Leaky Legislation

Listener: 15 September, 2012.

Austrian philosopher Ivan Illich coined the expression “iatrogenic medicine” to describe illness generated by the actions of physicians. An example is when the doctors prescribe some medicine, with resultant side effects, which are treated by further medication. The cycle repeats until a specialist reviews the patient’s entire record and stops all the medication – and the patient is cured (perhaps). The specialist was thinking holistically and fundamentally, instead of just reacting to the latest upset. Iatrogenic policy failure is even more common, probably because genuine policy specialists are rare, and so we thoughtlessly react to the latest upset rather than going back to basics. An example is a recent reaction to the leaky building crisis, which involved numerous badly built homes and public and commercial buildings. The fundamental failure – light-handed regulation – was itself a classic case of iatrogenic policy, a thoughtless reaction to the over-regulation of the last round of iatrogenesis.

The current upset is over who is to pay to fix the failure. The law could identify the share of total responsibility carried by each involved professional – such as architect, builder, subcontractor, inspector – although the legal process is clumsy, expensive and erratic. In principle, each should contribute to the reparation in proportion to their share. However, many of them are dead, have disappeared or are broke and can’t pay. Under the current law of joint and several liability, some of the remainder may have to pay the full costs. Since the local authorities, which were responsible for inspecting the construction, are always there, they can become liable to compensate for the misdeeds of all those unable to pay. Their culpability may be 20%, but they may have to pay 100%, which hardly seems fair to ratepayers. The iatrogenic response has been a proposal – not yet enacted – to repeal the law on joint and several responsibilities.

Side effect resolved. The new side effect is there is no longer full compensation to the innocent party for a ruined building. This is so patently unjust that there will be another iatrogenic proposal to remedy it, and so on. We need to go back to fundamentals instead of treating the last symptom. The naive mechanisms to guarantee the provision of the quality consumers thought they were buying did not work. The list of failed mechanisms is long, but particularly pertinent are consumers’ inability to judge quality and the likelihood that the professionals they rely on may not be around when the defects eventually appear. Perhaps we need a permanent agency that takes some responsibility for the quality of a building from beginning to its end – paid for by a levy on the consumer. There was such an institution in the 1980s: the Building Performance Guarantee Corporation(BPGC). However, it was abolished for the standard neo-liberal reason: it did not conform to their naive market model, while – horrors – it required government involvement in the regulation of the market.

Would it have prevented leaky buildings? Probably not. But it would have limited the numbers involved, for as soon as the first leaky building became evident, the BPGC would have had to react, tightening up on its inspections and imposing standards on those designing and building the structures. It would have also limited the need for long and expensive litigation with erratic outcomes. The result would have been fewer disasters, less waste and far less heartbreak. There is an interesting parallel with the Accident Compensation Corporation (which the neo-liberals also tried to neuter). A major reason for its introduction was to eliminate expensive litigation with erratic outcomes. Under the old regime, 40% of the insurance levy was being spent on litigation; today it is about 10% on administration.

The Woodhouse Commission, which first proposed the ACC, laid considerable stress on prevention, although this was not always pursued with the diligence that Woodhouse envisaged. (It is better nowadays.) Should we revive the BPGC? It would certainly be worthwhile exploring the issue. But it requires the vision, integrity and intellectual power of a Woodhouse Commission. How to keep away the superficial, whose achievements are yet more iatrogenic policies?