Vic Building Legislation: A Wolf in Sheep’s Clothing 22

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Monday, February 22nd, 2016
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The Building Legislation Amendment (Consumer Protection) Bill 2015 tabled in Parliament in December 2015 should set alarm bells ringing throughout the Victorian community.

The bill is a smokescreen devised to mask the deception of nil ‘consumer protection’ and the pretence has been formulated to feign legitimacy for revoking consumers’ human rights. Disguised as ‘lawful,’ this decree is a veritable wolf in sheep’s clothing!

If this bill were a genuine attempt at improving safeguards for building consumers, logically it would have addressed the problems repeatedly identified as causing consumer harm. The ‘solutions’ are self- evident, preventative measures the key: clean up the industry, introduce sound governance and give consumers a chance to compete in a fair market. However, this bill continues the old anti-consumer policy, with the ‘old’ classic features remaining totally intact and the ‘old’ VBA and CAV in charge.

An examination of the legislation reveals its negative focus on disputation.

Dispute history

Let us begin by considering the path to the current consumer catastrophe, including the colossal number of building disputes, the massive financial loss to consumers and the exponential increase over time. In 2002, there were 35,000 building disputes according to a media release by the building commissioner – hardly insignificant. But in 2002, CAV began its ‘conciliation’ service, supposedly to ensure dispute reduction.

However, as the statistics indicate, CAV was an extraordinary failure if its objective was as stated. From 35,000 disputes in 2002, this rose to 206,000 in 2008 and to 256,000 by 2011 – or 38 per cent of all Victorian building consumers!

In terms of consumers’ financial loss, it was $500 million in 2005, rising to $706 million in 2006, escalating to $1.6 billion in 2008 and reaching an estimated $3 billion in 2011. If we consider building consumers’ financial loss as a percentage of total consumer detriment, it was 22 per cent of total consumer detriment in 2006, 53 per cent by 2008 and not disclosed in 2011, according to the CAV Consumer market Experience Study of 2006, 2008 and 2011.

The irrational rationale

Under Victorian law, every new bill put to Parliament must be compatible with the Victorian Charter of Human Rights, “checked against the Charter,” and “telling Parliament how it relates to human rights.” It can only be incompatible with the Charter “in exceptional circumstances,” and a statement explaining how/why human rights came to be ignored is compulsory. Minister Wynne’s Statement of Compatibility declared this legislation as incompatible, his reasoning being that violation of human rights was a necessary precondition for ‘protecting’ consumers. Thus, regardless of their wishes, the ‘protective’ path for consumers is forced disputation and human rights nullification.

First, Wynne acknowledged the breach of an owners’ right to access a court or tribunal, requiring owners to “refer the dispute to the dispute resolution service” before being “entitled to commence proceedings in VCAT or a court.” He rationalized that “no less restrictive alternative is reasonably available” and “it is my view the right is a reasonable limit.” This is his justification for incompatibility with the Charter.

This new body will have extraordinary legally binding powers to forcibly extract money from owners to give to builders – this under CAV, which has an abominable record on dispute resolution and protecting consumers.

Second, Wynne argued it reasonable to violate a consumer’s right to a fair hearing by making dispute resolution compulsory for consumers, stating: “it is my view the right is a reasonable limit.” In his statement defending the bill’s compatibility, Wynne argued that the ‘old’ dispute resolution process “has a 90 per cent resolution rate but its voluntary nature… limits its effectiveness.” If we accept this figure and Wynne’s reasoning, such a successful outcome on a voluntary basis would negate any argument for mandatory disputes!

The horrendous dispute statistics above make it clear that this ridiculous 90 per cent claim is untrue. Almost 40 per cent of consumers suffered enormous financial detriment via ‘disputes’ in 2011, yet Wynne quoted a 90 per cent resolution rate.

On this point, CAV’s definition of ‘resolved’ is insightful; according to the Consumer Confidence and market Experience Study 2010-2011, “The term ‘resolved’ is used to mean that the consumer and the trader or supplier had reached an agreement about the consumer’s problem.”

