Queensland Developer Review: Industry Gives its Verdict

Setting the tone or just plain tone deaf?

An insolvency avalanche, escalating construction costs, crippling skilled labour shortage, worsening housing supply and affordability crisis, rising interest rates and stubbornly high inflation.

It seems all that’s missing from the drama and challenges of Queensland’s property industry are the sombre strains of composer Frederic Chopin’s funeral march.

But according to industry players, the orchestra has started tuning up.

And following the recent release of a raft of reforms proposed by the Queensland government’s Developer Review Panel it is just awaiting the conductor’s baton to be raised.

“How to worsen housing supply. How to crash the (expletive) market. How to increase homelessness. How to kill (expletive) everything.”

That was the blunt, nail-in-the-coffin assessment by one Brisbane property heavy-hitter, who added: “You know that’s what everyone wants to say but they’re not going to put their name to it—it’d be political suicide.”

Another high-profile local industry figure contacted by The Urban Developer also declined to comment on the record on the panel’s recommendations.

“Look, I reckon I’ll just pass on it. There’s no upside in joining that debate. They’re going to do whatever they want to anyway, so there’s not much we can do about it.”

According to peak body the Property Council of Australia, the reaction is symptomatic of a bruised and battered sector that is already “on its knees”.

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▲ Property Council Queensland executive director Jen Williams: The report is completely off-key.

Not surprisingly then, it has been quick to decry as completely off-key the panel’s final report, Setting The Tone: The Role of Developers in Queensland’s Building and Construction Industry.

The centrepiece of reforms contained in the report is the introduction of a new regulatory framework for accreditation, disclosure and registration of developers.

Under the recommendation, a developer would be prevented from entering into a contract requiring a project trust account unless they obtained and maintained an accreditation.

Minimum requirements for accreditation would include ensuring they were a fit and proper person of influence, they meet minimum educational requirements and comply with a code of conduct and legislative requirements. Accredited developers also would be required to register each development activity and, under disclosure obligations, affirm they have appropriate finance to complete a proposed contract.

It is intended the new framework would be supported by a regulator—either a standalone organisation or incorporated into an existing statutory authority—with effective compliance and enforcement powers.

“Could there be a worse time to propose such a heavy-handed burden on the industry?” Property Council Queensland executive director Jen Williams says.

After weathering supply-chain issues, labour shortages and escalating construction costs—and at a time when the industry was being called on to “step up” and solve the housing crisis—she says, “It seems implausible the Queensland government would choose now to pursue a new regulatory framework that adds further costs and administrative burden to developers”.

“The past few years have been difficult for all participants in the property industry—builders, developers and consumers alike.

No smooth sailing

“And the outlook is certainly not one of smooth sailing ahead, with projects continuing to be placed on hold as consumer sentiment starts to crumble and feasibilities are placed under pressure.

“Now is not the time to be adding additional barriers to investment, confidence and delivery.

“A new regulatory framework will do nothing to boost or fast track housing supply—in fact, it will do quite the opposite.”

Inner-city Brisbane developer Pikos Group’s new chief executive, Michelle Wooldridge, agrees.

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▲ Pikos Group chief executive Michelle Wooldridge: Unprecedented headwinds.

“As an industry, we are facing unprecedented headwinds to unlock housing supply in Queensland,” says Wooldrige, who is also the Property Council’s Queensland vice-president.

“It’s disappointing that in a time when the public and private sector should be working together collectively and collaboratively, we are defending against increased regulation that will ultimately impact those suffering the most—Queenslanders in desperate need for housing.

“We encourage the government to carefully consider the ramifications and how this will impact every day Queenslanders.”

The Developer Review Panel was appointed in November 2021 under the Queensland Building and Construction Commission Act 1991 to conduct a review of the role of developers in the building and construction industry.

A case for change

It was established following industry feedback about the important role of developers, and the need to examine the impact of their financial and operational capacity, ethical behaviours and work practices.

The review came off the back of industry feedback about the important role of developers, and the need to examine the impact of their financial and operational capacity, ethical behaviours and work practices.

Its remit was to address security of payment in the sector and examine the impact developers have on the quality and safety of design, construction and certification of the built environment.

In the panel’s final report tabled in the Queensland parliament on June 8, Developer Review Panel chair Alison Quinn says the review had determined there was “sufficient qualitative evidence to warrant a case for change”.

“Developers have a primary role in setting the tone of projects, and they influence security of payment, solvency and building quality and safety in several ways,” she says. “This influence can be both positive and negative.”

Quinn says the panel’s suite of recommendations sought to “resolve identified issues, minimise regulatory burden, and provide the Queensland government with additional data insights to inform future policy development”.

“The panel has been conscious of current economic conditions, the impact this has on industry participants, and the impending increased level of construction to meet the state’s needs over coming years,” she says.

Five key recommendations have been made to lay the foundation of “a benchmark for a better standard for developers in Queensland”.

“The panel stresses that the proposed reforms are not the ‘high-water mark’, but rather minimum standards on which to build the future of the role of developers in the building and construction industry,” Quinn says.

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▲ Developer Review Panel chair Alison Quinn: The issues identified in this report are unlikely to recede.

As well as a new regulatory framework, the reforms include improved industry education, clarity of developer responsibilities in relation to non-conforming building products and fairness in contracting, and promotion of the uptake of digital tools for recording design and construction information.

“Queensland is about to undergo an extensive period of development and growth,” Quinn says. “The issues identified in this report are unlikely to recede.

“The panel encourages all parties—government, industry and consumers—to work together to consider the outcomes of this report promptly.”

Queensland Minister for Public Works Mick de Brenni says the government has not yet committed to implementing the recommendations and the release of the report is the start of a consultation process.

“The panel’s recommendations will need to be tested alongside feedback before the government forms a view,” de Brenni says.

“Industry experts, those working within the industry, and members of the public will be invited to provide feedback.”

Issue unclear

The Property Council’s Jen Williams says there is no denying there is always room for improvement in any industry, and property is no different.

“Throughout the review process, we expressed our support for improving education and business skills across the industry… rather than adding complex regulatory requirements.”

But she says from its inception it had been unclear what “issue” the review of developers sought to address.

“After more than 18 months of investigation, the panel has failed to find any significant or systemic wrongdoing by developers,” Williams says.

“In the absence of any issue being able to be articulated or quantified, the panel has chosen to focus on the role developers play in setting the ‘tone’ of a project.

“An extensive regulatory framework—requiring significant government investment in its establishment and administration—is now being proposed.

“Surely, in the midst of a housing crisis and with government balance sheets under pressure, public sector resources could be allocated to better uses than setting up a framework to regulate ‘tone’?”

Article source: Queensland Property Investor