Gotti pukes prune juice on unions over flammable cladding

By Leith van Onselen

Robert Gottliebsen (“Gotti”) has hit the prune juice hard today, blaming the widespread use of flammable cladding across Melbourne’s high-rise apartments on the Construction, Forestry, Mining and Energy Union (CFMEU):

It might take one, two or three years but sometime in the future a wall fire will break out on an Australian apartment or office tower that is cladded with flammable material.

…in Australia our use of imported flammable cladding was greater in Melbourne than most other centres, particularly Sydney. And when we look at a key reason why this happened we can see the power of the CFMEU’s contractor approval model and how it might work if the CFMEU were to combine with the waterfront union.

…as the new union business model spread through the building industry, cladding makers like most other commercial building suppliers had to work to the union rules which added around 30 per cent to the costs.

That’s a loooong bow that Gotti has drawn, conveniently failing to mention the role played by escalating land (site) costs, which has forced developers to cut corners on construction costs and use cheap inferior product. Nor has he mentioned the influx of ‘fast and loose’ foreign capital, nor the other likely cause: simple developer greed.

Funny, because the CFMEU is one of the parties that ‘rang the bell’ on flammable cladding and demanded stronger government regulations long before the Grenfell disaster happened in June 2017.

Here’s the CFMEU in May 2015 – two years before the Grenfell disaster:

MICHAEL O’CONNOR, CONSTRUCTION, FORESTRY, MINING & ENERGY UNION: It [flammable cladding] endangers the public, it increases the chances that someone’s gonna be killed or someone’s gonna be seriously injured and that’s a concern for everybody…

This product is rife. It’s used in buildings throughout Australia. All the information we’re receiving, Brisbane, Perth, Melbourne, every capital city, we believe this product is used in many buildings and particularly in high rise buildings…

The material that’s fire-resistant is a lot more expensive than the material that isn’t, so if you’re a builder and you see two different products, one’s a lot cheaper and you get told that it meets Australian standard, you can’t blame the builder for going for that product…

When it comes to building materials and particularly imported building materials, it looks like no-one’s in charge. So we have a flood of building materials being brought into this country, some claiming to meet Australian standards and we know they don’t, some not even bothering to make a claim of meeting Australian standards. And when you go to the different authorities, whether it’s the ACCC, whether it’s the building code authorities, everybody’s trying to say it’s somebody else’s problem.

Here’s the CFMEU again in June 2016 – one year before the Grenfell disaster took place:

MICHAEL O’CONNOR, NATIONAL SECRETARY, CFMEU: Most buildings that we see, most modern buildings we see now, we have cladding material used, whether it be residential, office, hospitals, stadiums. So there wouldn’t be many buildings where you wouldn’t use a cladding product now…

What we do know is that the cladding we are using increases the risk of fire, increases the risk to people’s lives and we also know that both the Federal Government and many state governments haven’t done anything about it.

Two prune juices is enough, Gotti.

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Comments

  1. “…use of imported flammable cladding was greater in Melbourne than most other centres, particularly Sydney.”
    So, no problem with MERITON apartments, then, all good with Triguboff.

    • Ha! That was my first thought too. Can’t go negative on highrise construction standards without exempting HRH.

    • Kormanator_T800

      Sydney owners are in deeper trouble – Hi-rise Harry paid Mike Baird to change the law to let him off the hook:

      Many owners of the 1000 NSW buildings identified with possible non-compliant cladding won’t be able to claim against their developer or builder because the two-year window to make such claims will have passed, a property lawyer says.

      A change in law cut the window to make such claims from seven years, in part to reduce the risks for the statutory warranty insurance the state government underwrote.

      This meant owners of buildings built under a contract agreed after 1 February, 2012 – which includes many built in the current housing boom – would not be able to claw back the costs of rectifying any non-compliant cladding.

      http://www.afr.com/real-estate/nsw-building-owners-to-cover-costs-on-cladding-rectification-values-at-risk-20170829-gy6edn

  2. pretty ironic that you are blaming the flammable cladding on rising land prices, dont you think?
    after criticising gotti for the same sophistry

    the flammable cladding was consciously chosen by developers in order to maximize their profits

    • Yes – it was there, it was cheaper, there was nothing preventing its use. What more reason did the developers need?

