Strata managers 'not in disarray' says prez

Last week we said that Strata Community Association NSW  - the states' strata managers' professional body - was in disarray.  Objecting to that negative characterisation, NSW President Robert Anderson agreed to come on to the podcast and answer a few questions.

We had no shortage of those. For instance, we asked what the changes at SCA-NSW are. Has SCA-NSW been getting it wrong? Is there a new philosophy or culture, following changes on the SCA-NSW board?

Are the changes in the standard agency agreement a recognition that there was something wrong with the previous much maligned version or is it just to comply with changes in legislation?

What does SCA-NSW have to do to regain owners’ trust? What about training for committee members? Who should do it: SCA, the Owners Corporation Network (OCN) or Fair Trading?

And finally, will the SCA continue to claim that it represents owners? 

It's a slightly longer than usual session and the sound quality is OK but, thanks to the interview being conducted over Zoom, not up to our usual tip-top standards.

Enjoy.

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Recorded by Jimmy Thomson & Sue Williams; Transcribed by Otter.ai.
Find out more about Sue Williams and Jimmy Thomson on their websites.

Transcript

I suppose nobody will be surprised to find out that we get a lot of emails here at FlatChat.

Sue

Yes, and the most recent flood of emails have been all about strata managers.

Jimmy

Well I guess it's the ongoing fallout from the whole exposés last year.

Sue

We've both also done stories recently about people upset with their strata managers or things that strata managers have been doing which perhaps haven't been the greatest of...

Jimmy

Situations for them.

Sue

Yes, so we kind of thought who better to talk to really?

Jimmy

Well yeah, look, to be fair, last week we said that Strata Community Association New South Wales was in disarray and one of our justifications for that was that I'd been writing to them and you'd been trying to contact their PR people and get nowhere basically. So in response to last week's podcast, the chair of SCA, New South Wales Strata Community Association SCA, which is the professional body for strata managers in New South Wales, contacted me and said, look, can we talk about this? We are not in disarray.

So we thought, okay, well let's get him on the podcast.

Sue

Is he the chair or the president?

Jimmy

He's the president. I call him the chair. He's the president.

Third time Robert Anderson has been president of, well way back, the Institute of Strata Title Management, ISTM. So he's been around the traps a few times and he's going to be on the podcast.

Sue

Fantastic.

Jimmy

I'm Jimmy Thomson. I write the Flat Chat column for News Limited and I edit the flatchat.com.au website.

Sue

And I'm Sue Williams and I write about property for the Sydney Morning Herald, the Melbourne Age, the AFR and Domain.

Jimmy

And this is a special edition of the Flat Chat Wrap. Last week in our podcast, I said that SCA, New South Wales was in disarray. This week, we have somebody who takes great exception to that description and he's the president of SCA, New South Wales, Mr. Robert Anderson. Robert, how are you going? Welcome to the Flat Chat Wrap podcast.

Robert Anderson

Hi, Jimmy and Susan. Thank you very much for having me on. Yes, so I'm the current president of SCA, New South Wales.

Sue

You've been there for a little while, haven't you?

Robert

Yes. No, they have elections every October, Sue, and so the new board came on last October and it's mostly new. Lisa Piera, who is the senior vice president, she has been on previous boards and Matthew Jenkins has been on previous boards as well from the supplier chapter and Rod Smith was invited on halfway during last year.

The rest, Leanne Habib and Natalie Fitzgerald from the Strata side are new and Edwina Phelan and Peter Burney from the supplier side are also new. But they've got a lot of experience. For example, Natalie's been in the industry for 20 years and I think Leanne says 25.

Rod's been around for a long time. Lisa used to be with Macquarie Bank for many, many years. That's how I knew her.

Simon George is an appointed member to the board and Simon's background is banking risk management. So we don't have all the skills as a board and these days boards tend to have elected members as well as appointed members.

Jimmy

Was there a big turnover in the last election in numbers of people leaving and people coming in?

Robert

No, what happened was in the Strata side, it was exactly the number of nominations for the positions and for the supplier side, there were more nominations than positions. So there was a ballot for that.

Jimmy

But what I mean is there was a number of people who left the board and were replaced. That's what I mean by turnover.

Robert

Yeah, no, in the middle of last year, quite a few members left the board and Rod was one of the replacements that came on and I think they just waited until the AGM and Anne-Marie Paul, who comes out of insurance, was on there for a while, but she stood down in October.

Sue

How long have you been president?

Robert

Well, I've been president this time since October when I came back on the board, but I've been around for a long time, Sue.

Jimmy

This is your third go, isn't it?

