Victoria’s Building Regulation Mess 14

Monday, May 25th, 2015
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Over recent years, few building industry regimes around Australia have been subject to as much criticism as that in Victoria.

In 2011, an audit of the state’s building approval processes by the Victorian Auditor General’s Office found that 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 no less scathing 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.

In response, a panicked reform process was rushed though by the then Planning Minister Matthew Guy in 2013. This process saw the Building Commission and Plumbing Industry Commission replaced by the new Victoria Building Authority as well as changes to building practitioner eligibility requirements and the building approval process. It was blasted by industry and consumer representatives alike, with both sides agreeing that the reform process lacked adequate consultation and Housing Industry Association executive director Gil King saying the reforms created uncertainty for builders without improving consumer protection.

A bill to introduce further reforms such as new financial probity tests for registration applicants, a new protection fund for consumers and abolition of a number of existing boards did not reach the stage of parliamentary debate prior to last year’s election and change of government. What will happen with these measures is unknown, but for now, industry insiders say there are a number of problems with the system.

First, there is the dispute resolution process. Master Builders Association of Victoria Chief executive officer Radley De Silva says a lack of power on the part of either Consumer Affairs Victoria or the Victorian Building Authority to resolve building disagreement adequately sees builders and consumers dragged through long and costly processes in the Victorian Civil Appeals tribunal, taking an enormous financial and emotional toll upon each party.

Further problems revolve around the number of unregistered builders and tradespeople operating throughout the state and overly lax owner builder laws.

Whereas Queensland and New South Wales have more than 50,000 registered subcontractors registered in that state, De Silva says Victoria has around 2,000 – the slack being taken up by unregistered parties who may lack the knowledge and/or skills to do the job properly or safely. Inadequate laws which allow owner builders to build one home every three years and do not require them to sit any form of examination, meanwhile, means much work is being undertaken by parties who may not have the skills to supervise or manage the project adequately, he adds.

Whereas in Queensland and New South Wales, owner builder work accounts for only around five per cent of residential building work done, in Victoria, that proportion is closer to a quarter. According to De Silva, this means subsequent purchasers of these houses may unknowingly find themselves buying a home which has been constructed or remodelled under a regime in which the owner builder supervising the project may not have had the appropriate knowledge and skills to do so effectively.

“That’s a risk to the consumer,” De Silva said. “Most people, when they look to buy an established house really don’t enquire who built it or when it was built or who undertook the risk. You like the home and you buy it.”

Beyond that, there are a number of further problems. Licence lending – in which a registered builder simply provides their licence number and signs off on a contract (for a fee potentially worth thousands of dollars) while allowing an unlicensed builder to perform the work and thus exposing consumers to shoddy or unsafe workmanship is a massive issue, building registration consultant Nick Rush says.

An absence of ongoing tests to ensure builders who may have been licensed decades ago are up to date with their knowledge of building codes, standards and regulation, safe work standards and modern building practices and techniques, he adds, means many may be operating on the basis of knowledge which is out of date.

Under-resourcing of the VBA, meanwhile, has restricted the capacity of the regulator to be proactive in enforcing compliance and left it in a position of being predominately restricted to investigating consumer complaints.

Other commentators are even more forthright. Consumer advocate Anne Paten says the reform process of 2013 failed to address fundamental consumer concerns and complains that consumers have locked out of any genuine consultation throughout recent reform processes. Builders Collective of Australia president Phil Dwyer, meanwhile, talks about a regime which lacks accountability, has not delivered for consumers and has allowed people into the industry without the skills required to do the work properly.

“It (the building regime) has failed in terms of consumer protection, it has failed in terms of registration of builders, the regulatory conduct of the industry,” Dwyer said. “We’ve failed all the way through and we are still failing today.”

A Victorian Building Authority representative was unavailable for comment.

So how can things be fixed? De Silva wants a rapid mediation process to speed up dispute resolution, stricter requirements on the need for trade registration as well as better enforcement of those requirements and tighter restrictions on owner building laws to see owner builders restricted to building homes every six years (up from every three). He would also like to see owner builders required to undergo tests or exams to ensure they understand the responsibilities involved.

Rush would like to see a better funded regulator which was more proactive in enforcement as well as the implementation of proposed reforms to require registered builders to undergo tests of knowledge every five years.

Paten wants a more sweeping approach involving the replacement of many personnel within existing regulatory bodies, an overall of legislation including the Domestic Building Contract Act and a transition period during which all builders and tradespeople who are suitably trained to perform the roles time to get their knowledge and skills up to scratch or be excluded from the industry.

Victoria’s building regulation regime has been the subject of ongoing criticism. Much effort will be needed to address fundamental problems.

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  1. Dan

    The biggest problem is the lack of accountability of private builders. What do you do when they live in Wyndham but get a building surveyor from Dandenong to oversee their project. It's all done by phone, the actual builder is most probably unregistered too. Try getting any investigation done by VBA. Impossible as they have no skilled staff to do so. They rely on local councils to investigate, then don't bother any further, again lack do staff and will. Local council inspectors are overworked as it is with the amount of illegal works through backyard idiots, and the well known "I can build anything" via Bunnings types.

    • R. Jones

      I had a Consumer affairs house inspection and State Govt Building Inspector also attended he couldn't tell if a job was done to building standards couldn't make a decision just wanted the to let the problem go away it didn't builder ignored there report. then went to vcat builder then ignored vcat judgement. I have charged the Build. Inspector with attempted murder but police and liberal Govt now labour Govt wont do anything they are all a joke. R. Jones.

  2. Malcolm Findlay

    Part of any reforms should be that Continuing Practitioner Development be made mandatory.

