In the last three years, building regulation in Victoria was a hotbed of controversy and there was a chorus of disquiet with consumers and the building industry all singing loudly. 

An amending Bill of the better part of 250 pages was stalled and the last couple of years saw the partial dismantling of the Building Appeals Board (BAB) and Building Practitioners Board (BPB) in anticipation of both bodies being shut down.

The new government has a wonderful opportunity to revisit the reform package with the view to generating holistic, world’s best practice building control. For a few ideas, see this 15 Keys to Best-Practice Building Regulation.

Some Suggestions on How the Government Approaches the Renovation of the Building Act

Consultation is paramount and it would be a great idea to get every relevant stakeholder into the tent: consumer representatives, building representatives, even outspoken building industry ideological types. A summit where the relevant stakeholders spend a couple of days brainstorming with the Department would be a great idea.

There needs to be serious consideration about whether the magnitude of the change that is proposed in the amending Bill or the direction of same is the right way to go. The question needs to be asked: does the amending Bill fix the problems that upset the consumers and alienate the building industry? A number of other important questions flow from this.

Does one need to get rid of the Building Practitioners Board?

If the BPB was functioning in less than an optimum fashion, which is the view of some, why not fix the Board rather than migrating its tasks and responsibilities to an already busy VCAT? There is no doubt the Board would benefit from more consumer representation; it would even benefit from having a member who has been a victim of the worst manifestations of construction failure. Such a soul would provide an invaluable point of reference to influence the complexion of disciplinary decision making. A BPB could do this. The VCAT, however, may find it difficult deploying such a representative in its decision making matrix absent formal qualification.

A long standing bugbear has been the lack of ostensible independence of the BPB from the Victorian Building Authority, the VBA, but what is there to prevent the establishment of the BPB as a distinct and discrete statutory entity that is funded by building registration fees or a component of the building industry levy? The fact of the matter is BPB members contributed their time in not altogether a pro bono capacity, but for nominal remuneration basis in the order of $300 a day. If the responsibilities are fully migrated to the VCAT, then Treasury will need to generate additional funding for an expanded panel of members regardless of whether they are full time or part time, but it will be an additional expense to the taxpayer.

The defining powers of the BPB for many years were largely impotent in that the regulatory fines were simply not high enough, but again this is an easy fix – simply increase them.

The Building Appeals Board – why does it need to go?

The BAB has about 50 years of heritage in a variety of previous incarnations; populated by a mixture of technical and legal experts, it provided inexpensive and fast track determinations on building regulatory matters. Although not perfect, did it need to be dismantled? Again, it can be fixed. Broaden the consumer representation that presides over hearings and generate stronger walls of independence from the VBA and BPB. BPB decisions could be appealed to the VCAT.

Note that NSW appeals from the Building Professions Board find their way to the Administrative Appeals Tribunal rather than a body like the BAB. Again, that is an easy fix. However, to migrate all the responsibilities of the BAB to the VCAT, again, the Government needs to consider that there may need to be another visit to Treasury to provide funding for members to preside over what were once BAB hearings and it will cost considerably more than $300 per day.

Regardless of whether of one is talking about the abolition of both Boards, Treasury and bean counters aside, the real issue to be grappled with is one of whether the increased judicialisation of the process will lengthen hearing time, draw in more legal advocates, lead to longer lead times up to date of hearing and increase the costs of dispute resolution. Does this bode well for consumers and Building Practitioners? Someone needs to find answers to these questions before parliamentary passage of the demise of the Boards is a fait accompli.

The amending Bill does not really deal with some of the very serious issues that confront the Victorian building regulatory ecosystem and these are:

• Private certification
• A perceived deterioration of robustness of building control
• An ageing building surveyor fraternity
• Fee cannibalisation by building surveyors
• A lack of independent review for alternative solutions

So let’s look at what the Government may wish to consider in overhauling this area, an area that troubled the auditor-general some years back:

Private Certification

Fee Cannibalisation

This is a profession that is under siege and a profession that continues to engage in fee cannibalisation. There is a special case to argue that there should be a regulated fee floor below which building surveyors regardless of whether they are local government or private sector cannot compromise. The relevant building surveyor is critical to Victorian building control and the viability of building regulation.

Building surveyors must ensure that the amount that they charge to play the role of regulator is not governed by conventional fee crunching free market forces that dictate that the cheapest service provider will get the job. Society simply cannot afford to have building regulatory compliance in terms of quality control being governed by conventional free market forces. The Government could consider gazetting fees for inspections in particular to ensure that an appropriate amount of money is paid to generate a professional outcome. For a more comprehensive thesis on the need for fee regulation, see Why We need a Floor on Building Surveyor Fees.

