Wednesday, 30 October 2019

Building Amendment (Cladding Rectification) Bill 2019

Second reading

Debate resumed on motion of Mr WYNNE:

That this bill be now read a second time.

Mr T SMITH (Kew) (16:32): I rise to oppose the Building Amendment (Cladding Rectification) Bill 2019. I oppose this bill because it is simply a tax grab. I will get to the taxation implications of this bill later in my speech, but at the outset I want to say that we support property owners who are negatively affected by the failure of the Andrews Labor government and of course the Victorian Building Authority to properly regulate the building industry, which has resulted in this cladding fiasco that we have seen in Victoria over the last five years.

I want to bring the house’s attention to the history of Alucobond and aluminium composite panels (ACPs). The house will forgive me if some of the information I am about to provide it is somewhat technical, but these are important matters—very important matters—in which the government is seeking to increase the building permit levy to pay for the rectification of this very dangerous material from the outside of private high-rise towers, which if you think about it, is quite a unique and unprecedented situation where the public is being asked to pay for the rectification of private buildings. This is a rare situation. It is unacceptable. We should never have been in this situation. It is not just happening in Victoria, but amongst the Australian jurisdictions it is most prevalent in Victoria. The level of, I suppose, the proliferation of composite panels—very dangerous material—is at its worst in Melbourne.

Alucobond in fact has its origins in Germany, and I will be quoting here from Owners Corporation v.LU Simon, which is for want of a better description the Lacrosse building fire from November 2014. The judgement from VCAT states:

Alucobond in fact had its origins in Germany in the 1960s. A history of the product is contained in the document Alucobond—40 Years of Excellence—from a Pioneer to the Synonym (Alcan Singen GmbH, Germany, 2009). The title of the publication refers to the claim that “ALUCOBOND® became the synonym for aluminium composite panels all over the world”. It appears that the very first idea for the use of Alucobond was for “bed mattress support panels”, but alternative uses for the product were soon identified.

And this is the most interesting from our perspective:

The publication suggests that concerns about the flammability of the core material were identified as early as 1968: “Fire protection regulations became an increasingly important topic during this time … the research and development team worked on core material alternatives with different flammability properties, to the plastics used until then”. In respect of the period 1978–79, the publication states that changes in fire regulations, particularly in Germany, “increasingly demanded the implementation of flame retardant products for specific architectural applications”. This apparently led to the production of a new range of products launched in Europe and the USA during 1979.

If we fast-forward to Australia:

… Alucobond was first imported in the late 1970s for use as part of an exhibition and display system. By the early 1980s, the product was being specifically marketed to architects to be used as part of the facade of buildings, both new and refurbished. Sales grew through the 1980s and into the 1990s. The publication identifies a number of substantial projects incorporating Alucobond panels in the period to 1998 and then describes the expansion of the Australian business after a 1998 restructuring. Sales of Alucobond in Australia increased from 100,000m² in 1998 to in excess of 500,000m² in 2008.

That is the key time when we saw a massive proliferation in the use of these panels, and it is that period of time that has created the majority of the issues, the concerns and indeed the fires that we have been seeing in Melbourne and indeed other jurisdictions. The judgement states:

It seems that fire risks associated with ACPs had been identified in Australia not long after sales of Alucobond began to accelerate in the late 1990s. For example, in 2000 the Fire Code Research Reform Program published a report titled Fire Performance of Exterior Claddings … The report is identified in IFEG as a reference work available from the Australian Building Codes Board (“ABCB”) website. According to its preface, the report followed an investigation of fire performance and test methods for regulating the fire safety performance of exterior claddings in Australia. The report was intended for “regulatory authorities, fire researchers, fire engineers and manufacturers of external cladding materials and systems”. The abstract of the report is as follows—

and this is very important—

“This report discusses external vertical fire spread in multi-storey buildings with particular regard to the contribution made by combustible cladding systems. The historical fire record is reviewed with some examples presented, international research is discussed, various test methods described as well as an indication given of the performance of materials in a selected range of fire tests. Building regulations in Australia and in other countries are also reviewed and recommendations are made with respect to appropriate ‘Deemed to Satisfy’ requirements, with a recommendation that the ‘Vertical Channel Test’ developed in Canada be considered for use in Australia.”

The report notes, under the heading Historical Fire Record:

“There are relatively few documented cases of extensive external vertical fire spread involving combustible claddings …

But it goes on to say:

“… there have been a number of very serious examples of external vertical fire spread where a combustible cladding has not been involved, but where window configurations and combustible linings and contents located near windows have contributed significantly to ‘leap-frogging’ up the external façade.”

One of the most documented cases referred to in the report was a fire in the Museum of New Zealand in Wellington in 1997. The report states:

“This was a large multi-level national museum building under construction. The exterior cladding used comprised a thin aluminium-faced panel with a polyethylene core, mounted over extruded foam polystyrene insulation board and building paper. A worker, heat welding a roofing membrane, ignited the building paper and this quickly spread up the exterior façade involving the polystyrene and cladding panel. There were no deaths or injuries …

So we knew that in 1997 there was a cladding fire in New Zealand—rare, yes, but present. If we fast-forward to 2010:

Minutes of a meeting of State and Territory Administrations of the ABCB held in Canberra on 12 October 2010 reveal that the ABCB was by then actively considering whether ACPs complied with the DTS provisions of the BCA, including in relation to combustibility. Under the heading “Information on Alucobond—ACT”, those minutes record that:

“The ACT representative advised members a meeting had taken place between his Administration, manufacturers and a local fire engineer and they are now satisfied that the product in question does not comply with the BCA DTS requirements for combustibility. The NSW fire brigade also now believe a problem existed and he advised jurisdictions to be aware the approval problems encountered in his jurisdiction may spread. The Tasmanian representative requested the advisory note be forwarded as soon as it was available.”

In October 2010 the Australian Building Codes Board were aware and were beginning to discuss that these types of materials—cladding, ACPs and Alucobond—were potentially very dangerous. We had the Lacrosse fire in November 2014. In November 2015 The MFB’s Proposals for Reform of the Building Regulatory Regime states—I have it here, and I quote from page 3:

There has been regulatory failure. The Lacrosse building is an example of it, but it is not an isolated case of non-compliance. The MFB calls for change and makes recommendations for reform in the context of this regulatory failure.

The MFB is determined not to lose the opportunity to learn from the Lacrosse Fire. The experiences of the MFB since November 2014, and in particular the delay in reducing the risk of a further significant fire at the Lacrosse building nearly a year later has led the MFB to consider how the building regulatory system could be improved to provide for better fire safety for the people of Melbourne …

It goes on:

A common and alarming example of regulatory failure is the presence of buildings constructed with either non-compliant building materials or with compliant products used in a non-conforming manner. For example, as a result of the Lacrosse Fire, the MFB’s post incident analysis found that the building was clad with combustible aluminium/polyethylene composite panelling, meaning fire spread rapidly up the façade of the building causing severe building damage and greatly increasing the risk to life and safety.

In 2015 the MFB was advising that we had a serious problem with the compliance of various forms of cladding, yet it took another two years for the audit to be undertaken subsequent to the Grenfell tragedy in 2017. Now, in a submission to the Senate inquiry into non-conforming building products in 2017 Halifax Vogel Group, one of the biggest providers of ACP in Australia, made a number of comments. This is from a provider of cladding:

We first submitted a formal proposal for change to the Building Codes Committee … of the Australian Building Codes Board … that governs the BCA, in January 2011.

January 2011—during the Gillard government.

This proposal, which is included as Appendix 2, was that:

• Fire-resistant ACM panels to be made mandatory via testing … a materials fire test, and

• Requirements for fire-stop cavities in external wall systems to be made clearer in the BCA.

Now, John Thwaites was appointed chair of the Australian Building Codes Board in November 2011, and the Building Code of Australia and the Australian Building Codes Board did absolutely nothing to take heed of these suggestions from industry at that point. Noting that the Andrews Labor government are trying desperately to flick this issue over to the federal government, I would remind them that during their time in office federally—and indeed with one of the chairs of their Victorian Cladding Taskforce in a very senior regulatory position within the federal government—nothing occurred.

We have a situation where in the annual report of the Victorian Building Authority (VBA) they finally acknowledge that they share responsibility for, but cannot unilaterally fix, the building industry problems exemplified by these recent incidents, which I will refer to in a minute:

In response, the VBA has adopted a stronger end-user perspective …

‘A stronger end-user perspective’. What that means is, ‘We kind of forgot about the people that are living in the houses that we were meant to be regulating for their safety’, and, ‘We actually didn’t do our job; we were hopeless’. The VBA is a hopeless regulator, and it has manifestly failed to do its job.

I am going to attempt to provide, for the house’s interest, some of the human interest stories—almost human tragedies—that have gone on over the last couple of years because this regulator that reports directly to the Minister for Planning utterly failed in its job. For example, let us start with the apartment complex in Frankston South. I make mention of a gentleman by the name of Craig Fitch, who is a terrific bloke and chair of the body corporate of that apartment complex. He came to see me in January of this year. That building was so dangerous that the council had to post security guards out the front of it to ensure that no-one lit a barbecue, lit a cigarette or in any way had any other flammable instrument so that the building did not go up in smoke. The VBA posted a 24/7 security guard outside to prevent arson. The works were so enormous they were actually significantly greater than the cost of each apartment, I was advised. As Craig quite correctly said, the regulator just needs to get better and get rid of the rubbish out of the industry.

In my electorate of Kew a retired couple, the wife suffering a long-term illness and the husband retiring early to care for her, found subsequent to moving into a brand-new property that it was clad with very dangerous material, that the building was essentially worthless and that it was dangerous, and they had no knowledge that that was the case until they got a letter in the post from the VBA, who dealt with them in a most uncaring fashion.

There is Blair Warren-Smith from Glenferrie Road, Hawthorn, who has mortgaged herself to the hilt—done the right thing and got on the first rung of the ladder of the property market—only to find that the two crooks that built her building were the same crooks that knocked down the Corkman Hotel. The confidence that she has in this government’s ability to regulate the building industry is somewhat low. She found that her building was incredibly flammable and very dangerous and that she could not have a barbecue outside. I do not believe she smokes, but if she did she could not smoke on her balcony and she was up for $8000 up-front for emergency rectification works to make the building safe. I mean, this was incredibly distressing for that young lady, and credit to her for standing up and demanding action from the government, because this is a failure of government. This is what happens when regulators fail: innocent people get hurt.

We will go to South Yarra. Kevin and Jennifer Opie, retired teachers, bought a new apartment. In February 2018 they were told to leave it, it was so dangerous. They were told it was going to cost them $92 000 to make their home safe. I asked in this chamber about that and I was told I was wrong. I was not wrong. In fact over this whole debacle this government’s and indeed the VBA’s ability to tell the truth and respond accurately under questioning has left a lot to be desired.

We will go to Mordialloc. Well, this was an absolute disaster because the Andrews Labor government and indeed the VBA knew years ago that there was an apartment complex in McDonald Street, Mordialloc, that ought to never have been given an occupancy permit. It was a shambolic construction that, frankly, probably should have been evacuated three years ago. The residents were randomly evacuated some months back. They were given 48 hours to leave. Usually in Australia people are evacuated for natural disasters, not because their building is such a debacle and is so dangerous that it is not fit for human occupancy. That is another example of this disaster.

For the Clayton apartment building that received some attention some months ago, again the VBA was informed in 2017 that this building did not bear true resemblance to the plans that were submitted and was dangerous. The municipal building surveyor from the City of Monash wrote in his statutory declaration:

As a result of my inspection of the building on 21 July 2017, I formed the opinion that there was a danger and risk to the occupants and property as the building’s fire safety systems were deficient and not complying with the Building Code of Australia. As such, I issued an emergency order requiring the owners corporation to provide two 24/7 roving security guards to monitor the building. This was required to be done within 2 hours of the service. The order was issued to the OC and the occupants of the building.

