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Many Australians hope to build their own home, provide a safe haven for their family and live the ‘Great Australian Dream.’

Few realize the fundamental fact that once beguiled into the ‘Game of Building,’ they have contracted into the realm of gambling. Constrained in a contest of unequal competing interests in a game played on an unfair playing field, for unwitting players, the high risk of harm is hidden. These players, sadly, are odds on to lose.

Building is the biggest game in town

Australians who embark on having a home built know it will be the biggest investment of their lives, but most view it as an ‘ordinary’ activity, with little likelihood of loss. Building and owning a home is central to Australians’ thinking, integral to the Australian character and cemented into our culture. People believe there’s a fair system in place with protection to safeguard their interests – in game parlance, it seems a pretty ‘safe bet.’ And such views are perfectly understandable.

First, this is set against the backdrop of Australia as the land of opportunity, where fair working conditions and decent pay have defined the egalitarian values of the ‘lucky country.’ Through hard work and sensible saving, building the ‘dream’ has been advocated as an achievable goal.

Second, the strong message from all governments has been solid endorsement: “Build your own home. There are rules and it’s safe and secure!” Successive governments have further propagandized by providing financial sponsorship for first home buyers to build – a kind of benevolent bribery configured as ‘First Home Buyer Grants’ courtesy of Australian taxpayers. And even if our young people have insufficient savings, this has been reckoned irrelevant!

Third, the big building players (banks, insurance companies, developers, ‘industry associations’) and all involved in the building game have used their marvelous marketing to support the ruse that ‘building’ is supremely secure.

Two examples of some builders’ promotional puffery illustrate the flawed but persuasive promises. In a recent TV advertisement, potential home buyers were given the assurances “We will give you $20,000 of Love” and “A $10,000 cash back from us at Handover!”

We ask, will the “$20,000 of Love” not be built into the price before, if ever it’s given back?

And beyond that, for how many owners will there be “final handover” which gives them a chance to collect their $10,000 cash back?

Past experience offers insight. First, mull over how many cases you know where money has been returned after being taken? Second, how many owners have had a ‘love’ experience in building? Furthermore, there are many, many owners who fully paid for their houses, but never got to ‘handover’ and never lived in the house!

Speculating against the odds

For building owners, the facts are full-on frightening. The 2011 statistics reveal that 30 per cent of Aussie “gamers” suffered detriment – three in every 10! In Victoria in the same year, 40 per cent of owners suffered financial detriment, according to a CAV report.

What has been the loss to Victorians over time? CAV notes that in 2008, the financial loss was $1.6 billion. That sounds bad, but over the three years from 2008 to 2011, the percentage of building consumers financially damaged increased 2.5 times, from 16 to 40 per cent! Staggering! However CAV, a major player on Team Building, declined to disclose the dollar detriment figure for 2011.

So to quantify the loss, if we take the 2008 $1.6 billion loss and multiply it by 2.5, the 2011 loss computes to a hideous $4 billion! Even if we take a conservative approach and bump it down by a full billion, that’s still an inexcusable $3 billion.

With no Government statistics divulged in the five-year period from 2011 to 2016, but being conversant with the limited official information and the ample anecdotal evidence on gamers’ outcomes (worsening exponentially since 2011), we can extrapolate from the known to the unknown. Thus we can estimate the financial detriment to Victorian owners in 2016 to have risen greatly, perhaps to as high as $12 billion. In the interest of being objective and conservative, let’s moderate our guesstimate of Victorians’ loss this year to a lower figure of $10 billion. Scarcely trifling, especially if you’re one of the devastated losers.

Reflecting on the effect across the nation, given that Victoria accounts for around one third of all building, we can conclude Australian owners’ financial detriment to be around three times that of Victorians,  making Australians’ loss in 2016 $30 billion. Imagine that a new hospital costs between $140 million and $800 million; if we take an average of $500 million, the $30 billion loss to Australian building owners would cover the cost of building 60-plus new hospitals!

