Treasury has released its interim report for the National Construction Code Modernisation Project, which sets out five reforms the government decided would boost construction productivity.
While industry bodies and lobby groups were mostly on board with the changes, some are also calling for guarantees that the Australian Standards will have its paywall removed.
Last year, Treasurer Jim Chalmers and a slew of ministers announced they would delay the rollout of the next NCC update by a year, pushing its release date to mid-2029. This follows a wider movement of state governments freezing or delaying the implementation of the federal construction code within state policies, with the Northern Territory being the latest to jump on the bandwagon.
However, according to the Australian Building Codes Board, Victoria and Tasmania have introduced the 2025 NCC this month. ACT and Western Australia have also introduced the code this month, although they will have a 12-month transition period. South Australia will adopt the plumbing code this month, but the building code next year. NSW and Queensland have opted to adopt the code next year.
The ministers hope to use the delay to “modernise” the code to remove barriers to uptake, introduce AI to help cut through the 2000-page code, and improve the development process of the code for the Australian Building Codes Board.
With Australia facing a housing shortage, industry and government have agreed to target 1.2 million new well-located homes under the National Housing Accord, the interim report said. But housing and construction productivity are declining thanks to a range of factors, including complex regulation.
The five reform directions aim to target this problem by:
- simplifying access and use of the code: removing the barriers to access, reducing complications, ambiguity and complexity through AI and digital tools, which means faster design, lower design cost and less reliance on consultants
- recommitment to a national market: reducing variations of the code, such as jurisdiction specific requirements, and strengthening mechanisms to sustain consistency over time
- tougher, more rigorous cost-benefit analysis and decision making: separating policy reform from technical updates and improve cost benefit analysis to reduce disruption and implementing costs and risks
- enabling innovation and new products: establishing clear and nationally consistent pathways to accelerate uptake in innovative products and methods, allowing innovations to be used sooner and increasing national market opportunities
- reducing cost of demonstrating compliance: implementing risk-assessed compliance pathways tailored to building types and complexities to reduce paperwork, need for consultants and certification costs
Industry feedback
The Property Council’s chief executive, Mike Zorbas, said the report confirmed long-standing industry concerns about the burdens of the code system and the lack of necessary resourcing and state and territory buy-in.
He said getting rid of red tape and overlap was necessary to deliver “sustainable, affordable projects”, and the recommendations of the report will help prefabricated and modular construction.
The Housing Industry Association (HIA) had similar sentiments, although chief executive for industry and policy Simon Croft, who recently addressed The Fifth Estate’s Codes Red debate, along with Shane Keating, executive director for building policy, said the NCC reforms should also remove the paywall to accessing Australian Standards.
The code often refers to Australian Standards to set out its baseline for certain technical requirements, as well as inform compliant design, materials, installation and certification. Currently, the report said it would consider removing the paywall to standards referenced in the NCC.
The Master Builders Australia supported the report and pointed out the stats they recently presented to a recent Parliamentary inquiry, saying the Productivity Commission estimates regulatory burden can cost up to $320,000 per new house.
The Green Building Council of Australia’s chief executive, Davina Rooney, added that it was critical the reforms maintain the progress it has made in energy efficiency and liveability, saying it’s already helped households reduce energy bills and live more comfortably.
The challenges in the NCC that need a fix
According to the report, there were three interrelated challenges that were “collectively undermining construction productivity, housing delivery and confidence in the regulatory system”.
The first was that the system was not operating as intended. The framework was intended to set mandatory minimum standards for buildings, while allowing flexibility in materials, components and design.
However, the idea of allowing a unique and flexible pathway for each situation is uncertain, costly, high-risk and results in widespread avoidance, the report said. Compliance varies between jurisdictions and certifiers, and risk is shifted onto individual projects rather than managed systemically, and used to address non-compliance and defects, causing reports requiring “back solving” issues.
Instead, the industry is resorting to set recipes of “what, when and how” to do something, even when better or more efficient options exist. “The system intended to enable innovation is, in operation, constraining it.”
Another was that the cumulative cost of compliance across design, approval, procurement, construction and certification stages has disproportionately affected lower?risk and more standardised building types. Smaller projects are absorbing higher compliance costs.
The result, the report said, was higher prices, slower delivery and weaker productivity, which are costs “ultimately borne by consumers.”
Finally, trust and confidence in the NCC have declined, with industry stakeholders saying the compliance is dependent on interpretation. The system is rewarding process compliance over good outcomes, failures are occurring despite growing compliance efforts, and NCC is being used to pursue policy aspirations. The loss of confidence is further driving more regulation and assurance, and therefore a cycle of rising cost and diminishing effectiveness.
The challenge, said the report, is to restore clarity, proportionality and national consistency – so that the NCC operates as a trusted foundation for safe, efficient and innovative construction.