Tuesday, 12 August 2025
Bills
Domestic Building Contracts Amendment Bill 2025
Please do not quote
Proof only
Bills
Domestic Building Contracts Amendment Bill 2025
Second reading
Debate resumed.
Richard RIORDAN (Polwarth) (15:01): Continuing on the Domestic Building Contracts Amendment Bill 2025, we discussed before the break the clauses, and clause 25 limits the amount a builder can demand as a progress payment to the lower of the prescribed percentage for that stage of works or an amount that directly relates to the progress of the works. It also expands this to include contracts using modern building methods, which are to be prescribed by the government, including the various percentages. Clauses 26 to 50 deal with minor dispute issues, including when dispute resolutions can be ordered, payment of money, powers of assessors and various other legal and technical matters.
Clause 52 inserts new part 5A, granting Victorian Building Authority – now the Building and Plumbing Commission – inspectors new powers so they can compel information. Under new part 5A section 68B they can apply to courts for enforcement orders and in 68C they can inspect or seize documents. New division 3 outlines that they may enter business premises, take samples, make recordings, inspect building works and compel presence of registered practitioners. Inspectors must also give proper notice and obtain consent where required and may inspect digital records, using or seizing equipment, or enter with a search warrant in serious cases. New division 4 provides additional provisions and powers for inspectors as well as the required due process and retention policy for seized items. New division 5 deals with remedies and various legal avenues that may be taken. New division 6 outlines the various orders, declarations and other resolutions that may be taken by the VBA when handling these issues. New division 7 outlines the various penalties and offences that may be taken into consideration as part of any dispute proceedings.
Part 6 on page 84 is the transfer of functions from the director of Consumer Affairs to the Victorian Building Authority, along with the VMIA’s domestic building insurance and Domestic Building Dispute Resolution Victoria, which will be under the new one-stop shop conveniently located in the now almost empty Telstra building in Exhibition Street.
Clause 66, new section 140 on pages 88 and 89, contains transitional regulations. The Governor in Council may make regulations containing provisions of a transitional nature, including matters of an application or savings nature arising as a result of the enactment of the Domestic Building Contracts Amendment Act.
Essentially for this side of the house, whilst this bill makes many pro-consumer changes, they are not as sweeping as they could be and will most likely tighten up the regulations of the building industry and seek to improve consumer protections as a result of the Porter Davis and other building company collapses in recent times. In many cases it is improving the regulatory and investigatory powers of the VBA, or the Building and Plumbing Commission, updating the principal act from 1995 and providing a focus on consumer protection. This is as a result of the poor business practices of Porter Davis and others, which have resulted in more red tape for other building companies. But in order to ensure that a repeat of what happened in 2023 does not happen again, the changes are also to ensure that all contracts are written in plain and legible English, which will enable the terms to be better understood by all parties and show clear responsibilities.
Builders may still recover costs on contracts over $1 million, up to 5 per cent, though there is still room for other contracts under the threshold to have a formula for agreed cost recovery. This point may be a point of greater discovery in the upper house when this bill goes to them. Overall, these changes, whilst pro-consumer, will benefit Victorians by tightening up building industry business practices, although at the same time there will be an increase in uncertainty with the moving of many of the definitions and details into regulation.
Some in the industry have argued that the bond scheme and regulator consolidation may inject bureaucratic delays or raise premiums, ultimately increasing home building costs, which unfortunately is a major issue that this government has failed to address adequately over time. Market impact on small builders – smaller co-operators may exit the industry due to compliance pressures, consolidating the market into larger firms, limiting competition and again potentially putting upward pressure on home building. As we know, there are many, many upward pressures on the cost of new homes here in Victoria. As we discussed earlier in the contribution, nearly 45 per cent of the cost is regulation and taxation that has become very burdensome.
Builders and developers will need to begin aligning contracts, insurance and financial policies now in preparation. Consumers and industry bodies will be engaged over time to help formulate the regulation. There is an ongoing concern from this side of the house with bills such as this that have real financial impacts and cost impacts on something as essential as a home. It is quite frustrating that the industry and consumers are still light years away from knowing many of the details around how this bill will in practice be enforced. Legal and professional advisers have advised us on contract updates, developer bond rules, escalation clauses and rectification processes, all of which are yet to be determined.
There are still many questions unanswered by the government. How will the cost escalation clauses be structured practically? What timelines will regulations set for deposit limits and progress stages? Have these been thoroughly worked through and discussed with banks, which currently often set the guidelines and the guardrails around how progress payments are paid, as they are clearly a stakeholder in the process? What are the implications for small builders in meeting financial thresholds? Has there been enough thought given to making sure that small builder operators who perhaps only do one or two homes a year can still operate effectively and efficiently within this environment? And how will the developer bond scheme operate for mixed-use or staged apartment projects?
This government has put much emphasis and effort into proclaiming apartments as the way of the future and the housing solution for Victorians, yet all the evidence coming in is that apartments are now, per square metre, the most expensive way to house people in Victoria. This legislation, and similar legislation brought in earlier in the year, only seeks to make that expense even greater.
The opposition will not be opposing this bill. I look forward to the contributions of my colleagues on this side of the house, who will represent, as we so often do on our side of the house, a mix of practical experience, such as from the member for Narracan and the member for Morwell, who both have real lived experience in this area. I look forward to their contributions.
Josh BULL (Sunbury) (15:08): I am pleased to have the opportunity this afternoon to make a contribution on the Domestic Building Contracts Amendment Bill 2025 and to follow on from the previous speaker, the lead speaker from the opposition, who made a fairly measured contribution on what this bill will do. The government is committed to making sure that we are supporting each and every Victorian in every way that we can to add more supply to market when it comes to new homes; to provide for better, streamlined processes when it comes to planning; to implement stronger tenant protections and more social housing; and to have a long-term strategy when it comes to where we are right now in the centre of the city, the growing suburbs and the regions.
This piece of legislation comes about from the work that has been done in knowing and understanding the significant challenges that come when people are building homes. I think all local members in this place would recognise that very challenging environment, those very challenging decisions that community members do need to make, individuals and families need to make, when building a home.
What we know is that the great state of Victoria is growing. We have seen a whole range of pressures that have come about as a result of many factors, both national and international, when it comes to building homes. The decision for any individual or family to undertake the signing of a building contract in so many instances is one of the biggest decisions that the family or individual within a local community will make. With that comes some hesitation and comes risk, and indeed it is such a significant amount of money.
Just as recently as half an hour ago we did see a 0.25 per cent cut to RBA interest rates, taking the interest rate down to 3.6, being the lowest that it has been within two years, and we of course welcome that. But what we know is that significant cost of living is indeed something that all communities – everyone within our great state – are facing. The provisions contained within this piece of legislation go to providing for a more structured, more certain and better way of contracting when it comes to housing in our state. We remain focused on all of those reforms and the planning work that has been announced by the Premier and the Minister for Planning to make for a safer, more durable system that enables individuals and their families to purchase and build a home. It is critical that the regulatory framework for domestic building contracts be clear, effective and modernised to protect the interests of consumers and meet the needs of a dynamic building industry that continues to innovate and adopt new construction methods, new modes of construction, and to deliver, as I mentioned earlier, more housing for Victorians.
Following the collapse of Porter Davis the government committed to review the Domestic Building Contracts Act 1995 to ensure that it was fit for purpose and to strengthen protections for building owners while supporting the needs of the building industry. The bill is informed by the outcomes of that review and is designed to strengthen, as I mentioned, consumer protections while supporting the needs of the building industry, which is integral to meeting our housing supply targets that were in the 2023 housing statement that I mentioned earlier – a fit-for-purpose regulatory framework for domestic building contracts, providing for consumers to have that confidence and security when building and renovating homes as well. The bill supports the growth and innovation in the building industry, and we certainly know when we are speaking to the industry that there are many changes, and some of those I have touched on and some of those I will not have time to reflect on today. So those changes are there, and we know that in a dynamic environment where there are those cost pressures and there are many factors that go into these decisions that get made, making sure that there are provisions within the regulatory framework that allow for greater protections and certainty is something that I know will be very welcomed within my community and I hope very warmly welcomed right across the state.
The rules around when and how builders get paid under a major domestic building contract have not been updated since, as I mentioned before, that year of 1995, so it is a significant time now, and they have fallen out of step with the changes in industry practice. To enable a contemporary payment framework to be established, the bill amends the act to insert a new regulatory head of power that will enable regulations to prescribe deposit limits, progress payment stages and limits specific to different types of contracts. I think as local members we have seen, through both Porter Davis and others, some of those really concerning – in many instances devastating – outcomes which have happened to those that have been either trying to build a home or providing for renovations as well. The individual or family that is making that decision is beholden to all of these processes as they happen all at one time. That is dealing with finance, dealing with the bank and in some instances dealing with local government, which can be challenging at the best of times. Making sure that all of those provisions are moving in the right direction is something that is very, very important
I am conscious of time, just having 3 minutes to go, so I want to touch briefly on a couple of other elements that go to cost escalation, and those clauses I know were touched on by the previous speaker as well. Building material and labour costs and the uncertainty around supply of materials have increased for the building industry in recent years. In response, builders have advocated for the ability to use cost escalation clauses to enable the price of the build to be increased to reflect unexpected increases in the cost of materials or labour due to unforeseen delays.
A key reform contained within the legislation is to permit cost escalation clauses in major domestic building contracts with a value of $1 million or more for an increase no larger than 5 per cent. The million-dollar threshold was chosen as the figure as we believe it best balances the needs of both the building industry and consumers. The threshold of $1 million has been set at this level to reflect consumer risk due to those delays – those unforeseen circumstances that I mentioned earlier. Making those reforms is something that I think will be, again, welcomed within the local community.
The consultation period ran from November 2023 to February 2024 and was supplemented by a targeted consultation with stakeholders from practitioner, finance, consumer and legal sectors and conversations and meetings with the Housing Industry Association, the Master Builders Association of Victoria and the Consumer Action Law Centre, and the special advisory panel on the reforms did significant work between October 2024 and May 2025.
All of these provisions form part of a broader suite of work which goes to the government’s position around housing – more stock to market and leveraging those significant, important and large-scale investments in transport. Providing more homes where people need them of course provides for more opportunities. Members of this place and indeed the other place will be all too familiar with conversations around getting people to where they need to go safer and sooner and driving down costs both from a living point of view but also when it comes to amenity, services and the way that people live.
We as a government and all members of Parliament have an obligation to support communities to have a roof over their head and to be able to not go broke during the process. We have got an opportunity here with both this legislation and the massive reforms announced by the Premier, the Minister for Planning and other ministers to be able to do really important work that goes to providing a safe and affordable roof over people’s heads in a local community that they want to be in with their family. For all those reasons and many more, I happily commend the bill to the house.
Martin CAMERON (Morwell) (15:19): I rise today to talk on the Domestic Building Contracts Amendment Bill 2025. Looking around our side of the chamber when the government has put this bill up, they have sent in the two lovable tradies that are now politicians down at Narracan and Morwell to stand and talk and not only give a little bit of background on what the government is trying to achieve in this amendment bill but point out on the flip side to developers, tradies, builders and such that it is a fine line that we do have to walk sometimes in changing certain legislation that comes through this place, because at the end of the day this bill is all about when in 2023 Porter Davis Homes entered liquidation.
When that happened it was bad for the building industry but it was also bad for the 2600 families that were engaged and having homes built. They were all at certain stages. Some had just signed and locked away what was their dream home while others were only days or weeks away from moving into their dream family home. As I said, it is pretty easy to remember when it first happened and the footage on television and on social media of the temporary fencing put around these homes that people wanted to move into. We know we need amendments to building contracts to protect mums and dads who, as most people would probably stand here and say, are making the biggest financial decision of their lives, whether it is the first home that they are moving into, a family home they are moving into or they are downsizing and building another home. We need to make sure that we do get the mix right.
From the outset, with the big-volume developers we need to have protections in place for the people that they are building houses for, but we need to make sure that we do not hamstring them and make it so difficult with the red tape that these developers have got to jump through to get a house to jump up out of the ground. The one thing that is 100 per cent guaranteed in all of this is that any extra price that goes on a house is paid by the person that signs the contract for their dream home, so we need to make sure that it is still affordable.
We want to amend the Domestic Building Contracts Act 1995 in relation to the application of the act, requirements for domestic building contracts, implied warranties for domestic building work and limits on amounts of deposits under domestic building contracts. There is a range of other good safeguards that we need to put in place to make sure this happens. The member for Polwarth, who led off for us, did a great job in articulating where the coalition stands and also that we are united in the chamber today as we push this through because we are not opposing these changes, as I said before. We need to make sure that when we look at the big picture we do hold our builders and developers to account but also make sure that they can work to deliver quality housing to people that are in need of housing. I think we are generally in agreeance here. Every MP knows that we need more housing built for our population, because at the moment unfortunately we do not have that housing stock.
The member for Narracan and I attended an awards night up in Sale for TAFE last Friday night. It is terrific to see our budding apprentices come through, whether they be in the building trade or in the plumbing trade, like me, or in the electrical trade. We need to make sure that we have the workforce, because that is one of the big pinch areas in any development, whether it be housing or commercial: we need to have that qualified workforce. I know one of the huge bugbears for the member for Narracan, and me, with building domestic houses was with waterproofing in wet areas. If you are an avid watcher of The Block, you see Scotty Cam walk in and they check the waterproofing, but what we have not got is a registered industry that has checked on this waterproofing. Ninety-nine per cent of the time, if there is an issue in a domestic build, it is to do with the waterproofing. The waterproofing is in your wet areas, like your bathroom, ensuite, in your laundries and there is a little bit done in and around the kitchen, and what it does is make sure that the water does not impact the structure. We fail at it time and time again, and it has been going on since they brought in waterproofing. Back in the day if you hung a cladding sheet on a wall in a bathroom that was about all it was, and the tiles went on. So we need to make sure that we cover off all areas.
We have our builders and we have our tradies and apprentices, but we need to make sure that they are compliant and competent. Unfortunately at the moment a lot of our teachers in the trade are getting to the point where they are retiring, and we are just losing that wealth of knowledge to be able to provide that workmanship for our apprentices. As I said, we do not want to have massive amounts of regulations that tradies and developers have to follow that are not needed. Yes, we do need protections in place. I will talk from a tradie level: most of us do the right thing. We do have a few cowboys out here, there and everywhere that will try and cut corners, because we are trying to build all the time to a certain price. So this is good regulation coming through. Does there need to be more? Yes, I think there needs to be more done to tighten the industry up so we do not have some get-out clauses. But we need once and for all to make sure that our mums and dads of whatever age they are – whether they are starting out on their life journey and are in the midst of building a house for the family or, as I said before, building another house to downsize to bring that stock online – have those protections.
We are talking about housing, and one of the issues around housing at the moment in the Latrobe Valley is centred around rooming houses. We have a lot of issues with an abundance of rooming houses, and rooming houses in the electorate of Morwell are just booming at the moment. We have 17 rooming houses, and there are probably more that are being built in and around the area, and they provide 106 bedrooms in those 17 rooming houses. We need that emergency accommodation for people that are unfortunately fleeing domestic violence – we know that we need some stock – but we have developers who are doing these rooming houses and building them en masse, and sometimes they charge exorbitant rent. We have a lot of transient population coming down from the city and around Victoria that need these rooms. Currently developers do not even need a planning permit to build a rooming house with up to nine bedrooms in it. We have advised certain ministers on the other side that this is a problem, highlighting it. They know it is a problem. Council know there is a problem, and it needs to be fixed. We need to tighten those laws to make sure that we are getting quality builds and make sure that we are not impacting on neighbours and so forth – because in one street in Churchill there are three rooming houses being built. That is 27 bedrooms in three houses. And the kicker is the developers are exempt from paying land tax if they build a rooming house. That is the kicker, and they are exploiting that. They are standing up on social media talking about it. So yes, we are not opposing these amendments, but we need to certainly look at flaws and faults in our rooming house industry.
Sarah CONNOLLY (Laverton) (15:29): I too rise to speak on the Domestic Building Contracts Amendment Bill 2025. As we have heard in this place, the aim of this bill is to further strengthen protections for folks in domestic building contracts as they go about building their dream home. I have to say, representing a growth corridor here in Victoria that is one of the fastest growing areas not just here in Victoria but also in Australia, we really need stronger protections for those people who are trying to build their dream home. This has been a long time coming. What we do know is that Victoria is leading the nation when it comes to building more homes, and that is because we know that building more homes means more opportunity, especially for our younger Victorians, as they look and try to secure a place to live, to raise a family and to work in their local community.
Just this weekend the Minister for Planning announced that we would be speeding up planning approvals for small homes. This new single-home code will streamline approvals for single homes and small second dwellings on lots under 300 square metres. I do have to say at 300 square metres they are small homes. It is one of the many reforms that we have introduced in this space in order to get more homes built as we try to reach that target of 800,000 new homes over a period of 10 years.
This stuff is really important, and that is because without planning reform we likely will not meet these targets. Of course without fairer laws around domestic building contracts, people who are going ahead and building their dream home are at risk of falling into a nightmare, and we have heard lots of those stories over the past couple of years. I have had countless amounts of people that have contacted my office when we saw this play out a couple of years ago with the collapse of Porter Davis Homes, which we all thought was a solid, reputable building company. You do not find out things are going badly until they fall flat and people are left with nowhere to turn, with hundreds of thousands of dollars invested and with a half-built home that they cannot move into.
Even today, more than two years after that happened, I remember speaking to folks in the community, including those people who were in the process of building their new home. In fact I was living across the road from a property that was half built – it had a beautiful pool, a concrete pool – that we used to walk past and think, ‘Gosh, that’d be a nice house.’ It sat absolutely vacant, unable to be completed, for such a long period of time. I no longer live in that street and I am not sure what happened to it, but that family must have been absolutely devastated. These were people who were in the process of building new homes and were suddenly left uninsured and at risk of losing their deposit. Anyone here in this place who has gone ahead and tried to build a home knows that those deposits are not a small amount of money.
I remember how proud I was to see our government step in and go ahead and provide assistance to so many of these families. But what we knew then was that there needed to be significant reform in the sector if we did not want this to happen again – and we cannot let this happen again. That is why our government legislated to require that a builder take out domestic building insurance for a home construction before receiving any deposit or payment whatsoever. We made the decision to commence a review of the Domestic Building Contracts Act 1995 because we knew that there was more that we should and needed to do to protect home builders. What this bill does is it makes good on the outcomes of that review, which tells us that, yes, we still need to strengthen protections for consumers whilst also ensuring that the construction industry – the industry we need; let us face it, we need this industry to survive, because we need them to build our homes, our apartments and units – is well supported now and into the long term.
