2022 Federal Election

Strata Community Association Election Priorities Feature

As urbanisation continues to climb across Australia, so too does the growth of strata, as more and more Australians seek the diverse benefits that strata living has to offer. Currently, at least one in five Australians belong to a strata community.

As a result, the strata industry is well positioned to have a significant impact on the upcoming federal election, and SCA is committed to driving the national conversation towards the needs of strata communities.

In this feature, we will outline what SCA has identified as the three principal areas in need of reform, notably:

• Sustainability in Strata 

• Building Defects 

• Strata Insurance

As well as highlight SCA’s plan of action of combating these issues moving forwards towards the federal election.

Election Timing

Although at the time of this publication the date of the election has not been set, the next federal election must be held no later than 21 May 2022. The Federal Budget will be handed down on Tuesday 29 March 2022 and with the likelihood that it will be handed down prior to the election and the Easter and ANZAC holidays dominated April, an election in May looks likely at this stage. SCA spent the second half of 2021 actively engaging with the government and relevant government departments on issues critical to strata, and 2022 will kick off in earnest as we take our priorities for the Budget and the election to Canberra.

Although our election priorities have not been formalised or launched at time of publication, there are three critical issue areas that the federal government in particular can address to improve strata living and governance. These three issues will certainly be part of our advocacy agenda in the lead up to the election, and here is a rundown of the key points in relation to each.

Sustainability in Strata

SCA has declared its commitment towards a push for sustainable development of strata communities, and it forms a large part of SCA’s platform in 2022. Sustainable development has the potential to produce measurable economic, social and environmental benefits for all strata related stakeholders, including residents, developers, owners, strata managers and the government itself.

In 2021, the government released its plan for Australia to reach a target of net zero emissions by 2050, a plan which heavily relies on investment and implementation of low emissions technology. Assistance from the federal government in investing and implementing initiatives in strata can multiply the efficacy of reaching sustainability goals, reducing the footprint of a far larger scope of households than if focusing on an individualistic household approach alone. With millions of Australians living in strata complexes throughout the nation, and as many as one in four residents in Victoria and New South Wales, the needs of strata must be well represented in order to reach the goal of net zero emissions and a greener future.

We are asking the federal government to work in conjunction with SCA and invest in attainable energy efficiency and sustainability programs within strata communities, that will see significant and long-lasting impacts on emissions reductions, energy costs and overall liveability.

Programs that government can support and grow sustainability in our strata communities include (but are not limited to): 

• Installation of electric vehicle charging stations; 

• Implementing renewable energy generation and consumption technology; 

• Improving waste and recycling management systems; 

• Upgrades to lighting and electricity infrastructure; and 

• Commitment to practices in line with the United Nations Sustainable Development Goals (SDGs).

Building Defects in Strata

Building defects in strata complexes represent serious health and safety risks and can therefore have significant impacts on the quality of life for strata residents, owners and managers.

As covered in previous issues, data collected in the Office of the NSW Building Commissioner & SCA (NSW) 2021 Research report on serious defects in recently completed strata buildings across New South Wales found that 39 per cent of strata buildings in NSW had experienced serious defects, most commonly related to waterproofing (23%) and fire safety (14%).

Serious building defects cost an average of $331,829 per building to fix, with a considerable proportion of projects taking over a year to complete.

We know that the biggest barriers that face the resolution of building defects are the associated costs, knowledge regarding rights and responsibilities and owner’s corporation agreement on the direction of rectification.

SCA recognizes that strata managers are an integral in the process of resolving building defects and endure much of the responsibility regarding the insurance claims process, as well as leading the direction of owner’s corporation decision making.

As a result, SCA will be prioritising:

• Methods to increase education in effective building defect rectification processes for strata managers and owners corporations; 

• Improvements in regulation, compliance, building standards and construction practices for strata complexes; AND 

• Improving the efficiency of the claims process for strata communities.

SCA believes that building related defects are preventable, and that by working closely with the federal government better consumer outcomes can be obtained in the future.

Strata Insurance Complexity and Cost

In September of last year SCA released its highly anticipated strata insurance report, A Holistic and Data-Driven Analysis of Strata Insurance in Australia and New Zealand, led by Dr Nicole Johnston, Senior Lecturer in the Department of Finance at Deakin Business School. Its onset drew attention to the substantial number of challenges relating to the affordability, accessibility and high complexity of strata insurance. The report highlighted that 38 pieces of legislation regulate strata insurance, and that owners corporations rely on a complex aggregation of service providers within the system to effectively meet the specific requirements of strata communities.

Stamp duties were found to represent a significant cost to consumers, with the various duties, levies and taxes imposed on schemes creating a ‘compounding’ effect that drove up the cost of the required comprehensive insurance coverage for strata, with the report showing that stamp duties could consist of anywhere between 20 to 40 per cent of total costs.

Alarmingly, lack of population density coupled with high risks from frequent extreme weather events severely impacts the insurance market in the northern areas of Queensland, Western Australia and the Northern Territory. Residents are disproportionately affected by the affordability and availability of insurance, left with surging insurance premiums year on year as many insurers leave the market completely. Whilst unpredictability will be an ever-present issue in this area of Australia, practices can be introduced to mitigate the effect of weather unpredictability on insurance costs and availability.

However, affordability and accessibility of insurance is not solely an issue that impacts Northern Australia, as the Deakin Strata Insurance Report showed that the total cost of insurance for owners corporations nationwide in 2020 came to $1.08 billion, an increase of $461 million since 2016.

In order to rectify the issues facing strata insurance, SCA will be working to: 

• Support the introduction of an effective reinsurance pool in affected areas of Northern Australia to increase consumer protection and put pressure on rising costs; 

• Assist the federal government in compelling the respective state governments to reduce stamp duties and other related fee and levy relief through abolition, reduction or capping; 

• Increase widespread knowledge of the role that strata managers perform in the insurance claims process; and 

• Increase efficiency in the insurance claims cycle to reduce the difficulty and length of the process for strata managers, owners and residents.

1 Hazel Easthope, Sian Thompson and Alistair Sisson, Australasian Strata Insights 2020, City Futures Research Centre, UNSW, Accessed at cityfutures.be.unsw.edu.au/research/projects/2020-australasian-strata-insights
2 Serious defects in recently completed strata buildings across New South Wales | September 2021 Accessed at nsw.gov.au/sites/default/files/2021-10/Serious_defects_in_residential_apartments_research_report.pdf
3 Ibid
4 Johnston, N., Lee, A., Mishra, S., Powell, K., Bowler-Smith, M and Zutshi, A. (2021). A data-driven holistic understanding of strata insurance in Australia and New Zealand. Deakin University. p. 3-13.
5 Johnston, N. et.al (2021). p. 83.
6 Johnston, N. et.al (2021). p. 25.