Building industry lobby groups in Victoria have called for a Parliamentary Committee review of proposed new legislation which aims to improve consumer protection in the state’s construction industry.

But consumer groups say that the legislation is critical and should be passed without delay.

Introduced into Parliament in March, the Building Legislation Amendment (Buyer Protections) Bill aims to improve consumer protection throughout Victoria’s building sector.

It followed widespread concern that existing regulation and enforcement have not been effective.

Changes under the legislation include:

• creation of a new Building and Plumbing Commission that will handle building regulation, insurance and dispute resolution under a single agency
• new and expanded powers for the new regulator to issue building rectification orders for up to ten years after building completion
• new protections for apartment owners through a developer bond scheme; and
• replacement of the current last resort domestic building insurance scheme with anew first-resort scheme.

Further explanation of the new laws can be found in this article.

(At the same time as the Bill was introduced in March, the Department of Transport and Planning released a Regulatory Impact Statement to commence consultation on two further areas of proposed reforms.

These are requirements for apartment owners to be provided with a new building manual upon handover and new mandatory inspections to be completed prior to waterproofing or plastering.)

The Bill passed the Legislative Assembly last month and is due to be debated in the Legislative Council this week.

The Bill has been subject to mixed views.

On one hand, building industry lobby groups such as Master Builders Victoria (MBAV) and Housing Industry Association have raised concerns about several aspects of the proposed new law.

In a joint statement, the two groups have called for the legislation to be subject to review by a Parliamentary Committee.

Whilst the groups acknowledge the need to improve consumer protection, they have raised concerns that some provisions in the Bill will unfairly impact diligent and reputable builders.

In particular, the HIA and MBAV are concerned about the powers that will be given to the new regulator to issue rectification orders against builders for up to ten years.

Concerns raised include that:

• Subjecting builders to rectification orders for this length of time represents a significant and ongoing burden for builders. In fact, builders could be subject to orders for longer than ten years if the new regulator receives an extension of time to issue such orders from the Victorian Civil Appeals Tribunal (VCAT).
• Builders will not have any effective means by which to challenge the order. To be sure, builders will in fact be able seek review from VCAT in regard to any orders which are issued against them. However, there is no process by which to obtain a stay on the order whilst the appeal is underway. This means that builders would still need to follow the order notwithstanding that the order is subject to appeal.
• The definition of a defect under the Act is extremely broad. This, HIA and MBA argue, effectively mean that builders could potentially face a rectification order in respect of almost any part of the build with no apparent need for consumers to demonstrate that there are serious problems with the build.
• Builders could be subject to rectification orders even when they are not responsible for underlying defects. For example, builders could be subject to orders even where problems relate to poor design from architects or draftspeople.

In addition, the groups say that the legislation fails to address builder concerns regarding the existing dispute resolution scheme.

As things stand, the groups say that builders who are seeking payment for a disputed payment claim under their contract are typically forced to wait up to six months whilst the claim goes through Domestic Building Dispute Resolution Victoria (DBDRV) and then for years if the dispute goes through to VCAT.

The groups also question the need for new laws in light of current efforts of the Victorian Building Authority to better enforce existing legislation.

In the joint statement, Master Builders Victoria CEO Michaela Lihou and HIA Victorian Executive Director Keith Ryan called for an urgent review of the Bill.

“This Bill needs to be reviewed so that consumer protections are appropriately improved without sending legitimate builders out of business,” they said.

However, lawyers and consumer advocacy groups have voiced support for the new legislation.

Speaking after the laws were introduced in March (see article), Bronwyn Weir, Managing Director of Weir Legal and co-author of the landmark Building Confidence Report that was prepared for the Building Ministers Meeting in 2018, said that the changes were a step in the right direction.

Weir especially welcomed the move toward a first resort domestic building insurance scheme, which she says will materially improve protection for consumers.

As for the new regulator powers, Weir said that these are ‘long overdue’.

Speaking on Monday, meanwhile, Stephanie Tonkin, CEO at the Consumer Action Law Centre, expressed concerns about the moves to delay the legislation’s passing.

Tonkin says that the reforms are vital to restore consumer trust and confidence.

“Victoria has the weakest consumer protections for domestic building compared with the rest of the country,” Tonkin said.

“The weak protections, coupled with egregious conduct of a minority of bad actors, leaves consumers with little power or recourse when things go very wrong. Years of delays at VCAT minimise consumers’ limited rights.

“The lack of protections are stark compared with other areas of consumer law, or other jurisdictions, and in the context of a person’s most significant purchase.  The consequences of building disputes to mental health, relationships and financial position are devastating and life changing.

“It is well documented – including through two major expert reports – that the building industry in Victoria suffers from a significant lack of consumer confidence and trust. The actions of the minority are tainting the majority good actors in industry. New reforms before the Legislative Council have the clear purpose of rebuilding that confidence and trust through e.g. first resort insurance, developer bonds and an emboldened regulator.

“It is widely agreed, including by industry, that reform is needed to rebuild this consumer trust and confidence. However, a late push by industry lobbyists threatens to unravel decades-overdue progress.

“I am very concerned that we risk throwing the baby out with the bathwater with this last-minute push to stall the legislation.”

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