Monday, June 24, 2019

Do Australian building regulations promote safety, accessibility and livability of new dwellings?

A few months ago, I would have been astounded if someone told me that a building certifier in Australia could legally issue an occupation certificate with front path pedestrian access as shown in the photo above. In order to use the path, it was necessary for pedestrians to step over a concrete obstacle (14 cm on the driveway side and 23 cm on the house side). There was no way anyone could plausibly claim that the concrete obstacle was necessary for drainage, because water ran away from it toward the centre of the driveway.

With the benefit of hindsight, it is obvious that before buying a townhouse off the plan I had been lulled into a false sense of security by claims of building regulators that the Building Code of Australia (BCA) sets minimum standards for safety, health and amenity of buildings. I was not aware of the existence of the National Construction Code (NCC) at that time, but it wouldn’t have surprised me that it purports to provide “the minimum necessary requirements for safety and health; amenity and accessibility, and sustainability in design, construction, performance and livability of new buildings”.

I should have known better! I knew from the experience of many years working for governments that bureaucrats are no less prone to making extravagant claims than are people working in other occupations.

You might be thinking that even though it would be most unfortunate if someone was injured by tripping on the concrete obstacle, the existence of an occupation certificate, certifying that building regulation had been complied with, would protect the Owners Corporation against a compensation claim. That might be too sanguine a view. Legal information available from a reputable online source suggests that owners might not be fully covered by insurance if they could reasonably be expected to be aware of the issue and had not taken steps to address it.

The bigger issue of regulatory capture

In drawing attention to this pedestrian access issue, I am conscious that it is trivial by comparison with the building safety issues currently in the news associated with high-rise apartments in Sydney (Opal Tower and Mascot Towers). Michael Lambert, a former secretary of NSW Treasury, who reviewed building regulation for the New South Wales government and presented his report in 2015, has been quoted as saying that the issues associated with the Opal Tower “are likely just the tip of the iceberg”.

The Lambert report found “the incidence of building defects is significant” and “the incidence appears higher in NSW than elsewhere”. Lambert was not able to be more specific about incidence because “comprehensive information is not regularly collected on building defects”. He recommended that performance data be collected to enable the performance of the system to be assessed against clear objectives. In particular, he proposed a program of proactive investigations and audits of certifiers, linked to an education and training program for them. Lambert also recommended action to reduce the conflict between the accountability of certifiers for acting in the public interest and their commercial drivers for commercial success, including maintaining good relations with builders and owners/developers.

Michael Lambert has expressed disappointment that the recommendations of his report have not been more fully acted upon by the NSW government. It is not clear to what extent timely implementation of Lambert’s recommendations would have improved the quality of high-rise building in NSW, but the government’s failure to act more decisively on his proposals for incremental improvement seems to indicate that regulatory capture has become entrenched in this industry.

The theory of regulatory capture, advanced by the Nobel Prize winning economist, George Stigler, among others, refers to the tendency for regulatory systems created to act in the public interest, to instead advance the commercial or political concerns of special interest groups that dominate regulated industries. As it currently operates, the system of private certification seems to provide more protection to developers, builders, architects, engineers, and local government agencies that provide planning approval, than to home buyers.

Does more regulation provide the answer?

The knee jerk reaction of many people to quality control problems in the building industry is to urge that regulation be extended further and enforced more rigorously. However, even if determined political leaders can manage to steer some regulatory reform through the process of industry consultation, we need to face the reality that it would be prohibitively expensive for building regulation to be made much more than a ‘box ticking exercise’. Regulators can certify that certain things have been done, but that doesn’t ensure effective quality control. For example, regulators can certify that concrete has been poured to construct foundations, but it takes the resources of a building firm to control the quality of the concrete that is poured.

The main commercial incentives for firms to maintain effective quality control are to enhance their reputation in the market and to avoid litigation. Reform-minded political leaders should be seeking to identify how those market and legal incentives are impaired, and what corrective action could be taken.

Some readers might still be thinking that additional box ticking regulation would be an appropriate response to the specific question of safe residential access. I am wary of that approach because it could end up adding excessively to building costs and make homes less affordable.
Consider, for example, the guideline for dwelling access proposed by Livable Housing Australia:
A safe continuous and step free path of travel from the street entrance and / or parking area to a dwelling entrance that is level.”

Complying with that condition would not have added much to the construction cost of our new townhouse, but in many instances a step free path would impose excessive costs. In a paper written over a decade ago, Alan Moran, pointed to evidence from government housing authorities - which commission a considerable part of the housing that is specifically geared towards the needs of people with disabilities - that the costs of the building are increased by at least 4% and up to 20% where houses are built fully compliant with the relevant Australian Standard.

The issue of liability

There are two overlapping aspects relating to the issue of liability for safe pedestrian access to residences. The first aspect is liability for compensation in the event of personal injury. My understanding is that the law sensibly provides liability on all parties involved to exercise reasonable care. I don’t know whether courts have held that developers and builders maintain some liability after residences have been sold. It would be a travesty, in my view, if they are able to hide behind an occupation certificate, when that does not certify that minimal safety standards have been met for pedestrian access.

