What Lies Ahead in Construction: Leadership or More Licentiousness? 13

Monday, August 31st, 2015
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It is clear that we have a major crisis in the Victorian building industry. Hundreds of thousands of Victorians are living in limbo, casualties of a blatantly non-compliant and completely out-of-control building industry.

The blame for this calamity is unequivocally with those responsible for leadership failure: the senior departmental executives who formulated atrocious policies and the ‘governance’ officials who committed to this ‘no controls’ strategy. The culpability also lies with those we elected to govern, Governments and Ministers who are supposed to be in charge of building regulation and consumer protection. For decades, they have failed in their obligations and duty of care. Their lack of moral leadership and inability to recognise what is iniquitous made licentiousness legitimate.

At the end of the day, consumers and the public have a right to expect their Governments to protect them from the worst excesses of the market. But successive Governments abandoned the community, allowing the industry to be unrestrained. The ravages of the ‘free unregulated’ market caused hundreds of thousands of owners/residents to suffer enormous financial loss and for many, their lives are now placed at perilous risk.

Almost weekly, we learn of more building disasters. Be it the Mt Waverley wall collapse in July, the apartments with non-compliant cladding, the Lacrosse building fire in November 2014, or the fire and electrocution hazards in 40,000 buildings, with the ACCC now spending $80 million to remove the dangerous Chinese cabling – to be paid for by ordinary Australians. Then we have the estimated 10,000 Victorian families living the nightmare with faulty slabs, termed ‘slab heave.’ None of these are ‘accidents.’

Qualified, skilled and ethical practitioners, proper regulatory enforcement and punishment of offenders as a deterrent to misconduct, together with a real consumer protection regime, would have prevented what is the greatest consumer catastrophe in our history. As well, buyers would not be facing grave risk when attempting to purchase a house or apartment, and the Victorian community would not be confronting what is now a third-world built environment, bequeathed to them as the hangover – when they never profited from the party!

Let’s consider the Mt Waverley wall collapse, which had the same surveyors responsible as for the Lacrosse building’s non-compliant cladding. Aisha Dow in The Age in May 2015 quoted MFB Deputy Chief Officer David Youssef as saying “In my 30 years I have not seen a fire spread like this in a high-rise before” and “I actually didn’t expect to see it in my career because I was confident that Melbourne high-rises were built to very high standards. We’ve been caught by surprise with what occurred there.” Youssef’s confidence was clearly misplaced. The VBA’s fictitious ‘very high standards’ led to ‘surprise’ because the non-existent standards were an ‘official Government secret’!

After the fire, the MFB condemned the building, but residents were ‘allowed’ back to live in these apartments. On August 14, Channel 9’s ACA revealed that 66 people have died overseas from this ‘highly flammable cladding’ and VBA’s Jarrod Edwards confirmed that the building could catch fire again, with the danger of deaths next time. Edwards blamed the surveyor. However, it is the duty of the VBA to check and oversee surveyors; this obligation was negated by the VBA and instead consigned to ‘protecting surveyors.’ The CSIRO fittingly labelled this disaster “massive regulatory failure.” Legal liability rests with the VBA, but it has never been punished for its willful negligence. As for financial compensation for residents, will the insurer pay a second time? Not likely!

Life is precarious for those living in this building, but none of us should be surprised. The VBA has a decades-long history of ‘no regulation.’ Its philosophy does not value people’s lives and its paradigm has never contemplated proper insurance cover for owners as of any import.

So where does this leave owners and residents?  In May 2015, the VBA announced an audit on 170 buildings to find out how many have flammable cladding, focusing on buildings ‘built’ between January 2005 and 2015.

These dates are significant for the VBA. From 2005, we can chart the beginning of our massive consumer catastrophe, a consequence of the introduction of the ‘No Resort’ insurance in 2002. By 2005, the impact of a lawless industry without the insurers to ‘play policemen’ allowed these rogues to run rampant. Not only were they uncontrolled, they were assisted and defended by the bureaucracy. Not surprisingly, from 2005 the number of reprobates grew exponentially, with the financial consumer detriment increasing as rapidly. Consider that in Tony Arnel’s press release of 2002, there were 35,000 owners who had building disputes that year. This quickly escalated. By 2008, it was 206,000 owners who suffered financial loss, or 16 per cent of all building consumers – the detriment to building consumers was $1.6 billion, up from $706 million in 2006, representing 53 per cent of the total financial consumer detriment for that year.

By 2010, 256,000 building consumers, or 40 per cent, suffered financial detriment, totalling around $3.8 billion.

How long will this VBA audit take and what will it do? From Dow’s article, we learn that as usual, it is unknown how long this audit will take. In a statement, the VBA said when it found non-compliant cladding it would notify the public and relevant fire service and would call in the municipal building surveyor to decide whether there is a risk to occupants. Herein lies the critical part from Edwards: “Once this work is concluded, the VBA will then consider further action which may include disciplinary action or prosecution in appropriate cases.” The key word here, important in the VBA/CAV dictionary is ‘may’ as opposed to ‘will.’ To translate, there will be no action because ‘may equals no action’ is ‘the VBA way.’ Its credo demands protecting the crooks, shielding them from harm and ensuring that they avoid any civil or criminal charges.