According to this, ‘resolve’ does not mean ‘finding a resolution!’ This fallacious storytelling renders the 90 per cent claim ridiculous. Also telling is the victim blaming, with disputes being seen as the “consumer’s problem” and the irrational supposition that since consumers are the problem, they must be ‘regulated’ into disputes and punished.

Further calling into question CAV’s performance is this staggering statistic from the CAV Consumer Experience’ Report of 2008: “44% of problems with home building were unresolved.”

But there’s more! In 2013, the Auditor General found CAV had falsified the ‘consumer satisfaction’ statistics in its annual reports. And, despite 256,000 building consumers suffering financial loss in 2011, CAV concluded its 2011 Report on Consumer Experience: “This study shows that the Victorian market environment is working effectively.”

This CAV will continue to ‘control’ disputes and damage consumers. Obviously, CAV’s credibility as Wynne’s basis for mandating disputes and breaching human rights is discredited.

How can CAV and the VBA, with their blighted history on the public record ‘dictate’ the dispute arrangements? Consider the craziest of claims, Wynne’s assurance that the VBA will use “suitably qualified conciliators and technical assessors capable of examining domestic building work.”

This is not so! Under new section 48(1), an assessor can be:

  • an architect registered under the Architects Act 1991
  • a building practitioner registered under the Building Act in a prescribed category or class
  • a person in a prescribed class of persons.

According to this, assessors can be any building practitioner – say a demolisher! Or it could be any ‘person’ without any building qualifications or expertise! All have powers to inspect buildings, write reports nominating a building as defect free and to invoke orders compelling owners to pay money to builders who have no entitlement to payment!

This is not just illogical, but illegal. Section 176 of the Building Act stipulates that only registered building inspectors can legally inspect buildings. Unregistered imposters do not qualify. But Wynne’s way, breaching the Building Act, removes any impediment to ‘protecting’ the cowboys!

Third, the Charter protects a person’s right not to have his or her privacy unlawfully or arbitrarily interfered with. Wynne explained his willingness to contravene the Charter by saying “In my view, while the exercise of the entry power may interfere with the privacy of an individual in some cases, any such interference will not be arbitrary” and adding that “Any resulting interference with privacy will occur lawfully under these provisions.”

In layman’s language, Wynne’s overreach of his position and powers has him deem the unlawful contravention of the Charter and rescinding our human right to privacy as lawful, demonstrating his contempt for consumers and the law.

Fourth, under the Charter, a person’s right not to be deprived of their property other than in accordance with law is protected.

“It is unlikely in my view that any exercise of this power will result in any real deprivation of property,” Wynne reasons, adding that “should it result in any deprivation of property, I am satisfied it would occur in accordance with law.”

As above, Wynne has rationalized deprivation of our right to property as lawful by his decree and thus justified the unlawful breach of the Charter of Human Rights!

In conclusion, it is not surprising that this bill defies rationality. How could one possibly justify breaching the Charter of Human Rights and violating consumers’ inalienable rights to ‘protect’ them?

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Discussions
22
  1. Dubravka Hampel

    I have read this article and I am shocked that this is happening in Australia, especially in such a rich first world country. To think that innocent people just wanting to build a home for their family end up in such disasters and are so hurt and the government does nothing to help them which they should because everyone votes them into power. Where are the promises they give before they get elected? What about the fair go and justice?

  2. Mel

    This article has cut through the political spin and clearly demonstrated that the Victorian Government has no intention whatsoever to protect anything more than the industry. Common sense would say that the best way to protect consumers from these disasters would be to ensure that only fully qualified and experienced tradespeople of good character are registered. A good start would be by looking at registration, because at the moment fully qualified does not mean builders have the experience required to build a home that is fit for purpose. Thank you Anne!

