Thursday, 20 February 2020

Bills

Owners Corporations and Other Acts Amendment Bill 2019

Second reading

Debate resumed.

Ms HALFPENNY (Thomastown) (11:51): I had been speaking prior to question time, and I think I had got up to just talking through a little bit of background to the making of this bill that has come to the Parliament today to be debated and the extensive consultation and discussion that there has been in the lead-up to proposing these changes to the law. I think I was saying that there had been a legal review. There have now been exposure papers. There has been draft exposure legislation. There has been the ability for stakeholders and those affected to make submissions. This has been done over a number of years, really, so there has been a lot of consideration, effort and wanting to consult with those affected to make sure that this legislation does actually protect those that it needs to protect and also ensure that it is a modern law that reflects the modern circumstances that we are in.

In terms of the actual changes that this bill is proposing with owners corporations—I have mentioned the retirement village changes—it is looking at things that really you would think anyone should expect. For example, it is trying to increase the professionalism of the management of owners corporations and ensuring that those that manage these organisations to protect tenants, owners and people living in these apartments, units and so on are fit and proper people. This legislation ensures that if people have been convicted of certain crimes, they are unable to manage owners corporations. It also gives owners of these properties and those that live in the properties a little bit more say in ensuring that the amenity is what it should be and that there is not, for example, smoke that drifts from one apartment to another. It also talks about there being things such as five tiers of owners corporations. When it comes to the regulation of these bodies, if it is a small body that is looking after, say, three units, we do not want an onerous requirement and burden on that sort of owners corporation. So they are required to do a little bit less than, for example, an owners corporation that is managing 100 apartments in a high-rise block in the inner city.

Talking about some of the other things that owners corporations will be required to do, they have to make sure, for example, that developers do not have undue control over the owners corporation at the expense of the owners of each individual lot or apartment. This legislation prevents developers from setting up owners corporations that give them all of the power at the expense of the lot owners. It also provides for lot owners being able to vote when it comes to taking actions in places such as VCAT in response to various issues that come up, again giving those lot owners a bit more say and a bit more control over the places that they have.

Another thing that has come up, and I guess it is fairly topical at the moment, is maintenance. Big blocks of apartments—or whatever—do require maintenance. We cannot allow these places to fall into disrepair, of course, because they can be unsafe as well as unsightly and can cause problems for the value of property. This legislation, which I think is really important, requires owners corporations to have—and continually top up—funds for ongoing maintenance into the future. I have heard of a number of occasions where, for example, owners corporation fees are kept very, very low, but what happens then is that when major maintenance is required, the lot owners or the owners of the properties are required, in unforeseen circumstances, to put in huge amounts of money that they cannot afford in order to fix emergency maintenance issues. This is about equity as well, so if each owner has paid a little bit more—and this is probably in particular with landlords or people that own property for investment, where they really do not want to pay anything to maintain the properties that they are leasing, even though they are getting the rents. This legislation will require those people that are more resistant to putting in extra money to do so in order to make sure there are enough funds into the future when major maintenance is required.

So overall this is legislation I think that will be welcomed, in particular by owners of properties and those that are leasing properties, and I think that it is a bill that is well worth— (Time expired)

Mr EDBROOKE (Frankston) (11:56): It is a pleasure to rise and speak on the Owners Corporations and Other Acts Amendment Bill 2019. We have heard from various speakers that while this bill is complex, it is rather dry. For me, I think I have read through all the notes, obviously, before I got up to speak and was very interested in certain aspects of this bill and how it will affect members of my community. We have heard various members talk about some of the horror stories that constituents in their seats have come to them with, and I heard the member for Bentleigh yesterday talking about an elderly lady who visited his office with a bag full of paperwork from the owners corp. His words were, I think, that he was even flummoxed by it, and I have experienced that myself as well. It does seem that that amount of paperwork is not put there for any purpose of efficiency; it is actually put there in order to flummox people, especially when we have the older generation. Whereas things probably used to be a little bit less IT and a little simpler in those situations, today I think in some aspects we are at risk of those people being taken advantage of. That is what we are experiencing in Frankston. I think this legislation goes a long way to updating the existing legislation that has not been updated since 2007, when it was actually enacted.