These reforms are about fairness, and they are all about lifting standards that are outdated and, I would have to say, in some places archaic. They are about making sure that when Victorians enter into a contract to build a new home they do so with confidence in the industry and that if anything should go wrong, they will be okay. When you are building a home, it is not built overnight; it can take years to have your dream home built, and those home builders need to ensure that they have protections. That is what this bill is all about.
The first important step that this bill takes relates to payment timing requirements. Believe it or not, the provisions relating to this section about how and when builders receive payment under a major domestic building contract have not been updated. I could not believe this when I read it. They have not been updated and they have not been amended in over 30 years. It is clear to anyone that they have fallen out of step with the expectations of a modern building industry, with the expectations of my local community, who have been going gangbusters and building homes like there is no tomorrow. What we needed to do was set up a new up-to-date framework for regulating payments, and we needed to implement that framework as quickly as possible. This bill will help achieve this by creating a new regulatory head of power which will be able to regulate different aspects of payment – everything from prescribing deposit limits to progress payment stages across all different types of building contracts. What we have done is ensured that by enshrining this in a regulatory framework, our government has greater flexibility to go ahead and update requirements in different circumstances, which allows these regulations to be updated and amended a whole lot more easily over time.
Really importantly, it is also going to provide greater clarity for builders and consumers on what they are allowed to prescribe or pay at any given stage for any given project. For example, a builder will not be able to demand or receive more than a limit prescribed in the regulations. Hypothetically, this may be something like not being able to demand more than 10 per cent of the build for the first stage of the project; that is a clear example. It would also mean that a builder will not be able to demand or receive payment that is worth more than the percentage of work they have completed on a home or renovation, and I think that is really important. There needs to be an incentive for builders to go on and finish the job. Like I said before, some jobs are finished really quickly, and other jobs that I have seen in my community have had really ridiculously long construction periods. So what will this mean? For example, a builder will not be able to claim more than 75 per cent of the cost of the overall build if they have only constructed a third of the house. This is really important for consumers because it creates a general expectation of proportionality when it comes to payment. It also helps protect their money.
Another really important change that the bill makes is to enable cost escalation clauses with stronger consumer protections. We know from recent years that inflation can affect the cost of building something; we absolutely know that. The same is also true for building new homes – everything from building materials to labour costs and uncertainty around the supply of certain materials. We have learned how precarious our global market can be. We saw and heard about a lot of hold-up in the construction industry, particularly in those first few months and years post COVID. All of these things can mean that the cost of building a new home can be somewhat greater than the price that was originally agreed upon, and we know what this has meant for a lot of building works. Builders sometimes cannot afford to deliver new builds without having the consumer pay extra, and that becomes really tricky, like I said, when you are trying to introduce new laws and regulations that are based on fairness for both parties. We understand that this is a major challenge for the construction industry, who have asked us for a fairer cost escalation system to reflect the changing costs of materials and labour. But this still needs to be fair, importantly, to the consumer as well, and that is why this bill will allow for cost escalation clauses. But what it will do is provide a limit; it will limit these to major domestic building contracts that are worth more than $1 million or cap the increase in the contract by no more than 5 per cent of the cost. This is just one way we are trying to make it fair but also balanced and make sure we have got that healthy construction industry, because like I said, we really need that industry to be thriving, because we need them to build our homes, particularly to get to that target of being able to build 800,000 more homes here in Victoria.
The bill contains a number of different amendments, and some of them are really fantastic. I think the message to my local community, as they continue to go on and they build their first home and their second home and homes for their kids, is that we are all about fairness. We want to make sure there are greater protections for consumers but also recognise the importance of having fairness and protections for the building industry. This is a fantastic bill, and I commend it to the house.
Wayne FARNHAM (Narracan) (15:39): I am pleased to rise today to speak on the Domestic Building Contracts Amendment Bill 2025. Listening to the debate so far, there has been very respectful debate, actually. We do not oppose this bill, for starters. We all recognise that consumer protection is very important, and to the previous member’s statement, we do need to find a balance between consumer protection and keeping the building industry going, because as rightly pointed out, we need builders to build homes – now more than ever, we need that to happen. But I have read through this bill, and there are a couple of concerns. A lot of the building legislation that has come through this place since I have been here has been due to the collapse of Porter Davis – 2600 homes. People lost deposits. It was a big hit to the construction industry. No-one saw it coming, probably except for the directors of Porter Davis themselves. But the industry did not see it coming.
It was rightly pointed out earlier that when someone builds a home it is more than likely going to be the single biggest investment in their lifetime. It will be. There is no doubt about that. For most of the people in Victoria it is their single biggest investment. And I have said this in this chamber before: it should be the most exciting time in their life, but unfortunately so many people get caught out. And they get caught out for various reasons. They do not read their contracts properly. They do not double-check things. Builders go into liquidation; we have seen more prevalence of that in the last three years than we have seen in the last decade.
But I do have a concern in this. When Porter Davis went broke, Porter Davis did not go broke building million-dollar homes. They did not go broke building $1 million mansions. About 10 per cent of houses built in Victoria are over that $1 million contract price – only 10 per cent. So we have got cost escalation here for homes over $1 million of up to 5 per cent. There are a couple of things around the cost escalation that I have a concern with, and maybe the government will listen and fix it up in regulation. I do not have a problem with cost escalation on materials. I do not. That is fair. The builders cannot control the cost. We do not know. Everything is linked to global prices now, so a lot of price rises will happen beyond the control of our domestic supply. But I do have a problem with cost escalation for labour, because if I just sit back and wonder, ‘Well, do I want to give myself a pay rise and charge the client another 5 per cent?’ I do not think that is quite right. Materials is absolutely fair enough, but labour is within the individual’s control. I could have a subbie that priced the job and they decided, ‘I didn’t put enough on it, so I’m going to go on the cost escalation and get a bit more labour.’ I would keep it narrow to materials, because I think that is fair.
What I would also like to see is a drop from that $1 million threshold down to about $600,000, because that is where most of our homes are built, probably even lower actually at about $500,000 – 5 per cent on $500,000. It is just my personal opinion. I sit back and go, ‘Ninety per cent of the market is below $1 million dollars. Why aren’t we looking after that market?’ We are only aiming at 10 per cent, and I think that is probably a little bit misguided. I actually believe if you are going to have cost escalation you need to drop that threshold, because as I said, Porter Davis did not go broke building million-dollar homes. Most of their homes were probably in and around that $500,000 or $600,000 mark, and that is where I think we really need to focus. I think to just have it at $1 million may not help builders with price escalation. If you are building 20 homes under $1 million and prices go up 10 per cent, you are actually going to risk going into liquidation. We know what happens to consumers when a builder goes into liquidation: it ends up costing them more to finish that house. Lowering that threshold could save a lot of grief for a lot of people. I think that is important to remember. Every time a builder goes into liquidation, for a consumer to get that house finished after that builder has gone broke will probably cost them 30 to 40 per cent more on the remainder of the contract because another builder has to take over that liability, so he will charge extra for that. I think this is where we have missed the mark a little bit on this bill. I think you should lower it, because I feel as though it could alleviate a lot of grief down the track. It really does need to be considered.
I have said this before in this chamber and I will say it again: I fear the government is missing the point a little bit when it comes to construction. As I said, most of this bill is pretty good. We do not have an issue with it. The industry does not have an issue with it. But the member for Morwell touched earlier on waterproofing. I keep saying this to the government: we need to fix the problems at the front end so people have security. Waterproofing is one of those trades that is not regulated. There is no qualification for it. Although you have to supply a waterproofing certificate when a new home is built, no inspection is carried out.
Someone referenced The Block before and how good The Block is. Well, I reckon The Block is the biggest load of crap on television.
Members interjecting.
Wayne FARNHAM: Yes, absolutely. As a builder, I look at that show and it sends all the wrong messages as far as I am concerned. They come in and look at the waterproofing and they say, ‘Oh, you know, it’s not quite right.’ They are not even qualified to do it. I have seen the foreman on The Block go up and do a frame inspection. He is not a building surveyor.
A member interjected.
Wayne FARNHAM: Exactly. Who is he? What is he? I think The Block is a disgraceful program. I absolutely hate it.
Members interjecting.
Wayne FARNHAM: I do not want them in Narracan, I can tell you right now. The government really needs to look at legislation around the inspection of waterproofing and the inspection of insulation. We are in a time now where we have energy ratings around homes, and insulation is not inspected either. As I say, no-one really knows if they have got R2.5 batts in the walls or R1.5 batts in the walls. People do not know what is in their ceiling unless they get up there and have a look, and there is a fair chance that if most people jumped up into their ceiling to have a look at the insulation, they would not know what they were looking at – that is a given. So why don’t we bring in those inspections to protect consumers so they have the right energy ratings and the waterproofing is up to date? Get waterproofers licensed; that is number one. They are not licensed.
Dylan Wight interjected.
Wayne FARNHAM: Even the member for Tarneit could be a waterproofer, although if he goes like he does in Parliament, he would never be at work. He would be getting kicked out all the time. He would definitely be a work-from-home guy, that bloke, I can tell you. He would definitely be working from home with the amount of time he spends in this chamber.
Members interjecting.
Wayne FARNHAM: As I said, I do not have too much of an issue with this bill. The only other thing in closing I will say is this: I still have not seen, in all the bills that have entered into this Parliament, real protection for deposits. Yes, there are fines. Yes, there is potential for licences to be cancelled. There are all these things brought in over the journey on different building legislation bills, but I still have not seen that piece of legislation that says a deposit is 100 per cent guaranteed. If we remember back to the Porter Davis issue, where a lot of people lost their deposits, I think at the time – and I am happy to be corrected – the government put in about $15 million to help those people out. That is a cost back to the Victorian taxpayer, and rightly so as those people had to be helped out; do not get me wrong there. But I still have not seen one piece of legislation that absolutely, 100 per cent protects deposits, because a builder can still take a deposit without the proper insurance. He can still go into liquidation. He might take 20 of those and still go into liquidation. He can still take those deposits, and those people miss out. What I would like to see if there is another building legislation bill coming in, and hopefully there will be, is 100 per cent guaranteed protection of deposits so the dodgy builders get caught. As far as I am concerned, the dodgy builders can get out.
Eden FOSTER (Mulgrave) (15:49): I am proud to stand here today and speak in support of the Domestic Building Contracts Amendment Bill 2025. A home represents a lot more than just the bricks and mortar it is made of. It represents decades of hard work and dedication, and that is why it is so important that we get the settings right when it comes to building contracts. This legislation updates the state’s existing framework for builder obligations and contract rules. The current iteration of regulation is simply not up to the standards that consumers and industry both expect. Following the collapse of Porter Davis Homes – and we have heard from many previous speakers about this collapse – this government undertook a review of our existing building contract framework, with consultation across consumer groups, industry and other stakeholders.
This bill represents results of this review process, with changes to a number of areas such as strengthening requirements and protections for domestic building contracts and major domestic building contracts, supporting contract flexibility by allowing the use of cost escalation clauses in Victoria for major domestic building contracts with a contract price of $1 million or higher with a 5 per cent ceiling on price increases, additional consumer protections and making a range of additional reforms to clarify contractual requirements and strengthen consumer protections across the act.
The reforms in this bill are about fairness, balancing consumer protections with industry needs and flexibility to support an innovative economy. Many of the rules that this bill is addressing remain unaltered since the mid-1990s and have fallen out of practice with industry standard. To enable a modern payment framework to be established, the bill will amend the act to insert a new regulatory head of power that will enable regulations to prescribe deposit limits, progress payment stages and limits specific to different types of contracts. This will give the government flexibility to revise payment requirements in response to varying circumstances, such as the degree to which a project uses modern construction methods, and to adapt those requirements as building practices continue to change over time. To protect consumers from being charged for work that has not been completed, builders will not be allowed to demand or receive any amount or instalment of the contract price that is not directly related to the progress of work actually completed under the contract. This design ensures that the value and timing of contract payments are crystal clear to both consumers and builders, while allowing for long-term flexibility in an ever-changing economy. This certainty is incredibly necessary for us to improve our building industry, especially as we are wanting to build more homes for families across our state.
Another key aspect of this bill is the enabling of escalation clauses with strong consumer protections. Building materials, labour costs and uncertainty around supply of materials have increased for the building industry in recent years. In response builders have advocated for the ability to use cost escalation clauses to enable the price of a build to be increased to reflect unexpected increases in the costs of materials or labour, as well as unforeseen delays. This is incredibly reasonable given the current global economic uncertainty, but we need to balance this reasonable request with strong protections for consumers. The last thing we want to see is dodgy builders exploiting this to charge an unreasonable amount to customers well above any initial contract. Because of this, the bill permits cost escalation clauses in major domestic building contracts with a value of $1 million or more, and for an increase no larger than 5 per cent. This gets the balance right, ensuring that consumers who put their hard-earned money into the construction of a home do not suddenly have to fork out hundreds of thousands of dollars above what they initially expected. Only the top 6 per cent of builds will be covered by this clause, meaning it is only covering the largest and most complex builds, which are far more likely to see cost overruns from a builder’s perspective. This reform is not introducing a new standard that will affect the vast majority of contracts. It is an exception that applies only to a small number of contracts and is used in exceptional circumstances.
I would love to talk about some of the other important reforms this bill includes, such as the establishment of the new Building and Plumbing Commission or other changes that protect consumers. But before moving on to what these vital reforms are, I would like to talk about an example within my own electorate. In Wheelers Hill down Ferntree Gully Road there is a block of land which was approved for 52 apartments over four levels, and 54 townhouses – exactly what we want to encourage. But the land now sits incomplete, with only a few houses being fully completed. This is a textbook example of a project which this bill is designed to support and protect. The minimum financial requirements for both builders and developers would have ensured that only financially stable entities could build these larger developments. A developer bond too would have to be included to ensure defects can be rectified, serving as a security deposit on the developer side. With the addition of clearer exits to contracts in the event that timeline or cost blowouts occur and tying payment to actual progress, these reforms will have a real impact. Even if they cannot be applied retrospectively, they will prevent scenarios like that in Wheelers Hill in my electorate from happening in our community in the future.
I would like to spend the remainder of my limited time speaking about how this bill fits into the broader political project that this government is delivering. This legislation is just one part of this government’s plan to deliver more homes across our state. As I mentioned at the beginning of my speaking time, a home represents far more than just the raw materials that it is made of; it represents security in knowing that you control your living circumstances, and it represents being part of a broader community. Without radical changes to how we build our suburbs, we are at risk of gating off entire areas or even entire councils to future generations, to lower middle income people and to minority communities that are socio-economically disadvantaged.
This bill helps deliver the certainty that the industry needs to help us face this challenge. Why is it right that such areas as Brighton, Kew or Toorak are so impossible for so many people to live in? These areas have resources that people want to live near, whether it be great public transport, access to public services and education or other amenities. These areas are in massive demand because of these things. That is part of the reason why purchasing a home there is so expensive. Right now, unless you are incredibly fortunate to have a high income that you have worked hard for or to have inherited wealth, you just cannot live in these communities. That is why building more medium density in these areas and other middle-ring suburbs is so important. We are always going to be able to purchase a bigger or nicer home further out where amenities may be more limited, and that is the trade-off, but it will mean that there is a choice that is available, and right now that choice does not exist.
It is not just about the wealthiest areas, though, and that is why I am so pleased that both Noble Park and Springvale will be included in the new train and tram activity centres, because without greater choice, the reality is a number of people who grew up in my community do not have the ability to purchase a home there anymore. Many move further out, away from family, and others end up renting long term. I want to stress that these are not necessarily bad options. It is all about choice and trade-offs and what a person’s or family’s preferences are, but right now many people simply do not have that choice. They do not have the option in any capacity to live where they grew up, and I do not think that is right.
The opposition, despite supporting today’s bill, clearly have a different view on this. They do not want to see homes built in this state, and they want housing to be more and more unaffordable for everyday hardworking Victorians. The path those opposite want us to head down is one where it is effectively statistically impossible for somebody who grows up in my electorate to live in large portions of our city. Honestly, I think that is quite a depressing reality that we need to avoid as much as possible.
In conclusion, this bill is key for guaranteeing certainty in our building sector as we build more homes and more opportunities for Victorians. Consumer protections and industry desires have been balanced to make sure we support this key sector while protecting consumers as they build one of the most important parts of their lives. I would like to thank the Minister for Consumer Affairs for his work on this bill, as well as his predecessors. I commend the bill to the house.
Brad ROWSWELL (Sandringham) (15:59): I also rise to address the Domestic Building Contracts Amendment Bill 2025, noting that immediately as I got to my feet to speak a number of Labor members left the chamber. My goodness, I have not even started. I am just warming up. I do note the Minister for Environment at the table is a Snoop Dogg fan. Was it Drop It Like It’s Hot?
Mathew Hilakari interjected.
Brad ROWSWELL: No, I have got my speaking notes in front of me. Stick around, you might learn something.
Mathew Hilakari interjected.
Brad ROWSWELL: I thought Hilakaris were better than that. The Liberals and Nationals have called for an overhaul of domestic building matters for some time, and we have done so because it is the right thing to do. We have done so because fundamentally we believe on this side of the house that the ability to have a roof over your head, the ability to have four walls around you and the ability to have a place of stability in your life are fundamental for living and contributing to this community – that is quite clear. It is not just a roof, it is not just four walls; it is a place where you can base yourself, where you can live a life of contribution in your own community, a life of stability for yourself, with your mates, with your family – that is a fundamental.
That is why when in 2023 during the quite sad – quite tragic in many cases – circumstance around Porter Davis Homes, when they entered into liquidation due to increased financial difficulties and a number of other reasons, the Liberals and Nationals called for an overhaul and review of protections for building owners at the time, including, I might say, more protections to prevent owners being exposed by poor practice. The government has since acted on this. Often on this side – perhaps too often, perhaps unfairly on this side – the alternative government is critiqued and criticised for not being forward leading on some of the policies that we believe in and hold true, and in this case that is not the case. It was this side of the chamber that actually led the critique of the circumstance involving Porter Davis. It was actually under the leadership of the member for Kew, who has just joined me at the table, who drew the government’s attention to this matter, drew the broader community’s attention to this matter, and, frankly, beat her drum until someone listened. It has taken a few short years for the government to act, but here we are today with the Domestic Building Contracts Amendment Bill 2025 before us.