  3. Dr Sharon Harrison

    I am shocked and appalled that Planning Minister Richard Wynne has ignored the obvious conclusion which has been highlighted in so many reports over recent years, namely that the Victorian Building Authority has failed to regulate the industry and has allowed cowboy builders and cheque-book surveyors to flourish. Instead of introducing a raft of new legislation and removing building consumers' human rights, Wynne might have started with Goods Shed North instead. The regulator has actively worked against the interests of consumers who have been treated with disdain, while the interests of builders and surveyors have been protected. One only need look at building surveyor Marie Walker who was allowed to run amok for years at the expense of consumers. When a member of the Building Practitioners Board Member David Newnham asked asked why there was not a more severe penalty due to the practitioners' attitude and the nature of the allegations she faced when Walker faced her fourth BPB Inquiry in 2011, BPB Member Carolyn Lloyd commented that the practitioner has three businesses and the impact on these would be extreme. Apparently, the BPB Inquiry panel was concerned to minimise the impact on Walker's business. The interests of consumers and public safety obviously came a distant second. It would take a further two inquiries and more consumer detriment before the Board finally cancelled Walker's registration.

  4. Hans Tracksdorf

    Entirely Agree , All of this legislation is a giant smokescreen. If the government were really serious about addressing the system they have set up , they would provide and underwrite genuine 'Domestic Builders warranty insurance' to protect the home owners. At the moment we have a government designed 'Monty Python System' whereby the builders got to drop dead or go broke before the legislation 'kicks in'. I know that Queensland have had a fully funded system of insurance in place for the last 10 years at least ( and Qld is generally referred to as a cowboy state ! ), so why haven't we?
    Im one of those registered practitioners and like most of us, we have little faith in the regulator, as all of the technical expertise it once had, has now been replaced with beaurocracy..

  5. Bruce Christopher

    It would seem that this development is an admission that the system in place is known not to be capable of handling the problems created by ridding the department of properly qualified, in-house, scrutiny and due process. An unfortunate acceptance that the resulting extent of poor work practices is now beyond the capacity of both the department or the legal system requiring a defensive move to stifle the claims process, postponing the problem to future incumbents.

    In the meantime there will need to be a program of awareness to consumers to warn them of the risks they face without protection so they can be more assertive about who they are hiring, consider engaging an independent assessor and hold enough payment back to increase the probability of proper completion.

  6. Les Williams

    I am happy that Sourceable had the courage to highlight this issue. The Subcontractors Alliance contended in our submission to a Senate Economics Committee that recent similar legislation enacted in QLD contravened state and federal completion laws and subsequently we were denied any FOI access to any supporting documents. Legislation is about vested interests not the public interest. You may now get an appreciation of what happens to construction industry subcontractors — insolvency nationally around $3billion pa mainly caused by the wrongful withholding of money of three times that amount . The question should be asked – does this legislation contravene state and federal completion laws. Senator Matt Canavan had this to say in the Senate Economics Committee Brisbane hearing [31/08/2015] on the competition issue — “Unfortunately, it is not an abnormal phenomenon for governments to ignore the regulatory impact assessment processes. It happens on both sides of politics, I should say, from time to time. The fact that they have done that is unwelcome but not uncommon” Barrister J Sive:- But it is unlawful. It would appear to me that Senator Canavan's disregard for the contravention of our laws particularly where it has such a detrimental effect on so many should really preclude him from holding the federal ministerial office that he has recently been given.

  7. Rob

    I would only qualify the other side to the amendment by saying- The construction industry has the highest rate of insolvency compared to all other industries. If the VBA had powers to compel Homeowners (client) to pay builders for reasonable completed work. It would solve a significant cash flow issues that small building companies face everyday. No Homeowner should have to pay for unreasonable work, but should it be the home owner that decides what's reasonable? Having seen first hand, the haste in which mum and dad- homeowners claim defects to avoid any payment for works and the subsequent insolvency of a family building business is sickening. The legislation amendments require balance and each party needs to abide by the conditions of contract and if it ends in dispute, the VBA as umpire needs a carrot and STICK approach.

