasonable steps to
ensure that persons they deal with aren’t involved in intentional phoenix activity? Why or why not?
HIA has a number of concerns with a proposal that would place a positive obligation on a registered
practitioner to refrain from working or associating with a company or person that has engaged in
unlawful conduct, including where the practitioner knows that the person has become bankrupt and
not paid a liability for defective work.
Not only does this place an undue regulatory burden on businesses already subject to extensive
licensing requirements, but there is also significant uncertainty regarding what ‘reasonable steps’
would be when attempting to satisfy themselves that the person they are entering into a contract with
has not illegally phoenixed or been declared a bankrupt.
For the above reasons, HIA does not support this proposal.
51. Do you agree with the proposed definition of “intentional phoenix activity”? Why or why not? Please
make any suggestions for change.
The problem with developing a definition resides partly in the fact that phoenixing, of itself, is not
inherently unlawful unless it is undertaken with malevolent intent in which case a range of broader
generic criminal law sanctions may be applicable. The challenge for governments looking to regulate
in this space is that it is impossible to distinguish between legitimate business rescue and intentional
activities to avoid legal liabilities. It is important to balance the potential risks of legislation
inappropriately applying to those engaged in appropriate business practices. Not all company
failures will involve illegal phoenix activity and genuine company failures do occur.

HIA opposes illegal corporate phoenixing. Such activity creates an uneven playing field and
represents an inefficiency in the construction industry which leads to a misallocation of resources,
additional costs and lower productivity. But not all ‘phoenixing’ is illegal. In HIA’s view the only
conduct that should be considered illegal phoenixing is when there is a deliberate and systematic
liquidation of a company with the fraudulent or illegal intention to:
• avoid tax and other liabilities, such as employee entitlements; and

• continue the operation and profit taking of the business through another trading entity.
However, incorporation is a legitimate business arrangement and a fundamental principle of

company law in Australia (and elsewhere) that must be preserved.
The adoption of a corporate structure as a separate legal entity, independent of its directors and
shareholders should continue to be regarded as an appropriate risk management strategy to respond
to project and business risk.
52. Do you support that a failure to comply with the duty is addressed through disciplinary action rather
than being an offence? Why or why not?
See response to question 50. HIA opposes this proposal because the existing laws provide a solid
and sound regulatory framework for regulating insolvencies.
However, HIA does not oppose enforcing education and training notices on industry license holders
if this serves as an alternative for those who would otherwise have their registration cancelled,
disqualified or suspended as a result of disciplinary proceedings.
53. Would you support a mandatory reporting requirement if a person reasonably suspected that a director
of a company has, will or is engaging in intentional phoenix activity?
HIA opposes this proposal as the person may not be in the position to distinguish between legitimate
business rescue and intentional activities to avoid legal liabilities. Therefore, this may cause an
overregulation for those who are trying to implement the former.
If implemented, HIA notes that there is no clear guidance to the industry/guidance document (as the
RIS indicates) of what “Reasonable Steps” would entail to assist with compliance. Guidance notes
should be distributed for review and would like to be involved in this review process.
Recovering costs to maintain a strong regulatory approach and increase accountability
54. Do you support the proposal to provide the Secretary with the power to give a written investigation
cost notice requiring a person to pay some or all costs associated with an investigation? Why or why
not?
HIA strongly opposes this proposal. There has been no justification provided, and if one were to be
provided, there must be a mechanism and strict guidance justifying why the investigation was done
in the first place, as opposed to proceeding with any investigation.
This proposal also represents an additional layer of cost and regulatory burden on the industry.
The residential building industry already bears the burden of numerous taxes, levies and
development contributions to the benefit of the broader community and public good. The introduction

of yet another ‘cost’ on the residential building industry, to cover the government’s investigation
activities, is unreasonable.
The RIS does not provide any in-depth assessment of alternative options to recoup the cost of
enforcement and compliance activities. Furthermore, the introduction of any additional costs should
be preceded by the preparation of an appropriate level of industry consultation. Where a cost/benefit
assessment indicates there would be a negative cost to the housing industry, the scheme should not
proceed or should be amended to ensure a positive cost/benefit is achieved.
55. Do you believe that the limitation to the power for the Secretary to issue an investigation cost notice
is sufficient? Why or why not?
See response to question 54, above.