Again, more security guards because the building what was so dangerous. What did the VBA do about that? I have no idea. I doubt anything because when the Herald Sun went out there a couple of months ago, knocked on the door and spoke to a number of students who were living in this apartment complex all that they could find to advise what the fire danger of the place was was on a door that no-one used. There was a sign suggesting that you needed to be careful with regard to flammable material at that site.

A child care centre in Clayton was found to be highly dangerous. A letter from the City of Monash to the property owner said:

An inspection by the VBA revealed concerns that there is a danger to life, safety or health of any member of the public or any person using the building due to the installation of the combustible expanded polystyrene cladding or linings to external walls.

But we are told that does not matter. We are told that child care centres, or indeed any other private buildings that are not residential, do not matter to this government because they are not rectifying any of these buildings, whether they be aged-care facilities, hospitals, child care centres or schools. If it is a public school, they will; if it is a private school, they will not. If it is a child care centre, forget it. I think that is very worrying. When parents at that child care centre in Clayton were asked what they thought, they were horrified to know that their children were going to day care in potentially a death trap.

Then we get to Kardinia Park. We were told, ‘Kardinia Park’s fine’. Well, in fact Kardinia Park is not fine. In the annual report for Kardinia Park prepared by the Kardinia Park Stadium Trust, which was tabled in this Parliament, we were told that there were quite serious dangerous flammable cladding issues that needed to be rectified. Then we had the revelation most recently that Marvel Stadium was equally clad in dangerous material, that that material had been there for quite some time and that it had been known by the government that that material had been there for quite some time.

But the greatest concern that I have has been the revelations that the Victorian Comprehensive Cancer Centre is clad in dangerous, combustible material. My greatest concern with the VCCC is that, according to a whistleblower, the MFB did not sign off on the occupancy for the VCCC. Now, that is a very serious allegation. The MFB advised they would not issue the report without the statements. The FRMU, the fire risk management unit, recommended that the MFB not issue the regulation 1003 report for final MFB sign-off on the building. There are allegations that this process was fast-tracked to enable then US Vice-President Joe Biden to open the VCCC. I think it is utterly disgraceful if it was the situation that the safety of patients, of workers and of visitors to that hospital was undermined because of a desire by the Premier to have a photo with the Vice-President. I think that is very concerning and, if true, utterly disgraceful.

There have not just been two fires in Melbourne because of cladding; there have been quite a number. There have been five in total—the Lacrosse fire; Hampton Road, Hampton; Sydney Road, Brunswick; Princes Highway, Dandenong; and the Neo200 fire earlier this year. That is obviously on top of the Grenfell tragedy in London in 2017 where 72 people tragically lost their lives.

This is a very, very serious issue, and it is incumbent upon all of us in this house to understand and reflect on the moral obligation we have to ensure that everyone’s home is safe. But that does not mean that you then have the right as the government to increase taxes on people who have done nothing wrong and who will most likely not benefit in the slightest from paying that increased levy. The levy is a 100 per cent increase for a development over $100 000, a 200 per cent increase for developments over $1 million and a 641 per cent increase for developments over $1.5 million. The Urban Development Institute of Australia (UDIA) opposes this bill. It argues that this bill, if it becomes law, will add $4000 to $6000 extra to every new apartment costing $400 000. It says this will serve to negatively impact on housing affordability and create a greater hurdle for home buyers applying for finance. UDIA Victoria industry estimates are based on construction costs across a pipeline of 2200 apartments to be built in Docklands and inner and middle Melbourne. That is significant; that is a significant impost for people potentially buying their first home.

I think that this government is increasing red tape without addressing the real issues. This legislation is overly complex and confusing. It adds administrative costs to the building permit process, which will have to be passed on to consumers. In any case the building levy is paid by building owners, not the industry, so this seems like a very unfair way to raise the money. Why penalise people investing in jobs and/or asset creation? This has been caused by a failure of the Andrews government to regulate its own legislation. Surely this funding should all come from consolidated revenue. I do not think it is particularly fair that the taxpayer is being asked to foot the bill because the government has failed to regulate the building industry, but I do concede that there is a moral imperative that we get this material down as quickly as possible because we know how dangerous it is. I do not know why various classes of building are treated preferentially compared to others. This increase in the levy, I am advised, will last five years. That is a lot of money, particularly when you consider that, and I read from clause 14:

If the Treasurer is satisfied that there is in the Cladding Safety Victoria account at any time an amount in excess of the amount required to meet the anticipated payments from the account, the Treasurer, after consultation with the Authority and the Minister, may direct the payment of the whole or any part of that excess amount out of the account into the Consolidated Fund.

This is nothing but a tax grab. This money will be used to fund any other program of the state government unrelated to cladding rectification. If more money is raised than needed, it should be returned to those from whom it was levied, because—I say again—the people that are paying this will not benefit from it. They will not benefit from it at all, particularly if they are constructing a commercial building. Commercial buildings, as I said earlier, will not be rectified by this government.

The bill also provides for a process by which Cladding Safety Victoria will rectify properties, will assume the legal rights of owners. I think this is going to be a very, very difficult process for this entity to manage. But in the time that I have left, I will say: this is yet another tax increase or new tax by the Andrews Labor government. There has been a new stamp duty on property transfers between spouses, increased stamp duty on new cars, a new stamp duty on off-the-plan purchases, the so-called vacant home tax, new annual property valuations to increase land tax, increased luxury car tax, increased land tax for homes with contiguous blocks on separate titles, an increased fire services property levy, a new point-of-consumption gambling tax, a tripling of the brown coal royalty, a gold-mining royalty, a new tax on Uber and taxi fares, corporate restructure duty, increased foreign owner stamp duty in 2016–17 as well as in 2015–16, an increased absentee owner surcharge in 2019–20 and 2016–17, the introduction of an absentee landowner surcharge for foreign property owners in 2015–16 and a new city access tax for the West Gate Tunnel. That is 21 increased or new taxes.

The Liberal Party and the National Party believe that we need to help people, particularly people who through no fault of their own have bought a property that is clad in very dangerous material, but we do not believe for a moment that we should be increasing taxes at a time when cost of living is a major issue. People are struggling to get into the property market at the best of times. We must never do anything in this place to add excess costs to property. It is fundamental to the Australian dream of owning your own home, and for this government to increase the building permit levy by 640 per cent when it was their own fault that the building industry was so poorly regulated I think is entirely unfair and is why the Liberal and National parties are voting against this bill.

Mr RICHARDSON (Mordialloc) (17:02): This is an important opportunity to rise on the Building Amendment (Cladding Rectification) Bill 2019. I listened intently to the 30 minutes of the member for Kew’s contribution, and I want to touch on a couple of points that the member for Kew prosecuted in his contribution. It was a 15-minute history lesson, which I think is important in terms of context, but also then he made references to imports and areas of responsibility that are commonwealth responsibilities.

There was a reference to an Australian building codes discussion in 2010; of course oversight of states and territories is the commonwealth’s jurisdiction. There was a Senate inquiry reference; a sideswipe at the Gillard government of 2011, a partisan statement that we will soon reflect on a bit further, and references to the Victorian jurisdiction. So during that contribution there were references made to the commonwealth on a few occasions, and there were also references made in a partisan way to the Gillard government in 2011, but through every bit of the contribution—the 1800 seconds that we had to sit through that—we did not hear one bipartisan reference to the fact that this is a national and an international crisis that we are confronting that requires leadership from all levels of government—local, state and commonwealth.

I think it is a great shame, because it could have been quite a bipartisan reference. It would have given me a little flicker of hope that maybe we have got some kind of bipartisanship to work together on this challenge, but no. It was a missed opportunity. The commonwealth should have a role, and they have refused—refused—to be involved in this critical issue that underpins the safety and wellbeing of Victorians and indeed Australians.

If you are on the border, and products are going between state and territories—and there are issues around imports as well—we need the commonwealth to be in that space. It should not be lost, then, on the member for Kew that the fact is that the Senate has done an inquiry in that space. The Senate has put forward recommendations. They have heard from a range of jurisdictions . The notion that the commonwealth would suddenly be absent is unconscionable, but maybe the member for Kew does not want to rock the boat with his mates in Canberra, particularly Victorian Liberals, as he embarks on a potential leadership challenge in the very near future. Maybe he does not want to rock the boat and reflect on the commonwealth jurisdiction because it might affect his aspirations.

Mr T Smith: They don’t regulate the building industry.

Mr RICHARDSON: The member for Kew says that they do not regulate the building industry, yet they have a Senate inquiry into building materials and there is an Australian Building Codes Board—strewth! I mean, goodness, what are they in that space for? They are making recommendations. It undermines his contention, as he comes through with an interjection, when he did a sideswipe to the Gillard government of 2011. Come on, mate! Get real, get serious.

This is a national crisis. Rather than sitting back on our laurels and waiting for the commonwealth to come by—I mean, we would be sitting here until 2050, when the population will be 10 million and more apartments and more buildings have gone up—we are going to get on with the job of keeping Victorians safe, and that is exactly what we are doing here.

There are many media releases that have been put forward that talk about the establishment of an independent inquiry, the task force and the great work done by the task force to inform the government on reform and the outcomes, and then there is the multitude of media releases that have been put forward about keeping Victorians safe, and I want to put on the record—as the member for Kew did—our sincere desire and work to make sure people are safe. This issue touched the Mordialloc community on McDonald Street, and there are other buildings that are undergoing risk assessment in the City of Kingston. For anyone that has been impacted, we want to make sure that they are safe, that they are secure and that we are punching in their corner and making sure that they are safe, and we will make sure these rectifications go on.

In the Mordialloc example cladding was one element, and yes, the building authorities over a number of years dating back to 2010, when this permit was first issued, were woeful—absolutely woeful. There was mould; you would have a waterfall coming down in your building—unacceptable work. So getting those people out and making sure they were safe with the issue of cladding was absolutely appropriate. It was great work to do that and make sure those residents were safe. Out of the 17 units there were only three or four that were occupied at that time.

The notion as well that industry does not have a role to play and costs should be worn purely by the taxpayer I do not think stacks up. There are not just new players coming into the industry. There are builders who for many, many years have been building and helping to build our state for the future, but the whole industry has a role to support and maintain the highest standards. So where there is a crisis of this nature, the industry has a role to play in ensuring that we rectify this into the future.

Of the $600 million cladding rectification program that the Andrews Labor government has put forward to make sure that Victorians impacted are safe, half of that will be supported by industry. When we talk about the costs being worn, the margins that developers and builders may be making and the points put forward by the member for Kew about passing on unaffordability, it is the market rate of what apartments will sell at. If you sell for a particular amount in one given month as opposed to the next, that is what the market value will be.

I know the member for Kew has been on the Public Accounts and Estimates Committee before. He would know market forces; he would know about supply and demand and economics. He was a keen participant and a key interjector on that PAEC, with you as well, Acting Speaker Dimopoulos. Supply and demand will set what the apartment price will be, so the notion that this will pass through completely is a supply and demand issue. Whether it is a market rate of $600 000 or a market rate of $500 000 out in the Mordialloc electorate or elsewhere, that is what the price will be in the market. That will be it. So the actual price, the actual point of the levy, is the contribution of the industry. The notion that the industry can walk away, that we only blame the regulator for the past two decades, that we say, ‘Well, the industry is not a partner here’, is absurd. The taxpayer needs to make a contribution, given the urgency of these rectification works, with the industry as a partner to ensure the highest safety standards.

