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  • Writer's pictureDavid

Private building certification in NSW. What is it and how did it come about? What is the future?

Happy new year to all readers of my blog!

There have been a number of stories in the press over the Christmas period regarding a high rise residential tower in Sydney Olympic Park that was completed only recently and had to be evacuated due to structural problems. This article does not seek to comment on this case specifically as I have no personal knowledge of the project. Nevertheless, there have since been a number of comments made on the private certification system in NSW from the government, opposition and members of the press that warrant attention.

Minister for Better Regulation, Matt Kean has announced an inquiry into private certification in NSW, blaming the previous Labor Government that introduced private certification and "allowed cowboys and shonks to operate in the industry". The State Opposition Leader Michael Daley has also called for changes to private certification in NSW, stating that there is a potential conflict of interest when a developer hires a private certifier.

Prior to the introduction of private certification, almost all development and building approvals (with a few small exceptions) were the responsibility of local government. A Development Application (DA) was essentially a planning approval, looking at matters such as town planning schemes, the suitability of a site and the impacts of a development on its surroundings, while a Building Application (BA) was a building approval looking at matters such as building code compliance. Development Applications were governed by the provisions of the Environmental Planning and Assessment Act 1979, while building applications were governed by the provisions of the Local Government Act 1993 and its 1919 predecessor.

Historically, town planning and building regulations/inspections were seen as a responsibility government - something that a market could not deliver adequately, like many other functions that have also been privatised in recent years - think electricity supply, ports or airports.

Private certification was introduced to NSW in 1998 with Craig Knowles being the Minister for Urban Affairs and Planning at the time. NSW was not the first state to introduce private certification and it was already operating (successfully it was claimed) in South Australia, the Northern Territory and Tasmania.

One of the main arguments in favour of introducing certification was to "remove unnecessary regulation and streamline the assessment process", which it was hoped would “result in reduced approval response times, reduced holding costs, and improvements in the service provided to applicants".

The main proponents of private certification at the time were the development industry. There was a perception amongst many in the industry that private certification would speed up development and remove unnecessary bureaucratic obstacles. There was a perception amongst many that building applications were taking too long in many locations given that Councils had a monopoly on this service and that some Councils were being unreasonable during the inspection of developments during construction.

Conversely there were many opponents to private certification at the time including much of local government and environmental/consumer protection groups.

Significantly, the 1998 reforms extended the concept of certification from building works to land use. Development applications were traditionally the domain of local government authorities, and to a lesser extent the Minister for Planning. The 1998 reforms allowed minor, non-controversial forms of development, that might otherwise require a development application, to be dealt with by a person or body other than the local council (as complying development).

Some forms of development did not require a DA prior to 1998 and only required a BA, think a single house or alterations and additions. Ironically, the reforms meant that many of these developments now need two approvals being a DA and then a Construction Certificate.

Another result of the abolition of BAs was that Councils collectively responded by dramatically increasing the regulatory content of development consents.  As a result, development consents are now more difficult to obtain and more complex documents (as they now routinely deal with considerable construction detail that was previously only considered at BA stage). The process of complying development is also not necessarily straightforward, as the number of standards applicable is normally far greater than that which existed previously under BAs.

Since 1998, private certification has evolved and grown substantially. The range of building and development types that are capable of certification is expanding. The NSW Government has also taken a more active role in ensuring that councils have less to do with building and development control by centralising the formulation of policy relating to certification - via State Environmental Planning Policy (Exempt and Complying Development Codes) 2008. Previously Councils had more say on what could be allowed as complying development within their area. Recent comments from NSW political leaders indicate a potential pause or reversal of this trend.

Development Applications remain part of the system, as not all land use is capable of being initially privately certified as Complying Development, although BAs have been replaced with construction certificates, principal certifying authorities and occupation certificates. Complying Development now largely fills the role of development that previously only required a BA (although the scope and complexity has substantially expanded).

Between 1998 and the present there have been many reviews into private certification. Perhaps the most notable of these was the "Joint Select Committee into the Quality of Buildings" or the "Campbell Inquiry" in 2002. This inquiry ultimately led to the establishment of the Building Professionals Board - a NSW government body that overseas/regulates private certifiers.

Comments from NSW political leaders indicate that further regulation or restriction of private certification is now likely - beyond that which was set out in the Campbell Inquiry. What are some actions that have been taken in other jurisdictions? New Zealand

Perhaps the most radical response in relation to concerns about private certification took place in New Zealand. The National Government amended the Building Act in 2004 in response to the ‘Leaky Buildings Crisis”, which involved some 45,000 buildings being left without adequate weather proofing. This was a systemic building products issue involving the widespread use of a type of cladding that proved to be defective. All building classes including residential, commercial, schools, motels and the like were affected.

The then Government’s response to the leaky buildings crisis was to tighten regulatory controls on practitioners and products, mandating that all building consents must be through local Councils. Prior to 2004, building certification was carried out by private certifiers. The regulatory changes essentially put private certifiers out of business as more stringent requirements left them unable to obtain insurance cover.

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03 jun 2021

I am a retired professional engineer with long-ago experience as a structural engineer in the building and heavy engineering industries. I'm talking about the days before privatisation of building certification.

In retirement, my wife and I invested in a hotel apartment in a new medium-rise building in Queensland.

This investment was promoted as a 'set and forget' investment for retirees. Yeah, right.

The hotel operator's franchising arrangement (a contract with a franchisee), plus multiple owners of the multiple apartments in the building - each with an individual tenancy contract with the franchisee - all organised into a body corporate, the absence of reliable building compliance, plus the belated discovery of building defects, all converged to provide owners (investors) with a…

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