A focus on enhancing innovation pathways brings better outcomes, and larger, ideally national markets, and more competition that can lower costs of building.

New ways of working, and new systems that are simpler and faster, should find widespread support in a competitive industry. But productivity in building has been flat and is declining over time. One explanation is that innovation is not sufficiently rewarded. In other words, productivity does not rise to the quality of our ideas; it is constrained by the capacity of the systems around them, including codes, planning rules and available skills. Innovation is therefore not primarily an exercise in creativity, but an exercise in expanding the capacity of institutions to turn possibility into reality.

New products can have compatibility challenges with legacy systems from Modern Methods of Construction (MMC), Electric Vehicles (EVs) to Artificial Intelligence (AI). In recognition of coming innovations, NCC 2025 will require new products be tested by Accredited Testing Laboratories (ATLs) and older pathways such as expert judgement restricted to solutions other than fire and structure. This is a worthwhile improvement to legacy systems which recognised the legacy systems can’t cope with the changing nature of the products in decades to come. It also increases the importance of maintaining sufficient domestic testing capacity and why in June, when CSIRO executive announced its intention not to renew the lease for its North Ryde Fire Technology Laboratory beyond December 2026, HIA raised the alarm with industry.

CSIRO has been a cornerstone of building material testing in Australia. Its North Ryde facility began as The Commonwealth Experimental Building Station in 1944, to deal with the anticipated post-war housing shortage, the shortage of building materials, and to improve the quality of housing construction. The decision is based on its property strategy, financial constraints and organizational priorities which are orientated to climate, clean energy and advanced technologies. Since HIA raised the issue with government, the lease has been extended by six months.

Risk with closure 

The decision is difficult to reconcile with the federal government’s aims to make housing more affordable, simplify approvals, support innovation and strengthen Australian manufacturing.

Its closure will leave only one large scale commercial fire test facility in Australia, capable of full-scale fire tests for cladding, walls floors and façade tests developed in response to the Lacrosse and Grenfell fires.

The loss of local testing capacity would limit their ability to innovate and iterate testing of new products locally in a timely and cost-effective way, weakening domestic competition in fire testing. Overseas alternatives mean longer timeframes for appraisals or retesting at additional costs.

Today during another housing crisis, the solution is unlikely to involve less support for housing innovation and research.

Worrying signs for innovation

This matters because testing capacity is not a peripheral technical issue. It is part of the infrastructure that allows new products to move from idea to approval.

Research and Development (R&D) expands our knowledge, products and processes gives us better and more efficient ways of working, enhances Australia’s economic complexity and can lead to stronger economic growth. 

Australian Industry spends less on research than comparable economies. Overall government makes a modest contribution (less than 20%) to total funding of R&D; most currently comes from business itself.

Industry data shows medium sized business of more than 9 employees are most innovation active^1. However, Australia’s industry base has a shrinking band of medium-sized businesses.

Small business on the other hand often lacks the resources to engage in active innovation. Nearly 20% of construction firms that face barriers to innovation cite government regulations as the cause.

HIA’s previous work highlights that regulatory ambiguity, inconsistent approval pathways, and misaligned frameworks remain key factors constraining broader uptake of innovative systems like prefabrication.  These barriers create uncertainty for industry participants, increase project risk, and limit the ability of businesses to confidently invest in new methods of construction. While the promise of time savings, and cost effectiveness these systems offer requires scale.

The dominance of small business in our industry means a more deliberate and coordinated approach to innovation is needed to meet the challenge, but there are worrying signs.

What pathways exist for innovation in building?

Technology is moving rapidly and the NCC needs to be positioned for the future, including the role of AI, innovation and MMC. Approval processes for innovative systems, and off-site construction need modernising to keep pace with the coming change and support those willing to bring new products to market.

The DTS recognises a limited number of systems, under tighter criteria changes occur less frequently and can limit other preferences and approaches.  Many solutions require demonstrating compliance with testing standards.

• Performance Solutions, offer more flexibility on a project-by-project basis through assessment of a solution against the Performance Requirements or Verification Methods.  Many fire protection obligations still require demonstrating compliance with testing standards.
• Product assurance using CodeMark to demonstrate a product’s suitability against the Performance Requirements and provides for mandatory acceptance as a Performance Solution.

A better model

The NCC has never been designed to keep pace with rapid change in industry. As a result, the system can push evidence thresholds and risk down onto individual projects, certifiers and builders, who often struggle to determine the level of evidence required. To improve consistency and support innovation without compromising outcomes, more research should identify the systems with the greatest potential to transform industry. Clearer national pathways, protocols for new products, certified systems and trusted international standards would also unlock other opportunities.

There are around a dozen publicly funded research organisations in Australia, and approximately 40 Universities. Investments in higher education research often do not produce a proportionate commercial return^2.  This is because university research incentives are poorly aligned with commercialisation aims of businesses. They operate on longer timeframes and different priorities like publication and retaining IP and can be focused on the theoretical applications.

Opportunities

A better approach would be to increase competition for existing funds to those with commercialisation focus. Industry and government should work on an innovation support program that includes:

• Industry collaboration with government to identify priorities and undertaking research directly to inform emerging technologies and practices  
• supporting manufacturers with potential and appetite to innovate
• providing connections via innovation hubs and centres of excellence
• Aligning business funding risk-taking reward to the productivity problem.

Conclusion

Modernisation of the NCC presents an opportunity to refocus the relationship between government, publicly funded research bodies like CSIRO and industry on the innovation opportunity.

If these challenges can be met, we will strengthen sovereign capability, supercharge construction research and increase productivity and affordability.

Now is the time for industry to collaborate on improved ways of working. This starts with government recognising the construction industry, and housing supply in particular, is one that is critical to Australia’s prosperity.