Why the New Vic Building Legislation Must go Through 1

Tuesday, August 5th, 2014
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For the past 12 years, the domestic building industry in Australia has suffered under a draconian regime of alleged consumer protection that has seen various governments initiate review after review in their struggle to satisfy their public policy and those opposed while retaining the status quo to satisfy the powerful trade associations.

In Victoria, however, legislation is currently before Parliament, which will overhaul current arrangements and introduce a one-stop-shop for building industry regulation and will in fact deliver genuine protection for consumers as well as industry management that supports responsible practitioners whilst cracking down on unscrupulous operators.

This is a positive step and the legislation should be passed.

Indeed, the present system in Victoria has seen the industry decline into what the public now sees as a cowboy sector, which is lacking in integrity.

Consider, for example, the case of Charles, a consumer who resides in an outer eastern suburb and sought compensation of $196,000 for a failed project.

Despite assurances from his lawyers that his action would be successful, this was in fact not the case and he was forced to settle earlier this month for only $80,000.

As his legal bill came to $120,000, he remained $40,000 out of pocket whilst the $196,000 failed project stares him in the face each morning as a reminder of a system that is broken beyond repair.

This is just one example, but similar cases occur time and time again as consumers grapple with a system that appears in their eyes to favour builders but in fact does no favours to any disputing party in most cases.

From the perspective of builders, meanwhile, the current system – an outgrowth of the HIH collapse and events of 9/11 – has the ability to suppress good builders by the insurer restricting annual turnover and project limits whilst simultaneously allowing those prepared to fiddle the books to thrive. If the system does finally catch up with wrongdoers, they simply close the business and reopen under a new entity.

Finally, from the Victorian Government’s perspective they have recognised the failures of the past 12 years while taking the views of the Auditor General and the Ombudsman reports into account and addressed them through their one stop shop principle contained in the Building Legislation Amendment Bill 2014 that is now before the Parliament.

One of the key elements of this legislation is the removal of the influence of the private sector that currently sees some 75 per cent of all home warranty premiums directed to private enterprise, leaving only some 25 per cent for the intended purpose, which is consumer protection. This fact alone will ensure premiums remain at the same level and may even reduce under the one stop shop principle.

Unlike with the previous regime, this legislation is based on correct principles and will deliver genuine consumer protection as well as an industry management regime that supports good practices.

It must be accepted and become law.

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  1. Andrew Heaton Andrew Heaton

    No doubt building disputes are a simply awful experience for builder and consumer alike, and the case of 'Charles' above is not an isolated incident.

    Whilst not commenting specifically on the Victorian legislation, I would say that in general, any building regulatory regime should be geared toward speedy resolutions for all concerned and adequate levels of consumer protection, and should be bought about by genuine consultation with both builder and consumer representatives.

    I know there has been some disquiet about the recent reforms in Victoria and fears about excessive compliance requirements being placed on builders. Let's hope things work out OK once the new rules are actually up and running.