The Truth Behind the ‘Consumer Protection Reform Strategy’ 23

Monday, July 6th, 2015
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After the damaging Auditor-General’s Report of 2011 and the Ombudsman’s Report of 2012, there was much public comment on the disturbing revelations of failed governance and maladministration.

This forced a government response. The public officials were well prepared, and immediately after the release of the Ombudsman’s Report, Planning Minister Matthew Guy announced that oversight of the building industry would be reformed. The reality reveals that the ‘reform strategy’ was once again a misleading myth.

Much was promised in the campaign launch. Guy said there would be “a fresh start for building regulation.” The Building Commission would be gone and in its place, the Victorian Building Authority (VBA) would act as a “strong regulator.” Over the following months, we learned that there was a ‘Reform Strategy’ with the VBA to become a one-stop shop, responsible for everything: practitioner registration and discipline, regulation, enforcement, dispute resolution and even insurance.

Marketing was all positive, with Guy assuring confidence for consumers and the industry, improved registration processes, cultural change and strong governance, improved consumer protection and other benefits. Under the VBA, Guy committed to establishing “lines of accountability” that would be “transparent.” It sounded good.

An examination of the ‘strategy’ reveals, however, that there has been no real reform, if by reform we mean improvement. What we find is a marketing myth, an illusion of ‘reform,’ some changes, but no amelioration. Much like shifting chairs on the Titanic, there was a new name but the same people, strategies and consumers remain on the sinking ship. Unmasked, the ‘reforms,’ both implemented and planned, reveal an unchanged reality.

The Victorian Building Authority

The VBA is the new name for the old Building Commission. Re-branded, the VBA has grown in size, but beneath the surface little has changed. Most new senior officials of the VBA have come from similar backgrounds to those who left the Commission. In charge as chief executive officer is a senior official who designed and directed the Commission’s failed regulatory and governance systems. Surely common sense would dictate that any new staff enmeshed with the former so-called ‘regulator’ should have been entirely independent of and unconnected with the blighted Building Commission.

Guy promised cultural change, but consumers’ experiences demonstrate that there has been no change either in the culture or the agency’s operations. One example is attempting to obtain information. For consumers, this is fraught with difficulty.

The VBA makes less information available than was released previously. Building Commission documents and records are no longer available on the VBA website or on the internet. Yes, it as if the Building Commission never existed! Let us say that you wanted to become informed and read a back issue of the Commission’s Inform magazine, you can neither obtain it nor read it, nor become informed.

Additionally, what is on the VBA website is very limited. Where there is information, it is often incomplete, missing the most critical details. For example, a consumer may be considering engaging a building inspector. On the VBA website, you can look up ‘building inspector’ but there is no reference to the Building Act requirement that a building inspector must be registered and qualified. The law states that building inspectors must be registered, but there has been no enforcement. The reality is that there are hundreds of people currently claiming to be building inspectors, operating illegally, their conduct endorsed by the VBA whilst owners pay hundreds of thousands of dollars for worthless reports.

For 10 years, the Commission refused to stop this widespread illegal activity of false representation and under the VBA it continues unabated. Imagine the damage caused to consumers who pay for inspections and reports – sometimes as much as $20,000 – and they have been denied the opportunity to readily find this most basic information on the website of the putative ‘regulator.’ In reality, non-enforcement means that there really are no requirements. This make-believe ‘regulator’ makes a mockery of our laws and the touted ‘reforms.’ The cowboy practitioners are protected and the VBA has been complicit in enabling consumers to be robbed of their legal rights.

In relation to accessing information in the public interest, neither the VBA and Department of Transport Planning nor Local Infrastructure (DTPLI) have shown a willingness to give consumers access to documents. Over the last three years, the VBA and the DTPLI commissioned three reports, two on practitioner registration by Deloitte and PwC (costing $135,000), and one on slab heave. The VBA has withheld all three reports from those seeking access. This would suggest that the reports were very negative, but that does not entitle the public officials to hide such information. Consumers have a right to the facts and to be able to make informed choices.

Since the VBA has been operating as the ‘regulator’ for almost two years, let us review its performance. The Annual Report for 2013-2014 provides the scorecard. The CEO, Prue Digby informs us that the VBA’s core regulatory function is audits. So how many domestic builders, limited or unlimited were audited under Digby’s direction last year? From the look of things, not a one! There were 99 levy audits on building permits out of 164,000 Building Permits issued for $39 billion of building works; this is not only infinitesimal, but focused on collection of monies.

In other areas, how did the VBA compare in 2013-2014 to the Building Commission the previous year? For 2013-2014, the VBA carried out 70 fewer inspections and conducted 80 fewer investigations; with the Building Practitioners Board’s 53 inquiries and the VBA’s 28 prosecutions, the total number of building practitioners disciplined was 81, as compared to 136 under the Commission in 2012-2013.