    • Ian

      As you say Rob, nobody should have to pay for deficient work. The character of the work or value to be paid should be considered quickly so that the benefits of the contract and the purchase are sustained. While government has scrambled to protect house owners with over-regulation for a quarter century, this has patently not worked and probably not worked in anybodies favour.

      The idea that building surveyors are appropriately placed to deal with analysis of conflict situations is absurd. They may be part of the mix to be brought to the table but better more general specification and skills are what have traditionally been required and these are skills which have worked vastly better than the levels of over complication put in place over the last quarter century. Good quality contracts, thorough documentation, architects and quantity surveyors along with the capacity to resort to tribunal capable of ruling are the key factors which turn builidng disputes into quickly and appropriately dealt with glitches in a building process.

      If we cease treating home owner entities as invalids we release them to take responsibility for their dealings. We can aid that responsibility with information which clarifies what makes good documentation, good contracts, the value of archiects and quantity surveyors but we can not force consumers to appreciate it. When they do not, then, complication is likely.

      Over-regulation has made home building expensive. Yet this most expensive and complicated outlay is treated like buying a refrigerator or toaster instead of the careful, responsible process it should be.

    • Mark Whitby

      I'm sure you're right about this other side Rob… the lack of proper safeguards in current legislation works both ways to the detriment of all concerned. The negating techniques used by the legal profession is also exacerbating the problem. There are so many grey areas in standards, contracts and legislation to exploit.

      A proper definition of defect however, would go such a long way in creating a fair playing field for consumers. Funny that just one person is pushing this approach.

      Sourceable has excelled with this article, really getting meaningful discussion happening.

  8. robert

    Why spoil a good story with the TRUTH?
    Section 176 has NOTHING to do with who can inspect buildings and, indeed, has the reference to building inspector as a PROTECTED term only!
    Anyone can inspect a building including a prospective buyer!

  9. Diarmuid Hannigan

    I thought that the purpose of a Department of Consumer Affairs was to protect consumers. The function of this department I thought would be to go and properly investigate consumer complaints find out if the complaints are justified and if so police the supplier of the faulty goods or services. Consumer Affairs Victoria does not properly investigate complaints by consumers and does not police those complaints. More often than not Consumer Affairs Victoria obfuscates its responsibilities to the rights of Victorian Consumers and hand balls the matter back to the consumer to have it settled in a civil action. These actions more often than not involve the expensive and time consuming services of the legal profession. The failure of this regulator to do its job has resulted in more and more complaints by consumers in the housing area as the industry realises it can get away with sub standard work and not be held to account by the regulator. Hence we see a decline in the quality of the build in new houses and a dramatic increase in consumer complaints. Mr Wynne and his tribe need to address the cause of the problem but as usual they treat the symptom which just allows the problem to grow. In 2000 I watched the same solutions being applied by the same people in Smith Street to an open heroin trading market. The government`s solution was to hire people to pick up used syringes and not to arrest the people who were selling heroin openly on the street. It allowed the city of Yarra to lay claim to the highest death rate in the world for heroin overdoses for that year, bought to you by Richard Wynne and the silly people in the government. They are now doing it every day people who build new homes.. .

  10. Charles Litho

    Most building problems arise out of poor knowledge and practices of the workforce.
    A person doing the job has to be interested in doing it well because they have a joy in doing the work properly.
    We need a cultural change in the way we view the work people do.
    We need to see the importance to society of every type of work in the building area.
    I always remember the joy a man had in his work being an assistant to a Plasterboard tradesman and it took him an hour to tell me all the things he did. He was involved with people doing up market work under exceptional leaders.
    Spending resources to handle problems after they happen is real nonsense.
    We need to spend money on TAFE colleges and the apprenticeship system.
    The people taking on apprentices have to be rewarded for taking on costs.
    The building industry should not be an area where all the people who do not have an interest in learning to read and write to find a place to work.