Crafting the camouflage

Crafting the myth that building is ‘safe as houses’ was clever camouflage to conceal the perilous risks inherent in building. Thus the lack of skilled, experienced practitioners is unseen, their incompetence ensconced in ‘registration’. The ‘rules and regulations’ were developed as a decoy, comprising mock directives made and unmade, cobbled together to crush consumer contestants. And as the number of the cowboys continues to escalate, despite their abysmal, unethical conduct, fewer player misconduct cases are heard, names are suppressed and the records protected in the oft out-of-sight Practitioner Disciplinary Register.

Just a few of the building policy stratagems demonstrate the dire straits of defenceless consumers. Attempts to do their ‘caveat emptor’ research are stymied, unfair contracts (legal under ACL) are biased, false certifications of non-compliant and unsafe building work are widespread, warranties and guarantees are non-existent, the prejudicial, adversarial legal forums are unbalanced, the scam insurance is inaccessible, and the list of issues goes on. This is all facilitated ‘legally’ to enable the advantaged to be the winners.

The weighty work of the reputed umpires has been crucial in safeguarding the delinquent players and sequestering the isolated gamers to the danger field. Those in command of the legal system have worked collaboratively with Team Building United. To the further detriment of Team Owners, they have reduced the already shrunken case lists to undetectable. A fabulous formula, it’s been a knock out, one nullifying any possibility of the stunned to stand up.

In this way, the privileged players were indulged and the bull’s eye of boosting industry was reached. To succeed, the package was wrapped up in spin to disguise the lawless building industry and inspire false confidence in consumers. The facts were secreted away, the ‘rulebook’ was buried, camouflage obscured the truth, delivering ever more innocents to play the game whilst bolstering the booty for the beneficiaries.

Risky business

Now to the congruence between gambling and building. Both are risky, but there’s a critical difference. Gambling on sports offers unrestricted access to the facts so players can evaluate the best chance of winning, and relatively rigid rules and impartial umpires add further assurance. In racing, the horses’ breeding and form, trainers’ records and the jockeys’ history can be scrutinized. If taking a chance at the casino, despite the house advantage, it’s possible to cogitate what is at stake.

However in building, ordinary, hard-working Australians making the biggest investment of their lives think they’re on a ‘safe bet’, clueless in conceding to a big gamble! Intentionally uninformed, foiled from finding out the facts, they are gullible; assigned the status of the unprotected. The game of building has been calculated to cover up the set-up, with no way for the naïve to reckon on any rationality of the unintelligible, or to fathom beating the odds.

Presently, if we want to guess Victorian building gamers’ risk, we have to assess three elements in relation to consumer financial detriment:

  1. Look at the available statistics spanning 2002 to 2011, with attention to the significant increase in the numbers damaged and their monetary loss over the period.
  2. Factor in the substantive reliable, verifiable empirical evidence gathered by consumers.
  3. Respect the opinions of those ‘in the know’ who work in the industry.

Of utmost importance are the second and third of these. The second, based on extensive experiential consumer research, includes hundreds of thousands of case studies, incorporating 10 years of soaring growth in owners’ financial detriment. Over the past five years, this data has been collected and analysed by the Victorian Building Action Group. The appraisal demonstrates the chronic climb in detriment, rising from 40 per cent in 2011 to 50 per cent in 2016. That’s one in two – an even money bet!

The last evaluation to take into account is the first-hand experience of the building industry, the reliable knowledge base of those who work in the building/building dispute industries providing the best gauge. Their rational, perceptive judgments are more judicious than consumer research and far more chilling. The opinions of the experts and most worldly wise on building (builders, lawyers and others) back up the proven exponential increase from 2006 to 2011 to 40 per cent, with a current update. Their assessment on consumer detriment risk in 2016 is 60 per cent! Yes, that’s even worse than the consumer estimated 50 per cent, confirming the seemingly limitless, spiralling detriment scale!

