Why pay for demolition when the insurance company will after a fire?

That isn’t generally how building insurance works. The insurer pays out the agreed value and the owner still has to clean up the mess. Well, they have to clean up the mess if they want to do anything useful with the site. It’s very hard for a council to actually obtain an order to force an owner to demolish a structure. But in this case, they want to build apartments there, so they’re going to need to pay for demolition and remediation of the site at some point.

I don’t think the owners would want anything recycled from there.

The old public housing buildings in Flemington that were demolished (Victoria St, Hill St, Holland Ct) had as much recyclable material stripped for sale before they even started demolition. Gas meters, plumbing, wiring – it all got removed. Even the scrap value for recycling the metal is significant.

Potentially asbestos in there too which adds to the disposal costs.

I don’t see how burning it down helps with that. There was a small amount of asbestos-containing material in the demolished Flemington flats, which was dealt with in the usual way, but several times during the construction of the new apartment buildings, they’ve found asbestos contamination in the soil. Every time that happens, they pause construction, and call in a decontamination crew who filter the soil to remove the contamination. They had to do this on the site of the old Flemington Community Centre as well, and not so long ago Maribyrnong City Council had to remove asbestos contamination from soil in Footscray Park.

Burning the buildings down is just going to make decontamination and remediation more difficult and expensive.