A leading consumer advocate in Victoria has lashed out at recent building industry reforms in that state, saying they fail to address fundamental consumer concerns with the previous system and do nothing to enhance consumer protection.
Anne Paten, secretary of Melbourne-based consumer advocacy group the Building Compliance Reform Association (BCRA), said changes introduced by the state government in the Victorian Domestic Building Consumer Protection Reform Strategy announced in May fail to adequately address concerns outlined in two damning reports into regulation of the state’s construction industry from the Auditor General in 2011 and the Victorian Ombudsman in 2012.
“First of all, there’s no reform,” Paten said when asked about the impact of the changes. “Reform means change. It means something positive, it means improvement.”
Billed by the government as a means of enhancing consumer protection and giving greater certainty to builders, the reforms – the centrepiece of which revolved around the creation of the new Victoria Building Authority on July 1 to replace the former Building Commission and provide a one-stop-shop for all aspects of practitioner oversight – are widely unpopular with industry and consumer groups alike.
In August, Housing Industry Association regional executive director (Victoria) Gil King was vocal in his opposition to the changes, saying they were introduced without genuine industry consultation and create uncertainty and additional costs for builders without any benefits for either consumers or the industry.
On the consumer side, a number of owners whom the BCRA says have been impacted by poor building practices and shut out of consultation or representation gathered outside the VBA offices last month to voice their frustration over what they feel is a lack of genuine measures to address serious consumer concerns.
Paten said the current system has a number of problems which have not been addressed in the reforms. These include the lax builder registration processes, lax enforcement of regulatory compliance, long and costly dispute resolution processes which she says are weighted against consumers, penalties for shoddy building work which are too light, and the ‘Last Resort’ insurance system (which she says makes it difficult for consumers to gain compensation unless builders die, disappear or become insolvent), insufficient accountability on the part of regulatory bodies, and broad conflict of interest – not just between builders and surveyors but also between regulators and those they are meant to regulate.
She also said the industry has been ‘deregulated’ in the sense that while laws and regulations do exist, lax enforcement means in reality the industry is lawless, offering little protection to consumers.
“The registration process is a complete joke,” Paten said, referring to concerns raised in the Ombudsman’s report about practices in this area. “You can apply to be registered, have no building experience, be unable to pass the tests and fail the interview if you had one, and still gain registration.”
To rectify these problems, she said a ‘big broom’ approach is needed. That approach would involve cleaning up the registration process, getting people not just outside the building industry but also outside the state involved in inquires or tribunal hearings, introducing genuine consumer representation on the regulatory body and boards (Paten says the ‘consumer’ representatives do not have a consumer background), introducing ‘First Resort’ insurance and an industry Ombudsman to make regulatory bodies accountable.
Building industry representatives deny that current practices are as bad as Paten suggests.
King, for example, said practices for assessment for registration go beyond those specified in regulations in many cases. He added that the HIA has seen a number of cases where rather than being too light, penalties imposed on builders could be considered heavy, and that Paten's claims that the industry was being ‘deregulated’ were untrue.
“The term deregulation is often put forward when referring to the building industry - nothing could be further from the truth - since the introduction of the Building Act the process of building, designing and approval has seen a massive increase in the level of regulation that is applied,” King said, adding that the number of consumer complaints were relatively small for an industry which builds around 50,000 homes in the state each year.
“The cost of housing, for example, is severely impacted on by the burden of excessive regulation and unnecessary red tape.”
Paten said poor building practices have serious flow on-effects for consumers and have included loss of income, marriage and relationship breakdowns and even major health effects such as heart attacks, strokes, deaths and suicide attempts.
She said that in 2011, 256,000 people were affected in Victoria alone.
“When you get a building problem it’s not something that just goes away,” she explained. “People who don’t know about it will say to you ‘Oh look, why don’t you just get on with your life?’"
“Well you can’t get on with your life because you’ve got this building that you can’t fix, you can’t sell, [and] you can’t claim the insurance.”