As recently as May 2025, it was revealed by the Auditor-General that the Victorian Building Authority was still failing to make sure all relevant building permits have domestic building insurance, meaning that homeowners are still at risk in the early stages of construction – wow! The point of me raising this is to simply make the point that I would have hoped that the government would have learned from the tragedy that the collapse of Porter Davis Homes in 2023 was. It is clear that perhaps there is still a bit of learning to do, because as recently as May 2025 the Auditor-General found that the VBA was still failing to make sure all relevant building permits have domestic building insurance. This is not a good thing, especially for those home owners who seek to have a roof over their heads, who save and save and save and cut their cloth to make something fit in order to try and provide for themselves and their families and have a roof over their heads. I still think that there is a lot of learning to be done in this space. Work still needs to be done to tighten up regulations and ensure that the industry as a whole is operating above board. Any such reform needs to be carefully balanced with the need to cut red tape and reduce the cost of operating in Victoria in order to reach a sustainable and cost-effective medium for both builders, developers and homes and building owners.
That draws me to the next point I wanted to make in this brief contribution, and that was the demonisation of particular parts of the building industry by this government. I think we can all agree that more homes need to be built in this state, to again give people the certainty that they need to have not just a roof over their head and four walls around them but to give them that stability in order to contribute to our community, whether they be singles, families, young people, old people, people in need – whoever you may be. One of the great barriers to that being achieved is this government’s tax regime. How many new or increased taxes have there been, member for Kew?
Jess Wilson interjected.
Brad ROWSWELL: More than 60 new or increased taxes since this government was elected 11 years ago, and more than half of those taxes are property-related taxes, fees and charges.
I just want to be really clear about this, and perhaps this is an opportunity for some of the government members remaining in the chamber – and I am grateful to them for them sticking around and hearing this wideranging contribution – perhaps to learn this very basic principle, and that is: if you charge people more, things do not get cheaper, they get more expensive. Member for Kew, I know that you are going to be shocked by this, so let me say it again in a different, simpler way that hopefully members of the government can relay back to those in the finance and economic teams on the government benches: if you tax people more, things do not get cheaper or more accessible or more available, they get more expensive. More than half of those new or increased taxes in the last 11 years at the hands of this government have been on property – and they wonder why the cost of property is going up and up and up, not down and down and down.
It is quite clear to me that the government’s tax regime in this state has made housing more unaffordable than it ever has been. We know that because of the costs of properties going up and up and up. Something to watch is the fact that these changes, whilst we believe them to be pro-consumer, will benefit Victorians by tightening up building industry practices but at the same time increasing uncertainty by moving many definitions and details to regulation. My gentle, respectful word of caution to the government is this: due care must be taken to ensure that the government consults widely when working on those regulations because, as we know through previous experience, the devil can be a lot of the time in the detail. If the government do not give the building industry an assurance that they will widely consult with the industry that these regulations impact ahead of time, then they might very well do it all wrong, and it might be more burdensome than less burdensome. I understand the intent might be that regs are introduced to make building and construction in this state less burdensome and easier – I get that that might be the intent – but I encourage the government and those on the government benches to continue an open conversation and a genuine conversation with those impacted in the industry.
I will end on this. Again, it is the intent I think of everyone in this house that more homes be built in this state, because that is the right thing to do by Victorians. I think it is important that the new homes that are built in this state are a mix of homes – that they are not just one-bedroom apartments, that there are two-bedroom apartments, three-bedroom apartments, townhouses, family homes – to give those Victorians who want to live in those different types of dwellings the choice to live in those homes. I think it is incumbent upon the government to reduce the burden of state governments taxes, fees and charges on the property sector and on property in this state. That will make an immediate difference. I am proud to be part of a team that actually recognises that stamp duty is a burden to property ownership and home ownership in this state. I am proud to be part of a team that is taking, as part of its policy to the next state election in November 2026, a policy which says if you are a first home buyer you will not pay stamp duty on a property up to $1 million – up to $1 million. It does not matter what sort of property it is. It could be an apartment, it could be a townhouse or it could be a family home, but you will not pay stamp duty. We recognise this. We will not be opposing this bill, but I also encourage the government to do better when they can.
Bronwyn HALFPENNY (Thomastown) (16:09): I also rise to make a contribution on the Domestic Building Contracts Amendment Bill 2025. Of course this bill is all about making amendments to legislation to support homebuyers and also to support the industry to make sure that it continues to be viable, that it is strengthened both in its consumer protections but also in its support of the industry, and to make especially sure that we do not see a recurrence of the likes of the collapse of Porter Davis and other builders that we have seen. In many ways some of this we have already addressed in legislation in response to that building company collapse. But of course this continues our huge numbers of reforms around housing to make it more accessible and more affordable.
I just have to make one comment about the previous opposition speaker and his constant ranting about taxes. The taxes I think he was talking about are taxes on landlords. We are actually talking about supporting and helping homebuyers, particularly young people who are being completely priced out of the housing market and facing a future where they are destined to rent for the rest of their lives. To me, the most important thing –
Brad Rowswell: On a point of order, Acting Speaker, I feel like I am being verballed. Firstly, it was not a rant, it was a well-considered contribution. Secondly, if the taxes are levelled on the landlord, who pays? I feel like –
The ACTING SPEAKER (Lauren Kathage): Thank you, member for Sandringham. Is there a point of order? I ask you to take your seat if there is no point of order.
Brad Rowswell: Yes, I do have a point of order. My point of order is this: if the member has something to say about me, she can do so by substantive motion.
The ACTING SPEAKER (Lauren Kathage): That is not a point of order.
Bronwyn HALFPENNY: As I was saying in the debate – because the whole point of speaking about legislation in this house is to actually debate it, which includes disagreeing with other members of the house – when it comes to taxes and homebuyers, we have done a lot of work around stamp duty and actually exempting or reducing stamp duty, particularly for first home buyers and also for those buying newly built homes.
Getting back to this legislation, I would also like to include some of the experiences of residents in the Thomastown electorate, because the electorate also includes suburbs like North Epping and Wollert that are outer suburbs and new estates. We also have a few new estates in the more central and more established parts of the electorate where, for example, under previous Liberal governments, public state school land was sold off for housing.
As many speakers have said before me, investment in home ownership is often the biggest investment we will ever make in our lives. It is the biggest purchase that we will ever make, but also it is an investment, not just in the value of the property but also in our future, because owning your own home provides security, peace of mind and lifelong memories in that premises. Particularly in recent times in the electorate of Thomastown I have seen far too many people with great hardships and distress caused by renting, especially those at the end of their working lives that are going to be relying on the pension. They are still renting their home because they have not been able to get into the housing market.
Of course the Allan Labor government understands acutely the need for more housing and the need for more people to be buying their own home and living in their own home. We have been looking at more housing supply – for example, with economic activity zones – and reducing red tape, revamping planning legislation and allowing granny flats and second dwellings to be built on a single-dwelling block. There are also superannuation concessions, which are more a federal issue, for downsizing, and there are programs that are the precursor to the federal government’s Help to Buy scheme, where there is shared equity in homes so that buyers can purchase a house with a loan with a very, very small deposit. The government provides equity – sometimes up to 30 or even 40 per cent – for the purchase of that home in order to allow people to get into that home and not be renting and to contribute to a property that they can live in instead of paying rent.
We have also seen the revamping of the Victorian Building Authority, and there has been the strengthening of laws to protect consumers and make the industry safer. Many families do not necessarily need Help to Buy or affordable or social housing, but they do need confidence in the industry to purchase, and they do need support to build their new home and the protections to make sure that investment is protected. Therefore the Allan Labor government has over the last few years introduced many pieces of legislation in order to fix, change and strengthen the legislative framework for the building of new homes and also for the building industry itself, to ensure that it is a much more rigorous and more resilient industry, so people can have confidence that when they put down that deposit for a land and home package that they are going to get the house of their dreams in the time that they want and without any of those dreams crashing down.
Many of us, as I said, remember in this chamber the Porter Davis collapse. It was a home building company that was considered on the higher end. It was very reputable, but they failed, and in doing so they failed many of their customers, who were left without building insurance and were also left with losing their deposits and with houses half-built, and of course it is very difficult to get another builder to take over the building of a half-built house. Again, we have already introduced legislation to address some of those issues, and there was also strong support from the Victorian Labor government to support those that found themselves in this situation. But it ought not be that the government has to provide support to fill the gap or fill the breach or hole of a private enterprise. Hence we need strong legislation to ensure that these sorts of things do not happen again.
I am just going to go through a couple of the changes that are going to be made in this very hefty bill, really. There are a lot of changes that are going to happen around the regulatory framework and how contracts work, but I just want to talk about a couple of examples and go through them and explain also how they will be good in terms of the residents of Thomastown and particularly those young families or those young people looking to start a family purchasing their first home. We want to make sure that is something of excitement and jubilation, not something of stress and tears and all the dreams that come crashing down.
First of all, there are provisions for protections around escalation of costs, which I think people have spoken about. Under these changes, for properties up to $1 million the builder will be able to charge up to a maximum of 5 per cent additionally for any escalation in costs to the home buyer. These threshold figures really came about as part of the consultation process, and the government did extensively consult. There was consultation through the Engage Victoria website, but there was also reaching out to the various stakeholders, whether they were industry or consumer representative bodies, and so these threshold figures were seen to be the right figures in terms of feedback from the industry. I know that previously there were some comments about, ‘It should be this’ or ‘It should be that,’ but really these are the figures that came out as part of that consultation process, and so that is why they are in there.
The second example that I want to talk about in terms of this legislation is the additional reforms to clarify contractual requirements and strengthen consumer protection around the practice of contract splitting, where many builders engage in this practice to avoid domestic building insurance requirements. This is what occurred with Porter Davis, so this legislation is about stopping that sort of thing happening as well. There are many, many parts of this bill. It is all about protecting both the industry and the consumer. Another example of course is progressive payments on new products, again showing how the industry changes, and laws have to change with that.
Peter WALSH (Murray Plains) (16:19): In my contribution on the Domestic Building Contracts Amendment Bill 2025 I would just like to remind the previous speaker, the member for Thomastown, that when it comes to the housing market and the supply chain of houses and the supply chain of rental properties, if you tax one part of it, that has a knock-on effect for every part of that supply chain. So to say, ‘Oh, we’re only taxing people that own houses, we’re not taxing the renters’ – well, the landlords get taxed, and that gets passed on to the renters. Those on the other side of the house seem to think that those that have scrimped and saved and worked really hard to buy an investment property as part of their retirement plan somehow are a magic pudding that can just be taxed and taxed and taxed and that that will not have a knock-on effect to the cost of rental properties- – that that will not have the knock-on effect that they are actually selling their rental properties here in Victoria and investing in New South Wales or South Australia because they are not being taxed so much.
That reduces the supply of rental properties. Yes, there is an opportunity sometimes for people to buy that home and live in it. But if you cannot afford to do that and you want a rental property, there are less people investing in rental properties or less people owning rental properties because of the tax regime from those on the other side of this house. To say taxing landlords will not have an effect on renters is plain wrong. It defies economics and it defies common sense.
This particular piece of legislation before us is a result of the collapse of Porter Davis Homes, as has been talked about by those making contributions. If you think about that collapse – where I believe something like 2600 onsite and pre-site building contracts were impacted – they are 2600 real families, people who had saved, people who had their dream homes there in front of them in a contract or starting to be built and they were snatched away from them. There are a lot of personal tragedies from this Porter Davis collapse and other builders that collapsed following that. That was particularly driven by the fact that they had fixed-price contracts and the rising cost of building, supply chain issues and, the increase in labour costs and materials meant that they did not have the resources to run at a loss to build those properties. They chose to go into receivership as the way out, and as I said, families were the ones that paid for that issue there. As one of the previous speakers said, as of May this year the Auditor-General said that the Victorian Building Authority (VBA) – which was responsible for policing whether Porter Davis and others had the correct insurance for those builds – believes that there are still home construction companies that are not taking out the relevant insurance so that people do have protection into the future.
This is a bill that is solving a problem that was created effectively by a builder that was doing the wrong thing but also by a government authority, a regulator, that was not making sure that they were doing the right thing. One of the things, and I have spoken about this quite a few times over my time in this house, is, particularly under Labor and under the last 10 years of Labor, there has been an evolution of shifting responsibility to a regulatory authority, an independent authority, that is supposedly hands off from government. We are seeing that at the moment with the issues around childcare centres. The Premier can say it is not her fault and the relevant minister can say it is an independent authority of government, an independent regulator separate to government, that has done all these wrong things. One of the fundamental tenets of the Westminster system of government is ministerial responsibility. It does not matter in my mind that the government has passed legislation and passed this on to an independent regulator or an independent authority. Ultimately it should be the minister’s responsibility, the government’s responsibility, what those independent regulators or authorities are doing. The government can point the finger at someone else and say, ‘Not my fault. It’s those people over there,’ but those people over there are appointed by legislation that has been enacted by this government, and there should be ministerial responsibility.
If you think about the last 10 or 11 years of government since the Labor Party was re-elected in 2014, there have been countless faults of government, countless issues – like Porter Davis, like the cost blowouts in the major projects here in Victoria, like the childcare issues that we are talking about now – where there has been no ministerial responsibility. No minister has put their hand up and said, ‘That’s in my portfolio. That’s on my watch.’ That was brought home to everyone during COVID, particularly on the issue of hotel quarantine when 800 people lost their lives, when tens of millions of dollars were spent without supposedly any authorisation from anyone. When there were questions asked and investigations started, the ultimate response was no-one made that decision. It was what was called a creeping assumption – $80 million, 800 lives lost on a creeping assumption. It is important that we go back to the tradition of the Westminster system of government where there is ministerial responsibility for mistakes like Porter Davis where the building authority, the VBA, was not making sure the relevant insurances were paid. There should be a minister that is actually held to account for that particular issue, as is the case with the childcare issue at the moment and as with the case of COVID, which we know will never, ever get investigated properly. But given the decisions that were made then, there should be a minister accountable for those issues.
As previous speakers have said, it is every Victorian’s dream, despite what the former Premier said – that people do not want to own their own home anymore, they are happy to rent – to own their own home. If you look at when people get older, when people retire, they have much better lifestyles and opportunities if they own their own home than if they are in rental properties when they get to that stage of their life. So I think it is still every Victorian family’s dream to own their own home. One time it used to be the quarter-acre block, but we now know there are a lot of changes to what the definition of someone’s home is. But it is every Victorian’s dream to own their own home, and I go back to what I said to the member for Thomastown and the issue of taxes: a lot of families cannot afford to own their home now because of the tax regime we have in Victoria. If you think about it right from the start with planning issues, with cultural heritage issues and with all the steps to own a home, the Housing Industry Association had a report recently that said that more than 40 per cent of the cost of a house and land package in Victoria is government taxes. So the Allan government is taxing people away from that dream of owning their own home in this state.
I will just finish off. Late last year and earlier this year the Allan government had a plan – a target to build 800,000 homes over the next 10 years. That was totally discredited by the fact that they had missed that target substantially in the first couple of years. I notice in recent times that number has been reborn – that there is now another commentary going on that the Allan government has this plan to build 800,000 homes over the next 10 years. It has been discredited once and I am sure it will be discredited again, because under the current regime with the hold-ups to planning decisions, with the making available of land supply, with the problems in the supply chain of materials to build houses, with the shortage of builders and the shortage in that supply chain in materials, a lot of that goes back to the fact that the government closed down the timber industry here in Victoria. It closed down the native timber industry, so the timber we build our houses with now is all being imported because the government made a decision to close the timber industry.
A member interjected.
Peter WALSH: You did. You closed down the native timber industry. If you think about windows, doors, floors and stairways in houses, they are actually built out of hardwood timber. Yes, the frame might be pine, but the fit-out for a house is hardwood timber. We have a huge trade deficit to other countries in the world for the timber that we import for our homes – countries, I might add, that do not have the good environmental protections we have in this state. The Liberals and Nationals will not be opposing this legislation, but I remind the house again: it is the tax regime that this government has that is making it impossible for people to buy a house.
John MULLAHY (Glen Waverley) (16:29): I rise to speak on the Domestic Building Contracts Amendment Bill 2025. This bill is part of the Allan Labor government’s continuing work to modernise and strengthen the framework for Victoria’s building industry. From the outset I would like to thank the Minister for Consumer Affairs and his team for their efforts in bringing this important piece of legislation to this house, and I trust these changes will make a positive impact for Victorians.
This bill is informed by the comprehensive review of the Domestic Building Contracts Act 1995 initiated following the collapse of Porter Davis Homes. That event highlighted the significant risks that can arise when consumer protections are insufficient and when industry practices move ahead of the legislation that governs them. The review confirmed that the Domestic Building Contracts Act 1995 remains an important piece of consumer protection legislation but after nearly three decades it requires updating. The reforms in this bill respond to that conclusion. They aim to give people greater confidence when entering into building contracts, ensure protections are clear and enforceable and provide the building industry with a framework that is adaptable to changes in construction methods and technologies. For many families a home is the single largest financial commitment they will ever make. This is true whether they are building from scratch, undertaking a major renovation or extending an existing property. It is therefore critical that the laws governing domestic building contracts are clear, effective and able to meet the needs of both consumers and the industry.
The bill before the house delivers reforms across a range of areas, and I will outline some of the most significant. One of the most important reforms relates to the payment timing in major domestic building contracts. The current rules have not been substantively updated since the act commenced in 1995 and no longer reflect industry practice. They do not take into account the different stages and payment needs that can arise depending on the method of construction. This bill introduces a new regulatory head of power to prescribe deposit amounts, progress payment stages and payment caps for different types of contracts. Details will be set out in the regulations, which allows these requirements to be updated as industry practice changes. It also allows different rules to be applied for different types of construction. For example, builds that use modern methods of construction may have different staging to a conventional build. A central safeguard is the introduction of a proportionality requirement. This means that a builder cannot demand or receive more than the value of work that has been completed at that stage. This prevents the situation where consumers are paying ahead of the work and are potentially exposed to loss if the builder cannot complete the project. For building contracts that are not prescribed, such as a smaller renovation, the bill allows owners and builders to agree to custom payment stages and amounts. This ensures flexibility where a one-size-fits-all approach would be inappropriate.