The background of this legislation is of course that the consumer property law review was announced in August 2015 covering four major pieces of consumer property legislation for which the Minister for Consumer Affairs, Gaming and Liquor Regulation is responsible, including the Owners Corporations Act 2006. Issues paper 1, entitled Conduct and Institutional Arrangements: Estate Agents, Conveyancers and Owners Corporations Managers, was released in September 2015, with submissions closing later in 2016, and issues paper 2, entitled Owners Corporations, was released in March 2016, with submissions closing in April 2016. An options paper was also released, and the drafting of the bill has been informed by much stakeholder feedback and the options paper itself.

So you can see that a lot of consultation has taken place, as it did on other pieces of legislation that affect the way the people live—legislation that this government introduced to protect renters and legislation that this government introduced to protect the occupants and neighbours of rooming houses. It is a larger map that shows that this government has been listening to people, especially when these issues have been boiling away for years. We have been opening a door, saying, ‘Come and tell us exactly what we need to do as residents. Tell us what we need to do from the perspective of the owners corp’. We listened, we have consulted and this is obviously the result today.

We do see the changing nature of the way we live in Australia, in Victoria and even in Frankston every day. The revitalisation of Frankston, which has been a huge project—it started in 2015—has seen, I guess, the state government provide catalyst developments for investors who would like to build mixed retail, mixed units in Frankston. We will see more of that in the CBD of Frankston, because the way people purchase their properties—what entices people is not necessarily now the backyard; it is not necessarily the two dogs. Families are different, and we have to actually change to that as well. This bill actually goes a long way to doing that. Frankston now, for instance, is a long way from where it was in 2007. We are seeing a lot of different interests from people, who are not interested in just buying a home. They are interested in buying a unit on a brand-new street, next to a brand-new train station, metres from the beach, with great businesses. We are seeing that change, that different mode of life. People are actually interested in living in the CBD, where they can, for instance, use better public transport as well. This legislation goes a long way to ensuring that we are looking to the future and making sure that we are actually changing so that it makes it easier for residents and owners corps as well.

Some of the great things that this bill does that I would like to touch on—there are probably about four or five which really take my interest. One is that this bill rationalises the regulation of owners corps. We have heard people previously talk about the five tiers. What we are actually doing is regulating owners corps according to their size in a more rational and responsible way by introducing that tiered system, with new thresholds for owners corporations to have committees, professional managers, external audits and reviews of financial statements and also building insurance and maintenance plans as well as annual financial statements. We are actually enhancing the protection of those injured through negligently maintained common property by increasing the level of public liability insurance required to be taken out by owners corps from $10 million for any one claim to $20 million, which makes a lot of sense as well.

We are also enhancing the equity between past, present and future lot owners by requiring such owners corporations to deposit fees into a maintenance fund that is adequate to actually implement the maintenance plan. This has been a huge issue in my electorate. I guess as a local MP you find yourself dealing with some fairly small issues that people are upset about, and some fairly large issues too, where you are actually trying to provide housing for someone. But on the opposite end of the scale, you know, someone has been asking for a long time to get their window fixed or their door unjammed, and the owners corp just cannot do it. These issues come up every single day, and I am sure they are across the board in every electorate as well. Of course, by making it more efficient and clarifying these roles within the owners corporation, it makes it easier for people to get that work done as well.

Another interesting aspect of this bill is it improves the quality of owners corporation managers and enhances protection for owners corporations. We have strengthened the disqualification and insurance provisions of the current registration scheme for professional owners corporation managers; we have prohibited certain terms in owners corporation management contracts; and we have given the Victorian Civil and Administrative Tribunal the power to rule generally whether other terms in management contracts are unfair.

Another very interesting aspect of this bill that will positively affect people in the electorate of Frankston is the improvements to the governance and financial administration of, and internal relations in, owners corporations, and that again might sound like a dry piece of legislation, but it is going to have very meaningful consequences for people around Victoria. We are improving decision-making within inactive owners corporations by giving the owners corporation managers authority to make interim decisions in certain circumstances, which is very useful.