As the number of registered building practitioners increased and the number of incompetent, unscrupulous offenders increased, the new VBA as the reformed ‘regulator’ decreased the minute number of audits, decreased the number of investigations and inspections, and the number of inquiries and prosecutions. Of 21,186 building practitioners registered, a mere 0.38 per cent were called to account last year. Put simply, 99.62 per cent of practitioners were free to act as they pleased without fear of sanction, for a near-zero probability of punishment! This performance comes as Digby states that the VBA is “working to become a better regulator.” These appear to be empty words, with the VBA’s performance seemingly in stark contradiction to its pledge to reform.

The VBA Mail of 13 May 2014 states: “The aim of the proposed reforms is to deliver improved consumer protection and oversight of building practitioners” and “the VBA will have responsibility for implementing the reforms.”

Yet with 46 more staff and a budget of $42 million to operate in 2013-2014 (80 per cent of this money paid by owners), the VBA has managed to deliver no improvement for consumers and to do less oversight of practitioners than its predecessor.

Consumers are not considered stakeholders by the VBA. They remain locked out of consultation and denied any representation, their rights and protection non-existent. It is therefore unsurprising that the mythical ‘reform’ has not become reality for consumers.

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  1. Mel

    Anne has succinctly cut through the spin to highlight very successfully what those in the system have long experienced. Her in depth knowledge should be capitalised on, yet the distinct refusal to allow genuine consumer voices speaks volumes of the current culture in the Victorian building industry. Anne and those like her (rare as they are) are often the only shining light in the very dark process that thousands of ordinary Victorians are enduring for years on end. Let's see a considered, genuine response to the findings of the Victorian Auditor Generals report released in May, and return Victorias' building industry to something to be proud of.

  2. Dick Gower

    Depressing reading that nothing has changed.
    Please keep up your good work Anne.

  3. Andrew

    It is great that Anne has been on the side of consumers. We have been fighting with this and previous governments for change to the system that protects the cowboy builders, inspectors and surveyors for too long.
    A change in the system is desperately required and it is required NOW.
    If there is no change NOW then another generation of people will be saddled with a disastrous building system.
    Keep up the good work.

  4. Peter quartel

    Anne is right. From my own experience it appears that the Building Commission was completely unable to identify, let alone remedy, illegal conduct by builders. I find it extremely hard to believe that an organisation that actually wanted to perform could be as hopeless as the Building Commission or now the VBA. Can the Labour government do any better?

  5. Dee

    This does not surprise me at all. It seems these days that anything to do with a government of either persuasion will only do what it wants to do, and the general public are the losers overall. I fully sympathise with all those who have fallen foul of the VBA , keep up the good fight and hopefully you will win through.

  6. Beverley-jane

    Year after year, enquiry after damning enquiry, all the vulnerable consumer receives is yet another name change!
    When so called professional practitioners can devastate the finances and stability of families through incompetence and outright dishonesty, then legally avoid accountability time and again via liquidation, it is sheer negligence of consumer protection. Simply immoral!
    Without critical scrutiny of those seeking registration, effective control/enforcement of regulations, any registration and regulatory body is nothing more than a parasite to consumers – in fact impeding and endangering consumers hoodwinked into supposing registration criteria offers assurance of competence, financial accountability and good character.
    The regulator, recalcitrant builders and all too powerful 'member associations' who protect these incompetents with ongoing memberships and legal assistance further abuse consumers and damage the industry, dragging honourable and competent members along with them.
    Far too many of the 'homes' being 'built' today will not be sound for future generations let alone those consumers who have risked life savings to build. Disposable homes?
    Consumer beware!

  7. Graeme Doreian

    Great article that no bureaucrat or politician from any political party want exposed.

    It is known that relevant Ministers liaise with the various Departments named, that then gives those Departments comfort knowing they can keep 'ripping off' the consumers.

    I believe the legal paternity, who have set up this 'minefield of deceit', pocket from Government and the consumers, just one big' boys club'.
    I bet, if they had building problems their 'mates' would silently fix the problem.
    Because of the, I believe rectification costs, and potential legal ramifications, NO ONE in any political party will act thoroughly, as has been revealed in VAGO reports since around 2000.

    Consumers are too abused, and weak, even when healthy to make a united stand, and until they do the 'charlatans' will rule, protected by the bureaucrats, politicians, and vested interests.

    Congratulations Anne, I only wish large numbers of people would support your group, and 'get the bastards'. Until people are hurt no one cares. MAKE A STAND NOW.

  8. Karin

    Great summary of the depressing state of affairs – when will the Government wake up?

  9. Mark Whitby

    Another informative one Anne,

    It's a pity that everyone is so misinformed on so many issues in the building industry. Virtually everyone thinks that anyone who inspects a building is a building inspector… WRONG. They are building consultants… and they do not need to be registered or insured. But if they call themselves building inspectors they are actually guilty of misleading the public.

    I think that the misinformation is so widespread that the real Building Inspectors (who look at buildings under permit at each stage of construction) should be called something else… perhaps Building Permit Inspectors?