Robert

It is. I've been doing Strata since 1994. Everyone remembers when they get into Strata and you fall in by accident.

I was a teacher before that. And then in 2000, I became president and did a term and a bit and then Peter took over and then he stopped and I went back in to do the last 18 months. So I was there from 2000 to 2004.

I didn't expect to be back on the board because I was running my own business for 17 years. When you're running a small business, you would appreciate association takes a lot of work and it's volunteers on the board. And I sold my business two years ago and I do local work now.

So I have got a bit more time to give back to the industry and give back to the association that I didn't have in the last 20 years or so. So that's why I'm back here now. Right.

Sue

So we said that the SCA New South Wales was in a bit of disarray and you said you're not, but have you been getting it wrong? Has SCA New South Wales been doing stuff wrong, do you think? Or have you been doing everything right?

Robert

Oh, look, that's a hard question to answer. I don't know what by wrong means. It's always a learning process, you know, and part of the professional standards scheme, really, if you look at it, not a straight line, it's a continuum of improvement.

So one thing that we, I wouldn't say got wrong, but had to revisit was the Code of Ethics last year. And that has been updated and it's National Code of Ethics now. So it goes across every state and every jurisdiction.

So members of the associations in here and the other states need to comply with that. It needed to be tightened after the media expose. I think there were a couple of points, because no one wants to get into that situation again.

Members want to provide service and good service and they want to do better, you know?

Jimmy

Would you say there's been a change of, I mean, let's not beat around the bush. The ABC expose and the follow-up articles were pretty devastating for the, I guess, the level of trust in strata management. I mean, has there been a change of culture or philosophy and SCA as a result of that?

Or is it just tinkering around the edges?

Robert

No, I don't think it's tinkering around the edges. I think there's, like, trust is a really hard thing. And obviously, once it's kind of damaged, it really does take a long time to get back.

And there are certain owners' corporations that, and strata managers at the Colfax that are going through that process. I've seen it when I've been doing the locums. But there's still 90% of the strata managers face-to-face that their owners' corporations don't have a problem with any of this, because they've been doing a great job all the way through.

There's always a little bit of problems with trust. There's some problems with trust at any time where you've got a relationship that involves, like, if you own your own home, you'd be getting your own tradesman to do the works, and so on and so forth. Here, you're giving up some, I'll call it power, but giving up some power to another, to another.

And you do have to have a level of trust. And there's also financial money involved. So trust is important.

And sure, the association, but the industry as a whole needs to go through a rebuilding process of the trust. And they have to prove it by their works, really, by the results.

Sue

And so those ethics, they're kind of things about transparency and conflict of interest, having to declare a conflict of interest, those kind of things.

Robert

Yeah, I don't have it in front of me, but it is those kind of things. It's also to act in the owner's corporation's best interest, and so on and so forth. I just haven't got it in front of me, so I can't go through line and verse.

Jimmy

Is that a bit woolly? I mean, it kind of, I know some strata managers will say that it's in the owner's best interest just to do what I tell them. And that's not always necessarily the case.

I mean, is that, do you think the changes that have been made have been made because they needed to be made to improve the service of the industry or because of the exposure?

Robert

To the legislation, you mean? Yeah. I think sometimes changes are made to legislation that are kind of reacting to a situation, and it goes all the way back.

I was around when they had the 73 Act, and they didn't change that very often, then 95. And then they really started changing things, reacting to after Regis Towers. That was the first big one where they changed.

These changes, some of these changes are, in my view, and this is my personal view, they don't go anywhere. They're just more and more legislation. It makes a strata manager like a secretary shuffling paper when really the task at hand is like we had to do all the cladding replacement program, and then often there's major remedial works like I've done over a million dollars for window replacement programs in schemes, and then balcony replacements where they weren't the right height.

I mean, all the buildings in the 70s and that, they're 900 metres instead of 1,050. So they're the important, and then the bearing defects in the new schemes, my goodness, that is really, really intensive work. And being there for owners.

So I do think that some of the legislative changes don't really make it easier for owners corporations or easier for strata managers.

Jimmy

Can you think of any off the top of your head that you think may be worth revisiting before it all gets gazetted?

Robert

Well, it's too late. The course is halted on the new ones, but I was just looking up, for example, I know that because I looked at the Hansard for the first time in my life at the last one, and I know that they said between 16 and 20% of all bankruptcies are by strata. So I actually looked up the figures and 90% of bankruptcies, voluntary administration bankruptcies, there's 10% which are creditors.