We are aligning the provisions of the act governing the validity of owners corporation resolutions and those governing the validity of owners corporation rules by requiring that both resolutions and rules not be oppressive or unfairly prejudicial to a lot owner or resident or unfairly discriminate against a lot owner or resident. We support the owners corporations’ duty to repair and maintain common property by permitting them to enter private lots on a reasonable notice when necessary to enable repairs to common property. Again, this is an issue that is raised time and time again in my office. It is probably as common as fencing issues, which I know the Acting Speaker would have heard of in her electorate too. But it is great to see that we have been listening, and we are enacting a piece of legislation that I think will be very beneficial to those people with those issues.

We permit owners corporations to collect and use water falling on common property and to deal with water rights through this legislation as well, and we improve decision-making in owners corporations, particularly inactive owners corporations, by providing special resolutions that do not obtain the required voting threshold but which are unopposed to be treated as interim special solutions.

Another point in this legislation which is interesting to me is that this legislation clarifies relationships and reduces disputes in owners corporations in multistorey apartment buildings, and it does that by enabling them to make rules controlling smoke drift from private lots, which is often an issue. It allows the owners corporations to develop a model rule on smoke drift that requires residents to ensure that their smoke does not penetrate the common property or any other lot, which I think makes sense.

In conclusion, the amount of consultation that has gone into this bill is quite amazing. The bill is reflective of the public’s opinion of what they would like to see made easier, made more efficient and made fairer. I think that is indicative of this government over the past year, and four years previously—that we are actually out there listening to our communities, forwarding that information and making legislation based on that. I think that is why we are here. We are not here just to be yelling at each other over the table. We are actually here to listen to our communities and represent their opinions, and I think this bill does that. I commend the bill to the house.

Mr CHEESEMAN (South Barwon) (12:06): It is with pleasure that I rise this afternoon to speak on the Owners Corporations and Other Acts Amendment Bill 2019. In reflecting on this bill and in fact the time which I have spent in this country, I have decided to make the following contribution.

I was fortunate enough to move to Australia in 1988, and indeed we settled at that time in the regional city of Ballarat. In reflecting on my observation of Melbourne through that period of time, and indeed on our fantastic regions and our fantastic rural communities, it has occurred to me that the needs to house our communities have indeed changed. Over that period of time of course, and over the last 150 years from when Melbourne first was coined Marvellous Melbourne, our communities and our society have dramatically changed. In reflecting on the properties that our family went to look at when we first came here from New Zealand, the common property that people were looking to purchase was of course the traditional quarter-acre block, either a weatherboard home or indeed a brick veneer home. That was I think what most people in this place would have observed as Victoria’s and indeed Australia’s typical housing stock.

In that period of time of course, when there were disagreements over really simple things such as fences or trees overhanging property, there was a relatively straightforward process between adjoining owners in responding to those particular issues or those circumstances, other than perhaps in the very, very inner suburbs—areas like, say, Carlton or Brunswick or North Melbourne—where there were what I would describe as very typical homes that had been built in a style that people would recognise in some of the inner-city suburbs of, say, London or Manchester and the like.

As our needs to house our community have changed, as the nature of the family unit has changed, as our families have in many instances declined in size and as our lives have become increasingly busy, the desire to have a typical quarter-acre block with a standard brick veneer or weatherboard home on it has changed. Some people of course still do aspire to that. But through the last 30 years we have seen a massive increase in Victoria’s population and we have seen a massive increase in Australia’s population, and that has seen us build a lot of additional housing stock in the outer suburbs of Melbourne and in our fast-growing regional communities—places like Geelong, Ballarat, Bendigo and the like. The nature of the properties that we are seeking has changed. We are now often looking to live on common land with individual dwellings built on that common land either in single-storey or two-storey buildings or often in residential towers that might be 20, 30 or 40 storeys in size. As a consequence of that, Victoria’s property law has been evolving and will need to continue to evolve to reflect that new reality.