    It's not unlike the confusion regarding pergolas and verandas. Very few in the public know there is a difference… that verandas have a roof covering and pergolas do not.

  10. Roy Coon

    How true. It took eight years to get an occupancy certificate for a $22k extension which ended up costing over $100k due to a dodgy builder, an incompetent Building Commission and a completely useless VCAT that had absolutely no concern for any regulations or standards that were ignored by the builder as well as multiple surveyors notices. The fact is that the builder broke the rules, went through the kangaroo court system (this was his third time) and was let loose to do it again without conviction.

  11. Diarmuid Hannigan

    Australian Consumer Law states that one must not engage in Misleading and deceptive conduct, unconscionable conduct or unfair empowerment in a contract. Surely Mathew Guy and his troops have engaged in all three of these sins in creating this new and ineffective body that they purport will protect the consumer rights of new home owners when in reality this has not occurred. One has to ask where is the Minister for consumer affairs and where is the head of Consumer Affairs Victoria Clair Noone and why are they not doing the job they are paid to do.

  12. Pam

    Anne Patten is one of the only public faces of building reform and consumer rights in the building industry in Victoria. According to the latest VAGO report nothing has changed from those reports cited above. It is most interesting to note in the 2014 HIA annual report amidst the huge economic and well-being losses by building consumers in this state “they rallied against proposed changes to domestic building insurance and the Building Act- and acknowledge their success in having the VBA momentum stalled. They also recognise the ongoing challenge for the new government, and they also point out they will once again very busy with cross-benchers to influence the Victorian Upper House of Parliament. With very rich lobby groups such as the HIA and similar industry bodies, what hope have consumer and Australian citizens in Victoria have?

  13. Mar

    This is one of the greatest scandals in Victoria and hard to believe that in spite of all the promises nothing changes. Perhaps the government want the political donations that come from the developer world. Have the mafia taken charge of the development world?
    Whatever it is, it is outrageous that both sides of government sit back, make promises and do nothing .

  14. Dave

    Wells aid, and aint that the truth. Govt regulation – helping to make life difficult for you yet again.

  15. Cheyanne Dumbleton

    Its hard to believe that the VBA are keeping up their end of the bargain in relation to the Australian Consumer Law stating that one must not engage in Misleading and deceptive conduct, unconscionable conduct or unfair empowerment in a contract. Seems its polar opposite when they are removing the ability for consumers to search for suspended builders instead of noting that they are currently suspended due to being found guilty of non-compliance. There is no record anymore kept to state that they had/were/are suspended. Practically removing any ability at all for consumers to be informed and at best given half a chance to protect themselves against such shady builders. The Building Industry is one of the biggest sectors granted…. but only because there is a demand for business. Now we the consumers, DEMAND to be protected against this corrupted system

  16. Val

    This is disgusting and must be changed.

  17. Lesley Crouch

    The building industry is important for the economy and it is difficult for an ordinary consumer to understand why governments haven't acted to ensure that the industry is efficiently run and that builders do their job with integrity. We all suffer when building codes are not enforced and when disreputable practices are allowed to continue. Thankyou to Anne and all the people who are fighting to improve this situation so that consumers can have confidence in the builders who build their homes, apartment blocks, public buildings for us and future generations.

  18. katrina

    Theses builders are lining they own pockets and not helping fixed they mistakes that they have made on building people houses

  19. Dick Gower

    Anne is to be commended for her work in bring such a serious issue to wider attention. Anybody involved is a serious building dispute will know first hand of the serious flaws in the consumer protection or redress.

  20. Andrew Heaton

    At the time of introducing the reforms, Matthew Guy stated specifically that consumer protection was not adequate and that the building regulation system was not working.

    To then introduce a regime involving fewer inspections seems incomprehensible.

    Likewise, I too find the virtual wiping of old information on the VBA web site to be extremely frustrating and poor.

  21. Mary Drost

    Wonderful that there are people who bravely attempts to expose the scandal inside the building industry and what it is doing to innocent residents who put all their money into building the home of their only to find so many defects that it is impossible to live in and often they are financially ruined as they pay to have the problems corrected. Why is this allowed and why is not the inspection process not being done properly and why are shonky builders being given the licenses to allow them to build. Something very wrong going on in the Building Commission and it is high time the government took it seriously and really corrected it. Why do they turn a blind eye, is it because they just want to keep building as they have allowed manufacturing to go overseas and all we now make is houses.

  22. Connie

    I have heard about how bad the system is from one of my relatives and cannot believe the government allows this to happen. I cannot understand how all these people get paid to do nothing. When is the government going to wake up?

  23. Rob

    Wow if only Mathew Guy did what he said he was going to do. Instead people continue to lose faith in tradies, surveyors, the VBA and ministers. It's a situation that needs to be corrected as in the long run it's not good for anyone, least of all the economy. For starters the information needs to be more freely available.