And of that 10%, so of that 10%, it was 265 last year in New South Wales. So if we're saying 16 to 20%, that's 40 people we're talking about. I don't know how many lots there are in New South Wales now, but 900,000, we're talking about 42 people to 51 people.

So that's the perspective has got out of perspective in my view, those types of changes. Another way to do that, easier way to do it, get the attorney general to change the threshold for bankruptcy from 10,000 to 20,000, much better solution.

Sue

And I think one of the things you've just recently done is you've changed the standard agency agreement, haven't you? So does that mean there was something wrong with the previous much maligned version, or is that just to comply with those changes in legislation?

Robert

That version was appropriate for the times, 2017. It's 2025 now, that's a long time between reviews. For example, government reviews every five years, strata.

And really, we should have reviewed it earlier, there's no doubt about it. And some of the comments about maligning it were, you know, people can't get out of a contract and that. Well, my response is sign a one-year contract, not a three-year contract, and everyone's entitled to do that.

So some of the commentary was a little bit unfair, but it did have to be changed, Sue, for the Unfair Contracts Act. And the two main clauses, there's 11 clauses in the contract for the strata. So all the clauses were reviewed for unfair contracts.

And so now the ones that are pertinent to strata owners and strata owners corporations are firstly the insurance. And that's, if you have a three-year contract, for example, in the first year, the owners corporation has strata managing agent arranging the insurance, getting the quotes, and then the broker will make a recommendation. And then the strata committee will say which one they want to go with.

Most of the time, 95% of the time, it's whatever the broker recommends. But in the second year, so the owners corporation say, no, well, they might have someone on the strata committee who's a broker. So they go to them.

Well, in the past, the strata manager could say, well, part of the fee structure was based on getting the insurance commission. We're not going to get the insurance commission now. Therefore, we need to do a tick up.

Well, that's gone. You can't do a tick up anymore. And there's a clause that says not only that, you're banned from doing it by the government.

So that's a government clause. So that's a big change.

Sue

And you have to do it if you do.

Robert

Yeah. Now, it's only if strata and owners corporation go and arrange their own insurance after the first year of the contract. So in the second or third year, they go out on their own and do the work, then you cannot increase your management fees by the amount of commission.

Jimmy

So that's a big change. I mean, it's been argued for many years that a lot of smaller strata managers, especially, would go out of business if they couldn't get insurance commission. Is that what's going to happen as a consequence of the law that changed that you've just described?

That if strata managers can't get commissioned, or if their strata scheme goes and gets its own insurance quote, then the strata managers are saying, well, I can't charge you anymore. So I'm out. I'm going.

Robert

Look, I don't think this is as big an issue as strata commissions in general. It's just, it's a, you know, one out of 50 might do that change during the course of an agency agreement. The agent's got the right then to terminate the agreement and say, well, you know, it was negotiated on different terms, and now those terms have changed.

So that could happen. But often they'll kick, they'll plod on and have to adjust the agreed services fee at the next renewal of the agreement. So it's not a, that's not a huge problem, but it is become more prevalent since the Four Corners and 730 report expose.

Jimmy

And yeah, well, that was at the heart of that really, wasn't it? Just as a general observation, what do you think SCA New South Wales has to do to regain owners trust?

Robert

Well, I think they're doing it. I think the agency agreement's one of the things that's been done and that next part trench of rollout will be a community association, a building management committee and a company title. So there's four agreements in total.

They've been doing, they've been updating their best practice. So the best practice on insurance has been updated, the guide, the best practice guide on insurance, because now an insurance invoice needs to be broken down. As you know, it's got to have the net premium, then the amount of the broker fee shown as a percentage in an amount.

The commission goes to a Strata agent as a percentage of the amount, then the fire services levy, and then any other charges, and then the total of the bill. So that's a big change. And that's been happening since February, that the brokers now have to send invoices like that.

So as long as corporations see it, they can see how it's broken up. So they're doing, they've done that. They're doing ongoing training, like CPD, continual professional development.

It's a big deal. The government sets the topics, but this year the topics were 2024 legislative changes. Now there was two changes in that, and they were big.

They were big changes that people didn't really get their head around for right up until 3rd of February when they came in, because lawyers were on leave during January. So they've been doing that, doing that training, and work health and safety was the other topic this year. But on top of that, there's webinars every, and they get 400 viewers plus every fortnight on different topics.

The last one was, the one before last was about the fire, I think it's 1851, which has been delayed for a year, and what it will mean for owners' corporations. It's a cost that needs to be kind of prepared for by, that's partly why it was delayed. The other reason why it was delayed was they didn't have enough certifiers in the fire industry.