The second issue of liability relates to the question of who should be liable for ensuring that reasonable expectations of home buyers are met in relation to safe pedestrian access. In thinking about this I have gone back to a paper written many years ago by Ted Sieper, an astute Australian economist who has been under-recognized because he eschewed academic norms to publish or perish. (Ted’s paper was entitled: Consumer protection – boon or bane?  It was presented to a C.I.S. conference held at Macquarie University in April 1978.) Ted argued that in considering the choice between the alternatives, caveat emptor – let the buyer beware – and caveat venditor – let the seller beware – law makers should compare the relative transactions costs that would be imposed on buyers and sellers. He noted: 
“while consumers with different safety requirements can discriminate cheaply among different products, producers can only with great difficulty discriminate among consumers”. 
(I am grateful to Greg Cutbush for suggesting that I look for Ted’s paper.)

I think Ted’s transactions cost point is highly relevant to the issue of safe pedestrian access. It seems reasonable to expect that that developers and builders would generally show some care to avoid compensation claims for personal injury. However, it is up to individual home buyers to shop around to obtain the standard of access safety they require.

With the benefit of hindsight, we should have insisted that an appropriate standard for safe residential access was written into the contract of sale before we agreed to buy. If the developer had been reluctant to agree to that provision, that would have set alarm bells ringing in our minds.

Regulators should stop making misleading claims!

There is irony in the fact that regulation to protect consumers aims to discourage misleading claims by vendors, but apparently does nothing to discourage building regulators from making misleading claims about the products they are selling.

Regulatory authorities should be required to renounce misleading claims they have made that the BCA and NCC provide minimum necessary standards for safety.  

If building regulators want to be helpful to home buyers, they should advise them to consult their lawyers to ensure that contracts for sale require developers to meet appropriate standards for safety and amenity.   

Monday, June 17, 2019

Why did my grandmother have a problem with nostalgia about "the good old days"?

“Don’t you talk to me about the good old days!”
I can remember hearing my grandmother say that in the 1950s, when I was a child. She was responding to a visitor who was talking nostalgically about the horse and buggy era.

My grandmother would have none of that talk. She was a mild-mannered, softly spoken person, but she wanted people to acknowledge that the “old days” were not so good.

I remembered what my grandmother had said recently while thinking of how best to illustrate how economic progress had improved the lives of people in Australia during the 1950s. Rather than adopting my usual approach of reciting statistics, it occurred to me that my grandmother’s story might make the point more effectively.

Ethel Vernon was born in 1900. She had happy childhood memories, but her life changed radically when she was 17 years old. That was when she married Archie Bates, who was quite a few years older than her. By the time Ethel was 30, she and Archie had 7 children.

At the time, 7 children would not have been considered a particularly large family. The average for Australian women who were born in 1900 was about 3 children. About one-quarter of women born at that time had no children, presumably because the First World War reduced the number of potential marriage partners. That meant the norm was about 4 children per family.

Archie worked as a station hand and overseer on Woodlands, a sizeable sheep property at that time, located on the Wimmera river, near Crowlands in Victoria. I think the economic circumstances of the family would have been somewhere near the average for Australians in that period.

From the photo shown above, taken in 1925, it looks as though family members were reasonably well fed and had at least one set of respectable clothes. The photo shows Ethel and Archie at the centre, with their four eldest children and some friends and neighbours. 

During the 1920s, the standard of living of the Bates family, like that of most other Australians in rural areas, had more in common with that of most rural people in a middle-income country, like Brazil, than with the way most people live in rural Australia today.

For example:
  •    There was no running water in the house. When you needed water, you went outside and turned on the tap on the small rainwater tank.
  •      When you needed hot water, you had to heat it on the top of the stove, or light the copper.
  •      There was no refrigerator. Food could be preserved for a day or so using a Coolgardie safe that worked on the evaporation principle.
  •      When you wanted to use the toilet, you had to go outside and up the garden path to a dunny built over a hole in the ground.
  •       There was no washing machine. All clothes were washed by hand.
  •       There was no electric light – just kerosene lights and candles.
  •      When you wanted to go somewhere you had to walk, unless you were lucky enough to own a horse.

What my grandmother remembered when people talked to her about the “old days” was the drudgery of long days of housework, looking after a young family without the benefit of modern conveniences. I think she was probably also irked by being wholly dependent on the money her husband gave her.

My grandmother’s standard of living didn’t improve much until the 1950s. The depression and Second World War restricted economic opportunities for people living in rural Australia, as in many other parts of the world.

During the 1950s my grandmother’s circumstances improved markedly. She gained some economic independence by obtaining the franchise for the Crowlands post office and telephone exchange, but the improvement in her standard of living seemed typical for the times.

I saw all this happen because I was living with her:
  •     She was able to afford a new kitchen and bathroom with running water installed. She had a much larger water tank constructed.
  •     She bought a slow combustion wood stove that provided continuous hot water.
  •      She bought a fridge that ran on kerosene.
  •     Running water enabled a flush toilet to be installed using a septic tank system.
  •     A few years later she bought an electricity generator and set of batteries. That enabled her to use a washing machine as well as to have electric lights.
  •     In the early 1950s grandmother bought a Holden ute.  After that, use of the horse and sulky became a recreational activity rather than the primary mode of transport.