      • Ronin8317MEMBER

        The Australian standard for flammable cladding doesn’t exist. Maybe we need to ask why there isn’t one even though there seems to be one for everything else.


      • Except it did not comply to Australian building standards and codes

        Fair enough – just give a list of all the developers who’ve been prosecuted with hefty penalties applied due to using the non-compliant materials and you’ll demonstrate how irrational their use has been.

    • UE does state ‘the other likely cause: simple developer greed’. Also, I took UE’s reasoning to be that if Gotti is to attribute the use of non-compliant cladding to costs, then the more likely factor is land not labour.

      • rubbish

        “That’s a loooong bow that Gotti has drawn, conveniently failing to mention the role played by escalating land (site) costs, which has FORCED developers to cut corners on construction costs and use cheap inferior product.”

        FORCED

        As if they werent making money hand over fist

      • bolstroodMEMBER

        @ UE
        Gotti is trying to discredit the CFMEU and the Maratime Unions.
        How coincidental that these 2 unions are to be part of the new Super Union.
        Gotti is being a Catspaw for the Bosses as usual.

    • The counterfactual is ‘would developers have avoided the unsafe cladding had land prices been lower?’
      My guess is ‘no, of course not’, not least because with lower land prices the building costs (including the cladding costs) would be a greater component of the eventual price.
      It works for Gotti too – ‘would developers have avoided using unsafe cladding if there was no such thing as the CFMEU?’
      No, of course not.

  3. This is clearly a failure of reguation. If Australia doesn’t have a regulatory framework which prevents use of dangerous materials in building, there’s no need to look any further for the root cause of the problem.

    Apparently building regulation has been privatised. Which was clearly a very poor decision by whomever made it, and also a failure of subsequent decision-makers not to reverse it.

    Blaming developers for cutting costs, or unions for whatever, is ignoring the actual problem. Regulation exists to prevent exactly these sorts of problems.

    • Works both ways, why is not liability placed where it deserves to go. ie the developer? Problem with so-called standards is people just look at the sticker on the outside of the box and say ‘no worries mate’ it has the tick.

      A builder should know what the hell is actually in the products you are building with. Instead people have coated these buildings in petroleum and when they go up in flames we get the rousing rendition of whocouldanode, whodathunkit. It is the law of unintended consequences.

      • Some truth to that, the developers/builders are also at fault. However, time and again its shown that if you dont have proper regulation, standards fall below whats acceptable. If you had proper regulation and inspection regimes etc with punishments, then far less likely anyone would try to cut corners.

      • Dave,

        Don’t get me wrong we should still have regulation, however the issue/aim of regulation should not be to try and accredit every product that human ingenuity can devise under some all-knowing, all-seeing regulatory body because the regulation/regulators will never keep up.
        The regulation (for example in the case of fire resistance) should state a measureable/real-world testable standard for fire resistance/flammability. And circumstances in which it should not catch fire or time-period in which it should be resistant to fire.

        We also need to get back to a proper market economics/pricing. Given a building with poor/risky/flammable cladding, this should be reflected in the asset price (i.e. a fall), such that a new (presumably more responsible) owner can come in, and afford to invest in new cladding and then put the properties back on the market.
        We seem to continue to insist on governments bailiing out (or exempt from liability) these losers who made the poor decision in the first place and then wonder why we end up with an increasing number of said losers running and owning the system.
        Something like the exterior of a building (and products in general) should have a defect liability period more suited to the age/life of the product. i.e. the case in NSW where you have 2 years is a joke.

      • drsmithyMEMBER

        Works both ways, why is not liability placed where it deserves to go. ie the developer?

        Why not both ?

        We also need to get back to a proper market economics/pricing.

        HTF is it reasonable to expect Joe and Jane Average Homebuyer to know the intricacies of proper and safe building construction, and whether or not their new home is compliant, even if they’re buying OTP, let alone the 2nd/3rd/4th/10th owner down the track ?

        That’s about as reasonable as blaming VW drivers because their cars can’t actually pass emissions tests when they’re being driven.

    • It was actually the inspection and compliance that was privatised, straight to the actual builders. The regulations exist but are completely ignored because they only have to sign it off themselves, with no long term consequences.

