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Conflict Over Energy in Australia’s National Construction Code

Builders and energy groups clash over Porter Davis collapse.


Sun 16 Apr 23

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All-important energy efficiency standards can’t be sacrificed in the fight to ease pressure on Australia’s beleaguered building industry, lobbyists warn.

It comes as reports that the Victorian state government is consulting with the sector amid calls for urgent reforms following the financial collapse of one of the nation’s largest home builders Porter Davis.

According to the ABC, the collapse has left more than 1500 homes unfinished in Victoria and 200 in Queensland – having a major impact on the housing stock for both markets.

ABC News reported that rising material costs, labour shortages and interest rate increases have led to cost blowouts, putting mounting financial pressure on builders. Footage courtesy of @abcnewsaustralia

Victorian Premier Daniel Andrews has concerns about the conduct of Porter Davis, particularly over allegations of baiting customers and leaving them without insurance.

Reported in the Weekend Australian, Grant Thornton, the appointed liquidator, has shortlisted 15 builders capable of meeting the unfinished houses.

Dire outlook for Australian Housing

Last week, Wood Central analysed data provided in the latest ABS’s ‘Building Activity Report’.

By the numbers, commencement or ‘ground breaks’ are expected to fall as builders and home buyers are both impacted by the affordability crunch.   

This financial year more than 1300 construction companies have already gone into liquidation, receivership, or administration – a number that by February 2023 already surpassed the total number for 2021/22.

Special Report: Last week Wood Central analysed the National Housing Finance and Investment Corporation (NHFIC) 'State of he Housing' and Australian Bureau of Statistics (ABS) 'Building Activity Report.'
Special Report: Last Friday, Wood Central analysed the National Housing Finance and Investment Corporation (NHFIC) ‘State of the Housing Report’ and Australian Bureau of Statistics (ABS) ‘Building Activity Report.’

In an AFR interview last month, Brad Walters head of product and ratings services at data company Equifax warned that more companies in the sector are likely to collapse.

“In construction, they’ll continue to climb, because of the pressure the sector is under.”

“For another six to 12 months, it’s going to continue to be a tough environment in the construction industry”.

The Frame and Truss Manufacturing Association (FTMA) is the national association representing the Australian timber frame and truss manufacturing association.

According to a March 30 credit risk report, provided by Alares to FTMA members, insolvencies are at their highest levels since 2019 with the frame and truss sector on high alert.

HIA calls for changes to energy-efficiency standards in the National Construction Code

Leading the charge, the Housing Industry Association is urging the deferral of major changes stipulating how Victorian homes will be constructed under the National Construction Code.

The discussion comes amidst an uncertain housing market. According to an International Monetary Fund (IMF) report on Friday, the Australian Housing Market could risk ‘a wave of defaults.’ Footage courtesy of @abcnewsaustealia

The code lifts minimum energy-efficiency standards for new builds from six to seven-star ratings and creates design requirements for accessibility.

“If they were pushed back at least a year, as has happened in other states, builders and customers would have more time to adjust, HIA’s Victoria executive director Keith Ryan said.

“Significant changes will be required to most existing home designs that customers can see when they visit a builder or visit display homes,” Mr Ryan told AAP.

“Customers looking at home designs for land they have bought or plan to buy, face great uncertainty the closer we get to October 1.”

Victoria lifts the bar to for energy-efficiency ratings in buildings

On 26 August 2022, Victoria agreed to increase minimum energy efficiency building standards for new homes from 6 to 7 stars (out of 10 stars) under changes to the National Construction Code 2022.

The rating scheme is based on the Australian Nationwide House Energy Rating Scheme (NatHERS). NatHERS is a star rating system (out of ten) that rates the energy efficiency of a home, based on its design. Footage courtesy of @nathers3774

The changes, which come into effect from October 1st, 2023, include a Whole of Home energy use budget that includes fixed appliances such as heating and cooling, hot water and lighting.

The changes have sparked debate with the CEO of the Green Building Council of Australia, Davina Rooney, supporting the adoption of higher energy efficiency standards.

“The GBCA welcomes improvements to energy standards that will result in more comfortable homes that are cheaper to run,” she said.

“The residential sector accounts for 57% of emissions from buildings in Australia.”

Rooney said that the IPCC report, which has strongly supported the use of timber in construction, has called for urgent action across the economy, with residential energy efficiency a key part of that challenge.

The Energy Efficiency Council (EEC) argues homes can be built cost-effectively to seven stars, largely through better design and orientation.

The Australian Climate Council has also supported the push for greater energy-efficiency standards in residential housing. Footage courtesy of @ClimatecouncilOrgAu

While Victorian builders, like others across the country, are under strain, they’ve been given ample notice and support to adjust, EEC head of market transformation Rob Murray-Leach said.

“Builders could make strides towards seven stars if they considered a home’s positioning on a block and which way windows faced,” he said.

“In a way, seven stars is just asking builders to think properly about design and orientation.”

Victorian builders push for overhaul to industry rules

The Royal Commission on People with Disability identified a lack of accessible housing as a significant issue. More than 10,000 Australians with severe or profound disability experience homelessness each year.

According to a study commissioned by the Australian Human Rights Commission, the country faces a major problem with accessibility unless major changes are made to the National Construction Code.

Australia is struggling to meet its commitments to accessible housing. Footage courtesy of @ahuri

Victorian builders have ramped up their push for an overhaul of industry rules since Porter Davis went into liquidation.

Maxwell Shifman, the National President of the Urban Development Institute of Australia highlighted the need for Victoria’s planning system to be streamlined, blaming delays and extra costs for contributing to the demise of struggling companies.

He is confident conditions will improve following the Porter Davis collapse but said government support would come too late for some.

“If they addressed some of these issues earlier, we might have been able to avoid some of the massive failures that are occurring at the moment,” Mr Shifman said.

He also pointed to reductions in overall approvals for housing and said rapid reform was needed to improve numbers as Australia’s population started to grow again.

Overhaul to the Domestic Building Contracts Act

The HIA is also pushing for an overhaul of the Domestic Building Contracts Act.

Master Builders Victoria interim chief executive Michaela Lihou said the act should be reviewed and include rise and fall clauses.

Fixed-price contracts were not fit for purpose with labour and material costs now impossible to forecast, Ms Lihou said.

There were also restrictions around when builders could get paid according to stages, leading some having to bankroll projects when delays slowed stages down.

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  • Wood Central

    Wood Central is Australia’s first and only dedicated platform covering wood-based media across all digital platforms. Our vision is to develop an integrated platform for media, events, education, and products that connect, inform, and inspire the people and organisations who work in and promote forestry, timber, and fibre.

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