My grandmother was extremely grateful for the conveniences of modern life. She saw them as a blessing, even though she was not materialistic. She believed that “where your treasure is, there will your heart be also” and her heart was in cultivation of the goodness in herself and others.

In later life, my grandmother’s main recreational activity was voluntary work for a charitable organisation. That would not have been possible without the time-saving devices in her own home.

It isn’t difficult to understand why my grandmother objected to people talking nostalgically about the horse and buggy era. Economic progress brought about a remarkable transformation in the quality of her life.

Monday, June 3, 2019

Does Israel Folau deserve support from advocates of free speech?

If your employer sacks you for breaching your employment conditions by publishing material on social media, I don’t think you can claim that your right to free speech has been violated. By accepting an offer of employment, you agree to abide by the conditions of that employment. The employer has not used force to prevent you from publishing the material concerned. You remain free to continue to publish such material after having been sacked.

However, that doesn’t necessarily mean that the Australian Rugby Union (ARU) acted legally or wisely in sacking Israel Folau. I will leave the legal question to the lawyers. My focus here is on the wisdom of sports clubs and other organisations taking stands on social issues and insisting that employees align with their values.

Israel Folau was sacked for a post on Instagram asserting that hell awaits drunks, homosexuals, adulterers, liars, fornicators, thieves, atheists and idolaters, unless they repent. The ARU insists that such comments preclude Folau from remaining an employee of the ARU because they do not align with the ARU’s values.

I think it was most unwise for the ARU to assert values in conflict with the opinions any employee might express on theological matters, such as the existence of hell and who may go there. The values pursued by sporting organisations should be related to furthering the interests of their sport and the collective interests of its supporters. It would be reasonable for the ARU to insist that players refrain from being offensive to other team members, but any team member who claimed to be offended by theological assertions made on social media should be told to grow a thicker skin.

It seems to me that Rugby Australia was also unwise to support the ‘Yes’ case in the national plebiscite on same sex marriage in 2017. Despite the merits of the ‘Yes” case, sporting organisations should have avoided taking public positions on this issue. It is obviously imprudent for organisations that seek the support of the general public to risk causing offence to significant groups of supporters by becoming involved in divisive social issues.

Qantas is another organisation that came out strongly in favour of the ‘Yes’ case, even though its involvement in the issue risked offending significant groups of customers, shareholders and employees. I wonder whether the CEO and Board considered the possibility that supporters of the ‘No’ case might arrange a boycott.

In a post on his blog a few weeks ago, Jim Belshaw speculated whether an employee of Qantas who supported the ‘No’ case might be reluctant to speak out publicly:
“I thought what would I do if I worked for Qantas and wanted to campaign for no? Would they fire me or would I just be marked never to be employed again?”
Jim speculated that a person in that situation might consider that the best way to save their job (or contract) would have been to shut up.

Jim’s comments prompted me to re-read John Stuart Mill’s argument in On Liberty that “the moral coercion of public opinion” should be of as much concern to advocates of liberty as “physical force in the form of legal penalties”. I remain unconvinced that the concept of ‘moral coercion’ is meaningful. Public opinion doesn’t force anyone to do anything, or to refrain from doing anything.

Yet, I feel that Mill was on the right track in urging advocates of free speech to oppose attempts by cultural warriors to use employment conditions as a weapon to keep people silent. Mill seems to have been particularly concerned that under the influence of religious bigots, public opinion favoured use of employment conditions to prevent people from expressing socially progressive views. However, the argument he used also applies to attempts by the advocates of socially progressive causes to influence public opinion in favour of the use employment conditions to silence social conservatives:  
 In respect of all persons but those whose pecuniary circumstances make them independent of the good will of other people, opinion is as efficacious as law; men might just as well be imprisoned, as excluded from the means of earning their bread”.

In my view, Mill exaggerated the impact of public opinion and the consequences of job loss, but he makes a valid point. Advocates of free speech should be concerned about the use of employment conditions to constrain freedom of expression on matters that have little to do with the missions of employing organisations.

It seems to me that advocates of free speech should be encouraging community organisations and corporations to refrain from taking positions on cultural and religious issues that have little to do with their missions. We should continue to acknowledge that employers have the right to sack people who breach their employment conditions. However, we should support voluntary collective action to discourage organisations from imposing employment conditions that unreasonably restrict freedom of expression of employees.


Jim Belshaw has a follow-up post in which he refers to an article by Peter Singer suggesting that the ARU scored an "own goal" by firing Israel Folau. Singer cites Mill in support of free speech: "as John Stuart Mill argued in his classic On Liberty – once we allow, as a ground for restricting someone’s freedom of speech or action, the claim that someone else has been offended by it, freedom is in grave danger of disappearing entirely".
It is great to have common cause with Peter Singer on the importance of free speech, even though I disagree with his radical utilitarianism.