    • Branko Mladichek

      No doubt you are right Charles but I am seeing a different picture on my building stage inspections. When you consider that project builders have been around for decades it is hard to give them slack for poor knowledge and poor practice. It is because it is not about that. When you see crappy brickwork, structural bracing smashed by hammer for wiring or pipeing, temporary downpipes on highly reactive sites taken down by bricklayers you must wonder what is the supervisor doing. Then you realise he is not paid to pull up subbies on quality but just to get to the next stage payment regardless of quality.
      Supervisor does even not pay the subbies, office does, so why should they take notice of him, especially after they have been screwed on price.
      Its all about greed and getting to the next payment regardless of quality. That is the only explanation I have for supervisor turning a blind eye to workmanship he would not have in his own home.

  11. TIM RENOUF

    This is very well explained. Well done Anne.

    Personally I think this building industry disaster warrants a Royal Commission, state or federal.

    Anne's concerns are mirrored in deliberations of some Senate Inquiries, such as the current Non-Conforming Building Products, where Standards Australia were severely challenged by FOUR Senators to explain how failings in Standards can be addressed correctly, so that "Net Benefit" is demonstrated and Standards are 'fit for purpose'. Often Net Benefit flows from the commercial interests who write the Standards and are virtually unaccountable.

    Many Standards are written correctly, and many are not. Then the Standards are called up by the Building Codes Board ABCB in regulations. The multiplier effect.

  12. Anne Paten

    In relation to Robert's comment, yes any person may walk through a building, including owners. However in this context we are talking about those who put themselves forward as 'professional' and qualified to inspect a building, find defects and write reports, with these to be used in 'building disputes' and presented to Courts and Tribunals. In effect, such people are pretending to be 'Building Inspectors' with real expertise. By implication, through 'inspecting buildings' they hold themselves to be 'Building Inspectors'. This is misrepresentation if they have no qualifications or expertise. Certainly most owners are not aware that these people have no technical knowledge and no credentials to gain registration. If we look at the Building Act 1993, under section 176 it states:
    " (1A) A person who is not registered in the appropriate category or class under this Part must not—
    (a) practise as a building inspector; or
    (b) hold himself or herself out as being registered under this Part or in a particular category or class of registration;"
    Thus, it is a breach of the Building Act to call oneself a Building Inspector unless registered. So titles such as 'Building Consultant' or 'Property Inspector' (soon 'Assessor') are used to pretend having expertise to 'inspect buildings' as is the role of a 'Building Inspector'. Such people charge anywhere from hundreds of dollars up to $20,000, with their 'reports' presented in 'building disputes' and in Courts and Tribunals and they even hold themselves out to be 'expert witnesses'. Based on their reports and evidence, decisions are made and the consequences for owners can be financially devastating. By implication, this serves to mislead the public.

    • Branko Mladichek

      Just to clarify it for you Anne
      Building Inspector is a reserved name under Building Act for mandatory statutory inspections. Any other building inspections are not regulated and anyone can do them providing they don't use the name Building Inspector. Hence you have property inspectors, building consultants and in my case building expert.
      Entry level for building inspectors is not all that high and you would be pushing to get some value from someone who is one in a situation where you have significant issues with your build. You are far better off with someone who has been a builder a long time, has tertiary relevant qualifications in building and building surveying knows about contract administration, disputes, estimating, and has inspected thousands of properties for pre purchas and during building stages, termite inspection qualifications etc etc (call superman) The trick is to find real McCoy from pretenders.

