From a consumer perspective, Parliament’s confusion and lack of enthusiasm to pass the Building Legislation Amendment Bill 2014 was the only good news last year. Emanating from the Consumer Protection Reform Strategy, its purpose was to conceal the reality: there was no reform for consumers.
A review of the proposed legislation reveals no improvement in consumer protection. Worse, it would actually make more consumers more defenceless and more susceptible to damage than is currently the case.
Let us consider a few of the key foundations of the fundamentally flawed ‘consumer protection framework’ and its performance, and then evaluate the outcomes of its successor, the ‘Strategy.’
Registration and Discipline of Building Practitioners
Of 21,186 building practitioners currently registered, the majority hold registration without meeting any or all of the requisite criteria. Whether holding no qualifications, not passing the test, buying the licence or among those ‘grandfathered’ in 1993, registration guarantees nothing. The VBA actually announced this fact in the form of an official disclaimer on its website in 2013.
In May 2015, the Victorian Auditor-General’s Office (VAGO) also confirmed the meaningless value of the almost non-existent ‘discipline’ component of the framework, with few practitioners going to an inquiry and most walking away before or after a VCAT appeal. In a May 2015 audit report, the VAGO stated that registration “does not ensure that the only practitioners who are registered are qualified, competent and of good character and the disciplinary system is not protecting consumers, as current sanctions are ineffective in deterring practitioner misconduct.” For those currently on the disciplinary register, VBA advises clients to “make your own judgement of their character.”
The ‘reform’ is to allow all registered building practitioners to remain so, regardless of the consequences for consumers, with the sullied VBA to be in charge of ‘registration.’ The significant change would be to require a ‘Police Check’ with such a check simply demonstrating that a practitioner has not been caught, not proof of ‘good character.’
Regarding discipline, the second supposedly significant measure is that the VBA may issue a ‘Show Cause Notice.’ This is likely to be a rare occurrence, but if it ever did happen, the recalcitrant practitioners could appeal internally, and if that appeal was unsuccessful, they could have a second appeal at VCAT. No doubt they will appeal, and given VCAT’s illustrious record on hearing practitioner appeals, together with its record on building disputes, it seems likely VCAT will allow the overwhelming majority of offenders to walk away.
Further, the proposed bill would mean no registration board. Whilst the BPB’s performance was deplorable, it was never in charge of registration. The discredited registration regime was created by the Department of Building and ‘controlled’ by Building Commission officials. The ‘strategy’ is to retain the same policy conceived by the same Department, from whence the current VBA CEO came. All those who should not be ‘registered’ remain registered and the VBA officials continue the Commission’s ‘everyone can be registered’ practice, following the tenets that inspired this sorry state of affairs.
In short, the new ‘strategy’ falls under the same meaningless ‘registration regime.’
Enforcement of compliance
The VBA’s statistics demonstrate that, like the Building Commission, the ‘no touch regulator’ continues with no enforcement. For example, in 2013/14, out of 13,261 registered domestic builders (limited and unlimited), not one was audited for compliance with building and safety standards. The surveyor audits conducted focused on permit levies and not on auditing surveyors’ work.
The VAGO’s findings of 2015 verify that the VBA does not identify ‘risks,’ does not enforce compliance and makes no attempt to prevent harm to consumers. Likewise, the VAGO found that CAV is loath to use its enforcement powers, with a mere four prosecutions in 2012/13, usually of ‘unregistered’ persons. Further protection for the rogues is provided by CAV and VCAT, both supporting the ’strategy’ of not referring any offenders to the BPB for discipline.
The reform is the VBA in charge of compliance, as was the Commission and the old ‘no enforcement’ mindset is the new ‘strategy.’
In short, the new ‘strategy’ brings about no change and even less enforcement.
Complaints and Dispute Resolution
CAV conducts few conciliations, declaring most disputes ‘resolved’ without providing any assistance to consumers. The VAGO concluded that it was unclear if CAV’s activities were at all helpful in reducing consumer detriment. However, many thousands of consumers have verified that CAV’s ‘helpers’ do not help consumers. CAV officials know the builders and their lawyers well, acting unequivocally as collaborators. These officials have a record of openly demonstrating prejudice, fully aware that by acting to protect the builders, they will cause additional damage the owners and their families, not to mention the blatant injustice.
The reform here is to move dispute handling from the CAV to the VBA. If a consumer makes a complaint, the mythical strategic boast is that Rectification Orders (RO) will help consumers. If, for example, an owner knows that the slab and frame are defective and complains to the VBA, it may appoint an ‘inspector’ to examine the work. If past practice of the Commission and VBA is a good predictor of future performance, the ‘inspectors’ will omit and or/minimize defects and support the offending builder. If the VBA issues a RO, and it need not, the VBA can compel the owner to pay more money to a builder. Meanwhile, the builder can get a VBA review and if this is unfavourable, he can then go to VCAT for another review.
From past experience, we know that most will do this to avoid VCAT orders against them for failing to comply with the RO. As construction lawyer Peter Micevski notes, the “prospects of appeal are likely to be high” and leading to “an over-crowded VCAT and high demand for construction lawyers to assist in the litigation of building disputes.”
What are the consequences for consumers? First, the RO can be within a ’reasonable time’ - which can be taken to mean months or even years! If the builder fails to rectify, the VBA may issue another RO, extending the time. Then there are two reviews open to the builder (VBA and VCAT). If a breach of the RO notice is issued, the owner may end the contract, but then has to apply to VCAT for an order against the builder. By now, how many years have passed? When the case comes up at VCAT, it can make any order it considers ‘fair,’ including ordering the owner to pay more money to the builder. This ‘strategy’ will allow owners to be legally robbed of more money, whilst years slip away (VCAT cases lasting up to nine years), owners paying the mortgage for a house they cannot live in and rent to live elsewhere, and more VCAT costs. All this because they wanted to exercise their ‘consumer rights’ to get the house they paid for.
This leaves VBA and VCAT in charge, both with appalling records of causing injurious harm to owners. The big winners again are litigation, lawyers and their cowboy clients. Consumers are hammered harder and more heartlessly.
The refusal to improve the scheme, underpinned by conflict of interest, collusion and secrecy is shameful. But to spin a ‘strategy’ to increase consumer harm disguised as genuine reform is truly wicked.