The bill also addresses the issue of cost escalation clauses. In recent years builders have faced significant volatility in the cost of materials and labour as well as supply chain delays, and we do not deny this reality. In response to this, this bill permits cost escalation clauses only in major domestic building contracts with a contract price of $1 million or more. Any increase is capped at 5 per cent, and there are strict conditions around how such clauses can be used. We are taking steps to ensure this is properly safeguarded. Before the contract is signed, the builder must provide a clear warning notice explaining the clause. Any increases must be calculated with due care and skill, and the builder must provide documentary evidence, such as invoices or receipts, to substantiate the increase. If any of these requirements are not met, the builder cannot recover the increased amount. This approach recognises that while cost escalation clauses can help manage genuine unforeseen cost increases, they must be tightly controlled to protect consumers from being exposed to open-ended price rises.
Another significant reform is to the definition of ‘domestic building work’. Currently work such as the preparation of plans, specifications and bills of quantities is included in the definition. This means that any agreement for this work must comply with the full set of requirements under the act even though it is not construction work. The bill removes these activities from the definition, allowing builders and owners to enter separate preliminary agreements for them. This aligns Victoria with other jurisdictions, including Queensland and Western Australia. It allows builders to be paid for preparatory work without having to comply with contract provisions that are designed for actual building work, while still ensuring consumer protections apply where appropriate. This change supports better prepared contracts, as preliminary work can be completed in detail before the main contract is signed, giving owners more certainty about the cost and scope of their project.
The bill supports the establishment of the Building and Plumbing Commission by transferring compliance, monitoring and enforcement powers from Consumer Affairs Victoria to the Victorian Building Authority. Bringing these functions together – regulation, insurance and dispute resolution – into a single agency will make oversight more efficient and cohesive. It ensures there is one body responsible for the full spectrum of building quantity, safety and consumer protection.
The bill also makes important changes to when and how building owners can end a contract. Under the amendment, if the agreed completion time blows out by more than 50 per cent or if the contract price increases by more than 15 per cent, the owner can end the contract. Crucially, they will not have to prove that the builder could have reasonably foreseen the increase in time or cost, and this removes the unnecessary hurdle that has made it harder for consumers to exercise their rights.
The bill addresses the practice of contract splitting, where multiple smaller contracts are used to avoid the rules that apply to major domestic building contracts, including domestic building insurance requirements. This practice was again seen in the collapse of Porter Davis Homes and left many consumers without the protections they should have had. This bill makes it clear that multiple related contracts can be treated as a single major domestic building contract if they relate to the same project. Statutory warranties will also be extended to a broader range of contracts, including verbal agreements, unsigned contracts and written contracts where the scope of work is unclear. This ensures that consumers are covered even when documentation is poor or incomplete.
The bill introduces a single clear process for variations to plans and specifications in major domestic building contracts, regardless of who initiated the change. This replaces the existing inconsistent rules, and more importantly, it gives both parties certainty around how variations must be documented and agreed to. Other reforms include removing most consumer protections from purely commercial arrangements between developers and builders and modernising statutory warranties to bring them into line with the consumer guarantees in Australian consumer law.
The reform in this bill will deliver a modern, fit-for-purpose domestic building contracts framework for Victoria, and we are doing this for tens of thousands of customers who, more often than not, find themselves at a disadvantage when it comes to building a house, just like a couple in my local community. In their 60s and now entering retirement, they downsized to a new townhouse in the area where they have lived for over 35 years, because they love living in our local community. The townhouse seemed adequately suited to the new chapter of their lives, but little did they know it would mark the beginning of several years of being kicked around between builders, developers and insurers, with no-one seeming to wish to take responsibility. The builder of their townhouse used subcontractors, which is common practice; however, it later became clear that critical inspection steps were missed, resulting in an improperly installed sewerage system. This issue may require a complete replacement, involving cutting through the concrete slab and temporarily vacating the property. Despite numerous defects and the plumbing being the problem, the builders are refusing to take any responsibility, insisting that the developers are to blame. This is precisely the kind of situation that this bill, along with other reforms in this space, is designed to prevent. I have sat with this couple many, many, many times and have seen their stress and lack of sleep. When they should be able to retire and enjoy the best years of their life, this has put undue stress on them. I am happy that this bill will help to alleviate these types of problems.
By closing loopholes in responsibility and strengthening oversight, the bill will ensure that no home owner, being someone in their retirement or a young couple hoping to start a family, ends up trapped in years of stress, uncertainty and costly disputes. They give consumers stronger protection and clearer rights while giving the industry the flexibility and certainty it needs to deliver more homes for Victoria. They respond to lessons from past failures, close loopholes that have been exploited and ensure our laws can keep pace with changes in building methods and industry practice. This is a balanced and considered package of reforms, and I commend the bill to the house.
Matthew GUY (Bulleen) (16:39): I rise just to make a few comments on the Domestic Building Contracts Amendment Bill 2025. In doing so, I really seek to look at clause 5 of the bill, particularly with reference to, as a number of speakers have, the Porter Davis issue and, more to the point, the insurance product that consumers rely upon to protect them from dodgy building or from work in relation to the building industry. I would say from the outset that the insurance product, domestic builders warranty insurance, is a topic that no government, not the six governments since its broad introduction 20-odd years ago, has got right.
It has been a wholly unresolved issue and – in fact even when I was minister – tinkered with, but it has never got to a stage where I think Victorians should have the proper confidence, as consumers, as building practitioners and as those who are seeking to enforce the law on this front, to know that everyone in this sphere and everyone along that length of the contract, as the bill states, is either protected or has adequate certainty or can have laws enforced so that people who are enforcement officers in this field can properly do their job. In fact when I was minister we lowered thresholds and made the product compulsory. It was not even compulsory to have an insurance product as a practitioner in this field.
This is certainly not to besmirch builders and building practitioners, 99 per cent of whom do a very, very good job and work their guts out. There are, like in every profession, people who are rogues, and the rogues in the industry create a bad name for a lot. They are the people we are seeking to pick up. But I am sure there are many of us in this chamber, as members of Parliament, who have come across victims of people who are rogues in this field. I know very recently of people who occupy apartments on the corner of Thompsons and Manningham roads, where the basement floods literally every time it rains – and when I say floods, I mean two or so inches of water in the bottom. There are cracks right through apartments. The rendering is falling off. This is barely 15 years old, but that is what the actuality is.
Then we go back to say, ‘Well, what can we do about it, and what is government empowering the Victorian Building Authority as the enforcement agency to do about it?’ That then comes back to the insurance product. What rights? What level of compensation? Where does that leave the consumer? Frankly, the insurance product is rubbish, and it has been rubbish for 20-odd years. I tinkered with the system, and a few governments have as well, but frankly, we have a system that is an insurance product that is formed out of one department, a central agency, Department of Treasury and Finance, that is enforced by another part of government – I think it is housing and building in this government; it was planning under the coalition – and it is paid for by another. No-one talks to each other because everyone has got competing interests.
So we have consumers who are not benefiting from a product, because you have got whole tiers of government and departments in government who are not willing or wanting to solve this problem for fear of either complexity or cost or whatever it might be. Even in this bill everything is going to Consumer Affairs Victoria. That is fine – I do not knock that at all. The enforcement agency is monitored by a different minister, and the product is devised and administered by a central agency, which is another minister. Every government before this one has done the same. It is not just an issue for this government. We have all done the same thing. The people who are not benefiting, obviously, are the consumers, and that is because the product itself is a junk product – domestic builders warranty insurance.
Queensland has a good system, a reasonable system, a system that is not a third-party system where you might struggle to get any level of compensation back. It has a totally different operation. There is an up-front cost for any government that wants to establish that. There are some years you will reap reward from that system, there are some where you will have to pay back into it, but ultimately the consumer has a better product in the Queensland system than we do in Victoria. It has been that way for 20-odd years. I am not here saying, ‘We’re great, you’re not’ or vice versa. It is a problem in our domestic builders warranty market that has been around through multiple governments, and it is still being tinkered with even today.
Sometimes I feel sorry for the Victorian Building Authority – not many people say that – because they are really hamstrung by legislation and hamstrung by a lack of authority to pursue the rogue builders who get around this system. We can expand their power – and I see this part of the bill does some of that – to go and hold people to account, as they should. The best way of doing that is not just holding people who should be held to account to account by expanding the VBA’s powers but by getting the VBA focused on the enforcement propositions of the legislation they have. They actually do not need it expanded. If they focused on doing their job through greater numbers of enforcement officers, they probably would. But then comes the question of what you can do with the builder, and that is a different piece of legislation. Again, there in part is the problem. That goes into consumer affairs. You have people who will literally just change their registration and operate the next day, and they can keep going. They leave a trail of destruction, an insurance product that cannot help consumers and governments that are running around in circles – all of us, for 20 years, running around in circles with one department which does not talk to another statutory authority which is oversighted by someone else and a different minister. At the end of the day, the consumer loses.
I do not knock anyone’s efforts to try and improve this system. There are parts of this bill that I think are good and other parts I think are a little bit substandard. I understand all of that. I do think that at the end of the day there will come a time in this state from one of us in government who will sit down and say that what we have is a product that is not working for consumers. We can give all the regulatory power in the world to the enforcement agency, but if they do not do their job and then cannot act on it, what is the point? And they are simply enforcing a product and the laws around a product which is DBI, domestic building insurance, that cannot give anything back to the consumer who is suffering – hence Porter Davis. This is why the government has had to move in to try and do something about it, because the product did not work. The insurance product did not help those consumers when it should have. That would not have been the case in Queensland had that case occurred in Queensland, for instance. The insurance product is substandard.
While it is important that we do streamline a number of these operational requisites around this whole issue and domestic building contracts – I understand that, I accept that, I think that is reasonable to expect – the biggest issue we face in this state in relation to consumer protection is the product that is meant to protect them. The insurance product is meant to protect them as a first base, and the insurance product does not protect them at a first base. In fact it works against consumers and in favour of those who are rogue builders in the system who can then restart. The product does not allow the enforcement agencies to go after them to seek some type of redemption for the consumer. Anyway, I put those points on the record, noting that the coalition does not oppose this legislation. I put it on the record because I do think, as I said, the biggest issue should be around consumers and consumer protection. At the end of the day, that is why we are here.
Paul HAMER (Box Hill) (16:48): I also rise to make some remarks on the Domestic Building Contracts Amendment Bill 2025. I want to first acknowledge the minister and his staff for bringing this important bill forward at this time. The issues that many people in the community have faced have been well ventilated and well reported about. Porter Davis was obviously a very highly publicised case, but there were many cases in my electorate where people were dealing with smaller builders and found themselves in a similar situation where the builder had not taken out the insurance and they were left with effectively empty shells.
I know I have spoken previously in this place about my own experience when we purchased a property that was a new build that was not quite finished at that stage. The builder did complete it. It was handed over to us and we occupied the property, but when it came to defects, the builder was nowhere to be seen. It was impossible to access the builder. But given that the builder had not gone into liquidation, the builders warranty insurance did not apply in those circumstances.
I heard the member for Glen Waverley talking about a family in his electorate, and he described the situation as stressful. I think that is a very apt description for anybody who finds themselves in this situation. It is a very stressful situation. The most significant purchase in anyone’s life is purchasing one’s home. Whether you are downsizing and you are going into a new dwelling or, as in our case, you are moving into a larger dwelling, I do not think it really matters; it is a stressful time. You want to make sure that you have the protection of the law and you have the certainty of what you are getting. So I think this is in the context of that broader discussion that we have been having about those consumer protections and making sure that, as we do build more housing and as we need to build more housing in our communities, we have suitable protections in place.
The purpose of this bill is to amend the Domestic Building Contracts Act 1995 in relation to quite a wide variety of items. There are a couple that I particularly want to single out, and they are changes to the progress payments under major domestic building contracts and also the cost escalation clauses in domestic building contracts. In terms of the progress payments and flexible payment timing requirements, the bill amends the act to insert a new regulatory head of power that will enable regulations to prescribe deposit limits, progress payment stages and limits specific to different types of contracts. It is this element, I think, that is really quite important and an important change in this legislation, because it recognises that timing requirements need to be flexible and more easily updated over time as construction methods evolve and change. I think this is dealt with in particular in clause 25, where it talks about a range of different contracts and the extent to which the limits of work have been completed, particularly when the contracts are using what are called prescribed modern methods of construction. Now, that is a very general term. People have used different terms at different times, particularly in relation to what we might call prefabricated housing.
It was interesting. Last week, as I was doing some research on the bill, the latest edition of the Engineers Australia magazine came out, which is always an exciting read for me. It did actually have a bit of a profile of a Western Australian company that is employing modern methods of construction, and they were talking about how they are able to build a house in four to five days onsite, which is really a phenomenal achievement. There are obviously significant hours of work or significant days and weeks of work that occur prior to the construction onsite, but it is really pretty clear to see the opportunity for modern methods of construction to actually reform the building industry and actually make a huge impact and dent into not only providing the housing that we need but also providing the housing that we need at a much more competitive cost if we are able to streamline that process.
Part of the streamlining of that process does relate to how the consumer protections work for those types of constructions and how the payment processes will work. The payment process that you might normally sign up to in a standard build – that would be a standard onsite build that might take, say, a nine- to 12-month period – would be generally predicated on reaching certain milestones and having, say, a certain number of rooms completed or the roof erected on top of the house. If you are doing all of that in a period of four or five days, it does not necessarily suit the current payment arrangement. A lot of that work is obviously done in the factory. There are all the material costs and all the manufacturing costs that have been manufactured and prepared in advance. It is only fair that that work is recognised and that the builder in this case can get the progress payment, but we need to have laws that recognise that there are different methods of construction and their payment requirements will differ from what we currently see.
Having looked at this issue in a little bit more detail, I recognise that there are quite a few areas of legislation that we probably need to be reviewing to allow modern methods of construction to be a really important part of the housing mix going forward. There is an enormous opportunity for us as a state to lean into this area and really be a leader in modern methods of construction, in delivering a better product, and I will say cheaper – not worse cheaper but cheaper in terms of it being the construction costs and the material costs – because you can deliver it in the way that modern methods of construction offer. This is an area that should be pursued, and it should not be from a regulatory or legislative side that it is restricted. I did want to touch on that element of the bill because I think it is a really important part of the bill that reflects where we are going as a society.
The other clause that I want to speak about is in relation to the cost escalation clauses with strong consumer protection, and one of the key reforms that has been proposed in this bill will be to permit cost escalation clauses in major domestic contracts with a value of $1 million or more and to keep increases no larger than 5 per cent. This will only apply to a fairly small number of contracts. It is estimated that the $1 million figure for a build only accounts for the top 6 per cent of home builds. But I think that this is an important change that will, again, help protect consumers. I commend the bill to the house.
John PESUTTO (Hawthorn) (16:58): I am pleased to rise and speak on the Domestic Building Contracts Amendment Bill 2025. It is important at the outset to remind the house and all Victorians that one of the principal reasons for this bill, whilst its purposes are ones we share with the government, was the fact that the government failed to respond to warnings about risks in the residential construction sector throughout 2023 and indeed into 2024. The government was briefed on many of the risks to residential construction firms in the sector, which put many consumers, many of them first home buyers, at great risk. The government was warned. It received briefings on it, and in 2023 and 2024 my colleagues and I in the Liberals and Nationals spoke passionately about the need to reform the sector, not only by way of consumer protections but by ensuring that the sector could address many of the needs that produced some of the failures that we have seen – not only Porter Davis but many other builders who went under at the time, which saw thousands of Victorian homebuyers, again many first home buyers, experience the trauma of seeing their deposits lost or having to go through the ordeal of locating and securing another builder to complete their home. So the government does not get any thanks today, I am very sorry to say.
We will not be opposing the bill, because these are matters which should have been addressed at the time. The government needs to take responsibility for many of the failures we saw in the residential construction sector. Remember also that the government’s principal agencies, the Victorian Managed Insurance Authority and the Victorian Building Authority, have as part of their statutory charter an explicit mandate to oversee and monitor risks to the sectors they oversee and regulate. Again, I am sorry to say that those risks went unaddressed, even despite the warnings. Ultimately, however, it is the government that bears responsibility for that.
We will not be opposing the bill, as I said and other speakers on this side of the house have said. We think that measures to provide consumer protections in the areas of contract variations, deposits and cost escalation clauses are all eminently reasonable, and we support those changes. Basic things, like requiring contracts to be in writing in English and legible, help manage risks later on which might materialise, particularly when there are disputes, as there often are. It is important that the parties are encouraged, indeed in this case required, to commit their agreement to writing.
There are two general points I want to make in addition to those that have been aired by other speakers on this side of the house. The first thing is it is critical that the government, consistent with the commitments it appears to have made to ensure that regulation does not stifle investment and the delivery of housing stock, oversees with a very vigilant eye how the new regulations operate in practice and in particular that it ensures that when it prescribes a lot of the matters that are to be prescribed, as we see in the bill, those prescriptions do not defeat the purpose of the act – in other words, that they do not overreach and we see such regulation that it creates more risk in the system, and by risk I mean risk of failure, risk of financial collapse, that would see consumers suffer even more pain than they might otherwise suffer by way of disputes alone. That is the first point I want to make. The government has a continuing obligation. This is not a set and forget; the government has a continuing obligation to ensure that its regulation does not defeat the purposes of the act, and these are purposes we all share agreement on.
The broader point that I do want to make though is that, as vital as these reforms are, we have to remember that reforms like this, which centre around the rules, are only part of the broader puzzle of reform and that governments have to eventually deal with what I would call the dynamics of a sector and the real-world movement of resources and the factors that drive decisions in sectors that are not easily amenable to rule making. Let me just give you a few examples. The first thing that I would mention – and it is a fact – is it is taking longer to build homes. That is a risk in the system. It is a risk for builders, it is a risk for consumers. We know this. The ABS has published figures on this. For a detached home the average completion time has blown out from about six months to over 10 months; for units and townhouses it has blown out by even more, to over a year. The average is 13 months, according to the ABS data that you will find on this. If it takes longer to build a home, that exposes consumers to risk. So what, I ask, is the government doing to ensure that completion times can be compressed – without of course compromising quality?