In these changed circumstances that we have seen, particularly over the last 30 or 40 years, we have needed to structure our property law to ensure that we achieve a number of things—firstly, that individual property owners within developments have the opportunity to have their say about things that are important to them, about maintaining the integrity of their private dwelling on commonly owned land and about their interest in the commonly owned land component of these developments. We have seen—many of us in this place—disputes between individuals and the view of the body corporate. We are now in a circumstance, after extensive consultation, where the minister has brought these changes to the Parliament.

I think over the next few decades we are going to see a greater percentage of our communities living in privately owned dwellings on common property. We are seeing increased densities in our middle suburbs—in places like Burwood, in places like Box Hill and in places like Mount Waverley. This legislation, I think, goes some way—in fact a long way, and I congratulate the minister for the extensive consultation with the community and with different interest groups—to making sure that we structure our property law in a way in which we can ensure that individuals have rights and that body corporations have fair and reasonable obligations on them in terms of how they interact with the individual shareholders, if you like, of the body corporate.

We have seen the nature of our properties over the last 30 years change dramatically. I think we are going to see a lot more of that change. We are going to see our housing stock change, and we are going to see increased density over the next few years. Victoria has gone through, over the last 30 years, a sustained population boom. I very much expect we will see that population boom continue over the next few decades, particularly because of the confidence that Victorians and those that wish to make Victoria their home have in the Andrews Labor government—and indeed have had in previous Labor governments—to build the modern community infrastructure that we need. That is going to see additional people moving to Melbourne, to our regions and indeed to rural Victoria.

We are going to see more body corporates established, and we are going to see more people owning private dwellings on common land. We need to make sure that our property law arrangements that are in place provide opportunities to resolve disputes, that we see fairness about how body corporates deal with individuals, that we ensure that people can continue to maintain confidence in investing in and buying privately owned dwellings on common lands, that there are appropriate arrangements in place to ensure that people have their rights preserved and that the corporations that manage these properties do so in a way that sustains these buildings.

Mr DONNELLAN (Narre Warren North—Minister for Child Protection, Minister for Disability, Ageing and Carers) (12:17): It is a great opportunity to say a few words on this legislation. Having acted as a voluntary chair of a body corporate some years ago for an apartment block of 22 people, I remember how frustrating it was to actually get people to engage in the process to protect their own interests, to be very honest. We had a body corporate manager who was a very good body corporate manager and did have the interests of the owners at heart, so that was not in question, but the real issue was that we did not have owners who were actually engaged. In other words, they were very difficult to get hold of. I remember that with some of the owners I actually had to ring four times just to get them to respond to simple correspondence.

In the particular instance at the time what I was trying to do for and on behalf of people who had interests as owners and investors in this property was to get them to make a claim against the builder to deal with defects in the property. They were not substantial, but they were probably $100 000, $150 000 or $200 000 worth of defects that needed to be dealt with, and the statute at the time gave us seven years to do so. Many letters were sent out, many times people were rung and messages were left to encourage them to sign the documentation so we could make a claim. At the time we also had the insurance industry playing games, suggesting that the body corporate could not take action for and on behalf of the owners—that each owner would have to do it individually. Fortunately I sought advice on that from a local property specialist and effectively the insurance companies had to back down and allow us, as a body corporate, to make a claim.

Subsequently we did get that sorted out. The builders, Laing O’Rourke, were good; they came back very quickly and fixed the defects. I am very grateful for that. But I can assure you there was a level of frustration about people who would spend over $500 000 on a property and would simply think of it as a passive investment. They were not interested in responding to someone who is acting as a volunteer for and on their behalf and thought I was just there to continually ring around and one day get the damn thing sorted out. The body corporate manager was similarly frustrated and was happy to have someone who was actually actively engaged and wanting to do it.

