Consumer protection in the building industry has been a controversial issue for far too long, and the current arrangements have hurt many thousands of innocents.
Private enterprises put together the outdated scheme we have today, and the design of it benefited the originators more so than the consumers of the building industry.
Yet, the Governments of the day have allowed it. Whether it was the Government’s complacency or design regarding the scheme, there is no doubt this position escalated building approvals and ensured the stamp duty and levy stream was uninterrupted.
This last resort warranty scheme is the very reason the building industry has spiralled out of control, and now the industry is riddled with defects and building failures of a scale unprecedented in the history of Australian building. Imagine buying an apartment and finding out later that mandated consumer protection did not exist in hi-rise apartments.
Our industry trade associations were so desperate to get their scheme implemented that when the prominent builders of the nation flatly refused to accept the Last Resort scheme, HIA agreed to exclude them from any form of consumer protection for Hi-Rise.
Regulators saw the insurers financially assessing the builders, and they sat back and then registered the builders when the insurer’s letter of eligibility became available. Still, no assessment of skills, performance, or longevity in the industry took place.
Trade associations saw greed above the interests of the industry when they implemented their secretive Last Resort warranty insurance schemes without any accountability whatsoever.
Both trade associations are directly responsible for removing the policeman from the industry due to their schemes that saw insurers vetting builders instead of the regulator.
The building industry under the Building Code of Australia has considerable and sufficient regulation to achieve a compliant sector; however, all the legislation in the world will not be valid if there is no policeman to enforce those regulations. Accordingly, we have seen self-regulation abused, and we as an industry are now being laughed at as we have failed dismally.
What’s the alternative, and will it work?
Yes, of course, it will, and while there is no perfect system, the HGFL system we used to have in Victoria and the current Queensland regime is the closest to a system that will protect all consumers on a First Resort basis. (insurance as we understand it) and equally important is the management of the industry, and this system will deliver both without the influence of vested interests.
Be mindful the HGFLtd system operated successfully for over a decade while the Qld System has worked for over thirty years.
Such a system and its management will tackle the areas of concern, such as obtaining registration in categories not compatible with skillsets or essential ability.
The emergence of the phoenix builder is so morally wrong whereby a builder enters administration to shut down claims against it for defects, and financial debt to creditors and then emerges as a new entity but with the same principles. Many of the creditors also fail as a result of these questionable practices.
There is no doubt the dilapidation of the industry has been profound and will take years to restore confidence in what was a proud and compliant industry some two decades ago.
Fortunately, the powers to be are aware of the shortfalls facing the industry but do they have the will and fortitude to make the right changes? I think they do, and we will see change effected, but they do need to escalate the reforms as we don’t have the luxury of time on our side.
It’s simple as basic common sense must apply as well as logic and the will to do the right thing by building consumers to give them the protection, they deserve for such a significant investment that in most cases is the biggest investment of a lifetime yet our current system treats them appallingly.
We can do better for consumers, builders, and our industry!