2016-03-23
I rise to speak on the Building Legislation Amendment (Consumer Protection) Bill 2015. Certainly the Greens support the bill and its intent. We believe that these are sensible amendments and reforms in this area. The bill responds to a couple of reports, including one from the Victorian Auditor-General's Office (VAGO) from May 2015, which reported on Victoria's consumer protection framework for building construction and which once again criticised the current system for providing inadequate protection for consumers. The bill also responds to VAGO's report, as well as to earlier reports, including a report by the Victorian Ombudsman in 2012.
The bill covers a range of areas. Firstly, for the dispute resolution of domestic building work disputes there is a new process for conciliation and resolution of disputes — Domestic Building Dispute Resolution Victoria. It is headed by the chief dispute resolution officer and supported by conciliators and technical assessors. Conciliation will be mandatory before an application to the Victorian Civil and Administrative Tribunal (VCAT) or to a court. The bill provides for reduced costs for consumers and builders and for reduced stress in relation to these matters. It provides for dispute resolution orders to require rectification of defective or incomplete work, payments to builders and payments into trust funds pending the completion or rectification of work. The bill also provides for the establishment of a trust fund.
In extreme cases where work is poor and it is not reasonable to allow the builder to attempt rectification, an order could be used to compel the builder to pay for the rectification by an alternate builder. Where a party refuses to participate, the bill also provides for the dispute to still be considered. If an assessor is appointed and a dispute resolution order is issued, the party that does not participate will be liable for costs in the preparation of the report. If they apply to VCAT for review and are unsuccessful, costs will be awarded against them.
The bill also turns to the matter of the regulation of builders. The bill abolishes the Building Practitioners Board and transfers the board's registration and disciplinary functions to the Victorian Building Authority (VBA). It also strengthens the regulatory powers of the authority, and the authority will be given new powers to direct builders to fix non-compliant or defective building works.
The bill goes to the registration of building practitioners, improving registration standards, including the renewal of time-limited registrations. Practitioners will now be required to seek a renewal of registration within five years and will need to demonstrate ongoing competency through, for example, having complied with any prescribed continuing professional development requirements. The bill therefore allows the authority to attach conditions to registration. This will make the registration system more capable of reflecting the particular competencies of different building practitioners and address the VAGO findings. Further, to make it clearer to consumers and practitioners what work a person is qualified to perform the bill also provides for the scope of works for registration categories and classes to be prescribed.
Finally, the bill replaces the current good character test with a broader fit and proper person test. Professional standards will be reinforced through new codes of conduct for building practitioners, although we do note that they are not prescribed in legislation. A practitioner will have the ability to seek an internal review of registration decisions by the authority, along with the right to appeal at VCAT.
The bill looks to disciplinary processes and sanctions, delivers more timely outcomes and gives consumers greater certainty. The most significant change is the introduction of a more efficient show-cause disciplinary process. Under the new process, if the authority reasonably believes after investigation that there are grounds for disciplinary action, it will be able to require the registered building practitioner to show cause why a disciplinary sanction should not be imposed. Practitioner rights will be safeguarded because practitioners will be able to seek an internal review of disciplinary decisions by the authority, followed by a review at VCAT.
The bill introduces more effective disciplinary sanctions, including the power for the authority to impose a condition on a registration, to suspend a registration or to partially suspend a registration. The grounds for disciplinary action will be expanded and made clearer to take into account the new dispute resolution system and to ensure that practitioners will be held to account if they do the wrong thing. This means that, in addition to the current grounds that an immediate suspension is in the public interest, a practitioner will no longer be able to practise if they are bankrupt or insolvent; if they have contravened a prescribed provision of the Building Act 1993, the Domestic Building Contracts Act 1995 or a prescribed law; if they have been convicted of an indictable offence involving fraud, dishonesty, drug trafficking or violence; if they have not paid a required amount; or if they are no longer being covered by the required insurance.