The other fact that I need to mention is it is costing more to build homes. When our objective should be to see the cost of construction – which ultimately is manifest in home prices; they will be largely dependent on it – reduced, we are seeing the cost of construction go up, by 30 per cent according to some estimates. And depending on the timeline and the time series you might adopt, there are even more significant price increases, depending on which sector of the market for residential housing you are talking about. Where is that addressed in this bill or in any of the housing statement, the Plan for Victoria or the Economic Growth Statement? Where is the government’s plan to reduce the costs of construction? Because unless you do that, prices continue to rise, and if you have a combination of longer completion times and inflation in the construction sector growing at a rate which, combined with those longer completion times, actually exacerbates consumer risk, that is a problem.
The third fact I want to mention is we need tens of thousands of tradies in residential construction alone, not only to meet the government’s target, which I doubt it will ever meet, either on an annual basis or on a decade basis. We need in Victoria well over 10,000 tradies at the moment to help us deliver the housing targets that the government has, or even an acceptable level of home completions. We are not seeing that. The government cannot point to its vocational rates of attainment and say that it is producing the number of graduates in the relevant construction trades that we need to deliver what we need by way of new homes. That is the third fact.
The fourth matter I want to mention is that part of the issue that surrounds construction costs depends on modern methods of construction, which the government has not dealt with in detail in the bill. It says it will detail that. I just want to make a mention that the Commonwealth Bank is doing a lot to ease lending rules for prefab homes. We have seen the Productivity Commission earlier this year release a report – which this government has not responded to, albeit it is a national report – on prefabricated and modular homes, which can be delivered much more quickly and considerably cheaper than conventional forms of construction. We know that there are firms in Victoria today that are delivering on the modular component and want to do more but cannot. All that I can see the government has done is commit, in its growth statement, to a centre of excellence, when what it should be doing is saying to the market that already exists, ‘How can we help you?’ It can do that by addressing certification requirements which can bring prefab homes to market sooner. It can address this by working with banks, superannuation funds and other institutional investors to get investment in prefab and modular home construction flowing at a much higher rate. It is not the solution to everything, but when we are trying to pick up the 1 per cent here and the 5 per cent there to try and reduce and cap the growth in construction costs, these are things that the government should be doing, and it is not doing them.
Whilst we do not oppose the bill, and in fact we do support consumer protections, which we called for more than two years ago when we saw the first collapse of a residential construction firm, we will obviously support these measures. But I echo the concerns of others across industry and stakeholder groups, that the government needs to be doing more. Setting rules is only one part of it. Create the ecosystem for the investment to thrive, because it will flow. There are people who want to contribute to the solutions to the housing crisis, but we have got a government that is so addicted to debt, it cannot reduce the taxes and will not reduce the taxes to help get those construction costs down.
Michaela SETTLE (Eureka) (17:08): I am pleased to rise to speak on the Domestic Building Contracts Amendment Bill 2025. This is an incredibly important bill. I think that so many of us know that feeling of having your first home. I can certainly remember the first time I bought a home for me and my family, and it is probably the single biggest investment that you make. It always amazes me when you have bought a place and you lay down more money than you can ever imagine on something that you have seen for 20 minutes. It is a big and scary investment. This is, of course, about building rather than going to see those places, but it stands that it probably is one of the biggest things that any of us ever do. I think that is why it is so important that consumers can feel that this government has listened and really listened carefully after what went on with Porter Davis Homes, for example.
This bill is about making sure that consumers can have the confidence that this government is on their side and that we do understand that they need a regulatory framework around contracts that is clear and effective and up to date. But I do just want to take a moment to highlight the fact that this bill also gives clarity and surety to the building sector, those builders.
I really want to make the point here that this regulation is not about frowning upon builders. If anything, by and large it is a terrific industry. There are the few issues that we have had, like with the Porter Davis collapse, that require this regulation. It is not to say that the regulation is in any way punitive towards builders.
I will just ask the indulgence of the house for a moment. I am actually having my beautiful house in Ballan renovated at the moment. I have this extraordinary company, Ballan Builders – very local – a local, Sam Sims, and his family. They have just been extraordinary. From the very outset when I talked to them about what I wanted to do in terms of the renovation, they sat down with me, and it was interesting because they said, ‘We’ll send the contracts through.’ Being a busy woman, I said, ‘Can I just sign them and send them back?’ And they said, ‘No. You’ve got to come in and sit down with us and go clause by clause through what this contract actually means to you and what the outcome of you signing this contract is.’ I really want to just make sure that we take a moment to acknowledge how many fantastic builders there are out there. Ballan Builders I highly recommend to anyone. They really take their duty of care about their clients very seriously. Their insurance documents were all in place, and they even gave me a bit of advice. They said, ‘Make sure you send our insurance documents to your house insurers, because then you are covered as well should anything outside of that happen.’ So I just wanted to take that moment to really acknowledge that there are so many wonderful people in this business doing the right thing and extraordinary things. Really this regulation is just about tightening up the system so that consumers can have that confidence.
I do just want to make a couple of comments following the member for Hawthorn’s contribution. I will say at the outset that I am always delighted to hear from the member for Hawthorn. He gives a very considered and thought-through debate. But what I would say – that is hilarious; phone is ringing, and it is Sam Sims the builder. I will just turn it upside down. I cannot take it now. ‘What do you think about the regulation?’ Anyway, back to the wonderful contribution from the member for Hawthorn. He does give a considered position, and what he was saying was that regulation is not enough; you have to have an ecosystem. I certainly agree with that. I think that is very important. But when I hear that I think, ‘But that is what this government is doing.’ We are really genuinely creating that ecosystem. The housing statement that was put out was groundbreaking work from our Minister for Planning. With Plan for Victoria and the housing statement, this government has done an enormous amount of work to really set the agenda, and it shows. We are all well aware that we have the highest rate of housing completions in the country, I believe, so it is obviously working. That ecosystem is well and truly being created.
The member for Hawthorn talked about the lack of tradies. I give a big shout-out to the Minister for Skills and TAFE, who has done extraordinary work through my entire time in this Parliament to just push endlessly to make TAFE not only a strong and robust system but also one that people respect, so that every parent thinks about TAFE as an option for their children. But of course the real game changer came with free TAFE. We have just seen some extraordinary shifts. I know in Ballarat that Federation University run some free TAFE courses to get people introduced. I was there not so long ago with the wonderful member for Ripon when we visited the TAFE at Fed Uni. We just met these extraordinary trainees, and there was that wonderful woman that we met – just really committed to entering into this industry. I guess I just want to say in response to the member for Hawthorn that I think this government really has created that ecosystem through groundbreaking things like Plan for Victoria, the housing statement and free TAFE. We really acknowledge that the only way to get through the housing crisis is around stock and increasing stock. Everything this government has done has really been focused on trying to get that to happen. Whilst I agree with the member for Hawthorn that regulation is not enough and it has to be an ecosystem, I would say that I think this government has gone a long way in creating that really robust ecosystem.
In this bill, the reforms include modernising payment timing rules. My wonderful builder set out for me a really clear plan about when I needed to pay for each leg of the work. Perhaps he was doing that off his back rather than through regulation, but it certainly made it really easy for me to understand when I had to dip into my savings and put them into the current account so I could make sure I paid the builder. It is about a flexible framework to set deposit limits, progress payment stages and payment caps into regulation. That is important because it needs to be evened out. Certainly what my builder did for me was pretty much even it across the whole build, so rather than having a shock that there is some huge, incremental payment needed, you know what is coming. I would certainly think that the modernising of the payment timing rules is incredibly important.
The bill introduces a proportionality requirement so builders cannot claim more than the value of work actually completed. It is interesting because I think this one is around a self-confidence thing for consumers as well. I know I am going to be rushing home on Friday night to see if those tiles are up and the laundry cabinetry is in there. As a consumer, it is hard to know what is happening on a building site, and to be sure that those payments are in line with what you are seeing roll out is incredibly important.
The bill is allowing for cost escalation clauses but only for contracts of $1 million or more, capped at 5 per cent, with strong consumer safeguards and clear documentation requirements; enabling preliminary works agreements; and removing plans, specifications and bills of quantity from the definition of domestic building work so they can be contracted separately. In fact that is what is happening for me, because I am looking at an even bigger renovation next year. I am going to wait till after the election – I am not doing it in an election year; I am not that mad. I am doing a reno in 2027, but I have asked to have those drawings worked on now. Allowing them to be separated off means that I can start the planning work without having to go into the contract with the builder for next year, though of course, as I said, I am incredibly happy with my builder and I will be going into a contract with him next year. But to have those divided up just means that as consumers we can really make those decisions ourselves.
This is an incredibly important bill about probably one of the biggest things that most families will ever engage in. The bill is really about fairness and about lifting standards. Those of us on this side of the house wake up every morning of every day asking ourselves how we can make the world a fairer place for everybody out in their communities, and this bill goes towards that very agenda. I commend the bill to the house.
Kim O’KEEFFE (Shepparton) (17:18): I rise to make a contribution on the Domestic Building Contracts Amendment Bill 2025. The bill is for an act to amend the Domestic Building Contracts Act 1995, the Building Act 1993, the Australian Consumer Law and Fair Trading Act 2012 and the Building Legislation Amendment (Buyer Protections) Act 2025 and for other purposes. Primarily the bill makes amendments to requirements for domestic building contracts, implied warranties for domestic building work, limits on deposits under domestic building contracts and domestic building work disputes as well as dispute resolution orders.
We need to do all that we can to ensure that there are the right structures and legislation in place to support and protect consumers as well as the building industry. We want consumer protections so that when purchasing or building a home, the consumer is getting what has been paid for. We want people to be able to own their own home and to get more people into homes. There has never been a more important time to support and stand with our building industry and to build more homes. I have a close friend who is a builder. He is very busy, which is wonderful to hear – he is a small business owner – but he does tell me often about the red tape and the confines that he often finds he is confronted with. He has three people that work with him. I think when we talk about homes we should also really be mindful of the hardship of small businesses and the struggles that they do face. We have to do as much as we can to make sure that they can keep their hands on the tools and that their businesses are viable. I am doing as much as I can to really chat to our local builders and the industry more broadly to make sure that we are doing as much as we can. We understand their challenges, and there has been some feedback to this bill, which has been really important.
The bill makes many pro-consumer changes, but they are probably not as sweeping as they could be and will mostly tighten up regulations of the building industry and seek to improve consumer protections as a result, particularly like in the Porter Davis collapse that we saw. This was a result of the poor business practices of Porter Davis, which have resulted in more red tape for other building companies. In order to ensure that a repeat of what happened in 2023 does not happen again, we do not oppose most of the things in this bill, but we do have some concerns. We have heard in this place before and in our own electorates the horror stories of people who have had devastating experiences when things do go wrong and the significant impact when a company does collapse. As we saw through the collapse of Porter Davis in 2023, more than 500 home owners or prospective home owners were at risk of losing their entire deposits due to the failure of the group to obtain business insurance on their behalf when it was required, and for many that was a risk to their life savings. As we know, when people are looking at perhaps building their first home or even moving forward in their lives, it takes a lot of time to save that money and to have that money at hand to do that. To think that someone is confronted with losing their life savings – think about that – is devastating.
So the type of legislation that we are talking about today is so important to make sure that we protect people out there that are actually building a home and also work with our building community, as I have mentioned. It was devastating for all of those that were caught up in that collapse. I did know a few people that knew people very closely. Those discussions were terrifying when they were looking at what was actually happening whilst they were experiencing that. It highlighted the need to do more so that we can have regulatory frameworks and protections in place that, first of all, protect Victorians but, secondly, punish those that fail to comply with the law. We must always continue to do more in this space and ensure that we have an effective, fit-for-purpose and contemporary regulatory framework in place. But also any such reform needs to be carefully balanced with the need to cut red tape and reduce the cost of operating in Victoria in order to reach a sustainable and cost-effective medium for both builders and developers, as well as home and building owners. We also know that the building industry is already struggling – and we have heard that today in this place – with ongoing financial pressures, material costs, staff shortages and the restraints and frustrations of bureaucracy and red tape.
We have a housing crisis, as you know, and we need to do all that we can to address all tiers of housing productivity and availability, including social and affordable housing. As you know, I am very passionate when it comes to housing, and it is an issue very broadly for this state. It is really distressful when you look at the figures when it comes to the housing shortages and particularly the rise in homelessness. The figures speak volumes when you consider that one-third of Australians experiencing homelessness are in Victoria. It is extraordinary and a direct failing of this government.
Social housing I raised this morning in my members statement. We have 1600 people on the waiting list that do not have a home. I know we are not specifically talking about social housing. However, we are talking about people’s lives, and it is extremely distressful. I work very closely with a few organisations back in my electorate. We look at ways that we can support people that are homeless and people who are sleeping rough – there are very complex mental health issues – to have a direct impact on them and try to get them the support that they need. It all comes back to the core business of having more housing. We have an extremely high shortage of social housing, and it is something that I really continue to work hard for. We have to acknowledge in this place that tonight people are sleeping outside, they are sleeping in cars, they are sleeping rough. Everyone, every single person, deserves a home and a roof over their head and a place to call home. We need to help those people in whatever way we can.
We also want people, though, to achieve the Aussie dream of owning a home, but it is getting harder and it is getting out of reach for many. Cost-of-living pressures and rising costs and increasing taxes are making it impossible for many to own a home. I have got a friend at the moment who was chatting to me about her daughter and her fiancé. They are working two jobs. They are working really hard to try and get that deposit. She was telling me every time they seem to get to that milestone, suddenly there are more increases that they are experiencing, whether they are insurances or other costs that they are experiencing. It is basically one step forward, two steps back. It was interesting chatting to her.
As parents, we want to help our kids. I have got a daughter who has been recently looking at going into the housing market. She is 37. It has been a long haul for her, and she is looking at buying a little apartment. She also works two jobs. She is a vice-principal at a school and also has a fitness centre. She says to me, ‘Mum, to have saved how I have saved’ – and we want to help her, but she does not want us to do that right now. She says it makes her proud to think she has actually saved that deposit. But again, it has been hard. At 37 years of age she has got to that point now – she is getting married in October this year – to finally go into the market, but it has not been easy. I think when you look at people that make sacrifices, they work two jobs or they cut back on things that normally they would like to perhaps do, like going out with their friends on a Friday night for drinks and having dinner and socialising. She said that was costing her 100 bucks a week, so she cut some of that out. That is the thing that really concerns me – that often people are so busy, heads down trying to save to get the Aussie dream, but sometimes they are just sweeping along and missing out on normal things that they should be enjoying. So we have to work harder. We have to try and work out ways that we can get people into housing and to own a home.
Getting back to the bill, the bill does seek to protect Victorians building or renovating their homes, and there are a few ways it does that. Some relate to strengthening requirements and protections for domestic building contracts and major domestic building contracts, authorised deposit limits, progress payment stages and progress payment limits to be prescribed in regulations, with any payment for work completed subject to a general proportionality requirement for any MDBC and any exemptions. There are some rules through this bill around how builders get paid under a major domestic building contract which has not been updated since 1995, so that has been quite some time. I am sure many within the industry will be welcoming that amendment. The bill will amend the act to insert a new regulatory head of power that will enable regulations to prescribe deposit limits, progress payment stages and limits specific to different types of contracts. So there are quite a few changes in here.
One of the others is that the bill seeks to take a balanced approach by allowing cost escalation clauses to be used, but only in contracts where the contract price is $1 million or more in conjunction with new strict consumer protections. But also, these cost escalation clauses must not be used to increase the price of a contract by more than 5 per cent in total, which I think is really important. A builder who breaches either of these requirements will commit an offence and be subject to a penalty. For a cost escalation clause to be valid, a warning notice must be given by the builder before the contract is entered into explaining the effect of the clause, and the building owner must place their signature, seal or initials next to the clause in the contract. Builders will also be required to warrant that any increased costs are calculated with due care and skill considering all reasonable information and to provide the building owner with a copy of any invoice, receipt or other prescribed documents and evidence that the increased costs are valid.
In my final few moments, I think it is really important we have really strong legislation in place, but I always get back to the point that we need to do as much as we can to get more homes on the market, get more affordable housing, get more social housing and get the builders the skills that they need. We need more people with skills on the ground, and we need to keep doing as much as we can to support the building industry and the housing industry.
Lauren KATHAGE (Yan Yean) (17:28): I am really happy to rise to speak in support of the Domestic Building Contracts Amendment Bill 2025. It has been an interesting afternoon in the chamber. We have been blessed, can I say, absolutely blessed, by some explanations by those opposite who have taken it upon themselves to explain to us how the Westminster system works. That was an excellent lecture from the member for Murray Plains. We had economics 101 from the member for Sandringham. The member for Hawthorn was wanting to tell us all about TAFE and trades. I really thank those opposite for all of that time they have spent telling us how things work. There was one nexus they seemed to come back to again and again. It was this report they kept referring to, a Housing Industry Association report, which they said says that in Victoria half the cost of a house is regulation and taxes, and that is why the price of houses is expensive in Victoria, didn’t you know? One of the things that I was taught when I was a student was to check your sources, so I was happy to check the source of this HIA report by the Centre for International Economics.
Even if we took at face value and in good faith what they said – I mean, the report does say that Victoria has a lower proportion of tax than other states. That is if we take them on good faith. We need to think about what this report considers to be the regulatory and tax costs associated with the cost of building a house. You might be surprised to learn that the report considers the income tax paid by the builder as being part of the cost – and not just the income tax paid by the builder but that paid by the builder’s subbies as well, so the income tax of any workers that are on site – not to mention the GST. Far be it from me to give the member for Murray Plains a lecture about the Westminster system, federalisation and the constitution, but last I checked that is not something we have control over, as much as we tried to, especially under the former federal government which gave us such an unfair carve-up of the GST. One part of the cost that the report assumes we do have some responsibility for is payroll tax. I am sure those on this side would all be able to tell the same story about what we have done about payroll tax in Victoria. I speak particularly as a regional member, where we have seen reductions in payroll tax for businesses. We are seeing reductions in the type of tax they are talking about as contributing to housing.
It does not stop there, because included in the report is the cost of the regulator – the cost of ensuring the quality and safety of the builds. Is that something they want to see reduced? Do they want to see less protections and assurances for consumers in what is the biggest expense of their life? I do not think Victorians would agree with that – absolutely not. This government is one that is standing on the side of building owners at that nerve-wracking time in their life. In fact that is one of the things this bill is about – making sure they have got those protections so that things like Porter Davis do not leave people out in the cold.
