THE Australian economy is potentially gaining an economic benefit of $1.1 billion a year as a result of building regulation reform, according to a new report commissioned by the Australian Building Codes Board (ABCB).
The report, 'Benefits of building regulation reform: from fragmentation to harmonisation', was prepared by the Centre for International Economics and examines the impact of three major building regulation reforms since the early 1990s.
The three reforms are: the introduction in 1992 of a national building code reducing differences in building regulation across states; a performance-based construction code in 1996 allowing flexibility and innovation in building design; and the consolidation of building and plumbing regulation into a single National Construction Code (NCC).
ABCB chairman, John Thwaites, said the report's findings confirm the value of building regulation reform to the Australian economy, while adding that there is potential to deliver further savings through a range of measures.
"The report demonstrates that the NCC is delivering economic benefits and reducing compliance costs through greater national consistency and by focussing regulations on performance outcomes of buildings rather than on prescriptive requirements" Mr Thwaites said.
"The pooling of effort toward creating regulations at a national level, not only reduces duplication, but also leads to a higher standard of regulation."
Mr Thwaites said the performance based code encourages innovation by allowing greater flexibility and more efficient design to achieve desired standards. He said industry stakeholders interviewed for the study indicated that performance based standards had led to productivity gains of one to two per cent, or around $738 million per year.
"All up, the economic benefits from a consistent national code ($304 million), performance based standards ($737 million) and a joint building and plumbing code ($61 million) total $1.1 billion a year," Mr Thwaites said.
The report finds that the full potential of the national code and the performance-based standards may not have yet been fully realised.
"Ongoing jurisdictional variations, variations in interpretation, application and enforcement, interference by councils, utilities and land developers and a lack of objectivity in standards are some of the main factors considered to be limiting the full potential of the reforms being realised," the report states.
"These are issues that the ABCB will continue to work on with the state and territory administrations in particular as it continues to seek greater levels of access to, understanding of and therefore compliance with the NCC," Mr Thwaites said.