The bill goes to building surveyors as well. It addresses the potential for conflict of interest for building surveyors — this was identified in the VAGO report — and prohibits builders from appointing a relevant building surveyor on behalf of the owner in relation to domestic building work. It therefore keeps at arm's length the relationship between building surveyors, builders and the consumer of those works. The authority and building surveyors will be given stronger powers to direct builders to fix defective work. An authorised person or performance auditor from the authority will have the same power to issue directions under this section as the relevant building surveyor. There have been instances where domestic building consumers have been left without domestic building insurance cover because the identity of the builder who was party to the domestic building contract and the builder who was named on the certificate of insurance differ. The existing requirement on a building surveyor to check if there is insurance coverage, because the parties to the contract and certificate of insurance are the same, will be tightened.
There are other improvements, including that each building practitioner in the chain must ensure that the building work they are engaged to perform is compliant and covered by a building permit. The bill also goes to strengthen regulation of owner-builders, which I will talk to a bit further down the line in my contribution. The bill addresses some of the anomalies with owner-builders and gives the authority the same performance audit power and power to direct owner-builder sites as it does for other building work.
In summary, looking at the bill, it improves information for consumers because consumers will have to be provided with the information by builders before entering into a contract. It provides for better conciliation of domestic building disputes, which will be done through the new body, Domestic Building Dispute Resolution Victoria. That will include conciliation and informal extrajudicial mediation-type processes. It will be mandatory, and it will minimise costs and stress for all parties. It provides for better dispute resolution of domestic building disputes. Dispute resolution orders can be made to require the completion of unfinished work, the fixing of substandard work and payments to builders and payments to trust funds until completion of work, and if a party refuses to cooperate, a dispute can still be dealt with and costs made payable by a non-participating party.
The bill contains better registration requirements in that the registration of builders will be strengthened. There is an introduction of time limits, a provision of categories of registration to reflect the competencies of builders, professional standards through new codes, and strengthened restrictions. It provides for better disciplinary action, better consumer certainty, power to introduce conditions or suspensions on registration, accountability for breaches and immediate suspensions of practice if it is in the public interest, and of course I have mentioned there are several grounds around that.
Of course there are also a raft of other measures, including improved governance addressing conflicts of interest within building surveyors — —
Business interrupted pursuant to standing orders.
Sitting extended pursuant to standing orders.
Ms DUNN — Picking up where I left off, the other measures it provides for include compliance with building permits, assurance for consumers as to the qualifications of builders and improved building standards, among others.
I particularly want to turn to the matter of owner-builders. When the Greens examined the bill it seemed the government's main purpose for tightening up the owner-builder laws was to stop disreputable builders, including builders who deregister as a result of this bill, from using owner-builder laws as a loophole to keep their businesses going when they are not fit to be in the building business. We certainly support that aim. The secondary purpose is to bring Victoria's owner-builder laws into line with those in other states and make sure that subsequent purchasers of owner-built houses can be confident that the quality and standard are as good as for any other house. The Greens also support that aim.
Mr Davis, in his contribution, mentioned correspondence from Phil Graf of Australian Owner Builders highlighting concerns about unintended consequences of the legislation. Certainly those matters I will explore further in the committee of the whole, or perhaps the minister can include those matters in his address-in-reply to this bill. I have given the minister the courtesy of some advance notice of the theme of my questions, because I want to make sure the minister has the information available to give me some detailed answers, including, I hope, some information about how the government intends to assist owner-builders, which of course we know is on the public record via Hansard.
Phil Graf from Australian Owner Builders says that people want to owner-build for a range of reasons. One is that it saves them money, and another is they want to make something individual or unique or high quality which is not available through what I will describe as cookie-cutter building companies and their product, and it is their dream to do so. I know of a particular instance of a person who became an owner-builder because in relation to their kitchen fit-out they wanted to use all recycled timber products. They simply could not find a builder who was prepared to do that in their case, so they became an owner-builder and sought out a cabinet-maker eventually who was prepared to do that cabinetry work for them. If that option had not been available to them, those people could not have achieved their dream and got the kitchen that they wanted from recycled timber, because it simply was not available as an off-the-shelf option for them.
