Liability should be spread more fairly


It is curious that the Government refuses to accept wider responsibility for the leaky homes crisis. It points to decisions of the courts that the role of the Building Industry Authority did not give rise to any legal liability.

But much wider issues are involved, such as housing quality, the health and safety issues which flow from substandard housing, social justice and fairness.
There is no obvious moral high ground for the Government’s stance on the leaky homes issue, particularly in the light of the finding of the Hunn Report in 2002 that the failures which led to this problem were systemic.

Nor is there any obvious reason that the financial burden should fall exclusively on the shoulders of the owners of affected homes and the hapless ratepayer.
The Government’s Weathertight Homes Resolution Service has received around 3800 eligible claims. If the rate of claims continues at the same level, our best estimate indicates they may total 13,000.

On the basis of the settlements to date and given their increasing cost, it is thought this number of claims would bring the total value of all settlements to somewhere between $1.25 billion and $2.5 billion.

At the lower end of this range, and again adopting outcomes on past claims, the local authority share is unlikely to be less than $600 million, including costs. If no one else is contributing, then the local authority share will be the full amount.

There can be no argument that local authorities should respond appropriately and fund their share of responsibility for the leaky building problem.
RiskPool will be able to fund claims to some level from its own resources, and it ultimately has the ability to appropriately levy its members.

Inevitably, however, those local authorities with the highest number of leaky building claims will carry the bulk of the financial burden.
It does not matter whether settlements are funded through RiskPool or directly through the local authority — any money paid will have to be found by the ratepayer.

Less than a year ago, Building and Construction Minister Clayton Cosgrove said the leaky homes issue was the result of shonky work done by some developers, designers, builders, subbies, inspectors and others.

“But they did have help. The deregulation of the building industry, the deliberate destruction of the apprenticeship building industry, the introduction of private building certification and allowing untreated timber framing to be used are all significant factors in this issue.”

We agree. All of those matters were under the control of the Government and/or the Building Industry Authority.

To this list can also be added the following matters which were also within industry’s control and beyond the control of home owners and local authorities:
 The approval of face-fixed monolithic cladding materials, systems and practices.
 The failure to respond over a number of years in an effective and timely way when the potential for a problem first became apparent.
 The failure to ensure that the insurance arrangements of building certifiers were properly in place for the protection of those home owners whose buildings had been approved by building certifiers.

It is time the Government woke up and began working with local government to take a greater share of the responsibility for this disaster.

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