There have been significant events. The Grenfell Tower tragedy in the UK was absolutely devastating—the lives lost and the horrific outcomes. That was the start of a journey that Victoria has gone on. We have seen the risk with various fires as well. We are not sitting back. We put the task force together straightaway. We have, through that journey, made sure that we undertake urgent building works to maintain Victorians’ safety, and that is what we are doing with this. I am really pleased to see the establishment of the Cladding Safety Victoria authority, which will underpin that work. At the start they will have 15 buildings that they will start to rectify, and that will expand and develop over time. The important work of that fund over the next five years will be to make those important rectifications. I understand that there were 2000 buildings, so they were not sitting back and waiting—2000 buildings were assessed, and 800 had an increased risk. That has been scaled, and that will be worked through by Cladding Safety Victoria to maintain the safety and the integrity of our building industry.

The notion that this is sending a shockwave through the industry—well, I do not know if you have seen the interstate migration to Victoria for jobs, for prosperity, the job numbers. We are the engine room of the nation. The Prime Minister wants us to keep ticking away at this. More people are coming to Victoria from all over the place but particularly from our northern neighbours on the eastern seaboard, coming for jobs and prosperity in Victoria. We are seeing more and more growth and development coming forward as well, so the notion that our doing urgent works and an urgent fund being set up and a levy being put in place to make these rectifications will undermine the prosperity of Victoria’s building industry does not stack up. It does not stack up on future numbers because Victoria and Melbourne are the destinations for jobs, growth and employment.

The member for Kew can say, ‘I don’t want this to come out of consolidated revenue; find it from the regulator somewhere’. Well, the regulator, funded by the state, will be using the funds achieved through the cladding safety fund and the program to underpin that investment. Rattling off various taxes and the like goes back to the point I made just before on the other bill: tell me and the Victorian people which funds you would walk away from, which revenue you would forgo, what cuts you would make in our state and who would you impact. Who would you line up for cuts? Who is going to suffer as a result of forgoing revenue in our state? Which part of the $73 billion that came forward in our state budget last year? What cuts are you going to make to revenue? Because you cannot say you are going to cut taxes, you cannot be opposed to taxes, and then on the other side of the equation say, ‘Oh but we won’t have any cuts. We won’t forgo any loss’. That is an absolute furphy.

The notion that the member for Kew would come in here and say that the commonwealth has no responsibility does not stack up. This is a national and international crisis. The leadership shown by the Premier and the Minister for Planning in establishing this task force and establishing this levy will keep Victorians safe.

Mr McCURDY (Ovens Valley) (17:12): I am delighted to rise and make a contribution on the Building Amendments (Cladding Rectification) Bill 2019 as I join my colleague from Kew, and we are going to oppose this bill. I note the member for Mordialloc continues to want to blame the federal government and blame everybody else, but does not want to look in Labor’s own backyard in terms of the tardiness and the time it has taken to get to where we are today. It is nearly five years since the first of the fires that we know of here in Victoria. This could have been dealt with in a much more prompt and swift approach to give some security and some certainty to some of those unit holders, that is for sure.

We know the purpose of the bill: advising the further functions of the Victorian Building Authority in relation to the cladding rectification, to provide financial assistance for building work associated with the cladding rectification, to establish a new account in the VBA and to impose an additional levy on certain building permits. No doubt, as the member for Kew pointed out, this is a tax grab, and we will get to that a little bit later on.

The main provisions are clauses 9, 10 and 14. Clause 9 outlines the circumstances in which building owners will receive financial support. Clause 10 creates added functions to the VBA, and clause 14 defines the deposits into the payments made from the new Cladding Safety Victoria (CSV) account, including excess funds to be paid into the Consolidated Fund by the Treasurer. Let us get some perspective here: since London’s Grenfell Tower tragedy, in which tragically 72 lives were lost, then the Lacrosse fire in 2014 and the Neo200 building in 2019 Victorians have certainly been surprised to learn of dangerous combustible cladding that was used on buildings throughout this state.

The government’s first response was to establish the Victorian Cladding Taskforce to identify buildings that were wrapped in this dangerous material. Now, we all know that this government is very good at establishing task forces to give that appearance that they are active in a space and really trying hard, but the reality is it was about buying time. To a large extent they have frittered away that time, which is disappointing because, as I say, it is five years since the first fire in 2014 and we should have had some resolution before now.

As of July 2019 the task force had uncovered 72 buildings regarded as extremely dangerous, 409 buildings that are highly dangerous, 388 at moderate risk and 200 at low risk. Labor has known about the dangers of this combustible cladding since December 2014 and the Lacrosse cladding fire at Docklands. Surely the Grenfell tragedy would have suggested to the Victorian government that they needed to start making financial commitments and preparations for this cladding rectification that was going to catch up with them sooner rather than later. But no, while the government was busy dismantling the Country Fire Authority they certainly did not have time for other activities like that.

I certainly believe that owners who bought in good faith, particularly those post the knowledge of the cladding dilemma, should not be footing the bill to remove that cladding. Their buildings were signed off for occupancy through the regulatory framework through the Victorian government, which is the highly regulated VBA as we know. Not only is this unfair, but most owners do not have the capacity to fund these urgent rectification works. If they buy in good faith, individuals ought to expect that their building is safe for themselves and their families.

Furthermore, what is worse is that owners are still in the dark months after receiving notification that their buildings have cladding issues. This is causing havoc for those wanting to sell their properties because potential purchasers have no idea what the cost is to fix up the mess. The Labor government has certainly let these owners down. Not knowing the cost of the repairs, I understand some property owners are selling their properties for discounts of up to $100 000. They need to get out of those properties, but because of the uncertainty purchasers do not want to buy in, because they do not know what the cost is going to be to fix it. In many cases there have been suggestions that it might only be $10 000 or $12 000 or $15 000 per unit to fix the cladding, but with no definitive answer people that need to move on with their lives, that need to get on and sell their properties, have to sell at drastic discounts. Again, this is because of the tardiness and the arrogance of this government that has just let this process go on for as long as it has. I think it is quite unfair that owners are stuck in this predicament, particularly those that need to move on with their lives for one reason or another.

It is not just corporations that are blowing in the breeze. This is mum and dad investors trapped in their own homes, trapped in investments that they simply cannot sell because of this unknown. This unknown is primarily because of the government’s arrogance and tardiness. It is simply unfair, and it is damaging families. Surely, I would have thought that after six months or more the VBA should be able to give a cost as to the repair of each building—a ballpark cost. The owners could then divide that by the total number of units in the building. Someone could come up with a cost per owner so that if they want to exit a building, if they want to sell, they can do so because they will be in a fair ballpark as to what the costs are going to be as they are selling—otherwise you do not blame a purchaser who is coming in and is unsure and will certainly want a major discount. That is where it has been disappointing.

The Liberal-Nationals call on the Andrews government to rectify all buildings classified in the most dangerous categories by the Victorian Cladding Taskforce. The government has established a $300 million fund for this rectification, with Cladding Safety Victoria to administer it, but further funds will be raised through the building permit levy. I do want to get to that in a moment because it is quite astounding again, after we have seen this government pilfer money out of WorkSafe and out of TAC. I quote from clause 14 of the bill about the payments in the Cladding Safety Victoria account:

If the Treasurer is satisfied that there is in the Cladding Safety Victoria account at any time an amount in excess of the amount required to meet the anticipated payments from the account, the Treasurer, after consultation with the Authority and the Minister, may direct the payment of the whole or any part of that excess amount out of the account into the Consolidated Fund.

We have seen that before, as I say, with WorkSafe and with the Transport Accident Commission. Here, I believe the government in good faith is intending to assist these owners in this cladding situation. I get that, and we do support that those owners need to be supported. But in terms of this bill and the way the levy—or what they call a levy where it is really a tax grab—can then be pilfered by the government, that surprises me. I know I have heard the minister say that this will be reviewed after four years, but my understanding is that this levy should be going back to those who paid it rather than just going into consolidated revenue.

It is a shame that this bill has gone down this path because if it was not for this tax grab there are plenty of other ways that we can support in this bill. The bill authorises the VBA through Cladding Safety Victoria to rectify cladding and transact funds. It sets out the formula for calculating and collecting the building permit levy, but frighteningly—and not surprisingly—it provides for the Treasurer to transfer those excess funds from the CSV account to consolidated revenue.

I do have many other areas of concern. The government just keeps increasing red tape without addressing the real issues, and the legislation is complex and confusing and adds administration costs to the building permit process, which will have to be passed on to the consumer again. The building levy is paid by building owners, not the building industry. This seems like a curious way to raise the money. Why penalise people investing in jobs and the asset creation? This is a failure of government to regulate its own legislation. Surely this funding should be spread across a much larger base.

We do support owners negatively affected by combustible cladding mainly due to this poor regulation of the building industry. However, the bill as a tax grab imposes an increased building levy on future developments over $800 000. Any excess funds collected will be transferred to the Premier’s account for cost overruns, of course at the Treasurer’s discretion. There is no indication that excess funds will be reimbursed to payees. The Liberals and the Nationals oppose these tax increases—because this is a tax increase. We oppose this bill, and we do not trust the motivation behind this tax grab. Although we support the owners of properties who are caught up in this cladding mess, it should have been dealt with a lot earlier than today, and I certainly do not support this tax grab where money just goes into the never-never and the government can use it for any other project they choose. It should be dedicated entirely to this cladding mess.

Ms COUZENS (Geelong) (17:21): I am pleased to rise to speak on the Building Amendment (Cladding Rectification) Bill 2019. The bill will enable Cladding Safety Victoria to administer the cladding rectification program announced by the government on 16 July 2019. The bill provides for an increase in the building permit levy to partially fund the cladding rectification program as well as financial management arrangements for administering the fund. The bill enables the state to take action against building practitioners or others in respect of the installation of combustible cladding.

Can I also take this opportunity to thank the Minister for Planning for all the work that he has done. On all accounts Victoria is leading the way on this serious issue—and it is a serious issue for many in our community, including my community of Geelong. I also want to take the opportunity to thank the task force for the work that they have done as well. I think this is a serious issue, and it of course needs attention. The minister has taken every step to cover off on all matters relating to this, and we have heard him speak numerous times in question time about how this is being dealt with. So I am very pleased that we have got to this point now where we are introducing legislation and that Victoria is leading the way right across this country on this really important issue.

The bill gives the Victorian government the power to sue dodgy builders or wrongdoers on behalf of owners or owners corporations who access rectification assistance. I think this is really important. It is really important, I know, for my constituents in Geelong who have been impacted in relation to having cladding on their buildings. I do not think there are too many, but they are certainly there. One of the apartment buildings unfortunately does have this cladding. Although my understanding is that it is not considered to be of a highly dangerous nature, it does need attention. Having had conversations with those constituents about their building and their concerns, I understand how traumatic it must be for those residents and tenants to know that there is a serious problem with the cladding on their building and the potential for fire. The risks are obviously higher than for any other building. I know for them this legislation is really important. It does impact on them, and they are really keen to see these changes come in. It is very traumatic for people right across this state that are impacted because they have that cladding on their building. As I said earlier, I am really pleased that we are actually taking action and are one of the states that is doing groundbreaking work with this legislation.

I know in my electorate people are concerned about dodgy builders and practitioners who come into our communities and whip these things up, and who often know exactly what they are doing when they are putting this cladding on. We want to make sure that they face the full extent of the law when they are doing these things, so that our community is safe. Obviously we want to ensure that not only the residents and tenants in these buildings are safe but also the surrounding community are safe if ever anything happens.

It was mentioned by those opposite that Kardinia Park has been identified as having combustible cladding on part of the building. Yes, that is true, but it has been assessed as being not a high risk. Obviously the Kardinia Park Stadium Trust are dealing with that. Those opposite should be held to account for their scaremongering, because what they are doing is frightening people into believing that they are at serious risk when in fact that is not the case. I think the Victorian Building Authority has made it clear in their assessments of what level of combustibility there is with various buildings. As a government we put faith in the work that they have done, and we put faith in the work that the minister and the task force has done. It is really important that it is put into context. There are various levels of risk from the combustible cladding and that is being dealt with.