The quintessence of building is the subtly fashioned illusion that nothing is “as safe as houses.” Thus, few Australians are conscious that they are gaming, or that a bet on ‘building’ may be the biggest gamble of their lives. Envisage outlaying $300,000, $500,000 or $1 million with the odds against!

Indeed, building is a risky business. It’s a game for fools, where manufactured misconceptions are the rules and the mass of shattered lives total the score. Most germane, in this game, you’re odds on to lose!

 
  • The Australian dream died more than a decade ago!
    House prices are a joke and this country is headed towards disaster as it will be a nation of renters, Middle class will eventually disappear and you will have more crime as people resort to illegal means. Those people who have gained wealth by ripping off others in property market will now have to watch out for burglars breaking into their houses while they sleep or car jacking their BMW/Audi/Mercedes in broad daylight, Only have to watch the news to see it's already happening.
    Welcome to Australia, The land of opportunity!

  • Certainly, the number of problems which consumers have been experiencing when buying a home is unacceptable. Whilst one can accept that building a home is a fairly involve task in which many hands are involved and much can go wrong whilst the fragmented nature of the industry mean that there will always be cowboys, both the industry and regulators do need to do better to deliver a better outcome for consumers on a more consistent basis. When you engage a builder, you do not expect to wind up as one of those cases on A Current Affair.

  • Well done Anne,

    Now watch this space as regards the lack of action by all governments to alter anything that might affect business.

    I wonder does any government think ahead to the day when so many defect-riddled houses become unsellable commodities… and the economic blight that this will cause.

    And will any government act to curb property investment incentives… or are young couples from now on facing a future with no possibility of realizing their dream of owning a home?

  • Thank you for this article Anne and to Sourceable also for publishing the truth. The reality clear and in terms we can all understand. If one enters the Building Industry, it is at great risk. This industry is not only protected but it is over protected and this has been hidden from the community through misleading spin from business and government. All governments have failed in their responsibility to protect consumers and give them any chance of competing in a fair market. What is glaring is that this has been no accident. Shame on all governments!
    Add this to the numbers of workers who have died in recent weeks. This is a recipe for an even bigger disaster for owners and workers. Where are the unions and the ALP?
    We all must speak out and demand that our politicians respond or we send them packing.

  • Extraordinary explanation Anne of an utterly broken system.
    What a Bonfire of the Vanities.
    And throw into the mix unproven performance of many building products being used in houses. One stunning example is how the wrong insulation is shoved into people's homes in hot tropical climates, in defiance of building designers saying they don't want it and demanding reflective insulations instead. A fact revealed in a government report 2014.

    Anne talks about a rigged system against the odds. Well that's the situation with insulation standards, regulation and enforcement. Many Standards do not have adequate consumer representation, as revealed in the May 2016 Interim Report of the Senate Inquiry – Non Conforming Building Products, which has just been reactivated and will report in May 2017.

    In The Fog of War, the consumer wants to believe, wants to trust, that Australian Standards will protect them. In many cases this is patently false. Very large companies and government agencies invariably control Standards Committees and write the documents to suit a string of commercial outcomes. The public has zero hope of challenging anything that happens with regulations and Standards.

    And the odds are also well and truly stacked against Small Business representation on Australian Standards. Standards are meant to have balanced committees, as per the powerful findings of a 2006 Productivity Commission investigation.

    And to top it off, the central Charter of Standards Australia is premised on "demonstrated Net Benefit". Yes, but for who? Industry players that write the Standards, or the public net benefit?

    To be fair, much good work is done in Standards, but alot is not.

  • Thanks Ann, so we're all 'Marks'?

