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.