The levy has specifically been designed to exclude single dwellings and will only apply in metropolitan Melbourne, where the vast majority of combustible cladding has been used. The government expects recovery of approximately $300 million over five years, or half of the announced $600 million cladding rectification program. Where builders or building practitioners have done the wrong thing, it is only fair that they contribute to the cost of fixing their mistakes. As I said, when these builders come in and do the wrong thing, they have to be held accountable. Making them pay for what they have caused is only common sense, from my perspective.

Under the Building Act 1993 there will be penalties for knowingly carrying out building work that is non-compliant. This is in addition to penalties which may be imposed by the Victorian Building Authority through a disciplinary process. In addition, the provisions in this bill will allow the state to take legal action against practitioners to recover the cost of the rectification work where it can be shown to result from their non-compliant work—and so they should be paying for what they have done.

We do not want to see more mistakes made and more Victorians put at risk, and the Victorian government and Cladding Safety Victoria are working to deliver on this commitment. Victorians expect that those who created the current problem with combustible cladding will contribute to fixing it. Where that requires legal action, Victorians expect their government to take the necessary action, which is exactly what we are doing with this legislation.

Given that the state is taking on the cost of the rectification, there will be no reason for an owner to seek to take legal action against a building practitioner in relation to combustible cladding where the rectification of the owner’s building is to be funded through Cladding Safety Victoria. The government believes owners should not have to deal with the cost and distress that court action can mean, so it will initiate any legal action on their behalf. I think this is a really positive part of this legislation, because we know, as I said earlier, that people have been traumatised by learning that their building is affected. Any ease of the stress involved in all of this—and people not being required to take legal proceedings—is very welcomed by those affected, including in my electorate of Geelong.

Some apartment owners have found themselves in this terrible situation through no fault of their own. Just imagine what that must be like for them—the trauma that they are going through. This will not stop owners from taking legal action against practitioners in relation to any other defects in their buildings that they are aware of. It is not going to prevent them from taking action on any other areas of the building that are found to be defective.

Fifteen buildings have been chosen by the government to be the first to be rectified, based on their risk rating; these will include a variety of building types. These first 15 projects will enable Cladding Safety Victoria to test the processes it has put in place and then scale up for the next tranche of buildings. Before the end of the year Cladding Safety Victoria will notify the owners corporations of the next 150 buildings that will come into the program in 2020. Construction works to rectify these buildings will begin after a design is approved and builders are appointed through an appropriate tender process. This is the first time anywhere in the world that a government has sought to put in place a systematic response to this highly complex problem. Thanks to the hard work of the minister and his team, we are seeing that happen in Victoria.

It is important to remember we are working with the owners of private apartment buildings to reduce the risk to life not just to them but to tenants, visitors and first responders in the event of a fire. Of course that applies to those in my electorate. We know first responders are concerned about firebugs—people deliberately going out causing fires—because it is known where some of these buildings are. That is of real concern. I think people should be more aware of the message they are putting out there in the community, particularly those opposite. I commend the bill to the house.

Ms STALEY (Ripon) (17:31): I rise to speak on the Building Amendment (Cladding Rectification) Bill 2019. At the outset I need to declare an interest, as I own an apartment in a building with cladding that has been assessed by the authorities and that it is proposed legal action will be taken on. With those introductory remarks, I am mainly going to talk about one clause. Clause 14 says that if there is any money left over from what is required to do this rectification, then that goes into general revenue. This is the clause which, when put with the review clauses in this bill, tells us that this is a new tax, a never-ending tax—and it is the 21st new or expanded tax introduced by the Andrews Labor government. In fact, it is the third this week, so they are not having a good week in terms of their taxation strategy and in terms of the promise and solemn commitment that the Premier, when he was Leader of the Opposition, gave to Peter Mitchell. He gave that assurance that there would be no new taxes, yet of course we now have this one.

I want to put this into context. After the Treasurer has consulted with the authority, he or she may direct the payment of the whole or any part of the excess amount into the account of consolidated revenue. So at any point the Treasurer can then verbal the head of the authority and say, ‘We need some more money this year. You tell me that it’s actually all fine at the moment. We need to prop up our budget. Let’s take some money out of this cladding rectification fund’. That is not only a clear tax grab; it is a really unfair outcome for the people who have been paying this levy.

This levy is unfair to begin with, because it is taxing prospective builders of new apartments for ones that have already been built. It is taxing those who do not even own an apartment. They are not in the situation that I am in standing here before you today as someone who has an apartment with cladding that has a fire risk. These are people who may not have any apartments. They are first home owners. In fact the Urban Development Institute of Australia has calculated that this will add between $4000 and $6000 to every new apartment costing $400 000. That is a one-bedroom apartment in the CBD of Melbourne; that is how much they cost. If it is going to add $4000 to $6000, that cost will be to people who are buying one-bedroom apartments, who are not wealthy people. They are often first home buyers. Why should they be the ones forced to shoulder the burden of this government’s inaction and inability to deal with this problem?

This is a problem the government has known about since December 2014. They have had five years, the entire time of their period in government this time around, to understand that they have got a problem here. We of course do agree that this is a huge problem. That is the one area on which we agree with the government. We do not think they have got to the right solution on the scale of it at all, either with this tax or by assuming that it is going to cost them $600 million to fix it. That to me is a number plucked out of the air. In fact clause 25 of the bill provides that there will be a review of the cladding rectification levy in four years time. New section 205LO(2) states:

The purpose of the review is to determine whether there is an ongoing need for that additional levy to fund cladding rectification works.

It refers to an ‘additional levy’, so there is no sunset on this bill. Those opposite who seem to think that this is a short-term taxation measure are sadly very mistaken. Their own bill says that this goes on in perpetuity. It is very, very unlikely that at the end of four years that $600 million will have been enough. People at RMIT, where there has always been a strong interest in the built environment, buildings and architecture, believe it is going to cost $2.6 billion to rectify these buildings. So we are looking at not a four- or five-year imposition of this levy. We are looking at a lot longer than that, and it will have to be higher than that. So there will be a double hit. There will be a hit to the budget, to consolidated revenue, as the government deals with this issue, but there will also be this tax on apartment owners.

Let nobody say that it is just the developers. Who are these mystical, evil beings, the developers? If you squeeze anything hard enough, it breaks or there is nothing left. The developers’ profit margin, the developers’ right to make a return on their capital, is why they develop properties. If you take away the ability for them to make any return, they just will not develop properties. I saw that in the top end of Melbourne when we had the additional taxes put on properties. The large-scale apartment blocks have largely fallen over. Those projects are not going ahead anymore because you cannot get them to stack up without foreign buyers buying the flats at the beginning. When they were taken out of the market, they no longer went ahead.

The property developers will pass this tax straight on to the property buyers. That is just so unfair. There is nothing fair at all about asking apartment buyers, often first home buyers, to pay for a situation caused through lax regulation over a long period of time that this government have known about and have not been able to find a solution to until they came up with this tax. It is very, very unfair that people who are going to live in apartments that do not have cladding on them, because they are going to be built after the cladding issue has been resolved, are paying for such apartments—and it goes on into perpetuity.

We get that in some way there may be enough money one year because it may be a bumpy process between when the tax is paid and when the rectification works go on. Then we have the ability under clause 14 for the Treasurer to do a tax grab that year. Under all scenarios, this bill is set up to be just another new tax hiding behind the veneer that it is helping a cladding problem that is largely caused by the lack of regulation and poor regulation from this government. At all stages we have regulatory failure here—regulatory failure from a government that has clearly run out of money. They can bring in three new taxes under three different bills. We never hear the word ‘tax’; it is a levy or a charge or something that is meant to be about the environment, whereas it is actually just adding another $1000 to a house block on the edge of Melbourne. This week they are getting everybody. Too bad if you want to buy a flat in inner-city Melbourne or you want a house on the outskirts of Melbourne. You will be paying more under this government, because they have run out of money and they are just taxing Victorians at every turn.

Mr T Smith: Labor has run out of money.

Ms STALEY: They certainly have, member for Kew; they have run out of money.

Mr T Smith: What happens when Labor runs out of money?

Ms STALEY: Well, they come after yours, mine and every Victorian’s—and that is what we are seeing in this week’s tax grab bag of bills. This bill should not be passed. This is poor legislation. It is the wrong solution to an admittedly bad problem. This is the wrong solution. The government needs to take responsibility for the failure of its regulatory regime, take responsibility for getting these things fixed, rather than setting up some extra authority with money coming from places that it should not be coming from and taxing more people. Taxing, taxing, taxing—that is all this government does. I reject this bill.

Mr FREGON (Mount Waverley) (17:41): I rise to also speak on the Building Amendment (Cladding Rectification) Bill 2019. I thank previous members for their contributions, especially the member for Geelong and of course the member for Mordialloc, who did us the service of providing a little recap of the member for Kew’s history section, which was good to hear. But I noticed that the member for Kew did talk about some knowledge from 2008 and then a moment in 2011 when it seemed the Gillard government was involved in something and then of course there was the period from very, very late 2014 to 2019. There seemed to be a bit of a gap there in any sort of accountability from around 2010 to 2014. I found that curious.

I would like to thank the Minister for Planning for the hard work that has been put into rectifying this very serious issue around the high-risk combustible cladding. Obviously the use of combustible cladding on Victorian buildings is a critical public safety issue. While there may be some concerns, as the member for Kew has said from his side, that public money should not be spent to assist home owners, in this case I think when we consider the greater public safety issues for not just the home owners but also those people who live and work in and traverse those buildings, it is fitting that public money is used for this purpose. Our government is committed to rectifying this very serious situation.

We are leading Australia and the world on this issue by inspecting more than 2000 buildings to better understand the scale of the high-risk combustible cladding problem and to identify where there were key regulatory gaps. Use of combustible cladding is a complex issue facing major cities around the world. As it stands, we have many home owners in Victoria grappling with the cost and complexity of removing this cladding.

Investigating the issues at hand and developing an appropriate response has no doubt been complicated but worthwhile. The government has, amongst other things, developed a risk assessment tool for assessing buildings with combustible cladding, restricted the use of certain combustible cladding materials, and undertaken a statewide cladding audit of both private and government buildings—which remains private, for obvious reasons, although there are some who like to hand out addresses.

The fire at the Lacrosse tower in 2014 sent shockwaves through our nation’s construction industry and sparked major concern over the high-risk cladding used in Australian buildings. In response our government started our nation’s first ever audit to identify buildings fitted with combustible cladding and to assess their risk rating.

In 2017 the Victorian Cladding Taskforce was established, jointly chaired by former Premier and architect Ted Baillieu and former Deputy Premier and Minister for Planning John Thwaites. Obviously bipartisanship in this matter was very important. If I can go back to our earlier discussion on the matter of public importance on mental health, if I am correct the member for Ferntree Gully also applauded bipartisanship in the establishment of Beyond Blue. So there are important issues, whether they be mental health or in this case cladding, where we benefit by working together.

The task force released an interim report in December 2017 and a final report in July 2019. One of its key recommendations was for the government to take action to rectify buildings with high-risk cladding and to establish a dedicated cladding agency. On 16 July 2019 the Premier and the Minister for Planning announced the establishment of this cladding rectification program, the key aim being to support owners to fix buildings with high-risk cladding in Victoria. As others have said, this program includes a $600 million package to rectify the highest risk private residential buildings and the development of a new agency, Cladding Safety Victoria, to oversee delivery of this program.