I notice this bill will improve the capacity to get some of these decisions made. This was about defects, but we also went through the same exercise in relation to maintenance and ensuring that the common property was up to scratch. I did note that the bill will improve decision-making within inactive owners corporations by giving owners corporation managers authority to make interim decisions in certain circumstances. That is very important. As I said, this poor body corporate manager was—although it sounds a bit silly—virtually about to hug anyone who showed some interest in what was going on in that particular property because he wanted some owners to get engaged so he could get things done. Obviously this bill has identified that as a serious issue. I only had 22 units, but I can imagine how difficult it must be if there are 100 units in a particular block, 200 units or the like, and there is a need to get decisions made. If you do not keep the common property up to scratch, the investment of the individuals will deteriorate over time. So I congratulate the minister for the consultation and for identifying it as a serious issue that far too many people, when they invest, have a passive attitude to it and that they do need to engage with the investment they have and engage in what the body corporate manager and the chair require.

I have also noted that the minister has also extended the obligations of developers to owners corporations, in line with New South Wales, from five to 10 years. I think that is very important as well, because while 90 per cent of properties are built properly there are many within the community, as has been identified recently, which simply have not been built to the standards they should be, so there is an obligation on developers to come back and rectify those particular issues.

I also note the minister has identified another issue which we came across—access to private individuals’ units so you can actually fix common property. In this particular instance we had to get the facade re-rendered because there was cracking. We had some owners who would simply not respond, full stop. In other words, we could not actually get the facade fixed until these owners finally responded. It took an enormous amount of work to get these owners to do what was for their own benefit—to actually damn well respond, to be blunt—and it was incredibly frustrating. The minister has identified the need for access to private property—not common property—to fix issues in relation to, say, a common facade or a courtyard or the like which is used by all owners.

It is important that these things get done, because what you will find is that frequently people who have passive investments will suddenly rock up, many years after the event—many years after not actually engaging with what the body corporate owners and the chair was actually asking them to engage with—and scream blue murder that the property has fallen into disrepair. If you do not build a sinking fund to deal with these issues over time, you end up in a situation where you have a lumpy, I guess, call on people’s funds—where for many years there may be nothing and then suddenly there is a massive lump they need to put in to actually get this common property up to scratch. That is very much a welcome addition to the act.

Another area which was not an issue at the time when I was the chair but which I can see enormous benefit of is the capacity of owners corporations to collect and use water off the roofs and the like for the benefit of all, whether it be for gardening or other purposes, in terms of common properties. It is important that this is allowed. I guess this really highlights the fact that if you actually go out there for extensive consultation, you identify the issues that need to be dealt with in terms of owners corporations, and this is what the minister has done. I note that one of those areas, which would have helped me very much at the time, is to improve decision-making in owners corporations, particularly in inactive owners corporations, by providing for special resolutions that do not obtain the required voting threshold, but which are unopposed, to be treated as interim special resolutions.

Those are the things we need to do, because I think at the time I had about three active owners out of 22—good active owners—but it really was push, push, push, push the whole way. In many ways it would have been nice if the body corporate manager at the time, who did have the interests of the owners at heart, was able to undertake some of these decisions, as opposed to us going to 22 different people and about 18 of them being inactive and never getting an actual response, and that is absolutely ridiculous.

I just want to say that the minister and her team have done a marvellous job identifying many issues, because as we know—as the previous member was indicating—a lot more people are going to be living in such apartments. There is a need to rationalise the way these are managed to ensure that they are kept up to scratch—that things like defects are identified and dealt with straightaway, without having inactive, passive investors sit still and effectively ruin it for those who are actually active and wish to do the right thing by all. Thank you.

Mr DIMOPOULOS (Oakleigh) (12:25): It gives me pleasure to speak on this important bill. This is a bill that is long overdue in a sense, partly because the last reflection on this in the statute books was in excess of 10 years ago—about 13 years ago. But that is not the only reason. The other reason is because Melbourne and Victoria have grown enormously in terms of owners corporation developments. I think the statistics that others have mentioned are that about 1.5 million Victorians—25 per cent of the population—live in arrangements that are covered by this bill and the legislation. In fact I am one of them, and I enjoy it because there are many benefits that come with it. Density in many respects—not in all respects—is a good thing. Density means that you have greater opportunity often to access services like transport and services like activity centres, and you can access your neighbours—in an appropriate way!—and I have the best neighbours.

