Is Strata a Fourth Tier of Government?
or, just some officious public servants ...
Despite the oft-repeated rhetoric that strata title is the fourth tier of government, let’s not kid ourselves about the seriousness and/or fairness of governance in the strata sector so as to make ourselves feel better and more important. Instead, let’s focus on what strata stakeholders actually need.
[6:75 minutes estimated reading time, 1379 words]
Introduction
If you’ve read much about strata title buildings over the last 20 years you’ll have undoubtedly come across the idea that strata title represents a new and subsidiary form of governance often referred to as the ‘fourth tier of government’.
It’s an attractive platitude that elevates strata title building management and is nicely self-actualising for strata stakeholders that looks [at face value] to be obviously true.
Plus, you see and hear the expression everywhere.
It appears in articles written about strata tile matters like Jacqueline McArthur’s 2003 ‘Strartaspheria’ where she describes ‘a fourth tier of government, a largely unqualified group running multi-million dollar budgets’ or in Michael Mobb’s 2013 ‘Bathurst Burr: on the fourth tier of government’ where he speaks about a ‘fourth layer … the “body corporate” the little government that runs the place, sets the rules and arbitrates on a zillion things’.
It’s in papers delivered at strata and other conferences, like Professor Bertus de Villiers’s 2011 Paper ‘Strata Titles, Mediation and Restorative Justice Making our Lives Liveable’ where he says ‘#####’.
And it’s used by academics like Professor Hazel Easthope whose 2009 conference presentation was even called ‘The Fourth Tier of Governance: Managing the future of our cities’.
Some stakeholders even refer to the concept in submissions on strata law reform like this one from the Tennants’ Union of New South Wales.
But, whilst it’s a catchy phrase, I don’t think it’s either an accurate or useful description of strata title building management or operations.
Worse still, using it elevates strata title building management and operations to a level of formality, responsibility, and accountability that just doesn’t exist and isn’t necessary.
And, here’s why.
A little bit on government & governance
Government and governance refer to the processes and systems through which a society or organisation is managed and controlled.
The concept of government involves the creation and enforcement of laws, policies, and regulations that guide and regulate the behaviour of individuals and institutions within a society. It also encompasses the exercise of political power and the effective management of public resources.
Governance, on the other hand, refers to the way in which power is exercised and decisions are made, including the processes and systems that ensure accountability and transparency. It encompasses both formal institutions such as government agencies, as well as informal systems of power and influence.
Both government and governance play a critical role in shaping the social, economic, and political structures of society, and their effectiveness has a significant impact on the well-being of individuals and communities.
Why does strata title exist [really]?
Strata title isn’t a social or political construct and wasn’t created for those purposes.
Rather, strata title was created to split multi-level buildings into separately owned apartments with collectively owned structures and shared areas and to create mechanisms and processes to collectively manage those apartments, structures, and shared areas.
You can clearly see these intentions for strata title in the earliest writings by and about the politicians, developers, and lawyers who created the first Australian strata laws like Rath & Grimes in their seminal handbook, in the story of Dick Dusseldorp, and in Hansard.
So strata title and strata title building management has a few primary purposes as follows.
To allow for real estate titles for three-dimensional cubic spaces that are stacked alongside and above each other [the strata lots] as a new asset class that can be separately owned, and freely mortgaged, leased, or sold.
To deal with the space between those strata lots and the building structures that keep them in existence and make them useable [the common property] from ownership, maintenance, and operational perspectives.
To deal with inter-strata owner and strata resident relations.
To facilitate strata owner decision making about the building and related matters.
To manage and provide for public and other risks that arise in the strata building.
To collect, pool, spend and account for the money required from strata owners for maintenance and operation of the strata building.
To work out what to do if and when the strata building becomes redundant.
In other words, strata title laws and processes are just an operating manual for a strata title building that, if followed, will produce a minimum acceptable outcome for the stakeholders.
Many years ago, a very experienced US strata practitioner told me that the main objective for strata title building management was to make sure that everything in the building worked as well as possible for the least amount of money and that if that occurred strata owners would be happy. I’ve never forgotten the simplicity, clarity and objectivity of that principle.
Why strata isn’t government
I can see why many people think strata title building management is like government or governance since more than a few government/governance like indicia exist.
Things like specialised strata laws, voting by strata owners, elections for committees, levies [like taxes], and by-law or regulation-making powers make strata stakeholders think they’re mini governments.
But, unlike governments in most democratic societies, strata title buildings don’t do any of the following things.
1. There is no policy in strata title buildings that is articulated, considered, revised, and supported by strata owners such that there is a mandate to do some things and not do other things. Rather, strata title buildings just do what they must to maintain the building, comply with relevant controls, and keep things in order.
In fact, strata title buildings can’t really change very much in their legal structures, building structures, or day-to-day operations at all; even if strata owners wanted to.
2. Strata title building management is not designed or run to achieve any societal or personal outcomes for strata owners, strata residents, or anyone else. Whether or not strata stakeholders are better or worse off is irrelevant to virtually all strata laws and strata title building management operations.
I can think of many cases where strata stakeholders are worse off [at least in their minds] by having to do what strata title building management requires.
3. There’s no accountability for poor strata title building management on those appointed to operate the strata building.
When something isn’t done, is done poorly, or goes wrong, committee members and professional managers are rarely at fault and, instead, all the strata owners collectively bear the responsibility and cost of dealing with the failures.
After all, when was the last time anyone successfully sued a committee member or strata manager for governance issues?
4. Strata title building [and strata owner] resources are not managed so that they use resources [space, utilities, money, etc] efficiently or appropriately to the changing needs of the strata building or strata owners.
In fact, the opposite occurs in most situations with strata laws requiring strata title buildings to immediately do what’s required and to raise whatever levies are necessary from strata owners to pay for those things without discretions.
5. Notions of social justice or fairness are not relevant to strata title-building management.
Whether something is fair or not [like being denied a vote or being charged interest when levies are unpaid] is usually irrelevant.
6. Self-interest is permitted in strata title building management by most strata stakeholders including strata owners, committee members, and strata service providers who can keep conflicts of interest to themselves, vote in their own interests, keep any advantages they secure, and act capriciously in decision making.
I know I would not be a very happy citizen if the Australian government operated like most strata title buildings.
An alternate viewpoint
So, if strata title building management isn’t a fourth tier of government, what is it?
If I had to find a government-like analogy to describe how most strata title buildings operate and/or are managed, I’d probably liken them to an officious bureaucracy where processes and following rules are more important than the underlying issues, the required strategies, and/or the outcomes.
Perhaps strata buildings are places where provided the annual general meeting happens validly and on time, it doesn’t matter if it made no useful or necessary decisions.
Think the Department of Crossing T’s & Dotting I’s.
So, let’s drop the ‘fourth tier of government’ rhetoric, stop pretending we are politicians with popular mandates, and just get on with doing the strata basics properly, consistently, and according to applicable laws and best practices.
Francesco ...
February 20, 2023