    • DominicMEMBER

      People obsess too much with regulation. The other way to approach the issue is to have no regulation at all, then the onus would fall on the developer to prove to would-be-buyers the merits of the building. Savvy developers who knew of shonky developments elsewhere would market their own by highlighting “non-flammable cladding” etc, thereby drawing attention to the fact that other developments may have it. Butchers these days are always advertising meat as “Hormone Free!”.

      The very existence of ‘regulations’ makes consumers complacent as they believe that Govt has all bases covered. What could possibly go wrong? People rely too heavily on Govt to protect them when they have no business doing so as these bureaucrats are hardly infallible – and nor are they incorruptible. Those willing to shell out hundreds of thousands of dollars without doing any homework deserve all that’s coming to them.

      • drsmithyMEMBER

        The other way to approach the issue is to have no regulation at all, then the onus would fall on the developer to prove to would-be-buyers the merits of the building.

        How is the average purchaser supposed to know whether or not they’re being lied to ?

      • The problem with the ultra-libertarian no-regulation free-market free-for-all is that the process of allowing the “market” to reveal the good products and the bad ones involves a lot of people burning to death.

      • Presumably, the purchaser would sign a contract that stated that a particular non-flammable cladding had been used. That would open the developer up to being sued if it turned out not to be true. It is pretty standard for contracts to specifically request that a counter-party confirm the accuracy of all statements therein. The bottom line is that a developer would probably go out of their way to install the better cladding simply to make that point of difference — suppliers of a product or service are inherently reaching for a ‘point of difference’ as a matter of course. It’s unlikely that it would add more than 1 or 2% to the overall cost of a unit, which is a small price to pay for safety. Again, a selling point to buyers.

        Now, it is true that a lot of developers have a habit of going bust just as the law-suits flood in. Most purchasers in a ‘wild-west’ situation (i.e. zero regulation) would be aware that this presents a risk and would demand (from smaller developers, at least) that a certain portion of their profits from a development remain in escrow for a minimum period of time, such that claims could be made against it. The alternative is that the small developer makes a personal guarantee i.e. all his assets are fair game to plaintiffs. If potential purchasers are still unhappy that they have sufficient security they can purchase instead from a large, listed company for peace of mind. Either way, purchasers will have the freedom to choose under which risk scenarios they undertake a transaction. The over-riding point here is that in an environment where there is no regulation whatsoever and therefore maximum risk to the buyer, the ‘burden of proof’ falls heavily on the seller. In today’s environment, very few purchasers do any due diligence as they assume the authorities have done all that on their behalf.

      • Arrow, only the terminally incurious would burn to death — and that’s good thing for the survival of the human race.

        Right now, the SJWs / Progressives etc are trying their damnedest to ensure that the worst genes proliferate.

        As the great George Carlin (opining on the future of the human race) said: “We’re goin’ away … pack your sh!t, folks”

        https://www.youtube.com/watch?v=suIePaXzuIQ

      • drsmithyMEMBER

        The problem with the ultra-libertarian no-regulation free-market free-for-all […]

        The problem with the ultra-libertarian no-regulation free-market free-for-all is that it fails even a cursory application to reality.
        Because if it actually worked, it would already be working.

      • drsmithyMEMBER

        Presumably, the purchaser would sign a contract that stated that a particular non-flammable cladding had been used.

        How would the purchaser know what to ask for ? How would they know how to verify it ? How do they know a particularly non-flammable cladding actually was non-flammable ?

        That would open the developer up to being sued if it turned out not to be true.

        Sweet ! Shame the purchaser is probably dying by the time they find out and the developer has phoenixed into another company so their next-of-kin can’t sue either.

        Some of us think it’s better to have a go at putting a better door on the barn, even if occasionally it still swings open in the middle of the night, rather than relying entirely on beating the stableboy after every horse escapes in an effort to scare every other stableboy into more responsible behaviour.

        The bottom line is that a developer would probably go out of their way to install the better cladding simply to make that point of difference — suppliers of a product or service are inherently reaching for a ‘point of difference’ as a matter of course. It’s unlikely that it would add more than 1 or 2% to the overall cost of a unit, which is a small price to pay for safety. Again, a selling point to buyers.