Members interjecting.

Mr DIMOPOULOS: What I mean by an appropriate way is that when you go to the letterbox or you are walking down the shared path, you do not want an over-the-top intrusion into your life, but you want sufficient acknowledgement that you live in a community—you greet each other, you say hello, you check on each other’s welfare, then you go—

A member interjected.

Mr DIMOPOULOS: That is right. Then you can go on your merry way.

Members interjecting.

Mr DIMOPOULOS: I will ignore the cheeky interjections from my colleagues, but density is good, obviously with protections for amenity and a range of other things.

If you think about it, this government has been an exemplar in investing in infrastructure in every part of society. We talked in question time today about major transport infrastructure, but for infrastructure in terms of social capital—schools and kindergartens and hospitals—we have invested an enormous amount. Part of that investment is because we recognise 130 000 people come to live in Victoria every year, year on year, so that investment is necessary. But what is also necessary is a revisiting of the legislation that covers an increasing number of living arrangements for us in Victoria—as I said, including my living arrangements. It is something that is required, but also now we should never consider living in an apartment or a townhouse, in any sort of owners corporation arrangement, as a second-fiddle option to the preferred option of living in your own lot or a house. That is no longer the case. We saw that with our rental reform. We have accepted that more people will live in rental accommodation—some by choice in fact, others by necessity. While we try and improve housing affordability, and we are doing a range of work on that, we also accept that because more Victorians are living in rental accommodation we need to make the rental laws fairer. Similarly, we need to make the owners corporation laws more appropriate.

There has been a historic imbalance, in my experience, when a new development comes online. For the developer, instituting a set of arrangements with the owners corporation that they establish does give them a fair bit of advantage in how they structure that property, that then new owners or even tenants have to live under. This is why this bill is extraordinarily important. It improves the quality of owners corporation managers and enhances the protections for owners corporation individuals, and in fact for their tenants if they do not live in the properties themselves. There was a significant amount of consultation conducted here, with over 100 submissions made to the government’s process—experts, the lived experience of Victorians. A whole range of people contested the provisions of this legislation.

There are some things I want to point out which are important to me, and I have had direct experience with this—where a developer institutes arrangements and a contract with an owners corporation which effectively might tie the hands of future owners for five, 10 or 20 years. Not always but often those arrangements the developer institutes with a management company are either favourable to the management company or favourable to the developer; it is often not favourable to the owners. This bill outlaws that. Effectively what it does is it extinguishes any management agreement that exists upon the first meeting of the owners corporation. Then the second question you may ask is: well, what happens if the developer has retained enough properties—it has not yet sold all the properties—and therefore can still renew effectively the management agreement because they have a majority of votes on the owners corporation? This bill seeks to deal with that issue too by not allowing—prohibiting—the developer-owned properties to vote for the appointment of a manager in the owners corporation. For me, that is a key thing.

It does many, many other things. It strengthens the disqualification and insurance provisions of the current registration scheme, and I think that is critically important. It also will prohibit a range of existing behaviours by both developers and body corporate managers. I should have said this at the beginning: most developers and most managers of body corporate arrangements are good entities. They do good work.

Members interjecting.

Mr DIMOPOULOS: Most do good work. The problem is that you cannot construct legislation, unfortunately, only on the highest principles; you have to construct legislation which protects a community based on the lowest common denominator of behaviour. This bill does a range of those things.

It also expands the obligations of developers in line with the New South Wales model, which prohibits developers from appointing themselves or their associates, as I said, as body corporate managers. It will require the developer to disclose any beneficial relationship between the owners corporation and themselves. It will prohibit the setting of the initial budget at an unreasonably low level to entice buyers, and then ratcheting up the price later. I think the member for Thomastown talked about an experience there.