Private Certification of Alternative Solutions – An Awkward Marriage

I have been banging this drum for a long time, a drum that no one listens to: private building surveyors should not be permitted by the legislature to sanction or approve alternative solutions under the Building Code of Australia.

The risk of compromise associated with the passing of lowest common denominator alternative design scenarios is palpably odious. Independent peer review must be introduced to ensure that independent reviewers totally divorced from the particular project and particular set of building actors approve subjective alternative solutions. Prior to the introduction to the performance based building code in the 1990s, this is precisely what occurred as alternative solutions had to be sanctioned by a predecessor of the Building Appeals Board (the referees Board.) All of these parties were independent of the project. For more ideas on how to overhaul private certification, see Stephen Smith’s, Six Ways to Fix Private Certification in Australia.

Auditing

There simply is not a sufficiently robust auditing regime. Audits occur after the complaint which is code for when the damage is done rather than before complaint, which is code for before damage is done. When I participated in a Japanese building and regulatory law reform think tank as a guest of the Japanese’s government in 2013, I opined that private certifiers should be audited annually, individually, just like members of my legal fraternity who choose to operate trust accounts. The Japanese civil servants told me this regime already exists and they “got that.”

If the bean counters fear this could have an additional bottom line impact, Treasury can look no further than the legal fraternity. If you operate a trust account, you have to be audited at least twice a year and the law firm pays for the auditor. The auditors are nominated by the oversight body to guarantee independence. The VBA could set up the same type of user-pays system. Believe you me, if the Government embraces this initiative, it will be a game changer and if coupled with fee regulation, what is essentially a weeping sore will heal.

Mandatory CPD

Every lawyer in the state of Victoria has to do mandatory CPD points and one of the compulsory CPD points is ethics. There is also a sprinkling of professional development, practice development and substantive law.

Some may say it is inconvenient, some may say it is down time, but under any criteria there will not be one lawyer who could say that he or she is not better for the experience. It is part and parcel of the ongoing professionalisation of any sector of the industry. Yes, it may cost more, but this is not necessarily always the case; in the legal fraternity, there are truckloads of education CDs designed specifically for CPD and it is common practice for there to be in-house seminars. Just because CPD is made mandatory does not mean that punters have to pay for external education providers. That is an option that is open to the individual.

The Registration of Expert Witnesses

The Building Act does not register expert witnesses. Expert witnesses have a huge bearing on whether building cases are won or lost, yet they are totally unregulated. It is paramount that a new class of registrant crystallise, and that category should be expert witnesses. This would ensure expert witnesses can be held accountable for unprofessional or any compromised expert evidence in building disputes. The professionalisation of this regime will cut the cost of litigation and eliminate much of the risk for a more comprehensive set of arguments in support of this registration imperative. For more information on this subject, see How a Registration Regime for Expert Witnesses Would Look and Why Australia Should Regulate Expert Witnesses.

 Other Approaches to Law Reform

In recent years, law reform in many jurisdictions has been carried out within the auspices of the civil service and the departments.

In this instance, it may be instructive to look to Japan; when the Japanese embark upon major regulatory law reform they take their time, establish a reform team which often includes external luminaries, then consult widely and they very carefully study other regimes to import international best practice. The Japanese also organise think tanks and – if need be – bring in offshore international experts as advisors on sounding boards.

Having participated in two such think tanks at the behest of Japanese Government, I can say their obsession is more to do with what fails than what works. The Japanese literally cross-examine the living daylights out of think tank experts in their mission to work out what has caused regulatory failure with the view to ensuring that the experiences are not duplicated. For more about the Japanese approach to building law reform see Building Reform: What Tasmania can learn from Japan.

The Government may wish to consider using the Japanese approach as a law reform template to ensure that there is not any “silo effect.”

On a final note, the most important questions for the powers to be to ask is: will the amending Bill fix up the problems that were identified in the Victorian Auditor-General’s Office (VAGO) report?[i]

For that matter, does it even deal with the problems associated with private certification? Is there another way?

These are hard questions but they must be asked because this is not a “road-testing” exercise, the Japanese do not “road test.” They find out a lot more by getting the road test results from other jurisdictions that have had a bumpy ride. On a sombre note, building regulation can fail in spectacular fashion i.e. the Latvian roof collapse (see Latvian Roof Collapse: Another Failure in Building Control) that killed many people partly as a result of the dismantling of the National Building Inspectorate and the leaky building syndrome in New Zealand that culminated in more than $20 billion leaky building rectification.

[i] Victorian Auditor-General’s Office, Compliance with Building Permits: http://www.audit.vic.gov.au/publications/2011-12/20111207-Building-Permits/20111207-Building-Permits.html.