    With the odds stacked against the consumer it's no wonder that building practitioners have bypassed legislation, with the help of their lobby groups – HIA, VBA, VMIA, etc., and ruining people's lives – collateral damage! You'd think with all the defective buildings the VMIA would would have increased premiums beyond affordability for the average builder/surveyor who has been indoctrinated to believe it's his right to buy his registration and rip-off consumers?

    So why isn't the VMIA paying out? The legal framework means they don't have to! The 'Fairground' jurisdiction here means it is virtually impossible to claim anything approaching the real cost. Therefore, why bother with the model?

    Prior to becoming a tax-resident I thought the adjective "Australian", often pumped out by politicians and believed by the general population, meant doing the right thing. I could not have been further from the truth. The reality is 'Australian' means thief, conman, not to be trusted, etc. The VBA epitomises my definition. Our successive Planning Ministers are no better. Therefore with such glowing examples of Australianism it's no surprise what has happened.

    The moral: You're a mug to use a registered building practitioner, and if your house is falling down sell it and let the other mug have all the problems.

  • Thank you for your insights Tim. Yes, the system is beyond broken. Now to your comments on Australian Standards: first you make an important point, and that is that there is no consumer representation on the Standards' Committees, or for that matter, on any Board, Committee or body in the realm of building/consumer protection in the country. There is not one genuine building consumer represented anywhere – that is the domain of the 'appointed and anointed' – or the 'in the know business beneficiary', or ex-Govt official 'supporter' of same. Second, even if the Standards were sound and appropriate, like all laws and regulations in 'building' and 'consumer protection', there is NO enforcement. In reality, without enforcement of compliance, the laws are effectively non-existent. Your conclusion that it is a 'fog of war' is accurate. There is a war and the fog is what keeps consumers (along with the reality of who, what, why and how of the harm) so opaque. You cannot act to prevent harm if you did not know there is any likelihood of harm. And if you did per chance find out, you have no arms with which to fight. Herein lies the secret of success. In a war no-one knows about – it's all secret! And the 'secreted' information ensures the success for the winners and the losses for the losers!

  • We have a very serious problem in our nation. In the late 1980`s we used to have Building Inspectors who were employed by our local councils. They would be trained they new the land within their local bourough and they new the builders. They also new they had a prescriptive fudiciary responsibility to the community to ensure the community were provided with good quality housing as an employee of local government carrying out the role of local government in the overriding duties of care to the community in health transport and housing. As our world shifted and became a lawyer colonized state the prescriptive fiduciary role of local government in Australia has been shifted by the lawyers to one of a proscriptive fiduciary role. Not so in Canada. The fact that the legislation of the regulation of the home construction industry was changed so radically without an measure of its effects on the quality of housing is indicative of the level of corruption that now exists within Australia. It is now time for all of us who care about the future of this nation to come together and make sure our government that is the Authorities who we trust to work for the nations interests do just that. Local Government should employ independent building inspectors. All blocks of land approved for home building must be accompanied with a soil report prepared by a soil report expert also employed by the local council. The State government should take over the responsibility of builders insurance as used to be the case. The fact that these changes have failed and that the local and state government have not addressed the situation clearly indicates that these entities are breaching their fiduciary obligations to our communities and should sacked.

  • Sadly, there is so much risk incbuilding your own home and pursuing the 'aussie dream'. Your article leaves one with little confidence in the building industry.

  • It is extremely disturbing that ordinary citizens are treated with such complete contempt. Greed and corrupt practices are what clearly drives this nefarious conduct. Rather than having to demolish poorly constructed homes, why are we, the people, not demanding that these corrupt practices be demolished?

  • We haven't got a hope while successive Governments allow the Building Industry to do what it likes without proper controls and accountability. People do not want builders to go out of business but they do want builders to deliver a safe, solid product.
    "With no Government statistics divulged in the five year period from 2011 to 2016", this would seem to indicate that the Government doesn't appear to care that consumers have all the information needed before they start on such a huge project of building their home. Come on Government, planning ministers, all those in charge of administering the industry, get your act together for all our sake and for the sake of Australia's future and its reputation as a place that people want to be.

