I rise today to speak on the Building Legislation Amendment (Domestic Building Insurance New Offences) Bill 2023, a bill that we do not oppose. The bill was introduced as part of a response to the collapse of Porter Davis Homes and dozens of other domestic builders in Victoria. Just last month we saw another Victorian building company, Montego Homes, collapse. More than 60 buyers who paid deposits to Montego Homes have been left without domestic building insurance, and the earlier state government support program deal to deal with the fallout of collapsed builders has just ended. Sadly, with many of these businesses going under, it is the consumer, the everyday Victorian, that has been left in financial pain. Among these are retirees, young families and more who have parted with their life savings, all trying to achieve something that has, sadly, become increasingly difficult in this state – that is, buying a house and owning a home.
So far we have not seen this Labor government do enough to support those suffering at the hands of collapsed building companies, because when things do go wrong it is devastating for the people impacted and can ruin their financial position forever. More needs to be done to stand up to the rogue behaviour of these companies and how they have financially ruined so many families, couples and individuals because of the lack of consumer protection.
While the bill works towards addressing these concerns with intentions to increase consumer protections against poor practices within the residential construction sector, one of the poor practices considered in this bill is builders failing to obtain domestic building insurance before accepting deposits on any major domestic building contract. This is something that was seen with more than 60 Montego Homes purchasers, over 560 at Porter Davis and many more across other failed building companies in Victoria. So far some consumers have been able to receive deposits back, but not without suffering from a strenuous and often unfair insurance process. Claims have been refused, reduced and stretched out across time, with many consumers receiving insulting quotes and facing increased out-of-pocket expenses. Mandating this insurance will be done through this bill by amending the Domestic Building Contracts Act 1995 and the Building Act 1993.
New offences will be inserted into the Domestic Building Contracts Act 1995 for situations where a builder demands or receives money under a major domestic building contract when the builder has not made sure the domestic building work to be carried out under the contract is covered by insurance.
This means that builders may be liable to penalties for domestic building contracts undertaken without insurance. The amendments also make other consequential changes to the existing legislation. The bill provides information about how and when investigation and enforcement powers may be exercised, as well as detailing how and when proceedings may be commenced. Amendments also note that builders who are found guilty of contravening certain offences under the Domestic Building Contracts Act 1995 may become ineligible for registration for a period of time. Lastly, there are a series of administrative changes to update terminology and definitions throughout the bill, including the definition of ‘builder’ and ‘major domestic building contract’ in the bill.
This is not the only bill that has been introduced in recent times to address concerns about our state’s building industry. Last year the Victoria Parliament passed the Building Legislation Amendment Bill 2023, which implemented recommendations of an expert panel’s review and report into Victoria’s building industry. This report focused on practitioner registration, building approvals, regulatory oversight and consumer protection. The report set out 14 recommendations to enhance accountability, including to developers; to improved dispute resolution and prevention; to increase compliance and enforcement; and to improve insurance coverage in the domestic construction industry. While this bill certainly leaves a lot to be desired, it takes some steps in the right direction to resolve this ongoing issue that is impacting so many Victorians.
The two primary concerns I have with this bill are that I do not believe it goes far enough to protect Victorian consumers from the damage caused by those failing to uphold the necessary standards within the building industry and, secondly, it does not act fast or efficiently enough. I do want to commend the member for Brighton for addressing these concerns in the reasoned amendment to this bill. The limited scope of this bill revolves around how it only legislates in areas regarding insurance, which many industry stakeholders, such as Master Builders Victoria, claim does not address the many concerns about the current state of the act. In our consultation with Master Builders Victoria there were calls for a thorough review of the act to better protect all parties and support the industry to deliver homes for Victorians. They stated the act needs to be improved and requires further clarity for industry around who is captured by the penalties and to clarify basic amended definitions, including ‘builder’. Many businesses and consumers have noted that the act is out of date and is no longer fit for purpose to suit current building practices. This bill also introduces concerns over the Victorian Building Authority’s investigative powers. Under the bill the VBA has explicit powers to enforce disciplinary actions against builders who breach their responsibilities under the Building Act 1993 and the Domestic Building Contracts Act 1995. Consultation with those in the industry has also revealed that there remains some confusion around the different levels of disciplinary action to be taken against builders found in breach of the act. This may cause significant challenges with the execution of amended and inserted provisions outlined in this bill.
Like with all legislation being introduced, there is also a key need to ensure sufficient community knowledge to make sure those in the industry understand the new obligations outlined in this bill. Questions remain over how the government intends to ensure that both the building industry and consumers are aware of changes to this act. This may pose issues regarding implementation – something that could occur with the proposed changes to the definitions of the word ‘builder’. The proposed changes to the definitions, specifically the definition of ‘builder’ to exclude the explicit mention of managing or arranging directors, may lead to confusion regarding builder obligations. This bill, just like the existing acts, has failed to sufficiently define who is a competent builder. No sufficient registry is maintained of builders with adverse findings against them in builders warranty insurance claims. There also is no registry for individuals purporting to be builders who have breached the Building Act 1993, the Domestic Building Contracts Act 1995 as well as acts including the Crimes Act 1958 and other criminal acts and codes.
The opposition’s consultation for this bill has been extensive, with peak bodies, industry professionals and other stakeholders within the building and contraction sector all met with. The opinion shared by all of these groups has been resounding: as it stands this bill does not fix the current issues within the system. Master Builders Victoria recommend first reviewing the Domestic Building Contracts Act 1995 as a whole, prior to some of the amendments in this bill and the offences it will impose. MBV also states quite clearly that both industry and consumers have indicated that the act is out of date and no longer aligns with contemporary building practices. They have also requested further clarity around the application of the new clauses, specifically that there is a need to determine whether the clauses extend to preliminary agreements or holding deposits paid before the formal signing of an actual domestic building contract.
They have also called for reviews into domestic building insurance as a whole and the process involved with it, as well as raising concerns over the loose definitions given. The Association of Consulting Architects also has concerns with the definition of a registered builder, among other things. I look forward to the additional bills to come that will address the broad issues within our construction and building industry, particularly improvements to the consumer experience within the building and construction industry as well as the potential of addressing planning concerns at a local government level.
With increasing cost-of-living pressures and a rise in homelessness, it is essential that this government oversees a system that ensures Victorians can safely build homes without the risk of business collapse. While there have been some builders doing the wrong thing, there are several more that have not. In my electorate our local developers, prospective consumers looking to buy a home and construction companies have raised several concerns about roadblocks within the system. Developers in towns like Euroa and Benalla have shared their concerns about the planning capabilities of local councils, with many dealing with permit delays, a lack of transparency and difficulty in receiving council approval. Some of these concerns have pushed developers out of certain regional communities, preventing much-needed development in these towns.
Last year I called on the Minister for Planning to introduce a planning squad that could help relieve some of the pressures that our local councils are facing when it comes to approving developments and construction of residential projects. These developers are not asking to build massive mansions or shopping centres. Most of these projects are for modestly sized residential options that are desperately needed through these communities. We are currently in the middle of a housing crisis, particularly in regional areas, and we must look at ways to increase the opportunity for more affordable options in our communities. Over the last year the Strathbogie shire, within the Euroa electorate, saw the largest rise in median rental prices across the entire state, up 19.1 per cent to $420 a week. While this bill still has issues and could certainly do more, it is generally a step in the right direction.