People want to owner-build because they can owner-build. An ordinary person who puts in the time and effort can do it. They can be the project manager and contract qualified tradespeople for everything that they cannot do themselves. If this legislation takes away the cost saving of being an owner-builder, if it takes away their ability to choose their preferred tradesperson for the job, if they have to do a building course that includes information that is not relevant to their project or if they cannot get two owner-builder permits within five years in legitimate circumstances, it might tend to drive some people to operate outside owner-builder laws, and the Greens certainly would not want to see that.
Mr Graf fears that this will especially happen for renovation works that will not show on the outside of the building, and those are the sorts of things like kitchen or bathroom renovations or knocking out internal walls. If that happens, it will undermine the government's purpose, which we support, of providing greater certainty of the quality of owner-built work.
We should be encouraging people to do their owner-building by the book because of the greater certainty for future owners of the property, and we want to raise the standing of building generally. If an owner-builder receives a certificate of consent for the works, every other consumer protection kicks in. When the work is inspected they receive a certificate of final inspection. If the owner-builder sells the property or the dwelling within six-and-a-half years, a defects report is created by a prescribed practitioner. The report must be less than six months old and must be provided to the homebuyer. If the owner-builder sells the place within six years, the owner-builder must also obtain domestic building insurance covering the work and providing the homebuyer with a certificate of insurance.
There are also additional assurances for the homebuyer that are included in the bill, including making the details of the register available online and providing greater oversight. If the owner-building is driven underground, we lose all those really important protections.
The Greens are proposing amendments to retain all of the measures that are aimed at closing the loophole for disreputable builders, but the amendments create an exception to let an owner-builder do their work legitimately.
Greens amendments circulated by Ms DUNN (Eastern Metropolitan) pursuant to standing orders.
Ms DUNN — The amendments turn to the issues of the longer waiting periods and expiry of certificates of consent. Currently, in terms of the waiting period, an applicant cannot get a certificate of consent if the applicant has had a building permit as an owner-builder on any land they own or co-own in the last three years. However, the certificate of consent lasts for three years, so the owner can do multiple tranches of work, including holding more than one building permit during a three-year period. Then they have to wait for three years after their last building permit expires before they can get a fresh certificate of consent for this property or any other property they own or co-own.
In relation to this bill, it proposes via clause 30(2) that the waiting period be extended to five years. Clause 31 would make a certificate of consent expire at the end of the prescribed period, which is either 12 months, unless otherwise prescribed, or on the date that any building permit lapses, if one is issued. The effect is that an owner-builder can only undertake one tranche of work on their own dwelling every five years, which makes the more stringent and expensive application process less cost and time effective. The effect in the community will be that owner-building will either be drawn to a halt or be driven underground, and we simply do not want to see that type of building being driven underground.
The intention of the government reform is to crack down on disreputable builders using owner-builder laws as a loophole — for example, building or renovating a home they own but do not live in and selling it, or even forming a consortium that co-owns multiple properties and applies for certificates of consent for renovations in different names during a three-year period. What is intended should be effective in stopping that loophole; however, the unintended consequence is that a genuine owner-builder who wants to work on their own home will have to wait five years after, say, underpinning some brick walls and repairing the floors before he or she can get a certificate of consent to maybe look at the bathroom or look at the kitchen — whatever their desire is next in terms of their owner-builder home renovations.
In relation to the amendment, it seeks to insert an exemption for owner-builders, and it does that by adding two subparagraphs to proposed paragraph (e) of section 25E(1), which is set out under clause 30(2) of the bill. The additional subparagraph (i) relates to the dwelling on the land to which the application relates. That same addition is mirrored in proposed paragraph (f). That amendment is seeking to create an exception from the five-year rule if the building permits issued to the applicant owner within the previous five years relate to the dwelling on the land to which the application relates. So it has to be related to that particular dwelling — that specific house that the works are attached to. It also captures any class 10 buildings that might be ancillary to that dwelling, and those class 10 buildings are the likes of fences, sheds and those sorts of things.
