Building industry regulation in Victoria is failing to provide reasonable levels of consumer protection, with the current registration system being insufficient to ensure that registered builders were competent to perform their tasks or were of good character, a damning new report has said.

Unveiling its latest report, the Victorian Auditor-General’s Office found ‘critical weaknesses’ in the state’s consumer protection framework for building industry regulation, and said that critical agencies had ‘failed to take sufficient, timely action to address these issues,’.

In particular, the report found that:

  • The framework is overly complex, with multiple agencies responsible for different elements.
  • Deficiencies in the registration and discipline scheme for building practitioners means the system does not ensure that all practitioners who are registered are qualified, competent and of good character.
  • Current dispute resolution services, which consist of voluntary conciliation only with unenforceable outcomes, provide only minimal protection and meant that builders and consumers were often dragged through long and costly dispute resolution processes at the Victorian Civil Appeals Tribunal.
  • Oversight of building surveyors is deficient and monitoring and compliance activities do not at this stage provide assurance that domestic building construction complies with minimum standards.
  • Disciplinary sanctions against building practitioners and surveyors have not been effective: over 27 percent of building surveyors, for example, appeared at disciplinary enquiries more than once within the same year.
  • The ‘last resort’ domestic building insurance scheme is inefficient and provides only limited consumer protection.
  • Key agencies had failed to take timely action to address legitimate shortfalls and deficiencies within the system.

The report follows a number of other damning reports into regulation of the state’s building industry over recent years.

In 2011, a VAGO audit of building approval processes found as many as 96 per cent of building permits examined had not complied with minimum statutory building and safety standards, and that the then Building Commission had failed to develop a framework to monitor the effectiveness of the building control environment.

Twelve months later, a report by the Victorian Ombudsman found that the building practitioner registration process was riddled with conflicts of interest, lacked accountability, and was allowing practitioners who failed stages of the competency assessment to still progress and be granted registration.

Moreover, whilst the former Coalition government rushed through a botched reform process in 2013, there is widespread agreement within the sector that a number of weaknesses still remain.

Auditor General John Doyle said the report highlighted that many problems within the system had still not been addressed.

“I found that the existing framework does not adequately protect consumers and that there is a pressing need to improve consumer understanding of the system,” Doyle said.

“The practitioner registration system does not ensure that the only practitioners who are registered are qualified, competent and of good character, and the disciplinary system is not protecting consumers, as current sanctions are ineffective in deterring practitioner misconduct.”

Whilst critical weaknesses identified in previous reports had been well understood, Doyle said, ‘key agencies have failed to take sufficient, timely action to address these issues’.

“Successive governments have consistently and regularly received advice about potential legislative and policy improvements to the consumer protection framework,” he said.

“However, recently proposed reforms failed to fulsomely address all of the issues and have stalled, compounding the detriment faced by consumers. These issues now require urgent attention.

“While there is no doubt that legislative reform is needed, agencies and regulators have sometimes been too quick to point to the technical boundaries and limits of their responsibilities, and too slow to work together to ensure the existing consumer protection framework, flawed as it is, works as well as it can to protect consumers.”

The report details nine recommendations, which include that building practitioner and discipline regimes, regulatory arrangements and the Victoria Building Authority’s monitoring and compliance regimes be reviewed.

Doyle says the agencies had accepted VAGO’s recommendations and outlined actions to address them.

Master Builders Association of Victoria Chief Executive Officer Radley De Silva said a figure quoted in the report that 28 percent of all consumers who engaged tradespeople to help build or renovate a home were experiencing problems – many of poor workmanship – highlighted the lack of requirements for tradespeople to be registered provided they were working for a registered builder, an issue he said Master Builders had been talking about for years.

Whereas Queensland and New South Wales have around 50,000 and 40,000 registered tradespeople respectively, De Silva says Victoria has only 2,000.

“This means that there are unregistered tradespeople who are pouring the concrete of people’s homes, putting the bricks around their homes and putting the roof above their heads,” De Silva said.

“Unregistered tradespeople also operate knowing there is a low risk of government regulators turning up at their sites to check on their performance or compliance.

“It is not surprising therefore that there are high rates of poor workmanship being experienced. This is evidence of the need for a broader trades registration program in this State.”