Australian Industry Group to explore use of sub-standard building products

For most of us, 'standards’ do not comes across as a particularly exciting area but in terms of the contributions product standards make, including in creating a fair and level playing field for Australian businesses, the issue is hugely important.

A major component in developing a fair market place– and perhaps an obvious one – is the creation and use of products and materials that conform to Australian standards and regulations. 

Unfortunately, businesses manufacturing and supplying products – including to the building and construction sector – are concerned at what they see as increasing competition from products that do not conform to Australian standards and regulatory requirements. This presents both safety and economic risks.

How widespread is the use of non-conforming products? At present there is not any really good source of information to answer this question but Ai Group has been receiving anecdotal reports of non-conforming products over the last few years and we now see that this issue is worth close examination.  Accordingly, we are embarking on a research project with an initial focus on the building and construction sector.  

The cost argument is one aspect we will be exploring.  How much does price dictate purchasing decisions and do customers give enough weighting to safety and conformance when sourcing their inputs?

Unfortunately, despite the potential very real dangers from using non-conforming products and materials, the regulatory burden is falling increasingly on importers and producers.  And the incentive to act is sometimes slim. Businesses feel they are effectively forced to pay twice under the current regulatory models: once to cover the cost of their own compliance; and secondly to fund Government enforcement on non-compliant competitors.  There is clearly a problem with the system when a growing number of companies believe the benefits of non-compliance outweigh the risk of being penalised.  This is putting those who are adhering to the growing regulatory burden at a huge competitive disadvantage.

Some sectors are achieving engagement with, and response from, regulators to start to address non-compliance. The electrical equipment industry, for instance, is working with regulators to redesign the current state-based electrical safety regulations. The aim is to achieve harmonisation across jurisdictions; visibility of equipment suppliers to regulators and consumers; and increased surveillance and compliance activity.

Electrical contractors are a vital link in the supply chain and their purchasing decisions affect the amount of non-conforming products in the market. As we have been highlighting in an awareness campaign, linked to our research project, electrical equipment standards exist to provide mandatory minimum levels of safety and performance. The entire electrical equipment supply chain, including manufacturers, suppliers and contractor installers have serious legal obligations to ensure that equipment supplied or installed meets the conformance and regulatory standards of Australia.

For example, electrical contractors who purchase electrical equipment from overseas are classified as  equipment importers and need to ensure equipment is designed, examined and tested to be electrically safe. The risks associated with importing, selling, supplying or installing non-conforming or counterfeit electrical equipment include fire, injury and death.  Penalties range from fines, imprisonment, loss of licenses, invalidation of liability insurance, legal action and risk to professional reputation. Additionally, there are severe penalties in place for non-compliance with state electrical safety laws.

Of course there is a wider issue of non-conforming products across broader industry sectors.  Following endorsement by the Prime Minister’s Manufacturing Leaders Group, Ai Group is examining the problems created by non-conforming products in the building and construction section and gathering further evidence on the scale and extent of these issues across the country.

The focus of the project will be the major product categories of steel, glass, electrical, engineered wood products, aluminium, paint and adhesives. We are working with companies, other industry bodies, and regulators to find the product types and industry sub-sectors most at risk. We will be mapping existing regulatory scope, controls and priorities to try to identify any gaps that may exist.

With different regulations, standards and compliance mechanisms applying in different sectors it means there will not be a single solution across all sectors or product issues. Identifying the failure points in each sector will provide direction as to the solution for that sector. Case studies identifying successful strategies will be useful and businesses reporting non-compliance should be prepared to provide specific examples or evidence to support their claims.

The findings will form a general report including recommendations to industry and governments. We will host an open forum to launch the report and discuss with all stakeholders the best way forward. We see this initial research as an important first step to solving this issue.

The impact on product and building safety is of great concern and the uneven market created by non-conforming products risks a downward spiral of product standards and quality with the potential for significant harm to Australian manufacturers.

 

 

Ai Group is seeking to work with industry bodies, regulators and businesses to research this issue. Interested parties can contact David Crossley (david.crossley@aigroup.asn.au or phone 02 4254 2502) or James Thomson (james.thomson@aigroup.asn.au or phone 02 4925 8313) to contribute information to this project.