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Capital disaster with asbestos contaminated houses

By Brendan O'Reilly - posted Wednesday, 5 November 2014

There are 1021 houses in the Australian Capital Territory (ACT) that are known to be still contaminated with loose asbestos, despite a programme 30 years ago to remove it.  An unknown number of homes (probably less than 100) in surrounding New South Wales (NSW), particularly in Queanbeyan, Yass and Bateman's Bay, are said to be also asbestos contaminated.  The majority have amosite (brown) asbestos but there are some cases where crocidolite (blue) asbestos is present.  An unknown number of non-residential buildings (mostly with gabled roofs) are also affected. 

One has to have sympathy for the affected owners.  Loose asbestos of this type (in the form of fluff) can, even in small quantities, cause lung damage, including asbestosis, lung cancer, and mesothelioma (though these conditions may take 20 years or more to develop).  There are also major economic implications for those affected, because their properties became virtually unsaleable and (in some cases) uninhabitable.  Whatever the precise reality, the media hype and the warnings from government have made affected owners very worried.

This situation came about because between 1968 and 1978 a Canberra company trading as Mr Fluffy insulated more than 1000 homes and other buildings in the ACT and surrounding NSW with loose-fill asbestos.  This was pumped directly into roof spaces and (in some cases) wall cavities.  The process was said to have taken only about 90 minutes and cost about $100 per dwelling.  This was all before the ACT achieved self-government. 


In 1968  the then Gorton Coalition Government was warned by its own health expert.  A report called Asbestos Hazard investigated the company’s work and identified "a serious exposure to asbestos dust", stating that "in view of the harmful nature of this substance the use of asbestos fluff for this purpose should be discontinued and less hazardous materials such as rockwool, insulwool or fibre glass should be substituted".  No action was taken by Government, and Mr Fluffy continued to operate for another decade. 

The use of amosite asbestos was banned in Australia in the early 1980s.  In the late 1980s the Commonwealth carried out a survey into its use in the ACT.  Following self-government in 1988, the Commonwealth and ACT Governments undertook a $92 million (about $90,000 per house) loose-fill asbestos removal programme that ended in 1993.  It aimed to remove visible and accessible loose-fill asbestos insulation from identified Mr Fluffy houses.  The Commonwealth in a 1991 Memorandum of Understanding (MOU) with the ACT government agreed to bear most of the cost of asbestos removal in the Territory.  Across the border in NSW no government action or coordinated clean-up was ever undertaken.

While the clean-up between 1988 and 1993 was thought to have fixed the problem in the ACT, asbestos fibres have since been found in many of these same homes.  Some ACT homes not remediated in the earlier clean up were also identified, while some affected homes had been demolished.  Asbestos levels were found to vary from "higher than background levels to extreme in some cases", and many homeowners have been left unable to live in, rent, or sell their properties. 

There have been some claims that official reaction in the ACT to the presence of asbestos insulation has bordered on hysteria and undue scare-mongering, and that the product should have simply been left undisturbed.  The stated consensus among quoted "experts", however, is that the only viable solution is the careful demolition of these houses, including the scraping and removing the surface of each block, and the secure disposal of all waste.  NSW authorities have done little about the asbestos in homes in Queanbeyan and other towns, but the NSW Health Department did issue a statement saying the risk to human health is low if the roof cavity remains undisturbed.

The argument for demolishing all asbestos affected homes essentially is that "there is no safe level of exposure to asbestos and any attempt to clean or make homes safe would leave fibres behind, risking the health of residents, tradespeople and visitors, and would also leave a stigma attached to the houses".  The greatest concerns relate to residual asbestos in the roof and in the subfloor and other areas asbestos could have migrated to. Tests had also found the sealant used in the 1980s clean-up was deteriorating.

In recent times the ACT Government proposed buying up and demolishing the affected homes and sought a Commonwealth contribution.  The Commonwealth refused a request for it to pay two-thirds of the total cost, calling it an "ambit claim".   (The ACT's claim was based on the 1991 MOU which stated that "the parties agree that should it become necessary any time to expand the programme to other residential properties or subsequently remove additional asbestos from properties previously subject to the programme, all costs associated with the Additional Programme will be calculated in accordance with the terms and conditions of the MOU".   These conditions clearly stated that the contribution to such outlays was to be "$2 to $1 by the Commonwealth and Territory respectively".)


Employment Minister Eric Abetz defended the lack of federal funding for the buy back of the homes contaminated by loose-fill insulation, insisting the Commonwealth's "very strong legal advice" was that asbestos was a matter for the state and territory governments.  (It is not clear whether this means the MOU is unenforceable.)  The Commonwealth instead agreed to make a line of credit available.  The Commonwealth has agreed borrow the $1 billion needed to buy back the asbestos affected houses in the ACT and clean-up the sites.  That loan will be passed on directly, saving the ACT Government $30 million in interest.

The ACT Asbestos Taskforce recently announced details of a new buyback and demolition scheme.  The ACT government has agreed to pay an October 2014 valuation for each affected dwelling and its associated block of land (as well as the clean-up and interest costs), but will obviously only be selling the land.  The ACT government is expected to be $300 million to $500 million (an average $400,000 per dwelling) out of pocket (a huge amount for a small jurisdiction) depending on how much it can recoup from the sale of the newly vacant blocks.  It hopes to maximise returns on the land by selling as many blocks as possible as dual occupancy sites, which may be unpopular with neighbouring owners.

All of this leads to the following conclusions. 

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About the Author

Brendan O’Reilly is a retired commonwealth public servant with a background in economics and accounting. He is currently pursuing private business interests.

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