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ACT government loan scheme to remove combustible cladding too late for some apartment owners

ABC News (AU) logo ABC News (AU) 6/04/2022
Neil Le Quesne says removing the combustible cladding will cost unit owners about $2.5 million in total. (ABC News: Greg Nelson) © Provided by ABC NEWS Neil Le Quesne says removing the combustible cladding will cost unit owners about $2.5 million in total. (ABC News: Greg Nelson)

Owners of an apartment building in Canberra's north say they have been forced to fork out between $50,000 to $80,000 each to remove dangerous combustible cladding from their building after years of delays from the ACT government. 

Like many people around the world, Neil Le Quesne watched on in horror at the Grenfell Tower fire in 2017 with the sinking realisation that he too lived in a building with cladding.

"We expected that it would not be flammable but to play it safe we got a specialist fire safety engineer to do some testing," the owners' corporation chair of the Space2 building in Turner said. 

"[But] they discovered that our cladding was flammable.

"The final report indicated that we have an intolerable risk and recommended we take action."

The assessment done two years ago found 15 per cent of the walls in the three-building complex were covered with dangerous aluminium cladding, which has polyethylene — made of petrol — as its lining.

Mr Le Quesne said the results were reported back to the insurance company which told them premiums would rise 40 per cent. He said a switch to another insurance provider was not possible, with none willing to take the building on.

Mr Le Quesne said it spurred the owner's corporation into action to replace the cladding at a cost of $2.5 million and works began late last year.

"We wrote to the government and asked them if they could provide some assistance at that stage, they replied that there was no assistance on offer but they were looking into it, and we had to proceed ourselves," he said.

Now, the ACT government has announced a $50 million concessional loans scheme for Owners Corporations to remove combustible cladding — something Mr Le Quesne said came too late for unit owners like him.

Sustainable Building Minister Rebecca Vassarotti said the government's loan scheme unveiled this week, followed an earlier 50 per cent rebate to get apartment buildings, primarily above three storeys, assessed.

"We have been really working with the community, with other jurisdictions in terms of identifying what the issue is and working to ensure that we've got the right programs and strategies in place," Ms Vassarotti said.

Under the scheme, loans will be administered by an external provider and offered at the government borrowing rate — currently between 2.5 and 3 per cent — with a maximum limit of $15 million per Owners Corporation.

"Regrettably, it doesn't appear that it is any assistance to us at all, because we felt that we had to move, we felt pressure," Mr Le Quesne said of the loan scheme.

He said not only had the Space2 Owners Corporation paid for the remediation work out of their own pockets, but they were also slugged with development application fees to proceed with the necessary works on the eight-storey and three-storey buildings.

"We made [an] application for relief from fees and charges. Regrettably, they wrote back to us saying that we will face the full charges, which in our case were about $40,000, and this is an additional cost to the already substantial amount we're paying," Mr Le Quesne said.

Ms Vassarotti said the fees were "essential" for the compliance work involved to ensure community safety.

'Two and a half years coming, and it's not enough'

Owners Corporation Network ACT president Gary Petherbridge said Space2 was not the only owners' corporation in Canberra that could not wait for the government's loan scheme.

"A lot of the owners' corporations who were identified early on with their insurance issues have already done the work or are already starting the work," he said.

"There's a large number of them that have already gone off and proactively responded … and this is because of the government's delays.

"It's been a long time coming, two and a half years coming, and it's not enough."

In New South Wales, the government announced a similar scheme a year ago to assist owners' corporations to remove the cladding but, unlike in the ACT, those in NSW will pay no interest.

Ms Vassarotti defended the loan scheme's interest rates, pointing out the ACT's combustible cladding support offered more than some other states and territories.

"The issues, particularly in Victoria and New South Wales, are significantly different in terms of the risk profile for the ACT and other jurisdictions," she said.

"Other jurisdictions are not providing any support for private owners, so we're really trying to strike a balance in terms of identifying what the real challenges are, and the barriers are for owners' corporations while ensuring that we've got a program that supports the broad community risk."

But Mr Petherbridge said it was not fair that owners had to pay interest on the loans, since the cladding removal was a result of the government's failure to identify it as unsafe earlier.

He has also called for the development fees to be waived.

"The ACT is charging people for the loans in terms of the interest. They're recouping other money by project development fees from the places doing the rectification work," he said.

Safety assessments reliant on self-reporting

While the ACT government has been accused of being slow to act when it comes to a loan scheme, it was one of the first jurisdictions to question the use of aluminium cladding.

The safety of some of the materials was raised in the Legislative Assembly in 2009.

The following year, ACT firefighters aired concerns it was being installed in Canberra buildings.

Greg McConville of the United Firefighters Union ACT branch said those concerns remained.

"The panels are effectively a sandwich of aluminium and polyethylene. Polyethylene is made of petrol – when it's heated it burns, it drips, and spreads fire," he said.

"We will continue to have concerns about that until it's removed."

An initial visual assessment by ACT Fire and Rescue found up to 90 apartment buildings were suspected of having combustible cladding, now about 65 have been confirmed as eligible for support.

Mr McConville said the ACT government had yet to audit privately-owned buildings in Canberra, and without this there could be some missed.

"We don't know where all of these panels are and there will remain buildings in the ACT where there is a fire risk because of these panels," he said.

"It relies entirely on self-reporting; it relies on those building owners to come forward and say 'we think we have these panels and we'd like it checked.'

"There will be many building owners who simply don't do that, and in the absence of an audit, we won't know how big this problem is."

The ACT commissioned an audit of public buildings after the Grenfell tragedy and 14 buildings have been rectified with works on nine expected to be completed by the end of the year.

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