Uncertainty surrounding the use of potentially unsafe and combustible cladding in the construction of apartment buildings is undermining the ability of owners corporations to secure building insurance within the ACT.

As is often the case, these issues tend to begin with a trickle and soon become a deluge. Perhaps a more contemporary metaphor would reference a spark which becomes a raging inferno, hyperbole notwithstanding.

Across our city, owners of apartment buildings (owners corporations) are experiencing frequent occurrences of staggering premium increases, occasional difficulty in placing insurance at all, and a small handful of buildings being unable to secure building insurance of any kind within the available market. Current ACT strata legislation places a mandatory obligation on owners corporations to hold building insurance, and there is no doubt that as this crisis develops an increasing number of buildings will be uninsured and non-compliant.

In many respects, the risk exposure of buildings across Canberra is likely to be less pronounced than in other cities, whose skylines are littered with genuine high-rise apartments in every direction. I am on the record as saying that the number of at-risk buildings is probably quite limited, and that remains my position.

However, regardless of the actual risk, a more immediate and very real issue arises from the reluctance of the insurance market to offer terms to many buildings with "suspected" combustible cladding. In the case of individual buildings, not knowing about a problem is arguably worse than being aware of one and having a cohesive strategy to remedy it.

The obvious parallel issue is the inflationary impact on insurance policies across the apartment market, as underwriters price in the as-yet-unknown additional fire and safety risk across the board.

Often referred to as "privately owned" buildings, it is important to make the distinction that apartment buildings are not owned by institutional corporations. Rather, they are a collection of homes owned and rented by everyday Canberrans. The "private owners" in this context are made up of first-home buyers, mum and dad investors, downsizers and young working professionals. Incidentally, every four years on the third Saturday in October, they are also known as voters.

The ACT government should never be so proud as to ignore the good work of our neighbouring "mature" states. Indeed, as this crisis has developed across the nation there's been no shortage of clear leadership.

Victoria leads the way in this regard, having conducted a state-wide audit aimed at identifying buildings with non-compliant cladding. As of July 2019, 2227 buildings had been inspected. The taskforce identified 72 buildings as being an "extreme risk" and 409 buildings as being a "high risk".

In July 2019, the Victorian government announced a $600 million package to rectify 500 of the most at-risk buildings with combustible cladding, of which $300 million will be funded by a new building levy announced in July 2019. The levy will apply to new permits for multi-storey buildings valued at more than $800,000, but exclude single dwellings, developments in regional Victoria and schools and hospitals.

The Victorian government established Cladding Safety Victoria to provide support and guidance to owners and occupants of residential buildings with combustible cladding.

CSV is presently undertaking a pilot program of cladding rectification on 15 of the most high-risk buildings, as identified by the Victorian Building Authority.

Under legislation passed by the Victorian government in October 2019, amending the Building Act 1993 (Vic), authorities will have the power to pursue builders on behalf of owners corporations where the state is paying for the rectification of dangerous cladding on apartment blocks.

In a similar (albeit less robust) initiative, the NSW government's cladding taskforce has been conducting an audit of all relevant buildings across NSW. 2300 buildings have been inspected to date, and over 430 buildings have been identified as "high-risk". On July 4, 2019, the NSW government commenced a parliamentary inquiry into building standards, building quality and building disputes, with a view to producing a final report by May 14, 2020.

The Western Australian government has implemented a similar program to NSW.

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By comparison, the response from the ACT government would be best described as anaemic. So far, they have committed only to conduct an examination of public buildings (that is, buildings that are owned by the government) while essentially ignoring the plight of "privately owned" apartment buildings.

Recent comments in December 2019 from Building Quality Improvement Minister Gordon Ramsay that the government would "start work on identifying, where possible, the use of potentially combustible cladding on private buildings in the ACT" do little to offer comfort to an uncertain and nervous insurance market, not to mention the actual potential underlying risk to life and property.

While I am pointing out discrepancies between the ACT and other states, it would be remiss of me not to mention one specific and potentially inconvenient difference in relation to the certification of buildings. Unlike NSW and Victoria, in the ACT it is the role of the government to issue occupancy certificates for buildings and to approve the fire safety controls in place prior to issuing such certification. If insurers are concerned that buildings are not fit for occupancy, surely it is incumbent on the ACT government to step in to remedy this issue, as it is implicated in a way that most other states simply are not. The potential liability to the government is on a scale which could match the Mr Fluffy crisis of recent years.

There are some clear steps that need to be taken to get in front of this problem, before it reaches crisis point. On behalf of the community, the ACT government must undertake a complete and full audit of all buildings and prepare a remedial action plan (including consideration of compensation for owners and/or occupiers). In the meantime, the government should be prepared to step in and provide insurance for any "private" apartment building in the unfortunate position of being unable to secure building insurance.

Anything less than this would be just fluffing about. And the last thing Canberra needs is another "fluffy" issue.