It also does a range of other things in relation to improving the transparency around body corporate management arrangements but also in lessening the bureaucratic burden on the smaller body corporate arrangements. This bill will institute a scaled regime in terms of obligations depending on how big the body corporate arrangement is. Others on this side have spoken about a scale of five steps in terms of the obligations that the bill and the law will require of different sizes of bodies corporate. It takes a big step in improving the governance and outcomes for owners of bodies corporate. It is something that has become, as I said in the beginning, increasingly important given a bigger number of Victorians are living under these arrangements. This is about reforming their lived experience, but also in many respects, even if it is not their lived experience, their investment if they are absent landlords.

It improves the decision-making within inactive owner corporations. It restricts, as others have said, proxy farming and committee proxies, and prohibits contractual limitations on lot owners’ voting rights. I did not know the term ‘proxy farming’ before reading up on this bill, but I absolutely have experienced the behaviour of proxy farming by others on a body corporate that I was briefly on in Footscray. There were a couple of keen individuals who had more interest and more time perhaps than others, and they would prosecute their own agenda by effectively pretending to do a favour for other owners by offering to be their proxy. Some would amount to eight, 10, 12 proxy votes, and they would prosecute a case which was really only important to them while not giving that level of transparency to the other body corporate members about why they were so interested in attending these body corporate meetings and grabbing their vote to use it for their own purposes. So these are all very, very important things not only for investment but for residential amenity for an increasing number of Victorians.

I want to commend the bill to the house. I want to commend the minister’s work. This is a very fraught area but an area that absolutely requires government investment in government time and government regulation. I thank the minister and the house for their consideration of this bill.

Mr PEARSON (Essendon) (12:36): It gives me great pleasure to rise today and speak on the Owners Corporations and Other Acts Amendment Bill 2019, and what a delight it is to see you in the chair on this fine afternoon on a Thursday, Acting Speaker Spence. I am delighted to make a contribution on this bill because I think that it speaks to Labor’s values.

It used to be that historically you could purchase a standalone home. The notion that it would be on a quarter-acre block was certainly common, but more likely it would probably be on 700 square metres as opposed to 1000 square metres, and you could purchase a property for probably three to four times gross average annual earnings. What that would mean in a very practical sense is that you could be someone who had left school at 15, like my father did, and who was a butcher, and you could buy a house, and, if you lead a moderate and temperate lifestyle—that is, you would enjoy life a little—

Mr Dimopoulos: That’s you to a T—moderate and temperate!

Mr PEARSON: Indeed. Thank you, member for Oakleigh.

You would be able to pay off that property in the fullness of time and be able to lead a good life. What would happen—and I am talking, I suppose, specifically about the baby boomer generation—is they would build up those assets over the passage of time. They would probably not have access to the superannuation system because by the time superannuation came in they were into their 40s. But you would have a set of circumstances where people would live in a house, they would pay it off over the course of time, and they would be broadly leading a pretty good and comfortable lifestyle.

Around the time when these sets of circumstances were occurring, there were challenges in terms of the infrastructure that was being provided to those communities. That certainly was a feature of political life at a state and federal level throughout the 1970s and the early 80s. Particularly, Acting Speaker Spence, you will recall some of the great campaigns about making sure sewerage was supplied to the suburbs as an example of that.

What we have seen more recently though is that the ability to service a mortgage for a house has meant that the average gross wage to service the debt to purchase a house has gone from, say, three to four times gross average earnings to probably closer to 10, depending on where you live. So the ability for people to be able to go out into the suburbs to buy a house on land and raise a family is being diminished; it is being questioned. You can lead an almost monk-like existence. You could not drink, not gamble, never go out, be solely devoted to servicing your mortgage. If you are on average weekly earnings, you are probably going to struggle to service that sort of debt in many parts of our community. And that was never the case—it was never, ever the case.

Indeed I am reminded by the great work by Daron Acemoglu and James Robinson, Why Nations Fail. In Why Nations Fail a central thesis is that where you have exclusive economic institutions and exclusive political institutions, nations fail. So there is a need to make sure that if people turn up, they work; and if they wish to be able to purchase assets and create wealth, they should be able to do so. When you lock people out and you basically say, ‘You can’t buy a house because it is too expensive’, ‘You can’t take on that level of debt because you simply cannot service that debt and we are going to lock you out’, that is when you start to see rising levels of inequality. That is where you see these sorts of challenges emerge.