  13. Lesley Crouch

    Requiring owners to "refer the dispute to the dispute resolution service" is just extending the time frame for the dodgy builders to evade their responsibilities. You will cut down on the number of disputes if there is proper policing of building standards. Australia has building codes . We just need a regulatory body that actually enforces and polices building practices. For example, why should the people have to go to dispute resolution when their building was burning because of sub standard cladding on the building, as happened in Melbourne, not too long ago. If you can't get your car into the garage because the builder has built it too low or too high. then, what is their to dispute? It needs fixing, not disputing. Consumers should be able to have faith in the regulatory structure that is in place in their state but in Victoria it seems that the system is broken . Listen to the news or current affair and you see faulty building stories on a fairly regular basis. The last one I have seen is the building company that has a number of houses only half built . All those people who have to pay off their loans but still haven't got houses to live in. We need proper building governance, proper system of building insurance that actually works, proper qualifications for building practitioners and checked by people with the appropriate qualifications to be able to know if someone is capable of building safe secure buildings so they can last, at least as long as my father's house did. Not being told that the whole system can be fixed by making people go to dispute resolution when there is an obvious problem that needs fixing, not talking ,

  14. Michelle

    I cannot believe the government is going to follow this through and allow any TOM, DICK OR HARRY to assess building works etc what is happening to Australia and to us consumers. Me mine was a dream that ended up as nightmare costing me heaps and heaps of extra money that I did not have but could not sleep at night knowing what the builder did to me and I did not want him to get away from it with my health and wellbeing so affected by all this and the result the builder declared himself bankrupt, VCAT was looking out for the builder not the consumer which is my self and ended up with a settlement form the insurance company as the builder could not pay me my money and you know what yes he declared himself bankrupt but he can still work for himself can be under a different name or for others. the Law really sucks and it is time to make some changes that is fair to all.

    • Mark Whitby

      That's right Michelle, and there are a "tranche" of further measures in the pipeline we are led to believe by Mr Wynne.

  15. Leigh

    Great article, Sourceable. Keep up the good work of informing people of the travesty of justice that is occuring in Victoria. I reckon the same stuff is happening in WA, but we are being hoodwinked into believing that the regulators are "protecting" us. Diarmuid's comments about Consumer Protection are so relevant in relation to my own story. Although I have brought up some very serious Product Safety issues with both the glazing and electrical equipment that was supplied with the house I bought from a major retailer, Consumer Protection WA keep telling me they do not have the "expertise" to examine the issues and have been "recommending that I accept the supplying company's offer to remediate and signing appropriate documentation" that voids the warranty on the product I bought. This regulator is actually protecting the huge corporation that defrauded me of my money by showing me a display model with 12mm bolts at major joints, yet gave me 5.5mm tek screws and reduced size steel work AND numerous defects with windows, gyprock adhesive, faulty circuit breakers, glazing that is not compliant to Australian Standards and it is quite possible the cable may also be of the same quality as Infinity cable. The scary thing about these tribunals is that they do not have the same requirements of evidence as required by a court of law and so the builders/companies can basically tell lies and are not taken to task for this.

  16. Val

    I know a number of older people who have tried to build what would be for them their last home but the building process ruined their future. Big monetary loss, years of their retirement lost and the stress took such a toll on their health and marriage. In all cases they went to Consumer Affairs and there found the staff worked to help with the builder and in one case tried to get the owner to pay the builder a huge amount of money when he had left 8 months before! As Lesley said there was nothing to 'dispute'. The building was very defective and he had already taken the full amount of money. In the cases at VCAT it was impossible for the owners to get any justice. Delays and adjournments dragged on for years, fees to solicitors and reports then more reports. Now to read that the system is about to become worse is absolutely disgraceful. The community has little faith in politicians but to take away human rights by calling it protection is sinking to a new low. Is this the Labor Party, the we 'stand for fairness' party and these the people that we pay so wee. I can only imagine how so many people will now be worse off with forced disputes when what we need is the laws enforced and severe penalties for those who refuse to do the right thing.

  17. Rose

    Thank you Sourceable for publishing this article which raises more worrying issues about the building industry debacle. Does this Bill really safeguard consumers’ entitlements or is it a euphemism to further disenfranchise them? If this Building Legislation Amendment Bill were passed, it would have a deleterious effect on public confidence. To reinstate and uphold fairer consumer rights, Victorians need good governance capable of sound, cogent solutions.