They've got to go and get, they've got to go and train them.

Sue

So these were for committee members?

Robert

No, no, no, they're for Strata managing agents, but later on when the government brings in committee training, the SCA would be able to do like lots of, lots of things. They can, like, you know, I spent 30 years chairing meetings, and of the buildings that I used to manage, I probably chaired 90% of them. So we know how to chair, and where it's, that's a lot different to one chairperson in an owner's corporation sharing that particular building year in, year out, you know.

So you get a breadth of experiences about problems and issues that come up, and secretarial works, as the Strata manager does, the notice of meeting, the minutes of the meeting, keeps the Strata role, and so on and so forth, lots and lots of other things. And the treasury, well, they, you know, they're going to make sure their credit is compliant to start with, and then, and that's a bit of work. And then to, you know, the invoices can go, lots of schemes now get, it's approved at one point, and then the treasurer from the Strata scheme will then counter-approve it as well.

So, you know, the software can now do a lot more things than it could do 25 years ago. So there's those types of things, there's reading and agency agreement, there's WHS, which I just spoke about, and the fire ones will be big, all those types of things will be important. And, you know, just the ongoing repairs and maintenance capital works fund plan, that's a, that's a sleeping, a sleeping giant, as far as I'm concerned, in owner's corporations.

Jimmy

Now, do you think SCA is the best placed organisation to conduct training of committee members? Or would OCN or Fair Trading be a better option?

Robert

Well, I, look, I'm sure, I'm sure between the three, I think they all have a role to play, I think. I don't think there's one, like, I'm just not sure how it'll work out. But it may be, you know, be web-based training.

And there's programmes that SCA have, and the government will, I imagine, develop some, I'm not sure, they haven't said. And OCN will probably develop some as well, I imagine. Yeah.

Jimmy

You know, the government's talking about compulsory training for committee members. Is it going to be a case that people will get, like, a spot test, a spot quiz, and if they fail, they'll say, you can't vote at your next committee meeting until you've, you've passed the test. I mean, what does compulsory mean in your imagination?

Robert

Well, I don't think it'll be that onerous. I think it'll be exactly what I said. It'll be that it might be, you know, we might be conducting face-to-face for the ones in the city, and every now and then, and then the rest will probably be webinar.

And it won't, it will be like a driving test, I think, Jimmy, like, you know, your Q&A on the driving test. I don't think it'll be too onerous. It can't be.

Because, like, I didn't have a problem getting strata committees, and they were very good committees, you know, in the main. But it's not always the case. And so, you don't want to make it, make the barrier to entry too high, I don't think.

Jimmy

I mean, that's always been one of the arguments against compulsory training, was that it's hard enough to get good people to sit on strata committees as it is without telling them that they have to sit at a computer and do a 20-minute test or a 20-question test. And if they don't get enough, they can't sit on the committee. I mean, it's got to be a balance, obviously.

Robert

Yeah, and it needs to be balanced, and it doesn't need to be very onerous. And I think they've got a year. The only thing I've seen is that you've got 12 months to do it, and then it's your next AGM, and you're re-electing a committee anyway, you know.

Sue

Yeah. You kind of think the OCN has to be involved, really, don't they? Because, I mean, with all due respect, the SCA has lots and lots of expertise over many, many years.

But at the same time, it's the interests of the owners that sometimes clash with the interests of the strata committees. And so, therefore, you've got to have the OCN involved as well as the peak body that represents owners, because, you know, they are the owners. And I know you have a chapter which you say represents owners, and we've often kind of criticised that, haven't we?

Jimmy

We have.

Sue

We feel that the OCN is the rightful representative of owners, but the SCA still says, no, no, no, we're the representatives of owners, which I don't think is really right or fair.

Jimmy

Well, the thing, my test for that has always been, if you go and complain about a strata manager to SCA, whose side are they going to take, the owners or the strata manager? And I know that the answer is we'd look at the issue equitably. But I can tell you, if I was a member, a paid-up member of SCA, and an owner complained about me, and you took their side, I'd be very annoyed about that.

Robert

Oh, it depends. It depends on the issue. Like, there will be some times where there's, and now the complaints are completely hands-off as possible.

They go to what's called PSN bag, which is, and no one from New South Wales sits on that, if it's a New South Wales complaint. It goes to an independent complainant committee who reviews it.

Jimmy

Do you have to be a member of the SCA owners chapter to raise a complaint with SCA?

Robert

No, no, no, no, no. The owners chapter's complaint, there's not really an owners chapter anymore anyway. And I don't think you've heard about that for a long time.