The bill also introduces an additional building permit levy as a source of partial funding for the cladding rectification program. I also think that is fair given that, as previous members have said, the industry has been involved in putting us in this position, so the industry should be a part of assisting us out of it.

This bill will also enable the state to have more powers to take action against dodgy building practitioners or others in respect to the installation of high-risk cladding. This bill gives the Victorian Building Authority the ability to provide information and advice on rectification work and make payments to persons or bodies eligible for financial assistance or rectification works, and it enables claims for payment to be made for building works associated with rectification work.

This bill introduces an additional building permit levy, as I said, which will assist in funding the carrying out of this work. It also allows for a review of the new additional levy amount to be conducted within four years of commencement of the relevant provisions to determine whether the levy needs to stay once rectification works have, hopefully, been completed.

Importantly, I think, this bill gives the government the power to take legal action in respect of combustible cladding against the builders on behalf of owners who access this assistance. The bill provides for rights of owners to be subrogated to the state so the government can take legal action against wrongdoers where appropriate. After all, it is dodgy practices in the most part and cost-cutting measures that have led to this problem to begin with.

The government will take action against wrongdoers on a case-by-case basis, and funds won from these legal actions will go towards aiding recovery of the costs of the rectification program. It is important that we get on with the job of fixing these properties immediately, but that does not mean that we have to let the builders responsible get away with what they have already done. Where builders have done the wrong thing, it is only fair that they contribute to the cost of fixing their mistakes.

The bill will allow the state to take action in this area against private actors responsible for the installation of cladding and allow us to recover the costs of the rectification. Other courses of action will continue to be considered, including the use of disciplinary action under the Building Act 1993, as part of an overall approach to pursue wrongdoers even where this may not result in cost recovery. Victorians rightly expect those who created the current problem to contribute to fixing it, as I have said before.

Fifteen buildings have been chosen at this stage to be the first to be rectified based on their risk rating and incorporate a variety of building types. These first 15 projects will enable Cladding Safety Victoria to test the processes it has put in place and then scale up to the next tranche of buildings. Before the end of the year Cladding Safety Victoria will notify the owners corporations of the next 150 buildings that will come into the program in 2020. Cladding Safety Victoria is scheduled to complete due diligence on all 15 buildings by the end of October. This enables Cladding Safety Victoria to check on work done to date and estimate funding requirements for rectification.

This is the first time anywhere in the world that a government has sought to put in place a systematic response to this highly complex problem. I note that the Minister for Planning recently returned from London, where they were very interested in what we are doing even after they have had obviously the Grenfell fire that was mentioned before, which was obviously a serious, serious tragedy for them. It is good to know that we can help them in, hopefully, their rectification work.

The state has formed a strong response to a complex issue and is getting on with the job of making sure every Victorian is safe from combustible cladding. This bill is about keeping Victorians safe. We have seen the worst-case scenario with combustible cladding with the Grenfell fire in London which saw 72 people tragically lose their lives. The Andrews government is leading the nation and the globe in its strong program to rectify the situation, but as I have outlined, this is not purely about safety; this is also about what is fair and about home owners who trusted their builders and were let down by dodgy practices and dangerous building products. I am proud to see us having such a strong response to this issue. I commend the bill to the house.

Ms SANDELL (Melbourne) (17:51): I am pleased to speak to the Building Amendment (Cladding Rectification) Bill 2019. Of course this bill is implementing the government’s cladding rectification program and giving the government the ability to recoup the costs of this rectification from builders or those responsible. I have to say I am very pleased to see that after months of what could be perceived as not doing very much the government has committed to addressing the cladding crisis. It is very good that the government has acted before we have had a tragedy the scale of London’s Grenfell fire, but honestly it really should not have taken this long.

We have known that we have a cladding problem in this state since at least the Lacrosse building fire in 2014 in the Docklands in my electorate. The statewide cladding audit which was set up following the 2017 Grenfell fire has inspected 2300 buildings so far, and a massive 35 per cent of these had combustible cladding. Of the 805 buildings with cladding more than half were found to be high risk.

In my electorate of Melbourne we have a high number of high-rise residential buildings, with the CBD included in my electorate, and many of these have this dangerous cladding installed. The City of Melbourne has 121 buildings with dangerous cladding. Long-term estimates suggest that 40 000 properties across Victoria will need full or partial replacement of their cladding, and as the audit continues I am sure that more and more instances will continue to turn up. For example, just this week it was reported that cladding had actually been found on Marvel Stadium.

So the cladding crisis is a problem on a massive scale, and it will affect thousands and thousands of Victorians. In fact it is already affecting so many. The impact of this crisis as well on affected communities, many in my electorate, has been quite overwhelming. Residents have been living in fear of a fire breaking out in their buildings, insurances have gone up as insurers have increased premiums for home owners affected by the dangerous cladding, apartment prices in affected buildings have dropped, significantly devaluing many properties, and builders have been deliberately going into liquidation to avoid paying for recladding.

Owners have had to choose between taking out costly loans to cover rectification or facing fines for failing to comply with removal orders. Many are actually just confused by the entire process, and they have been living with the risk of a fire. The significant financial, but also emotional, stress for residents dealing with the crisis cannot really be understated. I have had many people come into my office and explain the financial and emotional stress that it caused them. Honestly, these owners should never have been lumped with the bill for cladding rectification in the first place, because we are in this crisis due to a failure of government regulation, of compliance and of oversight. Since we privatised building inspectors and building surveyors in the mid-1990s and allowed developers to cut corners and avoid red tape we have seen an increase in building defects, and the installation of dangerous, combustible cladding is just one such example of this.

Since the scale of this cladding crisis became apparent the Greens have been calling for the government to set up a fund to cover the costs of cladding removal and rectification, and then to go and recoup those costs from those responsible—builders, developers or whoever. It is a simple plan, really, that acknowledged that a government does have to take responsibility for the failure of regulation and oversight that allowed the crisis to happen in the first place and also that governments have much more ability to take action against dodgy builders or developers or inspectors than the owners of apartments individually or as owners corporations do. It also acknowledges that the government is the one who has responsibility for the safety of the thousands of Victorians who are affected. It really is a core function of government to ensure that the state does not catch on fire.

But instead of adopting this plan when we first suggested it over a year ago, the government continued just to push the cost back onto the home owners who, really, purchased units in good faith, thinking that they were safe. It was very reasonable for them to think that their apartment would be safe, that the government would have regulated to make sure that they were safe, and then they found out they were not safe.

So in terms of the response from this government, first we had a bill in late 2018 which gave the minister the ability to ban high-risk, flammable cladding. It also created this very complicated and quite unwieldy three-way loan system where owners corporations could take out loans for cladding removal and then pay back the loans through their council rates. Unsurprisingly, very few, if any—actually I have not heard of any—of these loans were ever taken up. In fact many councils actually refused to administer the loan scheme altogether because the financial and legal risks attached to them were just simply too high. So we knew that this was an unworkable situation when it was announced.

We had another fire then in early February this year, again in my electorate, in the Neo200 building on Spencer Street; I have spoken to residents who live there. Then we had some money in the budget for cladding rectification but only for some government-owned buildings. Finally in July the government announced a plan to fund cladding rectification in this state, a $600 million package to cover removal in high-risk residential buildings. It was a plan that was just like the Greens had called for and just like the plan that we had announced over a year and a half ago.

We are very pleased to see this bill before the house today and to see Greens policy being implemented by the Andrews Labor government. It is also a win for the thousands of home owners and residents who have been fighting for proper government action for months. I would like to thank all those residents for their advocacy and also their resilience in pushing the government to intervene in this crisis. I know it has been a long slog. I know it has been very difficult for a lot of residents and owners corporations. Thank you, your advocacy has paid off.

To turn to some of the finer details of the bill, the bill sets up the legislative framework to create Cladding Safety Victoria, which sits within the Victorian Building Authority, and gives it the power to carry out rectification works. To cover the costs of the program the bill is increasing the building levy, which will fund half of the $600 million program. The increased building levy applies to permits for apartments, hotels, offices, shops, restaurants, car parks, warehouses, laboratories and factories where these buildings are valued at more than $800 000. As we have heard, buildings like schools, hospitals and social housing, for example, will be exempt from the new levy. It will be reviewed within four years to check if an ongoing levy is still needed and, if so, if the amount is sufficient to cover the cladding work that is still left to do in the state.

It also, very, very importantly, gives the government the ability to recoup the cost of cladding rectification from the builders who were responsible for introducing the dangerous cladding, because of course we have a joint responsibility here. There was a failure of government regulation and oversight, and the government had privatised building surveyors which created this problem in the first place, but also some builders knew that they were actually installing dangerous cladding and did so anyway. The ability to recoup the costs from those responsible was also another element of the Greens policy on flammable cladding, and we are pleased that this has been adopted by the Andrews government as well.

In summary, I am very pleased that the government has adopted some good, sensible Greens policy and is acting to help the communities affected by flammable cladding. Individual owners of these apartments bought them in good faith expecting, as is reasonable, that they would be safe. It was never going to be workable to make them pay for what is a failure of government oversight and regulation and then be left with the responsibility of chasing those responsible through the legal system, which is very costly and very difficult for these individuals to navigate. Government has a much broader ability to do that.

So I hope and I imagine that the government will continue to work with the affected communities and make sure that the program is rolled out swiftly so that these Victorians who are suffering from this problem—from this crisis that was created through a number of factors, including through a lack of government regulation—do not have to continue to live with that stress and that fear that they have been living under, some for many years.

Ms RICHARDS (Cranbourne) (18:00): I rise today to contribute to the debate on the Building Amendment (Cladding Rectification) Bill 2019, but I do start by reflecting that perhaps the member for Ovens Valley and the member for Ripon did not quite know if they were Arthur or Martha. We heard that there was a movement to cut red tape and then there was a movement to increase regulation. We heard a little bit more about reducing regulation again and then a little bit more about increasing regulation. I am not sure whether we have the sort of cogent response that people would expect from an alternative government, but I am delighted that this bill before the house provides the certainty, reassurance and resources that are needed.

The Building Amendment (Cladding Rectification) Bill amends the Building Act 1993 and in doing so provides for additional functions of the Victorian Building Authority in relation to cladding rectification and provides financial assistance for building works associated with cladding rectification. The bill will assist government to deliver on its commitment to respond to this critical public safety issue. We will take action, firstly, by responding to the expert recommendations of the Victorian Cladding Taskforce and establishing a business unit within the Victorian Building Authority; secondly, by funding the cladding rectification program with an increase to the building permit levy; and finally, by giving government the power to pursue dodgy operators.

To the first point, this bill establishes a business unit within the Victorian Building Authority, Cladding Safety Victoria, and this will enable the community to have a source of advice and trusted information on cladding rectification works to check the work is done. The government has acted. This bill will give Cladding Safety Victoria the power to administer the cladding rectification program, and I am proud of this government’s approach. With Cladding Safety Victoria overseeing the cladding rectification program, we know the community is in secure hands. This is all part of a $600 million package to fix buildings with combustible cladding.

On this side of the chamber we are responsible. As I identified under the earlier point, this bill will allow for a targeted increase to the building permit levy to support this package of reforms. This bill is strategic. Importantly, this levy—a four-letter word, ‘levy’—has specifically been designed to exclude single dwellings and will only apply to metropolitan Melbourne, where the vast majority of combustible cladding has been used.

This government is future-oriented. This bill allows the government to introduce regulations for any further exclusions. The bill is fair. It is expected that regulations will be introduced to exclude social housing projects from the levy. And the bill is rational. Hospitals and schools, which are generally class 9 buildings under the National Construction Code, will be excluded from the levy. This bill strikes a commonsense approach, balancing the need for a fund that will respond to this issue and the needs of the community to have the reassurance to know there is a process in place to support owners.