        So why haven’t they already been doing that ? Because saying “hey, those other guys over there are cladding their buildings with illegal solidified napalm that in the best case you you will have to stump up tens of thousands of dollars to remediate and in the worst case will give you and your family like Joan d’Arc, but ours are built to code” as a “point of difference” is entirely independent of Government regulation (or lack thereof).

        This is the core problem with the whole “we don’t need no regulations” fantasy. Evidence demonstrates time and time and time and time and time again that the “logic” behind it simply doesn’t work in reality.

        In today’s environment, very few purchasers do any due diligence as they assume the authorities have done all that on their behalf.

        Thus allowing them to focus their attention on more productive things than becoming experts in building techniques (and, indeed, everything else in the world from food supply chains to vehicle mechanics like they would have to in Libertarian utopia) just so they can have a decent chance of not being horribly maimed or killed, or being rendered bankrupt because of somebody else’s greed and/or negligence.

        Hence, we see a practical example of one of the fundamental enablers of the high living standards in what some of us like to call modern civilisation. Or at a more basic level, one of the key organisational structures (skills specialisation) that defines us as an intelligent species.

  4. So apartment burns down, no worries mate, still covered by insurance, insurance money used to build new apartment.
    Everybody wins. An all-round boost to GDP.

    /sarc

    Unions are as responsible as anyone else in this chain of events IMO. They are happy for their members to fit the stuff to buildings despite their concerns, so long as they are compensated sufficiently to look the other way. Game of mates.

  5. I’m no fan of the CFMEU but blaming them for the cladding problem is disgraceful.

    I would note that blaming other costs (eg land prices) for poor cladding is invalid as developers will cut every corner they can to maximise profits at all times in all circumstances. Corruption abhors a vacuum.

  6. reusachtigeMEMBER

    I think the general consensus is that any remediation work that is needed to fix this problem should be paid for by the government as they let it happen. It should definitely not be paid by owners as it is unfair to them and they will just jack up rents many times over, nor should it be paid by the developers who were just trying to maximise profits. It will, of course, thankfully be government.

    • Bullshit. You bought it, you own it, you deal with it, caveat emptor.
      Oh and by the way if you don’t fix it you’re going to jail if deaths were to occur by the failure to remediate the issue.

      • That’s BS, you build a car with defective airbags, you have to fix them, even 10+ years later.
        You build a building that has defective cladding that doesn’t meet Australian standards, you should have to fix it, and go to jail if you don’t, and they would, except for the game of mates.

      • Of course the builder should pay. However we all know that the developers in Australia seem to go bust at the drop of a hat. In circumstances of prior directors/operators not being found the buyer/owner should pay, (caveat emptor) to rectify issues.
        Being reliant on a ‘standard’ also invites the ‘oh well it met the standard’ and buck passing mentality that ends up excusing the builder for poor choice of material so they will never have to rectify anything.

        Ideally the owner/buyer needs to do better due-diligence.

        See my other comments above.

    • I agree Reusa, we should definitely privatise the profits and subsidise the losses via the tax payer. That’s the Capitalist system that works for everyone!

  7. Don’t understand what the fuss is. It’s just dog boxes in the sky owned by foreigners to park their cash and kept empty. Let the foreigners pay if they want to fix it or let it burn down. Either way, it won’t affect us.

  8. Unions are in the process of becoming structurally irrelevant, hence the pressure to merge. Merging keeps alive the great hope that they will be relevant again, but mostly is a direct admission of weakness.

    The flammable cladding point is very important – if unions had the relevance they once had, the flammable cladding would simply not have happened. That flammable cladding happened, suggests that the rot is too far gone. They know it, we know it, and in the words of someone smarter than me, ‘first slowly, then quickly’, everyone will know it.

    Politicians definitely know it, hence the gutting of the existing labor force via mass immigration and free trade agreements.

    Edit: Gotti is a symbol of his generation, also known as, the dumbest generation of narcissists in the history of the world.

  9. The cladding is illegal – not just cheap.

    When car warranties are 7 years long, the flat warranties should be too.

  10. Flamable cladding has an easy solution. Set fire to it. Problem will literally go up in smoke.

  11. Disgusting. There is no justice in the world when you can publicly fling mud all over the body that rang the bell, safely in the knowledge the sitting government of the day is likely to back your claims just because of partisan nonsense.