It's now basically, and it's strata managers, and there is a supplier chapter that they have on the books. I think they still have a number of owners corporations, but it's not something that's really active at all. Now, anyone can make a complaint, and it's on the webpage, and that's important part of the PSS, that owners corporations can make complaints, and they're heard.

So, and the same with strata managing agents, they must have a complaint process, and you will find it on their webpage, individual. So there's two, you make a complaint to the company, you can also make a complaint to SCA, as well as to-

Jimmy

I think the point, I mean, we get, obviously, in our position, we get a lot of people writing to us, individuals, who are, their committee is not hearing them, and their strata manager is a problem, and they're saying, you know, please expose this terrible thing that's happening to me, which we could not possibly do. But you do know there are people out there who are suffering, and they don't know who to turn to.

Robert

Well, that's the problem. That's, again, the issue. It's an interesting issue, the individual and the collective, because sometimes, and exactly what Sue said, there might have been a clash between owners and strata manager.

There's also clashes between individual owners and the owners corporation. Those interests don't always align, you know. And so, I've seen those things.

I had about five buildings in OCN, and one of them said, I don't want to look at all those emails that come in. So they said, you've got to look at them. So I never looked at them, but I do know what you're talking about, where you do get quite a few comments that are, that they kind of sent venting, really.

Jimmy

Yeah, I'm going to, we're about to run out of time. I'm going to throw a hypothetical at you. It's not a hypothetical.

It's actually something arrived in an email yesterday. Strata committee secretary sends an email saying, we're going to have a general meeting. It's, we're not going to do it in person.

They're just going to do it as a paper meeting. Here is your voting slip. Vote for what you want, what you approve, what you don't want.

And the person reading it said, oh, item 17 was that the chairman, treasurer and secretary should each receive a payment for the good work they've done over the past three years of $93,000 each. Would you, as a Strata manager, would you have a problem with sending that agenda out to people?

Robert

Well, we've got to send an agenda out. If, as you know, individual owners are allowed to put a motion on an agenda, and so can the Strata committee. So we, it's not our job to say, to vent that, but I wouldn't be having, all my meetings were on Zoom, but people could pre-meeting vote.

So they could either pre-meeting vote or they could turn up in person and do it. But I would never not allow, for me personally, and most managers would make sure there's an option to either have it in person and on Zoom, as well as pre-meeting voting for a general meeting. People, there's some items that need to be discussed.

And I would, if it was me, I'd probably rule that motion out of order, because as you probably know, you can only get for one year in the past, you can get it on a room. So it'd be $31,000, not $93,000 each.

Jimmy

So they've shot themselves in the foot by asking, by saying it was for three years. Robert, I think you've got the last word here. So what changes would you like to see in Strata, in New South Wales and Australia as a whole?

Robert

Look, that's a really hard question. I don't know completely the answer to that, but if I could change attitude, that it's a cooperative association arrangement, it's not an adversarial. And if we approach it like that, most of the time, things follow.

Like Grana Manager is really good. The value is not in the management fee. The value is if you're getting your window replacement program and you're saving $100,000, that's where the value of the Strata Manager comes.

The management fees, if you amortize them over the life of those balconies or windows, 20 years, management fees are nothing.

Jimmy

Yeah, they're very small. And yet, ironically, owners will look at their levies and go, why are we paying the Strata Manager so much? I know, I know.

Robert

That's a problem. So look, I want to see more professionalism from both sides, I guess. Some owners' corporations just shouldn't be professionally managed.

And it may come to that, there won't be Strata Managers going around. Some will just have to self-manage. And there's so many new buildings that are complex and big and that, and there's only so much time.

Jimmy

Okay, I think we're being cut off. We're about to be cut off. Robert, thank you so much for taking the time to talk to us.

And it doesn't feel like SCA New South Wales is in disarray after all. So we'll revise our opinion on that.

Robert

Thank you. Fantastic. And any time that you need to reach out, you know where to go.

Jimmy

And we know that those guys who've just had their bonus reduced by $600,000 are going to come looking for you.

Robert

Yeah, they'll be looking for me. They'll be looking for me. All right.

Thank you very much. Bye-bye.

Jimmy

Thanks for listening to the Flat Chat Wrap podcast. You'll find links to the stories and other references on our website, flatchat.com.au. And if you haven't already done so, you can subscribe to this podcast completely free on Apple Podcasts, Google Podcasts, Spotify, or your favorite podcatcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you'll get this podcast every week without even trying.

Thanks again. Talk to you again next week.

 Transcribed by TurboScribe.ai.