Another cost in the report, one which is particularly close to my heart, is they seem to think we charge too much in developer contributions for infrastructure. Do they want to see developers paying less for the roads, the open spaces, the community centres, the sporting fields and all those things that people in growing communities such as mine need? Do they think developers pay too much for that? We heard this explicitly from the member for Sandringham, who said that the property sector should be charged less. The property sector should be charged less ‘tax’, as he called it. These are infrastructure costs that people in my community rely on so that we can have a good quality of life. Maybe the member for Sandringham, in Sandringham, is not worried about such things, but I can tell you now that we are.
We heard similarly from the member for Bulleen. What is the history of the member for Bulleen? He extended the urban growth boundary of Melbourne further than you could shoot a rocket – all the way up. Goodbye, green wedge. Goodbye, rural conservation zone. It was all, in one fell swoop, turned into the urban growth boundary, and it made some people very rich. It made some people a heck of a lot of money. I do not think that fair-minded Victorians would have any problem with people who have done so well out of such decisions paying their fair share so that the people who live there – the people who seek affordable housing, the people who seek to live close to fellow community members in their different cultural groups – can have access to infrastructure equal to that which the members for Sandringham and Bulleen have. I will absolutely stand up here and fight for that until I am hoarse in voice and also stubborn in cow.
Thank you for allowing me to prattle off some of those points, because this is a very important bill. I received correspondence from a constituent, who I will call Dave. Dave is known to me. He contacted me about difficulties with his builder on a project that had been delayed so long that the materials on site were weathering beyond what would be appropriate for use on a building site and where the cost of the delay of the construction meant that he was having to pay for rental accommodation for him and his family, and he was at breaking point. He felt that he was going to be made homeless soon, because he could not afford to keep renting while he was waiting for his house to be built with ever-increasing demands for further and further payments from the builder. Nobody should end up in a position like that, feeling so desperate when, if you rewind time to when they had successfully saved up a deposit, they had made an excited trip on the weekend to the display homes, walked through and talked about different colours and finishes. That excitement and that joy, knowing that you are setting up a home for your family now and into the future, should not be ruined by unscrupulous builders.
This bill increases protections for people like Dave at what are some of the lowest and scariest points of their life. The anguish that they face will be reduced through this. That is because we want to support families, and we will not let them be taken advantage of. We will not let them have their dreams dashed. We have designed this legislation to make sure that there are supports there for them at this time, but it is a balanced bill as well. It does not ignore the needs of the building sector. I think they have done a great job here, and well done to the minister for balancing out the needs of the builder and the needs of the owner.
In looking at some of the changes that are coming about as a result of this legislation, I think the first thing we need to do is acknowledge that this is the second tranche of changes, the second tranche of protections and supports for consumers. We are not just doing a dash, a drive past and a quick change. We really consider, review and understand a situation so that we can make full-scale changes as needed rather than just have a bandaid solution. We had the Building Legislation Amendment (Buyer Protections) Bill 2025 earlier this year, which I am sure you remember. The bill that we have now before the house takes the next step around authorising deposit limits, progress payment stages and progress payment limits to be prescribed in regulations, allowing the use of cost escalation clauses, amending the definition of domestic building work and providing for the transfer of compliance monitoring and enforcement to the Building and Plumbing Commission.
What I think is really great, though, are the changes to the dispute resolution framework, which give power to the chief dispute resolution officer to issue dispute resolution orders so you can solve payment disputes, because people do not want to admire the problem, they want to get their house fixed, built, finished, paid for and lived in. So that is what this government is doing. It is making sensible changes and improvements to make sure that all Victorians have the chance of a fantastic home that they can be proud of. I ask those opposite to continue their support for this bill.
Roma BRITNELL (South-West Coast) (17:38): The people of South-West Coast that I proudly represent and countless Victorians are being failed by the Allan Labor government’s mismanagement of housing and the construction industry. The dream of owning a home is slipping away. Builders who make that dream possible are being driven out of business. Housing affordability in Victoria is in freefall. Under Labor the price of houses has soared, supply has stagnated and red tape continues to strangle the very industry which we rely on to build a home. The government’s response: a patchwork of reforms that ignore root causes and punish the people doing the work.
Today we debate the Domestic Building Contracts Amendment Bill 2025. This bill was meant to protect consumers and streamline the building process. Instead it has created confusion, added bureaucracy and handed more power to the Victorian Building Authority, a body that has consistently failed to regulate effectively. Builders are now expected to navigate a maze of new rules while battling material shortages, labour gaps and rising costs.
But here is the worst part: while private builders are held to increasingly strict standards, the government’s own housing commission stock is exempt from the very regulations it imposes on everyone else. In Victoria, a certificate of occupancy is legally required before a newly constructed building can be occupied. This applies to most residential buildings and is issued by a registered building surveyor after confirming compliance with the safety standards and the building code. However, when it comes to the state government owned housing, particularly public housing, there is a concerning loophole. These properties are not always subject to the same domestic building contract regulations as private builds. So while the law still requires certificates of occupancy for new constructions, government housing projects may be exempt from certain consumer protections and oversight mechanisms under this act. This includes situations where the government acts as the developer and is not bound by the same contractual obligations as private builders. That means while builders in Warrnambool or Portland must comply with every clause of the act, tenants may be moved into state housing without the same scrutiny of documentation, especially in cases of refurbishment or modular installations where the government bypasses traditional building contracts.
In Portland and Warrnambool, we have seen state-owned housing fall into disrepair. Tenants report leaking roofs, mould and structural issues, yet these properties are not subject to the Domestic Building Contracts Act 1995. That means no consumer protections, no oversight of building standards and no accountability when things go wrong. How is it fair that a local builder in Terang must comply with every clause, while the government can commission substandard work and walk away without consequences? This double standard is not just unfair, it is dangerous. It undermines trust in the system and leaves vulnerable tenants in unsafe conditions. It also sends a clear message to the building industry: we will regulate you to the hilt, but we will not hold ourselves to the same standards.
Labor’s failure to maintain and expand public housing stock has compounded the crisis. In South-West Coast, waiting lists stretch out for years. Families are forced to couch surf, live in cars or move away from their communities, and when homes are finally built, they often are poorly constructed and inadequately maintained. The Barwon South West Homelessness Network reports that, while thousands of households are waiting for social housing, there are few affordable properties to rent across the region. In fact only three rental properties in South-West Coast were deemed affordable in a Victorian Department of Family, Fairness and Housing report. The report also showed that as of June 2024, there were no affordable properties in the Warrnambool, Corangamite or Moyne shire local government areas, yet the Allan Labor government continues to underinvest in regional housing and ignore the growing demand for emergency accommodation and support services.
In 2020 Labor pledged 12,000 new homes and a 10 per cent increase in social housing. Four years later they have delivered less than half – just 4390 homes. Even more alarming, there are now 423 fewer bedrooms available than there were in 2020. The social housing waitlist has exploded by 25 per cent, with over 66,000 families still waiting, and the government refuses to release the last quarter’s updated data. You have got to ask the question: what are they hiding? Labor claims to have spent nearly $6 billion on homelessness, but where are the results? It really is always about outcomes. Wait times are blowing out and vulnerable Victorians are being left in limbo. They have spent millions in courts to keep the housing plan secret. It is time Minister Shing and Premier Allan stop hiding behind hard hats and hi-vis photo ops and come clean with Victorians – release the data; be honest. Labor cannot manage money, cannot manage housing –
Nick Staikos: On a point of order, Acting Speaker, I have given the member for South-West Coast ample opportunity to get back to the bill. She has not spoken on the bill at all. The bill relates to domestic building contracts. I would ask you to draw her back to the bill before the house.
Roma BRITNELL: On the point of order, Acting Speaker, quite rightly the bill is called the Domestic Building Contracts Amendment Bill. I have been talking about the contracts that apply to the domestic building industry, and I have referred to them on several occasions.
The ACTING SPEAKER (Paul Mercurio): I have been listening carefully to the debate since I have been in the chamber. It has been slightly wideranging. I do feel you went a little bit too far, though, member for South-West Coast, and I would like you to come back to the bill, please.
Roma BRITNELL: This is a bill that, as it is called the Domestic Building Contracts Amendment Bill, has resulted in much dysfunction in the market, which is an indication of exactly what I was saying, that Labor cannot manage money because they cannot manage housing, and this bill is proposing to try and address some of the issues that exist in the housing supply. As I continue to point out, housing supply has been disrupted by the mismanagement of this government, and I am calling for transparency, accountability and a real plan to restore dignity and hope to those who need it most – our most vulnerable, who the housing supply needs to be available for.
For too long we have seen stamp duty as one of the things that stands in the way, because it is a punishing tax, one of the many taxes that this government has imposed. That is why we have put forward a policy where we will support young people into housing by providing them with zero stamp duty on all properties up to $1 million, whether they are established homes or off the plan, because this is a commonsense reform that backs aspiration, rewards hard work, helps young Victorians finally break into the housing market and returns to normal some of the supply so we can address some of the issues created by this government’s mismanagement of the housing stock.
It is not just about cutting a tax that we are putting this in place, it is about restoring opportunity. It is about backing renters who have been stuck, not by choice but by a tax system that the Labor government have put in place. This government have put in place 63 taxes and nearly 50 per cent or 30 of those taxes are on property. That is one of the reasons we are seeing the challenges that this government have put in front of the community who are trying to get the basic human right of a roof over their heads. Meanwhile, builders are walking away from the industry. The collapse of companies like Porter Davis Homes was and should have been a wake-up call. But instead of supporting builders, Labor responds with more regulation, more centralisation and more confusion.
This is not only about building a home, it is about restoring public trust in planning decisions that shape our future. This Domestic Building Contracts Amendment Bill hands more power to the VBA, despite its track record of failing to enforce standards or protect consumers. Builders tell me they are terrified of making a mistake, not because they do not want to do the right thing but because the rules keep changing and the penalties are severe.
Nina TAYLOR (Albert Park) (17:48): I am a little bit confused. I thought the opposition were supporting this bill. That has been the discussion that has transpired through the chamber, and I am surprised that the previous speaker does not want greater protections for consumers and also for builders as well. As I say, I am a little bit confused because it seemed like a really strident argument against more regulation. But, you know, we know that the review following the Porter Davis Homes debacle really was critical because we know that we need to reinstate, we need to revitalise, if you like, for want of a better word, the confidence of consumers in the building industry. But I should say that there has been great respect paid to also supporting the building industry through this bill as well, appreciating the challenges that the building industry has had in recent times, particularly with significant increases of supply costs.
We know that part of this bill is not about demonising builders, it is not about attacking them, but at the same time you have to face facts when there have been really significant problems, when it comes to probably the most important investment in a person’s life – that is, investing in maybe your first home or wherever you are in the housing cycle.
I am just really perplexed by the previous speaker, because I would have thought that the opposition would want to see better protection for consumers and the building industry alike. Before I proceed with some further points, I do want to also perhaps offer a different position when it comes to some of the aspersions cast by those opposite. I should say Victoria is number one in Australia for building and approving homes. You would have thought exactly the opposite if you listened to the last few speeches by the opposition. We have built 15,600 more homes than New South Wales and 26,000 more homes than Queensland over the last year – just offering a bit of perspective, because I feel like it did a bit of a nosedive over the past hour or so – and over 10,800 homes are completed or underway through the Big Housing Build and Regional Housing Fund. We are certainly delivering some of the most ambitious housing reforms in the world, but we know there is so much more to do. I am adhering to the bill of course – that is really important – but there were some points raised that caused concern for me because I felt like they were really distorting what is actually happening in Victoria.
The other thing is, when it comes to supporting tradies, I know there were concerns raised about apprentices and facilitating that for the future and what we are doing here, and I know recently we were talking on the Local Jobs First Amendment Bill 2025. I should just say, on a project that is very close to home, the Melbourne arts precinct transformation, this project is supporting apprentices, cadets and construction workers to kickstart their careers with hands-on experience working on this city-shaping project. I am not going to protract that particular argument – just to show a really great example of fostering apprentices and cadetships but also 11,000 jobs that are being generated through that building project.
I did want to speak to further aspects of these very important reforms, thinking about the fact that building technology is progressing fast. Really the same old, same old just will not do, apart from the fact that we have obviously had some consumers with some devastating consequences when builders did not do the right thing. Just because some builders have done the wrong thing, this should not sully the building industry more broadly, and in fact I would have thought that the majority of people who work in the construction industry and are building homes for Victorians are doing the right thing. But I would proffer that it is actually those builders, rather than us, being attacked for seeking to provide better protections for consumers, which was certainly the strong point being made by the previous speaker from the opposition. In fact when we are looking at the building industry, we are just making sure that we reinstate confidence in the market for consumers but also builders alike, because a bad apple can sully a whole industry unfairly. I would proffer that it is more those who have done the wrong thing that are sullying the industry, not passing these important reforms. I am labouring this point a little bit, but the inference from the previous speaker of the opposition was that putting in better protections for consumers, and also helping to support with things like payment processes et cetera and how they are regulated, is sullying the building industry. I would say far from it. I say, on the contrary, this is actually providing much more fairness in the way the building industry is regulated, pertaining to some particular reforms that we have been discussing here in the chamber.
Coming to some of those reforms, I did allude to the fact that when we are looking at prescribing things such as deposit limits, progress payment stages and limits specific to different types of contracts, these are really pragmatic but critical elements when you are looking at the lived experience of both the consumer but also the builder. I think a nice way of encapsulating it is to ensure, for instance, that consumers remain protected through a general proportionality requirement, which will be introduced as a safeguard so that a builder would not be able to demand or receive a payment more than the percentage of the work they have completed on a home or renovation. That seems a pretty pragmatic and sensible change to be brought about here, and certainly I know that when you are committing good money that you may have saved over many years for a really important investment in your life such as a home, then knowing that there are these kinds of protections in place – proportionality, progress on the build – seems to be a really important step forward.
I also want to speak to a key reform, which will be to permit cost escalation clauses in major domestic building contracts with a value of $1 million or more and for an increase no larger than 5 per cent. I think it is self-evident as to why mitigating the risk of blowouts in projects is incredibly important, but you also have to balance supply costs. It is finding that happy medium between the need of the consumer to be able to reasonably anticipate the cost of the build but at the same time to ensure that where supply costs have increased, the builder can factor that into a reliable process as well, and that is certainly being advanced through these reforms.
Another key reform will be to enable consumers and builders to more easily contract around preliminary works and agreements. These reforms will amend the definition of domestic building work to allow building owners and builders to enter into preliminary agreements for plans and specifications. This will allow builders to obtain up-front payment for this work. I am not sure if the member of the opposition who spoke previously is opposed to that, because she is certainly pretty strident about the bill. I do not know, it is kind of weird, because again, I think this is a really pragmatic thing. It is certainly not harming the building industry; far from it. I would have thought it would be pretty important to back that kind of reform in. I certainly would welcome that.
It also recognises that some domestic building projects require substantial work to be undertaken to accurately price the contract, and you can see the delicate nuance there in the stages of getting from your original design to your end point, so to actually price the contract and prepare it to an appropriate standard. Many requirements in the Domestic Building Contracts Act 1995 do not suit a contract that is for the preparation of plans or specifications. Noting it was way back, I think 1995, the last time that such reforms were entered into, so to speak, it is timely and proper that we are advancing these better protections on the one hand for consumers – I am running out of time, but there is a lot more to this bill. I would proffer that instead of the protections undermining the building industry, they are actually inspiring confidence for consumers but also respecting the needs of the building industry. I would hope that the opposition will adhere to what has been discussed in the chamber, and that is that they purport to be proceeding to pass the bill. So I hope that they are staying on that track and not trying to undermine what are some really practical and timely reforms.
Jess WILSON (Kew) (17:58): I too rise to speak on the Domestic Building Contracts Amendment Bill 2025, and let me reassure the member for Albert Park from the outset that the Liberal-Nationals coalition will not be opposing the bill before the chamber today. But that is not to say that we do not have serious concerns about how we have ended up at the point we are in today and the way the government has dragged its feet to bring the reforms before us that are contained in this bill being debated in the Parliament today.
I note that the bill follows the government’s review of the domestic building industry after what was a catastrophic collapse of Porter Davis Homes in early 2023, and back at the time that we saw the collapse of Porter Davis Homes I was the Shadow Minister for Home Ownership and Housing Affordability and had much of the carriage of the issue at the time. That meant that I spoke to many home builders in this state who had lost their deposits and who had lost their hope of being able to build their dream home as a result of the collapse of Porter Davis. But we know it was not just Porter Davis that collapsed in Victoria. We have seen a series of home builders collapse, whether it was Hallbury Homes or a range of other family-sized home builders. Their collapse meant thousands of aspirational Victorian families who have saved incredibly hard for their deposit for their dream of owning a little piece of this great state could not achieve that and they were left in the lurch. They were left thinking ‘How on earth will I ever be able to own my own home? How will I ever be able to get back to the point of being able to build my own home?’ because of the collapse of these home builders.
I note the minister stated in his second-reading speech that this bill ‘will better protect Victorians building or renovating their homes’. But unfortunately, like so much Labor legislation, this bill is simply too late and too many Victorian families have paid the price of the incompetence of the Allan Labor government when it comes to managing the housing market in this state. I heard a member on the other side talk before about the fact that the government claims to be all about home ownership in this state. Well, nothing could be further from the truth. We saw the former Premier stand up and say that he does not think that Victorians want to own their own home anymore; that they are happy to be renters; that young Victorians do not have that aspiration to own their own little piece of Victoria, to have their own home and to create that important part of security for their family and for their long-term wealth in this state; that they are happy to rent.
And then of course we saw the housing statement announced by the government. This is a very glossy document that at the time the government said would result in 800,000 homes being built over the decade or 80,000 homes each and every year. The government have crab walked back from that target because they are failing abysmally to actually come anywhere near that annual target of 80,000 homes. And we do not have to wonder why that is the case in this state when we see the fact that we have got building costs soaring as a consequence of many of the issues raised in this bill, we are seeing taxes imposed on the property sector day in, day out by this government and of course we have a situation where this government does not believe in home ownership.