HIA opposes this proposal and suggests that a cautious approach should be taken prior to providing
more power to the Secretary without further evidence and justification that this will not result in over
regulation to the industry.
56. Is the definition of “exceptional costs and expenses” reasonable?
57. Are the appeal provisions reasonable?
See response to question 54, above.

HIA requests that further analysis and industry consultation (supported with data) to be conducted
to determine appropriateness of this proposal

Reforming Building Laws in NSW

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Reforming Building Laws in NSW

Uploaded by

Copyright:

Available Formats

Submission to the Department of Customer Service

Reforming Building Laws in NSW

Housing Industry Association contacts:

David Bare Jasminne Muliadi

• There has been inadequate consultation.

HIA elaborates on these matters below.

Page 2 of 114 | Reforming Building Laws in NSW

This is obviously inadequate.

Specifically, the RISs:

Page 3 of 114 | Reforming Building Laws in NSW

This approach is also indicative of an incredibly rushed approach.

1.1 THE BUILDING BILL

Page 4 of 114 | Reforming Building Laws in NSW

• the costs of HBCF premiums, or

• changes to the scope of warranties,

Page 5 of 114 | Reforming Building Laws in NSW

Other issues of concern that require further information include:

Page 6 of 114 | Reforming Building Laws in NSW

Greater accountability is proposed through:

Page 7 of 114 | Reforming Building Laws in NSW

Page 8 of 114 | Reforming Building Laws in NSW

• changes to the scope of warranties,

That single paragraph provides:

2.2 BUILDING WORK AND ITS APPLICATION IN THE BUILDING BILL

HIA is unsure exactly what is meant by this question, as:

• The definition of “building work” is contained in Chapter 1, section 5 of the Bill;

Page 9 of 114 | Reforming Building Laws in NSW

HIA makes the observations that:

Page 10 of 114 | Reforming Building Laws in NSW

• Fire safety work;

Page 11 of 114 | Reforming Building Laws in NSW

• Domestic building work;

• Engaged (contracting) directly with consumers (subject to a monetary threshold); or

Page 12 of 114 | Reforming Building Laws in NSW

This proposal is then not elaborated on, with the RIS:

Page 13 of 114 | Reforming Building Laws in NSW

2.3 REVIEW OF BUILDING LICENSING

Page 14 of 114 | Reforming Building Laws in NSW

Page 15 of 114 | Reforming Building Laws in NSW

There are numerous problems with demerit point systems including:

Page 16 of 114 | Reforming Building Laws in NSW

• Reduce the occurrence of defects; or

Page 17 of 114 | Reforming Building Laws in NSW

Page 18 of 114 | Reforming Building Laws in NSW

Page 19 of 114 | Reforming Building Laws in NSW

2.4 PROPOSED CHANGES TO BUILDER LICENSES

Page 20 of 114 | Reforming Building Laws in NSW

2.4 REGULATORY COSTS AND BENEFITS OF CHANGES TO BUILDER LICENCES

2.5 CORPORATE LICENCE HOLDERS AND NOMINEE SUPERVISORS

Page 21 of 114 | Reforming Building Laws in NSW

Page 22 of 114 | Reforming Building Laws in NSW

Itemized categories are similarly unhelpful and likely to lead to incorrect/unfounded/prejudicial

Page 23 of 114 | Reforming Building Laws in NSW

Page 24 of 114 | Reforming Building Laws in NSW

Page 25 of 114 | Reforming Building Laws in NSW

Page 26 of 114 | Reforming Building Laws in NSW

• Carrying out residential building inspections;

Page 27 of 114 | Reforming Building Laws in NSW

Page 28 of 114 | Reforming Building Laws in NSW

2.14 OWNER-BUILDER PERMIT SCHEME

Page 29 of 114 | Reforming Building Laws in NSW

Page 30 of 114 | Reforming Building Laws in NSW

3.2 QUALITY AND BUILD STANDARDS