  • Anne, you have hit the bull's eye here! We have been so damaged through a building saga now spanning 7 years and no end in sight. We have suffered a massive financial loss, all of our life savings gone. As well, we have suffered much stress, pain and heartache. Our health is in tatters and our lives in 'retirement' ruined.
    Over the course of the last 7 years, we had the first cowboy builder. He came and left within a year, taking nearly $300,000. We had the building surveyor approve the non-compliant base stages, including putting the house in the wrong place and set way too low! We did not know about the major defects and made all the payments to the builder because all was approved! After going to a lawyer and having the contract terminated we went to VCAT and a VCAT Order in our favor stated we were to be paid $160,000 plus. We thought we had won! But the builder did not pay us. After years passed he finally went into insolvency. Then we put in a claim to the insurance company but the insurer refused to pay out, saying "we do not take any notice of VCAT Orders"! We were then forced to have a second builder and he ran away a year ago. Now we are back in VCAT because he wants a final payment when he did not rectify the defects or complete the work. He left us in a worse mess, flooded out 6 months of the year, the site very muddy, slippery and dangerous for us to live there and risky for anyone to visit. Several people including my husband and I have fallen this winter and this summer will bring dirt and dust in the place of the floods and mud. How many more years if this ever ends? We have tried to get help – all Ministers, CAV, VBA, DTF, VMIA re insurance, our state MP. All refused to lift a finger.

  • Hi , Anne this article will go down in history as a example , The king is naked . In this sore & sorrow saga everyone is is only seeing the problem not the cause of the problem . The real cause is the bankers , Lawyers & bureaucrats . First the bankers control the price of housing not the builder or the Associations they belong to . It is the lawyers who write the laws to suite them selves & their two mates . Then the bureaucrats use what their two mates have put in place to control the foggy minded public . There is an old saying , There is 3 group of people in socialite ,The small group that make things happen , A larger group that watch what happens , & the largest group that just wonders what happens . Right & responsible go hand in hand . It is the system that play of the individuals greed , if you want cheap , cheep , cheap , you will get what you ask for . Regards A 69 year old builder that has seen it all .

  • An excellent article Anne, a real eye opener.

  • Great article Anne

  • Please read the article before building and get your facts before signing anything and do your homework

  • At the top of the hierarchy is the government who controls the building industry and in our state 'most liveable state' it is not controlled, no regulatory system hence all the nightmares which are overlooked. No one cares, the people who make money out of defective buildings are the only people who win the lawyers etc.

  • This is absolutly the truth and the bare facts of the end result of wanting to build a new home in Australia for the past 22 years.

    There is NO CARE FACTOR AND NO RESPONSIBILITY.

    OUR BUILDER HAS CHANGE HIS NAME AGAIN – HE DOES IT EVERY 2 YEARS AS HIS BAD REPUTATION CATCHES UP WITH HIM YET AGAIN.

  • The odds are always stacked against us. But to think to this extent and considering that this is such a big investment for most people. I do believe it because I have lived it and know too many others who have had their lives ruined. I admire Anne for her research, knowledge and insights.

  • Great article Anne. As owner builder, we were lucky (thankfully), watching all the contractors like hawks, getting a foreman to supervise various works. However we blinked at the final hurdle – now have a problem we want remedied, and can't move in. Even with commercial (contract works) insurance we were not covered – as it's classed as the standard exclusion "defective works", and that's very rarely covered by any product. The company whose reps verbally admitted 'human error' and apologised, says it's a 'product liability' issue and claims it's not covered on it's insurance. Also another thing I discovered insurance-wise at the beginning is: that despite the Vic building regulation (protection works) saying you need public liability for adjoining property owners, there is no insurance product for this. So I had my insurance company tailor my policy by naming all the owners. Could go on all day Anne, but wont so: "Keep up the good work"!!

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