Victoria’s Flawed Building System to Be Reformed 5

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Wednesday, December 16th, 2015
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Victorian Planning Minister Richard Wynne this week announced the beginning of a series of reforms, stating that this is only the start, and the new reforms will continue in 2016.

Since the current Last Resort Consumer protection scheme was introduced in 2003, there has been nothing but conflict and controversy in the manner it deals with both consumers and builders.

It was introduced under the illusion of protecting consumers and promising well-being for the future of the industry and its builders and consumers.

Over the past 13 years, the Builders Collective of Australia (BCA) has dealt with every government in the nation as well as consumers and builders where the Last Resort system was implemented. While a minority may have received some benefit, it is clear the vast majority of issues for both consumers and builders has only delivered heartache and devastation from a scheme of so-called protection.

The Last Resort scheme has spawned some 54 inquires/reviews that have cost tens of millions of dollars while governments struggle with the consumer controversy and fiddle at its edges in an endeavour to satisfy the threats of retaliation from the few who benefit from its being.

Fortunately, the Tasmanian Government saw fit to remove Last Resort in 2008 and now Minister David Tollner of the Northern Territory has just announced his vision of reform and asked Territorians to comment.

Minister Tollner agrees a holistic approach is required and has also included high-rise apartments in his consumer protection regime. His regime is supported by the recent findings University of NSW that since 2002, 85 per cent of all NSW apartments have building defects. That, along with security for subcontractors and suppliers in the event of a builder’s failure, demonstrates the insight Minister Tollner has of his portfolio.

Victoria’s announcement of their limited reforms this week is welcome and will assist many in the future, and in fact are crucial within the holistic reform we seek as demonstrated in the Consumer Protection document presented to government.

While no one has all the answers, we do believe that as a voluntary association we have had many years of exposure to the areas of failure of the current arrangements around the nation relating to consumer protection and industry management. We feel the key elements are vested interest, dispute and resolution, and compliance.

Minister Wynne has targeted dispute and resolution as a major element, and he is right on target as mandatory early intervention is the key to dealing with the majority of disputes.

While the principle is correct, we are concerned with the execution of the process as this is where success will reign or fail. We believe a moderator with good people skills and a robust knowledge of building is essential to deliver a binding outcome. It must be a simple process, delivered in a very timely manner.

The role of the building surveyor is also crucial to building outcomes and while this entity plays this important role, he or she is not the regulator. The surveyor’s role should be confined to delivering compliant buildings, with support from others who must assist in their specific roles, such as architects who specify products that may or may not be compliant. This kind of oversight was non-existent in cases such as the Lacrosse tower fire, where materials used were in fact non-compliant.

More than a year after it happened, the Victorian Building Authority (VBA) are yet to conclude their investigation into the Lacrosse fire. Only last week, MFB chief officer Peter Rau said regulations were still flawed and had it not been for the over-designed sprinkler system, there may have been loss of life.

The abolishment of the Building Practitioners Board will be helpful in terms of compliance, and timely matters relating to recalcitrant builders, as there is such a minority who should not have the privilege of holding a builders licence in our industry. Their failures are blight on our overall industry.

We also support the complete removal of all the overriding boards of our industry as they are extravagant and do not have the appropriate knowledge of our industry to be making decisions on its behalf.

The major key to reform is the removal of private enterprise from the consumer protection regime, as their presence erodes the majority of financial benefit that the builders in the first instance provide. The costs in the end are passed onto consumers, which then becomes an impost on home affordability.

Generally, the nation’s builders have nothing but scorn for the Last Resort Scheme. They are suppressed in expressing their views, however, by the scheme’s ability to control their businesses and livelihoods through the criteria it can apply without any accountability by its operators, as all regulatory oversight of Last Resort Warranty Insurance was removed in April 2002.

As builders, we are prepared to support consumer protection, but only if it is based on a sound business model that will see our funds deployed for the intended purpose rather than used in the manner we have seen over the past 13 years.

We want transparency and our funds accounted for. We expect our governments to conduct themselves in this manner and be accountable to the consumers of our industry as well. It is our contracts that are the heart and soul of the industry and it is this association between governments and our contracts that must be respected.

We look forward to working with Minister Wynne and his government to continue to deliver the aspects that are crucial to delivering a vibrant building industry that we can all be proud of.

It’s a good start, Minister Wynne.

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Discussions
5
  1. John Perry

    I have only glanced at this announcement so far but what I have seen of it appears to be sensible to me. It is pleasing, for example, that the building surveyor will no longer be appointed by the builder. The old system under which that took place promoted a clear conflict of interest and was frankly rubbish.

  2. Mark Whitby

    Hi Phil,

    Good summary of the Last Resort scheme.

    I agree that there is reason to be concerned about the execution of the Wynne consumer protection measures by so-called experts of unknown biases and a lack of a full definition of defect, appointed by government in what I see as a quasi-adjudicator role.

    The compulsory nature of the process could well lead to general quashing of correct expert evidence is what I see as potentially catastrophic for fairness.

    What I do not understand is why the abolition of the Building Practitioners Board will help rid our industry of rogue builders?

  3. Barry B.

    Given the unabating construction boom created by the rising populations and attending densification of Australia's urban centre, a far-reaching overhaul of building reforms is long overdue. A defect rate of 85 per cent for buildings in our largest state is absolutely shocking.

  4. Anne Paten

    Phil, I can't agree that this legislation has any value for consumers.
    You note a few key problems – all of these ignored. No 'pretend' attempt to fix, except for the move to make more disputes! Imagine Wynne's policy: the solution is not to clean up the industry, not to prevent disputes, not to punish the rogues or to prevent harm to owners. No, the 'strategy' is to make disputes MANDATORY, to force innocent owners to be 'in dispute' – and to grow the 'dispute industry', and the incomes of the 'dispute industry' interests!

    Wynne's solution is not to clean up the industry, not to address even one key problem in the primary industry! Consider all the flaws: registration number one! This highlighted in the Ombudsman's Report of 2012 and most seriously damaging to owners. What has Mr Wynne done in this regard? Nil! All who purchased licences remain registered – those who did not ever sit a test, failed the test, made up a 'mock' resume, cannot read Plans, etc., all remain 'registered'! Then we have as you mentioned 'non-compliance' – this the acceptable 'norm' and arranged through the official 'process' of zero enforcement. With nil punishment there is effectively no control – hence the lawless industry for the last 20 + years.

    Then there is the super scam of 'No Resort' Insurance, which 99% of owners cannot claim. And as you point out, the influence of the vested interests, making up the membership of all the boards/committees – they the beneficiaries of their own determinations, their blatant conflict of interest now widely documented – to be continued.
    But the BIG problem. No consumers! Not official stakeholders, they are non-existent, forcibly voiceless and utterly helpless. And Wynne's way is that they remain so!

  5. Brett Bates

    Same thing happening right now in NSW. The Minister for Innovation and Better Regulation, Victor Dominello MP, has established a review of our former ‘Home Owner Warranty Insurance’ scheme, now re-branded as the ‘Home Building Compensation Fund’. So this is the 'clever' country right? One where we have multiple state and territory Ministers and their attendant legion of minions all trying to come up with answers to the same problem. If that doesn't scream stupid inefficiency then I don't know what would. Here's the clear and obvious message to PM Turnbull for COAG. Uniform national builder standards for registration and commonality of practitioner licencing regulation across Australia is needed immediately. Get it done.