The government expects to recover half of the $600 million cladding rectification program under this new modest levy. The legislation allows for a sliding scale, with works less than $10 000 garnering no levy and those between $10 000 and $799 999 requiring a levy of between $13 and $1024. Of course it slides up from there.

To my third point, this bill gives the government the power to take action against those who do the wrong thing, because we need to make sure, once again, that we are taking a fair-minded approach to a problem that has emerged in the last two decades—one that was not around when I was growing up but is now a world-wide problem.

I note with pride that once again Victoria has become a world leader in responding to an emerging problem. We know the combustible cladding issue has fast become an international problem, and this highly flammable material has caused tragic fires over the past five years. None of us will forget the tragedy of the Grenfell building fire in 2017. We know 72 people lost their lives in London and countless others have been impacted. This fire and its consequences have reverberated across the world. I am loath to comment in this place on the tragedy of that fire because I am conscious that there are people still suffering: those who were in the fire, family members and of course first responders. I pay credit to them all. But what the Grenfell building fire did was highlight a public safety issue. We know this problem has been 20 years in the making.

I am so proud of the way the Minister for Planning took politics out of this issue by establishing the Victorian Cladding Taskforce and appointing former Premier Ted Baillieu, himself an architect, and former Deputy Premier and Minister for Planning John Thwaites to jointly chair the task force. This government and the Minister for Planning recognised that we needed to take leadership, and that is why the establishment of this body was such an important step in the process.

But I want to acknowledge that even before the establishment of the cladding task force, several years ago an Australian-first audit into buildings fitted with combustible cladding was undertaken. This was done in order to assess their risk rating. It is reassuring that this audit was done and that the original audit assessed more than 220 Victorian buildings.

As with so many things, this state was a leader. In March 2018 Victoria became the first state to decisively limit the use of combustible products on buildings, and in July 2019 the high-level task force that I spoke about earlier with those eminent Victorians, including those from the other side at the helm, recommended that the government take action to rectify buildings with high-risk cladding and establish a dedicated cladding agency.

It is important that this government take a strategic approach, which is why it was important that the task force work with the Victorian Building Authority; the Department of Environment, Land, Water and Planning; our friends in local government; fire authorities; and other stakeholders to identify buildings with combustible cladding and assess each building’s fire risk. As part of the policy response to this issue, the Premier and the Minister for Planning announced a $600 million program to fix buildings with combustible cladding and to formulate the Cladding Safety Victoria agency to oversee the program, manage funds and work with owners corporations from start to finish.

The bill amends the Building Act 1993 to further implement the Victorian government’s commitment to improve the building regulatory regime to increase safety and compliance of buildings with regulatory requirements. As I said earlier, the bill also gives the Victorian government the power to sue dodgy builders or wrongdoers on behalf of owners or owners corporations who access rectification assistance. This government will take action against wrongdoers on a case-by-case basis to aid recovery of the costs of the rectification program. Where builders or building practitioners have done the wrong thing, it is only fair that they contribute to the cost of fixing their mistakes.

This government wishes to ensure that the program reduces the fire and safety risk of private residential buildings to an acceptable level. Any delay or lack of action is a significant risk to community safety. This bill supports the establishment of a world-leading program to fix buildings most at risk and keep Victorians safe. However, this is not just about safety; it is about fairness for people who bought apartments in good faith and were let down by dodgy builders or dangerous building products. That is why under the Building Act penalties for knowingly carrying out non­compliant building work are up to $99 132 for an individual and $495 660 for a company. This bill also allows the state to take legal action to recover the cost of rectification work if it is not compliant. This is what the community expects. We cannot let people get away with unscrupulous practices.

Another reassurance to the community embedded in this bill is that there is no need for a building owner to take on the stress of legal action if this action relates to combustible cladding where the rectification is taking place through Cladding Safety Victoria. The government will initiate action on behalf of the owners. But be assured, this new body, Cladding Safety Victoria, will only use qualified practitioners and will take account of any disciplinary history before including them in any rectification works.

Further evidence of our strategic approach to this issue means that 15 buildings have been chosen by the government to be the first to be rectified. These steps will enable Cladding Safety Victoria to test the processes, undertake some analysis, do their due diligence, begin construction work and get ready to scale up the process for the next tranche of works.

I am delighted that the government is putting people at the centre of this process, with the people at Cladding Safety Victoria meeting with representatives of the owners of all of the 15 buildings that are part of the first group to be rectified. This has been a stressful time for owners, and we acknowledge the stress that this has put on people. This bill provides reassurance. People who own or live in buildings are told when cladding has been found, and anyone who wants to know the status of their building or a building they are considering buying or moving into can contact the Victorian Building Authority.

I would like to finish by acknowledging the work of the Minister for Planning. I would like to commend the bill to the house and wish it a speedy passage.

Ms VALLENCE (Evelyn) (18:10): I rise to speak on the Building Amendment (Cladding Rectification) Bill 2019, the Andrews Labor government’s latest attempt to tax Victorians more. Another day in Victoria and another new tax from the Andrews Labor government, and the predictability would be funny if it was not so sad. It is a new tax from a government that made a solemn promise to Victorians before the 2014 election that there would be no new taxes. It is a government addicted to tax because it has no money left.

After paying $1.3 billion not to build the east–west link and with cost blowouts of tens of millions of dollars on every single infrastructure project, is it any real wonder that the Premier is signing secret deals with the Chinese communist regime, giving them the inside running on Victorian projects in a desperate grab for money? There is an old tax saying that what the government gives, it must take away, and that says it all about this government. The Labor government wants to impose a new building tax on innocent Victorians to pay for what must be one of Victoria’s single greatest regulatory failures.

How did it come to this? How has it come to be that Labor—in power for 16 of the last 20 years—has created for itself a terrible legacy of standing by while its failed building regulator has allowed people to live in fire deathtraps? This is a calamity of the government’s own making. It allowed builders, construction companies and surveyors to install this flammable material on homes, schools, childcare centres and hospitals, putting the lives of many Victorians at serious risk. It is outrageous and, to add insult to injury, the Labor government wants to unfairly penalise Victorians for its monumental failures. Victorians are not to blame for the failures of the Labor government and the Victorian building regulator. Sadly, this bill is a new tax grab on new home owners to fund a monumental problem of the Labor government’s own making.

As I come to address specific details of the bill, I think it is important to say something about how the Labor government let this combustible cladding crisis unfold. In November 2014 the fire at the Docklands Lacrosse building drew attention to the serious fire risks posed by the use of combustible cladding that contained a highly flammable polyethylene core. Australian fire safety engineer Mr Tony Enright told the ABC Four Corners program:

A kilogram of polyethylene will release the same amount of energy as a litre of petrol. But it gets worse than that because polyethylene is denser than petrol …

The CSIRO conducted tests on the imported combustible cladding installed at the Lacrosse building and found it to be so combustible that the tests were abandoned after 93 seconds due to the potential for the equipment to be damaged.

Mr Adam Dalrymple, then director of fire safety at the Metropolitan Fire Brigade, described the incident as one that could have claimed hundreds of lives if things had turned out a little differently, saying:

The fire started on a balcony from an unextinguished cigarette—an innocuous type of thing …This set fire to the cladding, and the panelling itself allowed the fire to travel the full extent of the building—23 levels in 11 minutes.

It was estimated that it would cost $9 million to remove and re-clad the Lacrosse building alone.

The government’s building regulator, the Victorian Building Authority, launched a supposed external wall cladding audit in Melbourne. The VBA audit report released in February 2017 found that non-compliance in the use of external wall cladding materials was unacceptably high—a massive understatement—and astonishingly the VBA stated that the cladded buildings generally did not pose a fire safety risk and only one other building posed a fire safety risk.

Three years later, in June 2017, these issues were brought into sharp focus with the fire at London’s Grenfell Tower, a 24-storey residential housing block in London clad with the same combustible material. The tower provided 129 social housing flats, housing around 350 people that evening. Sadly, 72 people tragically lost their lives as a result of the fire. As Mr Dalrymple, then acting deputy chief officer of the MFB, said at the time:

Lacrosse for us was a bit of [a] wake-up call. Since then I believe that regulators have been rubbing the sleep out of their eyes. With this tragic event, everyone has woken up, albeit some 2½ years after we had a similar event in our own backyard.

He was of course referring to the Lacrosse fire.

It was only after the fire at the Neo200 building in Spencer Street earlier this year that the government finally decided to act—five years later. As early as 2016 the Neo200 building had been assessed by the MFB as posing a medium risk of fire as a consequence of the risks posed by the combustible cladding on the building, but MFB advice was dismissed after a council officer reinspected the building and concluded in a handwritten note that ‘the risk of fire spread is low’. Five years after the Lacrosse fire the local authorities were still completely incapable of managing this serious risk to life posed by fire in combustible cladding.

This government has known for five years that there are thousands of buildings in Victoria covered in combustible cladding, putting lives at risk and pressure on our emergency services, but it has only decided to do something now. And in doing something, introducing this cladding rectification bill, the Labor government has not been fair dinkum with Victorians about what it is trying to achieve with this bill—that is, that it is actually a bill to slug Victorians with a new building tax.

In his media release on 15 October the minister said the building levy will be introduced to fund $300 million of the program ‘after the commonwealth government failed to contribute’ and wants Victorians to believe he is being forced to tax them because the commonwealth will not help. But the minister may have forgotten the Premier’s media release on 16 July, in which the Premier said:

The Labor Government will directly fund half of the rectification works and will introduce changes to the building permit levy to raise the other $300 million over the next five years.

The Premier—so arrogant—did nothing to hide that the Labor government was always going to introduce a new building tax. The Labor government is imposing a new tax because it does not know any different. For every problem, every mess that this Labor government creates, it knows only one way out: a new tax. Because the Labor government has failed to ensure its building regulator is doing its job properly, its answer is to slap a new tax on innocent new home owners, who are being discriminated against to fix problems they have nothing to do with. This government is treating new home owners as an easy target.

It is too hard and this government is too gutless to go after the real crooks in this industry who have put Victorian lives at risk. In the five years since the Lacrosse fire, how many prosecutions do you think the VBA has commenced against dodgy building companies and surveyors for installing combustible cladding? Absolutely none. Zero. It is a disgrace. The VBA has recovered zero penalties and zero fines from the people who have put Victorian lives in danger. It is an absolute disgrace. Instead, the VBA is more concerned with shutting down churches providing homeless shelter in my local community than with protecting people who live in fire-prone deathtraps.

For apartments costing $800 000 or more, which will be every new apartment in the state, Victorians will be slugged an additional 13 cents in the dollar. That is a minimum tax bill of $104 000 before you can live in the apartment. Housing affordability under this government is bad enough, and Labor will make it nearly impossible for Victorians to afford new homes. Even more extraordinary, for apartments that cost more than $1.5 million to build, the government will tax you a massive 82 cents for every dollar, meaning Victorians will pay a minimum building tax of $1.23 million to this Labor government. This is an industry-destroying tax which will prohibit the vast majority of Victorians from being able to purchase apartments at a time when housing stock is in record demand.

Today the Victorian executive director of the Property Council of Australia said she was ‘deeply concerned about the impact the proposed huge increase to the building permit levy will have’ and that it will ‘negatively impact residential supply and housing affordability’. The Labor government is making it harder for Victorians to buy a home. What is also troubling is that this bill allows the minister to give any unspent building tax revenue to the Treasurer to help him clad the gaping hole in his budget rather than returning any excess revenue raised to the innocent victims of this combustible cladding crisis. With net debt projected to reach almost $55 billion by 2022, it is worrying that Labor is using the combustible cladding crisis to raise tax revenue to fix its budget headache.

This bill is bad for Victorians, bad for the building industry and bad for homebuyers. I urge members to oppose the bill.