In that housing statement, a glossy document, home ownership is mentioned once – it is mentioned once. This is a government that likes to talk the talk and bring housing legislation before this Parliament week in, week out yet does nothing to actually increase housing supply in this state, does nothing to drive down the cost of a new home for an aspirational Victorian and does nothing to actually make it easier for a young person to get into their own home. At the same time, they are taxing the property industry out of this state. They are simply picking up and leaving. They do not want to be here. They do not want to develop here in Victoria because they cannot afford to do it with the taxes that are absolutely crushing the property sector here in Victoria.
The bill before us today came about, as I said, as a result of Porter Davis going into liquidation. That left 1700 homes unfinished and almost 800 customers who had already signed a contract and paid a deposit stranded. Another 779 customers who had signed a contract and paid a deposit were also affected, while 410 employees were made redundant. But what we do know is that while those opposite like to say that they are on the side of the consumer, back in 2022 the former Minister for Housing, the member for Essendon, actually received a briefing from his department on 11 July advising him on potential insolvencies in the residential construction sector and options to de-risk consumers. This was a brief that went to the government, that went to the minister, months before the Porter Davis collapse warning the government about the pressures on the domestic building industry and the risk of insolvencies and presenting options to de-risk consumers. We know that none of those options were picked up at the time. So it is all very well and good for members to come in here today and say that the legislation before us is fantastic and it is going to make such a difference. Where was it three years ago? Where was that legislation when the minister was presented with a brief saying that this was going to happen, that this was a real risk to consumers in this state?
It was not just Porter Davis that collapsed; it was a raft of home builders that left thousands of families stranded in this state. As I said earlier, I got to know many of these families, particularly those who saw their dreams of home ownership and building their own home collapse when Hallbury Homes went into liquidation. There were people like Cameron Compton, who had paid a $40,000 deposit for his dream home, was continuing to pay that mortgage and had no sense of how he was going to continue to build that home and provide a home for his family, and people like Sushant and Anamica Chakravarty, who paid $78,000 as a deposit to build their dream home in Officer. Yet when these builders collapsed, the government refused to support these people. The government had said to those who had paid deposits to Porter Davis that it would come in and provide some support. But for any other home builders who collapsed subsequent to that, the government would not offer that same level of support.
It makes no sense that those people who suffered the exact same consequences when their home builder collapsed did not receive the same support from the government as those Porter Davis customers. The Hallbury Homes customers had to beg the government to allow them to come into this compensation scheme. I am proud to say that eventually, through their advocacy and our pressure, we forced the government’s hand and they provided them with that support and that compensation. But it comes back to the point: why didn’t the government take action when it was warned in 2022 that the system and the sector were under immense pressure? And let us be very clear why the sector was under immense pressure – it was because of the inflationary impact of the mismanaged Big Build in this state. Nearly $50 billion of blowouts on major government projects flows through to the private sector. It means the cost of supplies goes up, it means the cost of labour goes up, and that flows through to the domestic building industry.
While we saw Porter Davis, Hallbury Homes, these builders, not doing the right thing when it came to taking out domestic building insurance, it was also partly the fact that costs skyrocketed and they could not keep up, but it also comes back to the fact that the Victorian Building Authority was not doing its job at the time. It was a requirement back then that every builder take out domestic building insurance when a deposit was signed, The VBA knew that this was not occurring, but they were a toothless regulator, failing to do their job. We have a situation where thousands of Victorians have been left high and dry as a result of the collapse of these home builders. It never should have happened. The minister was warned months in advance and, when presented with options, failed to take action. That is the consequence of mismanagement in this state.
Matt FREGON (Ashwood) (18:08): I rise on the Domestic Building Contracts Amendment Bill 2025. It is encouraging to see that we have bipartisan support for the bill. I am not sure I heard that we had bipartisan support, but I am sure it is there. This bill acquits our commitment as a government to ensure that the Domestic Building Contracts Act 1995 (DBC act) is fit for purpose by strengthening protections. As previous speakers have said, the collapse of building companies, which has been very public, led to a review of legislation. We want a system of building in this state that protects consumers and also allows our builders to run their businesses, do their jobs and provide housing that is fit for purpose.
One of the aspects of the bill that I want to talk about briefly is the changes to the dispute resolution framework, which strengthen the government’s assistance to Victorians in dispute resolution. This is something that we have spoken on on this side of the house. Any day that you can keep a dispute of a contractual nature or otherwise out of court is a day when all sides involved are saving money. We love our lawyers. They do a very good job when they are needed. Frankly, when disputes go to court, the only people who really win are the lawyers – everyone else is losing to some extent. Hopefully they get a resolution that they deserve. If we rely on our mediators and others to do that work in dispute resolution and we can keep things out of court, that not only benefits the people and the entities involved, it also benefits our legal system as well, because one day out of court is a day that they are doing something else – hopefully more needed.
The recently passed Building Legislation Amendment (Buyer Protections) Act 2025 made significant changes to the dispute resolution framework in the DBC act, including transferring the responsibility for domestic building dispute resolution services previously provided by Domestic Building Dispute Resolution Victoria to the Victorian Building Authority and, as part of the establishment of the Building and Plumbing Commission, establishing a first-resort statutory insurance scheme. The minister is no longer at the table, but I thank him and his staff for their work.
I am in the position, as I think the member for Eureka was also saying, where I have actually had a bit of domestic building done at my place over the last year. So I have been firsthand able to experience the wonderful process that is reading through a very long contract. I like to think I absorbed the contents of said contract – reading it twice. But even with a little bit of knowledge in these things, there were aspects along the way – and do not me wrong, I am very happy with my builders and will give them a shout-out in a moment – where things cropped up that we did not originally see. For clients to know that the cost changes on large contracts will be limited to 5 per cent gives them a certain sense of assurance.
The other thing that we saw in our work was the payments. In the bill that we are enabling today, the rules around when and how builders get paid under these major contracts have been altered for the first time since 1995. It is fair to say that things have changed since 1995. Building standards have changed. The price of building places is higher. We expect more from our houses than we did. The Minister for Climate Action is at the table. It is unlikely in this day and age that a house built in 1995 would pass muster. I know as part of our build we decided to replace a number of our windows to make them double glazed, which will save us money on heating. I know when Europeans, especially from northern Europe, come to our country and look at our houses with all single-glazed windows, they shake their heads and do not understand why we are paying money to heat outside.
As our building standards increase, obviously the requirements for builders to provide for them increase. At the same time, when you are talking about a very large build, you do need that certainty, especially when you have banks involved who want to make sure that whatever they are lending you will be enough to provide for the asset that they are going to cover. You would not want to end up in negative equity with a bank. That is not a conversation anyone wants to sit down and have. These changes will provide flexibility to update payment requirements and respond to differing circumstances.
It is worth mentioning that builders will not be permitted to demand or receive more than the limit prescribed in regulations as you go along in the contract. I think that gives a sense of certainty that as a client you are buying what is already done, so should things – touch wood; lets us hope this never happens to anybody – go awry with your builder, at the very least what you have paid for is what you have. I think that is a commonsense approach that I do not think I have heard anyone argue against.
In the little bit of time left I would like to thank the member for Yan Yean for her appraisal of the report – I think it was the Housing Industry Association report she was referring to – often referred to by members on the other side in citing a very large figure of regulations and taxes that apparently cause all of our building costs. The member for Yan Yean quite accurately pointed out that including income tax is probably a bit of a stretch. Without dobbing anyone in, because that would be unfair, I did have a chat with another member of this house who might have said something along the lines of, ‘Oh, yeah, well, we know that’s not really true.’ No names. We would not do that; that would be unfair. But I think it is one of those things from a certain point of view. However, a lot of our housing market is also existing stock, and I think it is a bit of a stretch to say that if we were to sell our house that has been there since 1960-odd –
Mathew Hilakari interjected.
Matt FREGON: We love our house. We are not selling it; you cannot buy it, member for Point Cook. We have just spent a lot of money renovating it. My point is it is a bit of a stretch to say that 50-odd per cent of the cost of an existing house is from taxes. Surely the cost of existing stock is an effect of the housing market in general. If all houses were brand new and they all had to have all of these charges that certain members of the opposition are arguing make the price high, okay, you could argue which ones were valid or not. But given that a lot of our stock is not new stock and yet we have a housing market that seems to be very high no matter where you go, I am not sure that that really passes muster.
The other thing I would like to mention in rebuttal, because it was mentioned by some opposite, is that apparently it is the Allan Labor government’s fault that house prices have gone up and they are unaffordable for most people, which I do not agree with. It is garbage. There was a story recently in the paper that said that the average price of housing is now 14 times the average income. When we bought our first place, as I have said before in this place, it was about three to six. I do not know if we are quite at 14, as the paper said, but I will finish with this: a former finance minister in the federal government Mathias Cormann, if I remember correctly, said that keeping wages low in his government was part of policy. (Time expired)
David SOUTHWICK (Caulfield) (18:18): It is a pleasure to rise on the Domestic Building Contracts Amendment Bill 2025. There have been a number of contributions today talking about housing, the importance of the ability to buy the great Australian dream, investing in your home, and we know, unfortunately, that great Australian dream is becoming more and more unreachable. It is the role of government to ensure that we provide a marketplace where we can ensure that we have the most affordable homes and also a regulatory environment that does not find somebody that is investing in probably the biggest decision of their life, the most amount of money that they will ever invest in, with uncertainty about the builder they engage, particularly for a new home, and whether the building would actually be completed and ultimately the buyer would get what they were hoping for.
There have been lots of contributions today particularly referencing the Porter Davis collapse, when thousands of Victorians invested in that great Australian dream only to be left short, losing deposits, having to fight an insurance scheme that was subpar at best. That was a massive failure, and the government had to intervene. That shows a broken system. Since then we have had reviews and we have had governments promising a whole range of ways to fix things, and that is part of this particular legislation we are talking about today. Some of the comments made, which were very important, were that it is very, very important to ensure that we have an insurance scheme that stands up and that we also have a proper enforcement model to ensure that there is compliance. But ultimately the whole thing falls apart if the builders, with the best of intention, cannot operate in the market because of escalating costs and they fall over because they just cannot make a go of their business. There are lots of people doing that.
There are probably two areas to look at. There is, firstly, the issue with dodgy builders, and that is where there is a compliance issue, particularly where we see dodgy builders who open up again under a different name and are up trading again. That is something that needs to be shut down. That is something that is a really big, important element around enforcement, because we have got to make sure that we find those that are responsible – it is an enforcement issue – and we do not allow them to reoperate. That is a really important area in terms of confidence, because the last thing that you want is people turning around saying, ‘I don’t have confidence in the market. I’m not going to invest.’
The second part deals with the overall costs, and this is where I think the government should be able to do a lot better than they have. We have seen the government turn around and give their great big housing statement, promising – and the member for Kew mentioned this in her contribution – 800,000 homes, or 80,000 homes a year. That was a great target, a great press release, a great announcement, but unfortunately it was all idea – all numbers but no detail – and ultimately the government has fallen short of that and recalculated and recalibrated, as the glossy brochure does not actually depict what the outcome and result have been. ‘Why’ is the big question, and the big reason why we are not getting those numbers, although the demand is there, is because of the cost – the cost of operating, the cost of materials, the cost of labour. We know that there is an opportunity cost in terms of people working in the industry and what they might get for a job.
We have spoken to builders in here. When we had a round table after the Porter Davis collapse we talked to builders about how we can do things better going forward, and some of the small businesses – builders – spoke to us about their sons that were tradies and finishing their trade certificate and that the best they could offer up was, say, $70,000 to $80,000 in the first year out of their trade, versus them jumping on the Big Build and earning $160,000 or $180,000. There was no way that the small businesses could sustain that. So you have an opportunity cost in terms of the government providing, in many cases, exorbitant salaries within some of the Big Build arrangements, and we have seen that in the blowouts of some $50 billion in the Big Build escalation of costs. What that does mean is not only are the taxpayers paying and footing the bill for the escalating costs but also we are not getting housing through because the cost of housing, the cost of labour, is too expensive.
The other side of that is materials. The steel, the fabrication – all the materials that are going into housing – have been diverted to the Big Build, and therefore it is very hard to get materials, and when you do they are a lot more expensive. Even basic sand for cement is a lot more expensive in Victoria in terms of housing stock because it is being diverted to the Big Build, or, as we term it, the big bill, because all taxpayers are paying the price. That is a huge issue.
It is an opportunity cost, and who is losing out of that? Victorians are losing out of that. Victorians that want the great Australian dream are losing out of that. We had a former Premier that said, ‘Young people don’t want the great Australian dream that others wanted when we all started out. They’re all quite happy just renting and going out and doing what they do. They’ve got other priorities, and housing ownership is not one of them.’ Well, certainly the young people that I talk to would love to one day be able to own their own home. The problem is that under this government they have given up. They have given up because they know the opportunity is so far away from them because we have a hopeless government when it comes to managing money, a hopeless government in terms of being able to provide that opportunity and choice and in fact a government that would much rather have somebody sitting there saying, ‘Just rent for the rest of your life. We’ll provide you just enough income to be reliant on us, but we don’t want you to actually be able to look after yourself, fend for yourself and be able to own your own home.’
Well, that is not us. The Liberal–Nationals are all about choice and about giving people the opportunity to one day own their own home, and we need to do that in whatever way we possibly can. That is why one of our announcements already deals with stamp duty for first home buyers. It says that for up to $1 million on a new home or a home that is being purchased for a first home buyer, a young person getting into the market will pay no tax in terms of stamp duty. That gets them into the home, gives them a chance, cuts some of those costs and allows them to get into the market.
The other big element that needs to really be spoken about, and this is something the government never really focus on at all, is how much tax is being taken out of the build of a new home. Somewhere between 42 and 45 per cent of the cost of construction of a home goes into tax. No wonder Victorians cannot afford to buy their own home if half of it is going into tax. It would be okay if at the end of it Victorians were getting something out of it, but what are they getting? They cannot even feel safe in Victoria because we have got a government that is just wasting money.
In terms of fair value versus bad value, there is a lot of bad value that goes on in this state because of a government that is tired, lazy and cannot manage money. And that is why, if this government were serious, they would look at reversing a number of the taxes that we have got, lowering that threshold and saying, ‘We want to make affordability the key. We want to make affordability the focus.’ So yes, on one hand it is really important to have a regulatory environment so people do not take advantage of those people in any consumer product that you are talking about – and this is a very big choice, this is a very big purchase in terms of buying a home, the biggest purchase anyone would ever make in purchasing their own home. However, we do need to make it affordable, and we are not talking about that.
In all of the bills, in all of the discussions, in all of the legislation, in all of the work, the government forgets one word, and that is ‘affordability’. We have got to make homes more affordable. It is not a matter of just going out there and saying, ‘We’re going to build more’ if they are going to cost squillions of dollars and Victorians cannot get into them. It is not just an investor market. We do not just want people coming from overseas and saying, ‘We’re going to take up another investment.’ We want young people, when they finally get to the point of having their job, their next decision to be how do they get into a home. Keys in doors, choice, opportunity and the chance to one day be able to own a piece of real estate – the great Australian dream of owning their own home.
Katie HALL (Footscray) (18:28): I am very pleased to make a contribution to the Domestic Building Contracts Amendment Bill 2025. The member for Caulfield will be delighted to hear that this government is firmly focused on affordability, and the key ingredient for affordability is supply. Through our housing statement we have very ambitious plans to build more homes and improve affordability, but of course that has to be underpinned by reforms such as the one we are debating today to the Domestic Building Contracts Act 1995, because as many people have noted, when you are making the largest investment you are ever going to make you want to have some confidence that you are going to be protected in terms of that investment and that you are going to get what you pay for.
I am disappointed the member for Caulfield has left; I had written a few notes responding to some of his rather grand claims. Affordability is at the heart of what this government is doing, whether it is rental reforms or making sure that we have enough affordable housing, social housing and houses for people to buy their dream home if they can manage it, and the regulatory framework is a really important part of that.
I note that the Liberal Party, the opposition, have been saying today that they are not opposing this bill. It certainly sounds like through some of their contributions that they are opposing the bill. I do note that unfortunately they opposed our last reform to provide certainty to consumers in this sector and voted against the last bill that would have provided last-resort insurance products and that would have introduced regulations for people purchasing in apartment buildings to make sure for some of the defects that evolve after a period of time that people have protections in place there. It was very disappointing to see the opposition voting against that bill.
It is very important that building contracts are clear, effective and modernised to protect consumers and meet the needs of a dynamic building industry that continues to innovate and adopt new construction methods. I think there are some very exciting prospects for modern methods of construction, so what we know and understand as prefab construction. I think in many ways that is the future of building and building quality at scale. There are really great opportunities into the future for modern methods of construction.
This bill will better protect Victorians building and renovating their homes by strengthening the requirements and protections that apply to domestic building contracts and major domestic building contracts, including by extending to all domestic building contracts the basic documentary requirements that currently only apply to major domestic building contracts; allowing building owners to exit a building contract during the five-day cooling off period, even if they have sought legal advice; and enabling building owners to end contracts if the completion time for work increases by more than 50 per cent of the contract or the contract price increases by more than 15 per cent without first being required to determine whether the builder could have reasonably foreseen the increase.
I know in my own electorate of Footscray where we have the rather unfortunately designed Joseph Road precinct, many of the challenges in that very dense apartment complex were approved by the former Minister for Planning, the member for Bulleen. We have had to retrofit infrastructure in there. Until recently, they have had dirt roads. Thousands and thousands of people living in apartments – some of them have been half finished. There was one building on Hopkins Street that I think took the best part of 10 years to complete, and it was just a classic tick-and-flick approval. There were no setbacks, we now have very little room to install cycling infrastructure down there and there is no tree canopy. It was a very unfortunate decision by the former planning minister. Some of those apartments, because there were so many approved, took so long to finish, and some of the builders went bust. As a government, we had to take the developers to court to require them to retrospectively pay developer contributions – it was a shambles. So now we have an obligation to make sure that the people living in that precinct who did see their contract through and are now living in those apartments have the infrastructure that they deserve as Footscray’s newest residents.
I am strongly supportive of this reform so that if the building work timeframe increases by more than 50 per cent, people can get out of that, because what a terrible situation to be in, when you have saved up a deposit and you have signed a contract, to then be stuck in this period of not knowing when your home will be built.