In relation to any potential concerns about whether that would be extended beyond just the dwelling where the works are happening, in the case of, say, a subdivision which might create multiple dwellings on a site, neither the bill nor this amendment that I am proposing will alter the contents of section 25E, which provides that the authority can only issue a certificate of consent — and I quote from section 25E(1)(c):
… in relation to, or ancillary to, a single dwelling; and
(d) the applicant resides and will continue to reside, or intends to reside, in the dwelling …
So this rules out multiple buildings on a subdivision. It is really important that the amendment refers to 'the dwelling on the land to which the application relates', so there can only be one owner-built dwelling per application.
In terms of the questions that it would be good to see the minister address in his reply, we are interested that clause 28 provides for the need to get a certificate of consent, which is essentially an owner-builder permit.
We note that the bill suggests that it looks to projects that cost more than $16 000 as opposed to the current level of $12 000. We think it is reasonable to amend that to $16 000 in response to inflation and to counterbalance the other reforms that make it harder to get a certificate, but we do have concerns that under the current rules we might see people split their projects into sections that are less than $16 000 to avoid the need to apply for a certificate of consent because of the proposed more onerous conditions on owner-builders.
Clause 28 provides that owner-builders cannot contract out a major domestic building project unless the person they contract out to is a builder registered under part 11. A major domestic building project is defined by the Domestic Building Contracts Act 1995 as having a contract price of more than $5000. We know that owner-builders often contract unqualified people to do specific work — it might be works like landscaping, tiling, roofing, carpentry or concrete slab construction, for example. They must also contract in some elements like the licensed trades — licensed plumbers and electricians.
We are wondering whether each of those tradespeople need to be registered builders under part 11 if the contract price is above $5000, and we are also wondering about an owner-builder being able to pay someone either an hourly or a daily rate to work on their team, perhaps as a labourer — so not as a trades person per se. Could that person work, without being a registered builder, as part of that construction team? We would like to know whether the same rule applies to registered builders when they are contracted to build a home that is contracted in the usual way, not by an owner-builder. In relation to that, does each person on a registered builder's work team have to be registered under part 11? Does each contractor brought in by a registered builder have to be registered under part 11?
When we look at the VBA website, we note that there are a number of different types of contractors who are registered builders in Victoria. As it stands at the moment there are 9 reblockers, 35 structural landscapers, 9 underpinners, 27 earthworks and excavation trades, 79 bricklayers and no tilers. What we are wondering is: if a qualified tradesperson, like a tiler, wants to be registered under part 11 so they can continue to work under the new regime, what will he or she have to do? Will there be separate limited categories of registration for individual trades so they do not have to go through all the same education and financial hoops as general builders? If so, how will that work — for example, a tiler? What would it cost to do each of those elements — compulsory education, registration fees, insurance and continuing education? Does the government have any estimates of how many tradespeople intend to step up their registration?
We are also interested in knowing if the government will commit to some transitional provisions so that owner-builder contract work by qualified tradespeople who have not registered under part 11 does not fall in a heap on the commencement date of 1 July, and if so, what will those transitional provisions be? We are also wondering whether there will be any exceptions where owner-builders want to contract in specialist work of a type that is not done by any builder that is registered under part 2 or where that specialist skill is not available in their local area.
In relation to clauses 29, 30, 31 and 33, which all go to the term 'prescribed knowledge', instead of what happens now, which is that an applicant for a certificate of consent signs a declaration that they have read the statement of duties, the authority will need to be satisfied that the applicant has the prescribed knowledge of the duties and responsibilities of an owner-builder. Is it reasonable to allow the authority to consider the applicant's ability to undertake the task? They are currently not able to do so. Our concern is that it could be too onerous and too expensive and could drive the works underground.
I am sure there will be plenty of opportunities to explore in the committee of the whole matters that are not covered by the minister and also to explore further the Greens amendments. In summing up, this bill introduces a number of measures designed to strengthen protection for consumers and the provision of information to consumers, and to provide for the application of building standards, builders' registration and dispute resolution, and the Greens support this bill.