Mr J BULL (Sunbury) (18:20): What an entertaining contribution that one was. I am pleased to have the opportunity this evening to contribute to the debate on the Building Amendment (Cladding Rectification) Bill 2019. This is a bill that addresses what is a very serious matter, a matter that has been widely reported, widely canvassed and widely discussed throughout the state—indeed throughout the country and in fact right throughout the world. It is a bill that primarily is about safety, a bill that deals directly with the use of combustible cladding on buildings throughout the state that pose a serious risk to the community.

Before I turn to a number of elements of the bill, those mechanics in the bill, if you like, that a number of members have mentioned this evening, I do want to pick up on some of the comments that were made in other contributions, particularly from those over on the other side of the chamber, who have unfortunately and sadly yet again failed to learn from the mistakes of the past. Unfortunately, those opposite have sought yet again to play politics with this issue. They have yet again chosen fear and division over leadership and common decency in this area and sought to exploit those dealing with a serious issue—which of course it is—in an attempt to score points. This is not, as you would know, Acting Speaker, good leadership. It is not what those affected by this problem need, and it is certainly not what those affected by this problem deserve.

I had the opportunity to listen to the contribution by the member for Kew. Well, it did not go so well. He, and others, I must say, among those opposite, labelled this as—can you believe it?—a tax grab. But I suspect if the member for Kew had his time again, he may take the opportunity to reconsider his position on this bill. I suspect the member for Kew could have spent a little bit less of his time talking about the leadership of the Victorian Liberal Party and more time on what he should have been talking about by ploughing through some of the detail of this bill, which in fact supports those who need support at a critical time. I am astounded to add to that that there was a complete failure and a complete lack of explanation, if you like, as to the role of the federal government in this matter, who completely walked away from providing any assistance on this—and we talk about leadership. I certainly cannot understand how or why members on that side cannot explain that matter in its entirety.

I do want to say that this is a very serious matter. This is a matter that needs a plan, and this is what this bill provides and this is what the government is delivering. It is a matter where those affected by it need support. This bill provides a range of supports to do exactly that. It is what the government is delivering. Individuals affected by this need assessment; they need financial support. That is exactly what this bill does, and it is exactly what this government is delivering.

I do not want to spend—or, if you like, waste—any more time speaking about what those opposite are doing. What I always prefer to do is speak about what this government is doing. Victorians in November last year demonstrated in record numbers their support for this government, and on this matter I think Victorians—all fair-minded Victorians—would have respect for the elements of this bill that will assist them in the situation they face. There is no doubt, as I mentioned earlier in my contribution, that the flammable cladding on a number of buildings poses a significant risk, and of course action is needed.

This was tragically demonstrated by the Grenfell Tower fire in the UK, which highlighted the risks of combustible cladding on residential buildings. Sadly, 72 lives were lost when fire broke out in the 24-storey tower block in the west of London. Circumstances surrounding the fire continue to be investigated, but primarily there is a huge concern that the combustible cladding contributed to the rapid spread of the fire and therefore the loss of lives. The Lacrosse building fire in 2014 that other members have mentioned and the Neo200 building fire in February 2019, as others have mentioned, were local, in Melbourne, and were characterised by a rapid spread of fire across the external facade of the building—as a result, I should say, of combustible cladding.

These are of course very serious matters, and this bill is a result of a power of work, a significant amount of work. I do note that the Minister for Planning is in the chamber this evening. This bill comes from a significant body of work, work that was needed to assess a whole range of properties. It is a very complex process and a long process, but it is important work, and it should not be rushed.

This bill comes on the back of the work that was done in 2017 to establish the Victorian Cladding Taskforce, which investigates the use of non-compliant external wall cladding on buildings and has made recommendations to protect the public and restore confidence. The task force has overseen a continuing audit by the Victorian Building Authority (VBA) to identify where combustible cladding had been used inappropriately. On top of that, the interim report released in November 2017 found that systemic failures in the building industry had led to these major safety risks. The final report, released in July 2019 by the co-chairs, was to build upon that, and it recommended a dedicated cladding agency.

This bill does a number of things, as we have heard this evening, but primarily it enables Cladding Safety Victoria to administer the cladding rectification program announced by the government on 16 July 2019. The bill provides for an increase in the building permit levy to partially fund the cladding rectification program as well as financial management arrangements for administering this funding, a total allocation of $600 million. This is a very important program. The bill provides a range of functions which I, in the couple of minutes that I have got remaining, will not get to, but importantly it provides the VBA with the appropriate functions to provide information and advice on the work and payment process that will be needed for financial assistance—and there will certainly be a large volume of that—and to make provision for Cladding Safety Victoria to be able to work through the process to identify those buildings that need rectification. This will no doubt be a costly process.

This is inherently about leadership. This is a government that does not shy away from issues within our community that affect our residents—residents that deserve and need our support and residents in communities that look to the government in these very worrying circumstances for support and advice. It is not a political issue. For those opposite, it is not a tax grab.

I want to express my thanks to the Minister for Planning. He and his office have done a considerable amount of work on this matter, a complex matter, to get this bill before the house, underpinned by a significant amount of money. But it all goes back to supporting those in our community that need it the most. This is about safety and ensuring that this government stands with communities right across the state. It is a shame we do not have national leadership on the matter, but we will not wait. I commend the bill to the house.

Dr READ (Brunswick) (18:30): The Building Amendment (Cladding Rectification) Bill 2019 legislates the government’s cladding rectification program and allows the government to recoup the costs of this program from builders. It has been a long wait, but it is a relief to see some action on this. I became interested in this issue in March after receiving a letter from a constituent who lived in an apartment development clad with aluminium composite panels. She told me that residents and the owners corporation were given inconsistent information about what replacement material would be safe. It seemed odd at the time that nothing other than brick or cement would be satisfactory, apparently. It was unclear then whether the developer—which was VicUrban at the time—the builder, the building surveyor or even the council were to blame. But regardless of who was to blame, it was the apartment owners who had to pay anywhere between $10 000 and $60 000—no-one knew for sure—to rectify this.

Clearly not all owners in this apartment development could afford this sort of money. So if only some could afford to pay for cladding rectification, who was going to pay to do the rest of the building? She had just got a job on the other side of Melbourne and had been planning to sell and move before this came up, but she was now trapped in an apartment that would not sell for anywhere near its value for an unknown amount of time. She said in her email to me, and I quote, ‘We are now getting sent snippy notices about things we aren’t allowed to do on our balconies’. The building company that did the development went into receivership. Then other residents in similar circumstances began to contact me, complaining of rising insurance fees—up to fourfold increases in some cases—and that the legal fees of the owners corporation had increased.

Many months later I am relieved to see this bill, which takes important steps to relieve residents in this predicament. I applaud the government for this, even if it has required considerable pressure from the community, from residents, from councils, from fire engineers, from the Greens and, yes, even from the member for Kew.

About 18 months ago the Greens called for the establishment of a fund to cover the cost of replacing cladding in those buildings at highest risk of fire. The Greens also called for legislation to enable the government to pursue builders or developers for the cost of fixing flammable cladding. Eighteen months later this bill creates Cladding Safety Victoria to carry out the rectification works. Half of the $600 million program will be funded by increasing the building levy, and this will be reviewed within four years. In fact it may need to be reviewed well before then.

The bill also enables the government to recover the cost of cladding rectification from the builders who were responsible for installing the dangerous cladding. This is particularly important to me because the City of Moreland has the highest number of these buildings so far discovered, and almost all of them sit in my electorate of Brunswick. Residents feel trapped and they feel at risk. Never mind their financial circumstances, it is hard for them to go to sleep thinking that they are in a building at increased risk of fire. There they were, buying an apartment and thinking they had sorted things out, and then they are reading of disasters overseas or even fires closer to home. The emotional toll of this is considerable.

This is a result of regulatory failure. It is a result of the privatisation, among other things, of building inspectors about 25 years ago. I want to acknowledge here that the Parliament faces a difficult situation. On the one hand you have got private apartment owners who are needing considerable subsidisation to relieve their predicament; on the other hand you have got people who are homeless who do not get to see this sort of money. But the clincher is that some of these buildings are at risk of bursting into flames, and that overrides any equity issues here. I think it is critical that the public safety issue be sorted. That is why it is important for the government to move ahead with this program.

The cost of the privatisation of building inspectors should be a lesson to all of us of the likely cost of the privatisation of any regulatory agency. We should look back at this privatisation from 25 years ago and see this as a monumental and expensive failure which we will be paying for in years to come. While it has been somewhat crudely characterised as a tax grab by those to my right, they are not entirely wrong. It is a tax grab to pay for a privatisation which occurred a couple of decades ago. It is effectively a nationalisation to pay for a privatisation. The government’s initial plan to make owners corporations take out loans and repay these through council rates was a failure. This bill is much better, and I am pleased to support it.

Mr CARBINES (Ivanhoe) (18:36): I rise to speak on the Building Amendment (Cladding Rectification) Bill 2019. It is nice to make a contribution on that, but really there are much broader issues in relation to the cladding rectification matters that are affecting so many people across Melbourne. I have got no doubt of that when I drive through the Brunswick electorate, or occasionally ride through, and see that densification, as we see in the inner city in particular. There is no doubt.

If you are a member of Parliament representing those inner-city communities, yes, I could imagine you would have a very significant number of people who have been affected by—let us call it what it is—the crisis. It is a crisis. It is a serious problem. But I can tell you that in—what would you call it—the inner suburban areas that I represent, there are the same issues. There is not just, as the member for Brunswick touched on, the privatisation of the building surveyor work back under the Kennett government; you see the same in relation to planning permits that have been issued for residential builds. You need to shade your window because of overlooking. You need to have different setbacks on properties, as you would know, Acting Speaker Suleyman, as a former mayor in local government, and as many others who have served in local government would know. Planning issues are very significant and can affect people’s lives and their amenity in what is the biggest investment that they make in their life—that is, their home. That is the biggest investment anyone makes financially in their life.

That amenity and that financial commitment that people make can be affected not only by what happens around them but, of course, as we have seen with cladding, by the investment that they make themselves or a purchase that they make at a later time, and they find themselves in this no-man’s-land, this void of seeking retribution, perhaps—a different word would be ‘redress’—for what has happened to them in relation to cladding matters. Can I say, in my electorate I am dealing with so many people who look out for their parents, to help them buy a unit or a townhouse to downsize or to help look after them, and then find at a later time that matters that have never been appropriately addressed, checked or followed up have been ticked off by private building surveyors—shoddy work and phoenix companies.

We have seen and heard, and we understand. Although our government with a $600 million package is trying to address these issues, trying to track down dodgy builders and make them accountable, phoenix companies have gone—disappeared, never to be held accountable. How do we deal with that? It is very much a national issue that needs to be dealt with through national legislation. There is the Corporations Act 2001 as well regarding phoenixing and companies that behave in that way. So there are some very big issues that need to be dealt with on the national stage and tackled under corporations law—these very significant problems that happen at a national level.

I must say that I deal so often with people who are very distressed in my community because building surveyors, in whatever measure you might like to look at, have let down the communities that they are meant to serve. These privatised services have failed. They have failed people in the biggest investment they make in their life. In dealing with the cladding rectification bill is there a positive out of it all? I think it has just shone a light on the lack of regulation and that our statutory authorities have in the main failed to provide comfort, justice and redress to so many people in our community who have been so dreadfully affected, not just in cladding rectification matters but in the enforcement of planning conditions, whether it be through VCAT or local government—building surveyors not following through on their work, not following through to make sure that people with those planning permits have delivered on the commitments and the obligations they are required to meet.