To prevent consumers being charged for work that has not been completed, this bill will prohibit builders from demanding or receiving any amount or instalment of the contract price that is not directly related to the progress of the work under the contract. It astounds me how often these issues come into my electorate office. I had an email today from a person living in an apartment where it was not waterproof. We have heard about waterproofing a lot today, but it has not been waterproofed properly. You know, the cladding is falling apart – some of these defects could be remedied through the previous bill that we passed in our suite of building reform legislation that of course those opposite opposed. The reforms in this bill also enhance consumer understanding of rights by simplifying the framework. I think that is a really important thing for consumers to understand. It is often a pretty complex thing, a building contract.
Whilst protecting consumers, it is balanced with the interests of builders, because whilst consumer protection is a key focus of the reforms, contemporary building practices will be better reflected through this reform. So allowing cost escalation clauses and permitting the use of cost escalation clauses will provide more flexibility to the building industry and help builders better manage rises in building costs due to unforeseen shocks or delays. I am really proud of the work the government is doing in reform. We know the bulk of builders do the right thing; there are a small number who do not. But for us to build more homes, we need confidence in the market. And I think the government’s vision is clear. I commend the bill to the house.
Chris CREWTHER (Mornington) (18:38): For many Victorians, including in the Mornington electorate and across the Mornington Peninsula, building and/or buying a built home is the single biggest investment they will ever make. When that goes wrong, when contracts are opaque, deposits vanish or a builder collapses, or where the builder, developer or others do the wrong thing, families can lose years of savings and confidence in the system. The bill before the house attempts to respond to that reality. But Victorians deserve a system that prevents disaster, not merely one that manages it after the fact.
Let us start with the state of the industry. The construction sector has been under extraordinary stress, with fixed-price contracts colliding with inflation, supply-chain shocks and labour shortages. ASIC data shows 2832 building companies went into insolvency appointments in the financial year 2024, a 28 per cent increase on the previous year. That is the backdrop against which each and every home owner and small builder in Victoria is now operating. And Victorians remember what happened with Porter Davis. More than 2000 customers were affected across the east coast. Around 560 Victorian families paid deposits only to discover that there was no domestic building insurance in place, forcing the government to create a special reimbursement scheme. We cannot allow a repeat of that failure of oversight. Against this history, against the backdrop of tears and grief that so many people experienced as a result of that collapse, this bill goes some way to resolving some of those issues.
I note, locally, the Mornington Peninsula has one of the highest proportions of older Australians in Victoria, many of whom downsize and invest retirement savings into new builds or off-the-plan apartments, making them particularly vulnerable when protections fail. Local tradies and small builders in Mornington, Mount Eliza, Mount Martha and surrounding areas are doing it tough with cost pressures and regulatory uncertainty. Delayed reforms risk pushing more good operators out of the market while allowing bad operators to continue. The construction slowdown has had a knock-on effect for peninsula suppliers, from timber yards such as Moorooduc Timber in Mornington to appliance retailers in the electorate and elsewhere, hurting our local economy. Housing affordability is already a challenge here, with rising rents and limited supply. Every failed build or abandoned project on the Mornington Peninsula further reduces available housing stock, and that does have a real impact. Just this week in the news the Mornington Peninsula – terrible news for the Mornington Peninsula – was announced as having the highest level of homelessness in the whole state, out of every single LGA. It is not a statistic that we should be proud of there. The Mornington Peninsula has a mixed demographic, with both people who are struggling and people who are more well off, but there are serious issues when it comes to the housing crisis and indeed homelessness.
What does this bill do to tackle some of these issues? Firstly, on the commencement and scope, most provisions start on proclamation, with a backstop commencement on 1 December 2026. That means many changes will not be enforced for more than a year. In this market this volatile delay has real human costs. In addition, we have the cost escalation clauses. The bill bans cost escalation clauses for contracts under $1 million and, where they are allowed, caps total increases at 5 per cent, with documentation and due care warranties. On paper that protects owners from open-ended risk. In practice it will only work if enforcement is real and swift. It also regulates further deposits and progress payments. It shifts deposit limits and progress payment stages to the regulations while adding a universal ‘only for work actually completed’ proportionality rule, including for projects using modern methods of construction. That proportionality rule is welcome; the heavy reliance on future regulations is not – uncertainty is a cost.
It also regulates more with respect to contract splitting and clarity. This bill treats multiple contracts as one if in substance they should be a single major domestic building contract, closing a loophole exploited to dodge consumer protections. This is a good step. Let us make sure the guidance and enforcement, though, keeps pace. On precontract work, it removes plans and specifications and bills of quantity from the definition of domestic building work, so those preliminaries can be done outside the act, mirroring other jurisdictions while still requiring plans and specs to be incorporated into the main contract. That change must be accompanied by clear, prominent consumer warnings about rights and coverage for early-stage agreements.
On the regulatory machinery, it transfers compliance, dispute resolution and other functions from Consumer Affairs Victoria to the Victorian Building Authority as part of the shift to the single Building and Plumbing Commission. Centralising can sometimes help, but only if the new body fixes the very gaps the Auditor-General has already called out, and those gaps are very serious. In May 2025 the Auditor-General found the VBA does not verify that domestic building insurance (DBI) is in place before issuing a building permit number, a basic last-gate control that should never have been missing. The report also flagged the Victorian Managed Insurance Authority’s lack of claims-processing KPIs and transparency for home owners. If we move more power to regulators that have demonstrated that they have missed crucial checks in the past, we must also legislate hard accountability.
Labor promised that lessons would be learned from Porter Davis, yet it took media coverage, devastated families and emergency one-off schemes to plug holes that should never have existed in the first place. Even now this bill outsources critical detail to future regulations and sets a distant start date while Victorians keep signing contracts today. That is not urgency, it is drift.
There are five areas the government must address clearly, immediately and on the face of the law, wherever possible. Firstly, proof of insurance before money changes hands – the Auditor-General’s findings make it clear that DBI verification must be watertight. Consumers should never be left exposed by a failure to confirm insurance is in place. Second, time box regulations – with deposit limits, payment stages and modern construction settings now being moved to regulations, the government must act quickly to provide clarity. Prolonged uncertainty drives up risk and costs for home owners and builders alike. Thirdly, enforcement with teeth and transparency: new compliance powers must be backed by strong enforcement and clear reporting so the community can have confidence that the rules are being applied fairly and consistently. Fourthly, stronger deposit protections: the Porter Davis saga exposed how quickly home owner funds can disappear. Other jurisdictions have tried project trust escrow mechanisms to keep client money ring-fenced. Queensland’s experience shows both the potential and the pitfalls, with elements of the rollout now paused. In a similar situation here, the Victorian government must explore options to safeguard these funds without adding unnecessary red tape for honest builders. Fifth: stop the gamesmanship everywhere. The contract-splitting fix is welcome; now match it with clear civil penalties for deliberate evasion of consumer protections and modernise guidance for surveyors and lenders so the industry cannot shift risk back onto families through clever drafting.
Within the remit of this bill I must briefly highlight yet again the dire situation facing the owners and residents of 33 apartments at 5 Culcairn Drive in Frankston South, right next to my electorate, in the electorate of Frankston. I first began assisting these residents in late 2018, when I was the MP for those areas as the federal member for Dunkley, and have continued to do so ever since. Their building, only a few years old at the time, was found to have fatal cladding issues and a catalogue of serious defects: balcony collapses, major cracking, water ingress, rotting internal structures, dangerous mould and a collapsed-in underground car park at the time.
These issues should have been prevented by proper regulatory oversight. Instead residents have been left with repair bills in the millions, loan repayments at punitive interest rates and the ongoing mental, physical and financial toll of living in unsafe and deteriorating homes – if they can actually, in fact, live in them, because I am aware of one gentleman with a home there who was forced to live in his van, effectively homeless because of the situation. The builder, whose record includes decades of fines and licence suspensions, was still able to operate through associates and family, while the original building surveyor, who signed off on all critical stages, has since resurfaced as a building inspector. Similarly, the developer is also related to the builder and must take responsibility.
This is exactly the kind of systemic failure that shatters public trust, enables shoddy operators to operate with impunity and underscores why enforcement, transparency and proper vetting in our building industry must be non-negotiable. This bill moves in the right direction, and of course we need to ensure at all times that we get the balance right to enable good builders to operate, good developers to operate, without burdensome red tape or costs, while also stopping shoddy operators from doing the wrong thing.
Anthony CIANFLONE (Pascoe Vale) (18:48): I rise to support the Domestic Building Contracts Amendment Bill 2025. It has long been the great Australian dream to own your own home. However, as we build more homes, we need to improve building standards and consumer protections for families, particularly as we strive towards that target of 800,000 homes over coming years. Building off those previous reforms that have passed through this house, I am very pleased to be here today to support these new, further measures. Following the collapse of Porter Davis Homes, the government committed to a review of the Domestic Building Contracts Act 1995 to ensure it was fit for purpose and to strengthen protections for building owners while supporting the needs of the building industry. Of the key reforms included in this bill I just want to focus on one in particular around the new Building and Plumbing Commission.
This bill will support the establishment of the Building and Plumbing Commission, a new, powerful watchdog, by transferring powers from Consumer Affairs Victoria to the Victorian Building Authority, and this will bring together all aspects of building quality control – regulation, insurance and dispute resolution – into a single agency. For the first time, the regulator will bring together all aspects of that control – as I said, regulation, insurance and dispute resolution – for that agency, and the watchdog will be given tough new powers to protect Victorian families and their homes. The Victorian Building Authority’s CEO Anna Cronin has been leading a major transformation of the VBA’s performance and culture as part of this process since her appointment in July 2023, and during 2024 Ms Cronin commissioned an independent review into concerns raised by consumers about historical practices by the VBA, which has been released. The report did confirm what many already knew, which was the significant changes that were needed to better protect Victorians building or renovating their homes.
I would like to use the remainder of my time drawing the house’s attention to this report and to a local case study which is very relevant to why we need to continue doing more to strengthen building standards and protect consumers. The Victorian Building Authority: The Case for Transformation report sought to examine how the VBA responded to complaints involved in seven case studies, reviewed the interactions between the VBA, complainants and other agencies and identified regulatory improvements that should be made through improved practices, policy reform and legislation.
Some specific parts of the report I would like to draw the house’s attention to include and relate to defective plumbing works and the attempts by numerous insurance companies, builders and plumbers to essentially abrogate their responsibility to appropriately cover impacted consumers and families in a manner that was potentially inconsistent with Victorian Ministerial Order: Licensed Plumbers General Insurance Order 2002. The ministerial order is very clear. Under part 2, section 10(a) provides that a plumber must have insurance that indemnifies him or her for any liability to pay for the cost of rectifying any plumbing work required because of defects in the plumbing work. Section 11(a) provides that in the case of domestic plumbing work a plumber must also have insurance that indemnifies him or her for any liability arising from any consequential financial loss reasonably incurred by the building owner as a result of the defects or non-completion of the plumbing work, including the cost of alternative accommodation, removal and storage costs that are reasonably incurred. In part 3, section 18 states:
A plumber must have the insurance that indemnifies him or her in respect of domestic plumbing work –
(a) for public liability and completed work liability for an amount of at least $5,000,000 for any one occurrence; and
(b) for all other liability, an amount of at least $50,000 for any one claim or series of claims in relation to a compliance certificate … and
(c) for the reasonable legal costs and expenses associated with the successful enforcement of a claim against the plumber or the insurer.
There are also quite a number of other requirements around timeframes. The report into the VBA highlights numerous issues relating to insurers, builders and plumbers complying or failing to comply with the directions or intent of this ministerial order. Page 5 is very clear. It states:
Most of the building practitioners involved in the seven case studies have committed breaches of legislation or engaged in unprofessional or incompetent conduct …
…
When plumbing defects were alleged, if the plumber did not agree to fix the work or the owner did not want the plumber back on site, the VBA told owners to make a claim on the plumber’s insurance, with no further action taken against the plumber by the VBA. To get the insurer’s details, owners had to lodge an FOI application with the VBA. The case studies include 9 instances where owners made claims against the plumber’s insurer. In all of these, insurers delayed the claims process for several months or years. In all but 1 case insurers rejected the claims, leaving owners to lodge legal proceedings. There are allegations that claims are being rejected by insurers, contrary to the Ministerial Order for plumbing insurance which these policies are required to meet.
Page 15 highlights that:
… policies issued by the plumber’s insurers do not comply with the Ministerial Order for plumbing insurance.
Section 36 of the report talks about the effectiveness of insurance. On page 42 the report states:
It appears that some plumbing insurers may be behaving poorly, undermining the consumer protection intended by the requirement to hold plumbing insurance that meets the Ministerial Order. Allegations have been made that insurers are seeking to rely on exclusions or reject claims contrary to the requirements of the terms of the Ministerial Order for plumbing insurance. Government should ascertain whether the experience of the consumers in our case studies is more widespread.
A local case study I would like to draw to the attention of the house, the minister and the new Building and Plumbing Commission relates to very disappointing conduct by Suncorp, AAI and GIO, which are effectively ignoring, I believe, the intent of the ministerial order and disregarding the needs of my constituent and his family. Local constituent Chris contacted me in July to raise concerns and seek assistance regarding an ongoing dispute with the Suncorp, AAI and GIO insurance company and his plumber for defective plumbing works carried out in 2017 on their property and their ongoing struggle for rectification of these defective plumbing works to be funded and the defects repaired accordingly by the insurer and the plumber. As a young couple, Chris and his wife purchased their property in Pascoe Vale over a decade ago. Alongside the arrival of their two children throughout these years, they continued to renovate and expand their home, as many do. The original package of plumbing works completed in July 2017, I understand, consisted of sanitary plumbing, below-ground sewer drainage, below-ground stormwater drainage, cold-water plumbing, hot-water plumbing, type A natural gas fitting and rainwater tank installation. When combined, these original works apparently cost around $15,000.
At the time of this work, Chris informs me, the plumber held a business protect policy with Suncorp and that was consistent with the Victorian plumbers warranty endorsement. However, from early 2021 Chris and his family began to notice serious, persistent issues which they suspected were associated with defective plumbing. In early 2021 Chris began working from home, and he began noticing persistent plumbing problems, particularly toilets that would not flush properly or would fill and drain very slowly. With the issue gradually worsening over time, he attempted a number of home remedies, including drain cleaner and hot water and soap, suspecting it to be associated with a minor blockage. In February 2022 he noticed his backyard was constantly wet for several months. This was initially attributed this to a neighbour’s leak. However, on lodging a claim with insurance, their contractors confirmed a separate neighbour’s leak but also discovered the sewerage pipes on his property were broken in multiple locations.
In July 2022 an expert report confirmed multiple breaks in his sewer system unrelated to the backyard flooding, and Chris shared these findings with the original plumber, who delayed and offered no solution. In this time the plumbing issue only continued to worsen. Slow drains, a frequent need for multiple flushes and increased odour became a daily burden, especially for his children, who used the toilet upstairs. In late 2022 the situation further deteriorated, with the toilets becoming virtually unusable due to regular sewerage, odour and hygiene concerns. Chris again contacted the plumber from December 2022, who remained unresponsive. On inspecting the sewer vent, Chris also noticed deformation and realised the situation was very urgent, but the plumber would not respond. Throughout this time, Chris and his family were forced to continue to live in unsafe, unsanitary and unhygienic conditions for many months, virtually unable to flush toilets reliably or use basic amenities without fear of sewerage blockage.
As he sought temporary remedies and solutions to these issues, he obtained advice and inspections and was able to confirm quite a number of issues, including around the sewerage. The plumber did not follow the proper standards for installing the main sewer pipes. Instead of supporting the pipe with compacted crushed rock, he simply put the pipe in the ground and backfilled it with loose soil. Over time the soil settled and the weight pressed the pipe downward, creating a dip that eventually caused the pipe to break. This led to ongoing blockages, slow drainage and toilet and sewerage smells in the home, making basic hygiene difficult. Even the insurance engineers advised that the sewer under the house needed to be replaced. One section had totally failed, and the rest was also likely at risk. Plumbing standards also require a special overflow tap outside the house in case of blockage, and to stop sewer gases from escaping through this it needs to stay filled with water, so there should be a way to refill it, such as draining the tap or kitchen sink over it. But the plumber did not include this, which allowed gases to escape, potentially impacting his family and neighbours and resulting in damaged plumbing work and unsafe, unsanitary living conditions.
There are also numerous issues detailed here around the bad quality of stormwater works done in the ground and on the balcony. In terms of the gas main, the plumber used a plastic pipe for the gas line where copper should have been used, especially outside. Plastic pipe can break down in sunlight and pose a safety risk. Using plastic in this way is not compliant with gas safety regulations. This is a safety risk. The plumber also had a significant disciplinary history, which Chris was unaware of. It is a shame the members for Narracan and Morwell are not here as two former plumbers who could have spoken further on some of these issues.
By the latter half of 2022 Chris informed me he again sought to reach out to the plumber in good faith and request inspections, but the plumber continued to deny him. He sought advice and was advised that, yes, the Suncorp policy of the plumber should cover him for this work. He obtained quotes for the repairs. Originally $91,000 was quoted back in April 2023 and up to $270,000 was more recently quoted as of May 2025. But Suncorp have only continued to offer Chris’s family a $50,000 payment to cover the defective works, as they claim that is the maximum amount they are obliged to pay because the ministerial order is that amount. But that is incorrect – the order says it must be at least $50,000 insurance coverage, obtained by the builder.
Rachel WESTAWAY (Prahran) (18:58): The average age in my electorate is 35 years. Only 50 per cent own a home in my electorate; the rest rent. They want confidence in their biggest investment if they are to buy a house. Whether they are buying, building or renting in the seat of Prahran, they want to know that what they have is safe, secure and built to regulation. We have heard many nightmare stories of people who have built their homes and then had major issues. I want to draw to your attention an example of why we need better regulation in this space.
South Yarra Square, which is at 423 Punt Road in South Yarra, is a four-storey building. It is absolutely fantastic on the outside. However, the families that have invested in this property are living and facing an absolute nightmare. Thermal structure panels make up 22 to 25 per cent of their home; that is like polystyrene. Imagine discovering that your home is made of polystyrene. That is what they are currently facing. They are spending absolute millions to try and make certain that it does not pose an unacceptable fire risk and to renovate their homes and apartments to a level that is suitable. It is an absolute crying shame. These people are families who have spent their hard-earned investment money on buying into this block and who have now discovered it is not fit for purpose. In addition to that, the soffits of the balconies are made of cement sheeting, which is attached to these polystyrene ledges. It is absolutely extraordinary and something that we simply do not want to face.
Business interrupted under sessional orders.