Auditor-General: Victoria'S Consumer Protection Framework for Building Construction


Mr BARBER (Northern Metropolitan) — I was not exactly shocked, but I was quite saddened to read the Victorian Auditor-General's May 2015 report titled Victoria's Consumer Protection Framework for Building Construction because in many ways it points out that the problems that were highlighted in an earlier report were continuing in the same fashion. It laid absolutely bare the almost complete failure of existing efforts to protect people who end up in disputes with builders whom they have contracted to build their house.

A house is a major purchase and one you make very few times in your life. Apparently 28 per cent of building and renovation customers experience problems with their builder. Because of the amount of money involved and because we are talking about someone's home, disputes over house-building contracts are much more significant than disputes over other types of consumer contracts.

The approval process for becoming a registered builder is bewildering. From a consumer's point of view there do not appear to be any objective guidelines or criteria. The assessment of applications is done by individual assessors from within the industry who have what looks like absolute discretion. The Auditor-General's sample of the paperwork that has been used to register builders in the past shows numerous inaccuracies and inconsistencies, and a system of lifetime registration is in place so that once builders are registered there is no need for them to demonstrate their ongoing competency. As long as they keep paying the registration fee, they stay registered.

We only need to consider the situation of doctors and lawyers, where if 10 per cent of them at various times had been dragged before their disciplinary boards, then the world would come to an end, yet that is the case that we discover with building surveyors when we read further into the report. Consumer affairs is very much a toothless tiger in this jungle. The previous government acted to restore domestic building insurance, but the problem remains that it is called builders warranty insurance, and most consumers assume that means there is a warranty over the quality of the product when in actual fact it only comes into play if a builder dies, goes broke or simply runs away. The Auditor-General also tells us that there could be further cost savings to the way that the insurance scheme is being run.

The Auditor-General raised many similar concerns in 2011, yet it was 2014 before the then Minister for Planning, now the Leader of the Opposition in the Assembly, introduced 400 pages of amendments to the Building Act 1993, only to withdraw them at the second-reading stage. In the words of the Auditor-General, last year's bill 'did not fully address the key issues with the current domestic building consumer protection framework'.

Victorian consumers need better protection than the market can provide. Like any market, a good consumer framework needs to be in place so that people can participate in that market with confidence. In fact a good consumer framework will enhance the nature of that market if people believe they can transact between themselves without ending up in an enormous amount of litigiousness or even in the terrible bureaucracy that anybody who has made a complaint against a builder or a building surveyor has found themselves. In other words, people need to know that the Building Practitioners Board and the Victorian Building Authority are doing their jobs effectively. They also need to know that building registration means more than an annual registration fee, that they have decent insurance and that there are enforceable dispute-resolution procedures in place.

Good and honest builders need to ensure that the reputation of their industry is not being brought down by a few — that is, the dodgy practitioners who should not be registered and who are fleecing consumers by building substandard homes. We all need to know whether this new government is willing to act on the findings of the Auditor-General — at long last — or whether we are going to have another four years of hand sitting followed by another Auditor-General's report.