This is a very small part of a much broader issue about how we deal with planning matters here in Victoria. I am dealing with so many people trying to care for aged loved ones, their parents, trying to put them in appropriate accommodation and then finding that there are building surveyor matters that have not been appropriately dealt with, and they are just caught up in VCAT. They are caught up in the courts. They are caught up chasing builders and companies that no longer exist. They are fatigued. They are stressed financially and emotionally, and this just continues time and time again. This has been happening in recent years particularly, long before we have been dealing with the cladding rectification matters. If there is anything positive that has come out of the Building Amendment (Cladding Rectification) Bill, can I say it is shining a light on the lawlessness, the lack of accountability and the lack of responsibility not only of these private building surveyors and the work that they do and the accountability for their work but also of the statutory authority, which I think has been slothful, really, in its role in holding to account the people it is meant to police, the people it is meant to register and to regulate. People paid a lot of money, people gave a lot of resources, and it failed a lot of people, and now the government is providing $600 million. That is no small sum, and the costs that will ultimately flow on to those who seek to renovate their properties, build new properties, will ultimately be borne by the taxpayer and by the consumer. But can I say that this is only the thin edge of the wedge of the work that needs to be done to give greater certainty to people who are building a house or who are buying a house or a property about the obligations that they have.

I think I read somewhere in recent times that you have more rights when you buy a car, you have more rights when you buy a shirt at the shops or a food processor, than you do at the moment in seeking redress on building matters, on planning matters, from either those who provided the regulatory approvals or those that have done the building work. You can drive around Melbourne and you can see the shoddy developments, and you can see the cycle of stress, emotionally and financially, that is going to be put on unsuspecting Victorians that purchased these properties, because they have never really been ticked off appropriately by building surveyors in a privatised role.

This is a Kennett government legacy that we are dealing with, make no mistake about that—‘Red tape, paperwork—oh, yeah, we don’t want that!’. That is all being revisited on us today, and it is good that we have this bill before us. It is just and appropriate. As legislators we need to understand what anyone who has worked in local government or who has had to deal with planning matters knows: that building or buying a property is the biggest investment you will make in your life—an apartment, a flat, a unit, a house. What has the last quarter-century done in relation to what is out there and what obligations have to be met to meet the law of the land, the planning approvals, the planning requirements? Do we really think that is happening everywhere, based on what we know? I certainly know that whether it is the statutory authorities or those privatised services, they are not delivering in the way that they should, they are not accountable in the way that they should be and that is leaving a great legacy and a black hole and a gap that will leave so many people vulnerable—so many people.

I commend this bill to the house, but it is just the start of the work we need to do and the start of the costs—the $600 million—that we have to advocate for and attribute to the work we are doing now. That is a financial cost that we are all bearing for mistakes that were made in the past by the Kennett government, who thought a laissez-faire attitude to regulation would be appropriate, and that is being revisited on generations of Victorians today. We have a lot more to do in this space with the largest investment people make in their life, which is their home—the home in which they seek to support their family or friends.

There is so much more work that we need to do, there is so much potential to do good by people. So I am thankful that this bill is before the house. It has my full support, but there is so much more we need to do to make sure we are protecting people in the most important asset and expensive asset that they will buy in their life, supporting them into the future and giving them greater accountability and respect.

Ms THEOPHANOUS (Northcote) (18:46): I rise with pleasure to speak in support of the Building Amendment (Cladding Rectification) Bill 2019, which at its heart is about community safety, and I acknowledge the contribution of the member for Ivanhoe, who said that your home is the biggest investment that you will make in your life. This bill helps us deliver on our commitment to protect our communities from the risks and impact of combustible cladding, which we know can be devastating.

In 2017 we saw the terrible and tragic consequences of combustible cladding brought to the fore with the loss of 72 lives in the Grenfell Tower fire in West London. In Melbourne the Lacrosse fire in 2014 and the Neo200 building fire in February this year have highlighted the risk in our own backyard. While thankfully neither of these fires caused serious injury, the extensive damage to people’s homes, the trauma experienced by residents as well as the risks to the community and first responders were severe. Combustible cladding is a truly complex global issue impacting cities all around the world.

In Victoria thousands of home owners have been affected, including in my electorate of Northcote. The Northcote electorate forms part of two municipalities: Darebin and Yarra. While the addresses of the impacted buildings have been rightly withheld from the public for community safety reasons, we do know that 38 privately owned buildings in Darebin and 40 buildings in Yarra have been identified as having combustible cladding. But these are just numbers. I have been contacted at my office by a steady stream of local home owners and residents who have reached out to me to share their concerns and their distress as well as their hopes for a way forward. One key message that I have heard repeatedly is that while this is indeed a global issue, for residents and for home owners it is also an intensely personal issue. This is their family that is at risk. It is their home that has been made a liability, and it is their financial security that will be impacted by the cost of rectification.

I can only imagine the feeling of lying in bed, staring up at the ceiling, worried and anxious that the very walls around me and my family are unsafe. Our homes are meant to be our safe havens, where we can retreat from the hubbub, put our feet up and relax. That is our right. The risk posed by combustible cladding strikes at the very heart of what it means to have a home. Nobody deserves to have that sense of safety taken away from them. Nobody deserves to lie awake at night anxious that their home, their security, their livelihood and their loved ones are under threat. Indeed several people I have spoken to in my community have told me of how this issue has impacted their mental health. Residents deserve better. They deserve to live their lives in peace and in the knowledge that their homes are safe.

In Northcote we have a burgeoning population, and that has meant that in some areas we have seen many new residential developments being built at a very rapid rate. My constituents want to know that development in their neighbourhoods is both appropriate and safe. As a community we must consistently balance the need to provide affordable housing with infrastructure and community character—a balance that can sometimes be challenging. But what is most critical is that each and every resident of Northcote and of the whole state is able to feel safe and secure in the knowledge that the materials being used to build our neighbourhoods are not putting them at risk. It is for these residents, their neighbours and our local first responders that I am pleased to support the measures in this bill and the world-leading, proactive and systemic approach to this issue that the Andrews government has adopted from the outset. We have not sat on our hands waiting to see how things pan out on the global stage. The claim from some opposite that we have done little to address this complex and large-scale problem is patently wrong.

Following the Lacrosse fire in 2014 the Victorian government initiated an audit to identify buildings with combustible cladding and assess the risk. We remain the first and only state that has actively sought to identify buildings with combustible cladding. Some other jurisdictions have required building owners to declare the presence of combustible cladding, but this process is prone to delays as well as limited disclosures and failures to identify affected buildings. Our proactive approach ensures that identification is timely and that buildings which may be affected do not slip through the cracks and remain a risk to the community.

In 2017 we established the Victorian Cladding Taskforce to oversee the ongoing statewide audit and propose options for rectification as well as options for how to improve compliance and enforcement in this sector. In March 2018 Victoria became the first state to limit the use of combustible products on buildings to ensure that the health and safety of Victorians is protected into the future. With the release of the final report from the Victorian Cladding Taskforce delivered in July this year, we are now moving onto the next stage: rectification. I need to point out that throughout this process Victoria has been a national, indeed a global, leader when it comes to facing the challenge of combustible cladding head-on, and we have taken the same approach in relation to rectification.

Earlier this year we announced a package to fix buildings with combustible cladding, alleviating the stress of countless home owners who have been grappling with how to meet the financial cost of rectification. Under this $600 million package financial grants will fund rectification works to make sure homes currently at high risk are made safe. This is our number one priority, and we have established Cladding Safety Victoria to drive this work.

Cladding Safety Victoria is a dedicated agency that will work with owners and owners corporations throughout the rectification process. This aspect is important: a dedicated agency with clear functions and responsibilities provides clarity and certainty for the many home owners who are struggling with the complexity and the breadth of challenge relating to combustible cladding. This bill builds on the functions of Cladding Safety Victoria to get on with their job. Critically, it also enables Cladding Safety Victoria to make payments to home owners and bodies eligible for financial assistance to get rectification work underway. In fact initial works are already underway, with 15 buildings identified as priorities based on risks as assessed by experts. It is anticipated that by the end of the year Cladding Safety Victoria will notify the owners of the next 150 buildings that will enter the program in 2020. While I recognise that many home owners are eager to have their buildings fixed right away, this is an immense undertaking and it does take time. Proper process is essential to ensure rectification works are done properly by qualified practitioners to keep everyone safe.

Grappling with the expected cost of rectification has understandably been one of the most stressful challenges for some home owners in relation to combustible cladding. Under the rectification program announced in July eligible home owners and owners corporations will not be required to contribute to the cost of works unless they want a solution beyond that which is required by Cladding Safety Victoria. This is welcome news for owners in high-risk buildings who, whether purchasing their apartments as forever homes or investments for the future, acted in good faith, often investing their life savings.

The cost of this rectification work will be met through a $300 million investment from the government and through an additional building levy that is expected to raise a further $300 million over five years. The additional building levy provided for in this bill has been targeted to limit the impact to particular building works at specific price ranges. Detached dwellings and public-use buildings like hospitals and early childhood centres are excluded from the levy. We have also undertaken modelling to examine the impact of the levy on consumers and have designed the scheme to limit its effect on people buying a home. This is in line with our commitment to ensuring home ownership is an aspiration that remains within reach for everyday Victorians and we do not exacerbate existing issues relating to housing affordability. The bill also provides for the review of the levy not more than four years after it comes into effect. This will make sure any levy continues to be necessary and appropriate in relation to the scope of ongoing rectification works.

Finally, this bill provides for the state to take legal action against builders who have done the wrong thing. While we know that most people in the building industry do the right thing and would never consider putting others in danger through dodgy work, we also know that there have been significant failures within the construction industry and non-compliant work has led to the current combustible cladding problem. It is our belief that it is only fair that those who created this problem contribute to the solution. This bill will provide for the state to take legal action to recover the costs of rectification where it can be shown to be a result of non-compliant work. This measure sends a strong message to wrongdoers and ensures they are contributing to the cost of fixing this problem. Importantly, as the state is taking on the cost of rectification, home owners will not have to endure the financial and emotional toll of entering into legal proceedings. The burden of pursuing dodgy builders through the legal system can be a huge impost. I commend the bill to the house.

Ms HORNE (Williamstown—Minister for Ports and Freight, Minister for Public Transport) (18:56): I rise tonight to speak in support of the Building Amendment (Cladding Rectification) Bill 2019. In speaking about this, I would like to reflect on the amount of growth and the scale required in getting this right, which we need to be able to do. The growth that is occurring in the inner west of Melbourne, with the number of high-rises that are going up along the banks of the Maribyrnong River through the Hobsons Bay electorate, means that providing the community with assurances that we are enforcing planning conditions, that we are making sure that shonky builders will be held to account and that we do have that building compliance is absolutely paramount. As a number of my colleagues have said, that thought of going to bed every night not knowing whether your building is safe, the thought that the asset that you have invested in—the family home, the things that you have actually put your life savings into—may not necessarily be safe, makes it absolutely paramount that we address this through this important bill. I would also like to reflect on what my friend and colleague the member for Ivanhoe said about the emotional stress that people go through—the emotional and the financial stress of people having that uncertainty of not knowing the safety of their house.

One of my constituents is a woman who has been through the absolute wringer at VCAT with shonky builders, with a company that has actually been phoenixed and those sorts of things; her journey started with shonky builders in 2011. Whilst we have got much more to do to be able to protect people in that situation, this bill is absolutely the start of ensuring that there are those protection measures in place to make sure that people do have that redress and are protected in the future. I think the Minister for Planning needs to be absolutely commended for putting in the hard yards to have this bill in place, and I think one of the things that particularly gives us comfort is actually the work that has been done by the Victorian Cladding Taskforce to have that framework in place that provides the state with the opportunity to make sure that the work has been done to identify, protect and have the framework there that gives us a pathway forward to be able to address the concerns of the public.

Business interrupted under sessional orders.