The recent reform of the Building Act and the Domestic Building Contracts Act (purportedly introduced to aid consumers) seems to have merely tinkered with what wasn’t working without really honing in on the real problems.

Those problems have diminished consumer (home owner) rights to the point that consumers now spend over $3 billion each year in Victoria alone futilely chasing the builders of their decrepit homes for what they see as their basic right to have their homes brought to a reasonable standard.

Once we’ve gotten inside the heads of those who wrote these acts and standards and discovered the basic agendas of those people, we can really get at the root causes of why consumers are failing time and time again. Then we can commence proper reform and create a fair playground for both consumers and builders. Surely everyone wants that.

For instance, if we want fairness for home owners in the outer western suburbs of Melbourne, where the volcanic clay soils are so reactive that slabs placed on these soils have failed in the thousands under the present regime (some built after the 2011 changes to Code AS2870), then we’ve got to change a few things that go way back to when enterprise was protected at every level and consumers were of secondary importance.

Quite recently, we saw the hidden agenda of the committee for Australian Code AS2870 revealed in an admission spelt out in a recent VCAT case (and later appealed at Supreme Court) – Softleys v Metricon Builders, where the head of those responsible for writing Code AS2870 (Residential Slabs and Footings – Construction), Eric Fox, explained the basic thinking behind the writing of that code.

During the VCAT hearing, Fox said the Australian Building Codes Board (via its Building Code of Australia) required his committee to limit the strictness of the code AS2870 requirements so that the cost of footings would not result in the cost of housing being raised to the point that the price of new homes became economically damaging.

The requirements were framed such that even when complied with, “in some rare instances” houses would still fail through no apparent fault of anyone. But what about the fault of those writers? They deliberately relaxed the rules knowing that some house footings and slabs were likely to deform and distort past the design limits they set in their code even when home owners complied with the large list of after-care maintenance requirements placed on them via soil reports.

What a rotten and economically misguided thing to do.

Based on the Softleys v Metricon Homes precedent and an earlier similar precedent (Hooper v Metricon Homes), let’s just suppose conservatively that 10,000 of the worst affected Victorian new homes with grossly distorted slabs are eventually pulled down and replaced (at $300,000 each) to make those replacement homes likely to reach a reasonable life expectancy without regular, ongoing surprises such as cornices falling off and three-metre long plaster cracks appearing overnight. This equates to a $3 billion payout on those homes. That amount is doubled when legal costs are added, bringing the total to over $6 billion. That is equivalent to 200,000 homes that could have had the necessary bolstering of their slabs (at $30,000 each) to avoid such disasters.

That’s just waffle-pod slab failures to date. Soil heave can continue for years and years.

The unfair hidden agendas of the Australian Building Codes Board and the Committee for Code AS2870 have turned out to be far more damaging for the economy than simply being conservative at the outset.

But there are a multitude of other defects out there too. One medium sized structural engineering firm just condemns trussed roof installations.

There are also more than 10 commonplace non-structural defects in nearly all of the 500 new homes I inspected – those commonplace defects worth $10,000 or thereabouts per home to rectify properly. These are defect items not even discovered by the vast majority of building consultants, or certifying building inspectors, or building supervisors. If they were identified by those parties, they wouldn’t exist in virtually every new home.

The aforementioned precedents also apply to other defects (maintained but not rectified) during the warranty period, by virtue of the fact that they have failed (sometimes several times) in less than 6.5 years. Definitions of defect should have covered this (basic right to last a reasonable time) warranty, but it doesn’t rate a mention in any Act, Standard, Building Contract or Authority publication including the famous Guide to Standards and Tolerances.

Many other, more obvious poor workmanship defects fought over by home owners and their builders have resulted in enormous expense for all. Only the dispute industry has profited, and for this Australia’s economy may pay dearly.

A 2011 Audit by the Building Commission, which was supposed to look at thousands of badly affected waffle-pod slabs, was stymied by 12 larger building companies refusing to be included. Only 625 slabs were audited instead of the intended thousands. Then the VBA took over, refusing to make it public “so individual builders would not be unfairly penalised.”

This action by the Victorian Government (via the VBA) told us more than the report did, pointing to the hidden agendas in nearly every action taken ‘on behalf of consumers.’ So how can we trust the recent (or the proposed) building industry reforms being carried out now by the same writers who wrote the acts that resulted in this ginormous yearly $6 billion combined expenditure by new home owners and builders in Victoria?

With thousands of waffle-pod slabs failing, considerable revisions to AS2870 were made (extra classifications, stronger slabs, considerable additional information, even long-term droughts), but the code can still be misused.

The incorrect bypassing of Appendix D for highly reactive clay sites by the word ‘normal’ being misinterpreted, has still not been prevented, I think because of the same (unnecessary expense) mentality.

The main cause of inadequate soil classifications – the selection by soil report writers of the ‘Ys estimation method for normal sites’ being (wrongly) chosen for sites that are not normal – will likely cause the current disaster to continue unabated, with structural engineers and relevant building surveyors wrongly continuing to accept resultant inadequate classifications.

But something fair can still be done to achieve adequate footings whilst keeping house prices affordable.

Secret agendas will be exposed, and the changes may impinge on perceived rights of broad-acre land owners, by alerting the public to problems associated with their land – land that in 1962 was earmarked as being unsuitable for residential construction by Melbourne University’s Soil Chemistry professor Geoffrey Leeper in his lectures and publications.

With full-steam-ahead Federal Government immigration, the Victorian Government needs more and more residential land and makes sure that it becomes available. Unfortunately, it is made available with inadequate checks and balances that would prevent the unfair exploitation of consumers.

The following reforms however, could ensure that new housing (house plus land) prices do not rise uneconomically:

  1. A (fair) covenant could be placed on the titles for land sold for housing in highly reactive clay soil areas – one which alerts buyers and conveyancers that allowances must be made for likely increased costs associated with footings and slabs for new houses so that the prices reflect those allowances. This would ensure that the price of a new house plus land is similar to its counterparts in nearby less reactive clay soil areas.
  2. The Code AS2870 could be altered to require that all soil reports in highly reactive clay sites comply with Appendix D of the code unless normal conditions can be proven. In this case, by-passing it via the (very often wrongly perceived as permissible) short-cut the ‘Ys’ factor estimation method for ‘normal’ condition sites is stopped, because many of those sites are still nothing like normal due to the long-lasting on-going influence of the longest (13.5-year) drought in our history and the associated influence of trees past or present.

I wonder if similar mindsets involving the protection of enterprise is why the authorities have failed dismally to help new home owners.

And when will the current Ombudsman and Auditor General follow up on the serious revelations of their predecessors? Their predecessors bravely alerted the public only a few years ago as to just how unfair current Builders Warranty Insurance is, and how unfair the standard of workmanship is in the residential building industry. Despite their warnings, we all know these problems have not been resolved.

So far the silence of their successors has been deafening.