  3. Mel

    Thank you very much for this article. It is a breath of fresh air to finally have some voices calling for change. I am a consumer who is being dragged through the 'process' and has been doing so for the past three years with no result thus far. I have found the regulatory body simply does not regulate, even when your complaint relates to those who have been before the building practitioners board on numerous occasions in the past. It is a disaster that this environment has been allowed to continue, and indeed flourish, to the huge detriment of thousands of Victorians. We have the regulations there, but we have zero enforcement of those regulations.

  4. Warren Overton

    In the absence of stronger regulation the Australian Glass and Glazing Association is about to launch an Accredited Company program. To participate companies must have qualified and experienced staff who are undertaking CPD, effective safety systems, insurances and provide an appropriate warranty and certificate on the work they complete. Whilst this is voluntary it will help – but the 'good guys' will still need to compete against the unqualified cowboys who will always undercut. Only once such programs are mandatory will we achieve the required change.

  5. Bea Lasalle

    Great article. It's apparent that there should be some requirement for builders to undertake some mandatory skills and knowledge updates/upgrades at regular intervals. This would be good for consumers and the industry as I think the dude from Master Builders alludes to.

  6. Roger

    Great article, thank you.
    It's no wonder the problems with the building industry continue, just have a look at the senior management team at the VBA and try and identify someone in a senior role with Building or plumbing experience.
    How can people lacking in-depth knowledge of a complex industry know how to identify and address industry shortcomings if they don't really know the industry they are responsible for controlling.
    You have to wonder why the PIC was amalgamated with the B.C some years back it certainly wasn't because the B.C had it's ducks in a row!

  7. Branko Mladichek

    As someone who has been dealing with building defects through thousands of inspections of new homes and homes still under warranty I have seen a great range of problems. When however you look through the smoke and read between lines it all comes down to one issue: Money
    The fact is that because lack of effective regulation enforcement it is far cheaper to deal with building defects and disgruntled homeowners than to implement and maintain effective QA system. So builders don't do it. I regularly see and have for over a decade now houses built with zero or very littlequality control.
    How many times have I been standing next to the site supervisor whilst he was making a call to his concreter "Hi Jack, has that slab been poured?"
    How many times have I seen them simply walk past defects they would not have in their home?How many times have I seen structural bracing panels just smashed with hammer for plumbing or electrical or braces cut?

    There is no point having laws if you don't enforce them. How many times has Consumer Affairs imposed infringement?

    Its a joke that's not funny!

  8. Daniel Wurm

    The painting industry in Victoria is completely unregulated. Every year hundreds of Victorians are ripped off by unqualified and unscrupulous painters.

    In addition, untrained painting contractors risk the health of the community, by exposing them to lead paint and asbestos dust during the preparation stages of painting works.

    Poor quality workmanship costs the Victorian economy millions of dollars in defect rectifications every year, and untold thousands in health costs arising from lead paint and asbestos exposure.

    The Victorian painting industry supports the following model:

    licensing should be limited to qualified painters
    Certificate III Painting and Decorating (or equivalent) and completion of the short business course BSBSMB401A Establish Legal and Risk Requirements of Small Business should be the minimum qualification
    licensing should be required for any work over $1000
    licensing should be required for companies, sole traders and supervisors
    Interstate licenses should be recognised in Victoria
    Licensing to cost less than $200 per year

  9. Mel

    Couldn't have said it better myself John, my inquiry has been under 'investigation' with the BPB since Feb 2013, despite the builder running away from a $200,000 problem which he created himself. We have been told to expect no more than the $14,000 fine. To date I am unable to get an estimate of an inquiry date, if in fact there ever will be one.

  10. Branko Mladichek

    Just yesterday I visited building site for independent frame inspection. Frame was good and there were no significant issues but builder's astonishing neglect of site drainage resulted in water ponding against slab edge. This was on a highly reactive clay "P" classified site and in breach of good building practice, AS 2870, engineering recommendations and statutory warranties. This was asking for trouble and all the elements for foundation damage were there.
    Building surveyor that passed the frame said nothing about site drainage, when I called builder and queried drainage he was surprised but when I mentioned that major home builder had two demolition awards for foundation damage he quickly agreed to rectify drainage.
    The point is that it should not have happened and if we had $10,000 on the spot fine for breaches of warrantied then builders would quickly clean up their sloppy supervision. But it is not likely to happen because we already have a system of infringements in DBCA1995 but it is not enforced.
    Builders know it and don't care.

  11. Branko Mladichek

    Those calling for better education and training of builders and the continuing CPD are certainly on the right track , how could you argue with that? , but are completely deluded if they think this will make one shred of difference.
    Your builder is already an expert, trained. rehearsed and supremely talented to a world class standard in extracting maximum amount of your money from you at record speed(often claiming stage payments before stages are complete), (often you are already a cooked goose when you have signed your building contract before your own independent review).
    But when it comes to delivery of the promise it is when they actually have to spend the money they got from you that many will short change you. They will screw trades, skimp on supervision, fail on QA and deliver something less and often significantly less than 100% on their promise. Why? Because they can pocket the difference without fear. In my view it is nothing short of a fraud against homeowners abetted by the system and quietly enjoyed by parasites feeding off it.

  12. russ jones

    After reading all these letters on all inspections it seems a body of people like the ones who are paying for the job should be there when the so called experts make the laws on how a job should be done the quality of the job and workmanship standards that are required as well as a 20% payment to be held back until the job is finished to required standards and signed off by both parties. R. Jones

  13. Andy

    There are 100+ tradesmen licensed interstate that wish to work in Victoria. But their mutual recognition applications are taking six months to process rather than the 28 day period it takes other states.