Why this bill is important is that increasingly people now are buying their first property, and it is a unit, or it is an apartment, or it is a townhouse, and that is not something we have been traditionally used to in Australia. Although we are a highly urbanised society—I think more people lived in an urban setting than in a regional setting by the time of around about the First World War—we are not used to high-density living. This is a comparatively new phenomenon. It is not like living in London, or in Paris, or in New York City, or indeed in Rome, for example. I do recall that Rome in ancient times was the first metropolis that had a million residents, around the time of the establishment of the Roman Empire.

Our regulatory framework and our ability to properly regulate people who live in this built-up urban environment is quite nascent. It is very underdeveloped. On this side of the house we recognise that there is a need to have appropriate regulatory reform and an appropriate regulatory framework put in place to prevent market failure and to ensure that people who live in an apartment or some sort of complex have the ability to have fair and appropriate arrangements in place. The reality is that often the fees associated with owners corporations are quite extreme. You are not talking about a couple of hundred dollars here or there; you can be talking about thousands of dollars each and every year in order to create the sort of amenity and urban environment that people want.

So if you go from, say, the 1970s or 80s, when effectively the state would provide the infrastructure and I would live in my house—my 700-square-metre, three-bedroom brick veneer 30 kilometres from the central business district—and that was my world and that was my life, to now living in a complex with tens of other properties and hundreds of residents, maybe even thousands for the very large estates, there is a need for the owners corporation to be able to provide that regulatory certainty and to provide those services to service that area. This is new territory for us. As my good friend the member for Oakleigh indicated, the statute books have not really been updated or modernised in this respect for 12 to 13 years.

We have seen a dramatic reshaping of Melbourne’s urban landscape over the course of that time. I recall when John Thwaites was the Minister for Planning and work commenced on the Melbourne 2030 strategy about having greater levels of residential concentration along principal public transport networks. I found that quite a fascinating concept in the early 2000s. I thought it was quite curious to see high urban living within a concentrated space. Indeed when I reflect upon my visits to Melbourne in the 1980s, the notion that you would have a significant cohort of the community choosing to live in apartments within Melbourne would have been unfathomable in the 1980s. It was something that you just could not have even foreseen. Indeed I do recall Robert Maclellan, when he was planning minister in the 1990s, produced a document called From Doughnut City to Café Society. The doughnut city in those days was that you would have all the growth on the outer extremes and you would have this hollowed-out middle. Well, that has clearly not been the case at all with the passage of time.

Certainly if you look at what we have seen over this last decade, Melbourne is nothing like what it was 20 years ago. We have seen a real transformation in the way in which people live and go about their community. I think that too will bring its own challenges because people need to be able to live meaningful and fulfilled lives. People need to be able to ensure that if they are choosing to create wealth through the acquisition of an apartment or a townhouse there is an appropriate regulatory framework that protects that asset, because the reality is, as we know, that for so many people in our community the traditional pathway via which working people have been able to acquire wealth in the course of their lifetime and potentially transmit that wealth on to their children has been through the acquisition of property. That has been the way in which our society has been constructed and built.

Obviously with the rise in the development of the superannuation scheme, which was championed by Paul Keating in the early 1990s, that started to change, but we need to make sure that working people who are going to be more likely than not purchasing their first property in one of these complexes have that asset protected and that there is an appropriate regulatory regime put in place so that as they do the right thing—as they take out a loan, as they service the debt, as they pay the debt down, as they live their lives, as they raise a family or do not and as they continue to contribute to this great progressive society of which I am so proud to be a member—the regulatory framework protects that investment. Nations fail where you have got social and economic exclusion.

Mr FOLEY (Albert Park—Minister for Mental Health, Minister for Equality, Minister for Creative Industries) (12:46): I move:

That the debate be now adjourned.

Motion agreed to and debate adjourned.

Ordered that debate be adjourned until later this day.