In response to ‘slab heave’, Simon Johanson  in The Age in April 2014 reported that in Slater & Gordon’s submission to the Department of Treasury’s review on building consumer protection guidelines:“many homes underpinned with a ‘waffle slab’ system had critical defects.” Owners’ common experience reported to Slater & Gordon entailed “making unanswered complaints to their builders for years without resolution.” Johanson went on to say “home owners were unable to get their builder, Consumer Affairs or the Building Commission to look at the problem.”

Officials always refuse to enforce compliance, to discipline, or to deter the cowboys from continuing their non-compliant practices. Simply stated, builders refuse to honour the supposed ‘statutory warranties’ and the ‘officials’ refuse to make them.

What must be done?

We need radical change urgently, with rigorous scrutiny forcibly imposed. All responsible senior officials must be removed immediately and made accountable, and the culture of no enforcement, corruption and secrecy condemned. Most importantly, consumers must reclaim their voice, their rights to consultation and representation, with their legal ‘consumer rights’ reinstated.

This dictates that the responsible Ministers exhibit the virtues of genuine leadership: decency, diligence, discipline and integrity, and act in the public interest, ending this leadership void and long period of licentiousness.

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  1. Mark Whitby

    Terrific article Anne with some telling arguments and very welcome statistics to really get home the message that consumers are not being looked after at all.


  2. Michael Faine

    Well said Anne, the slide to the lowest common denominator in all things building and construction has been on for a long time. The authorities don't seem to want to know and the self regulation by certifiers seems dubious at best. There is also the issue of fraudulent certificates that claim to be code compliant and look like the 'real deal'. The shame of it all is that the consumer ends up with the problem and those responsible move on to other well paid jobs, not right.

  3. Mick

    Most consumers are not aware of a very important part of the Building Act 1993 under Section 248,

    248 Offence for agent to act without authority
    S. 248(1) amended by No. 33/2010 s. 51.
    (1) A person must not act on behalf of an owner of a building or land for the purpose of making any application, appeal or referral under this Act or the regulations unless the person is authorised in writing by the owner to do so.
    Penalty: 120 penalty units.

    A lot of builders regard signing of the contract gives them this "authority". A consumer can get back behind the "steering wheel" by informing their "appointed" building surveyor the "authority" has been revoked, and they will inform the surveyor when the "mandatory" inspection stage has been reached.

  4. Andrew

    Once again Anne has described the completely inadequate control of the Victorian building industry.
    How can the VBA let people's lives be in jeopardy. And the politicians let the farce continue. Keep up the good work Anne.

  5. Jenna

    Great article Anne highlighting the extent and consequences of the lack of proper consumer protection for home buyers – needs a government to finally take the bull by the horns and totally overhaul the complete governance of the industry including their own consumer affairs continued inaction and all regulatory authorities now!

  6. Russell Jones

    The terrible thing is those responsible won't do anything about it Govt departments staffed by people who are just doing a job. Dept heads don't take any responsibility all the way to to the top and Govt Minsters let it go till the next election. ((( I had a plumbing problem and it was sorted out on the spot they are the only Dept that did anything for myself ))).

  7. Mel

    Another great read Anne! Excellent job Sourceable for covering this. It is very telling that although this is a disaster of epic proportions, the full story is not being told to the greater public through the mainstream media. Keep up the good work.

  8. Lesley Crouch

    It is clear that there are enormous problems in the building industry that have been allowed to escalate over a number of years. It is unbelievable that successive governments and regulatory building authorities have not done anything to ensure that building standards and regulations are actually being adhered to. Do we have to wait for buildings to fall or burn down and have the photos of the resulting number of bodies splashed over the various media outlets before anything is done to regulate the building industry so that consumers can have faith in building or buying a home or investing in an apartment block. Australia has building and construction standards but consumers need to know that these standards are going to be enforced.

  9. Diarmuid Hannigan

    Good Leadership requires Compassion, Intelligence and strength intermingled with a good dose of common sense. Through this leadership trust within our communities is built and we all build a better society. Unfortunately our government system is failing us through incompetence, extreme bias and finally corruption.

  10. Anne Paten

    Thanks very much, Mick. This is good advice for owners. You have shown us a little known mechanism that can be invoked to give owners a bit of control in an 'arrangement' that otherwise has made them powerless to have any say, control or power over their own building. The fact that owners can be locked out permanently from the land they own and the partial building that they have paid for is a disgrace. Once the con-tract is, if you get the cowboy, it is for the owners, the end of their lives as they knew them. No rights – only as cash cows, to pay and pay and pay for defective work and more defective work. We must publicize this one opening under the unfair legislation and unfair con-tracts!

  11. Val Becker

    It is well past the time for genuine reform. Let us hope that we can see some true leadership which has been missing for so long in Victoria as you clearly illustrated in this article. Well said!

  12. Andrew

    Why is it that Anne is the only voice in Victoria that is calling for a complete reform of this diabolical building industry. All Victorians should be demanding a better system because it could be their children or grandchildren that suffer.
    It's a disgrace that the government seems unable to do anything about it or is it that they profit from the current system.

  13. Kelly Chitogal

    How very true. Welcome to Victoria, where crooked regulate the crooked