Thursday, 29 May 2025

Building Legislation Amendment (Buyer Protections) Bill 2025

Second reading

Debate resumed on motion of Ingrid Stitt:

That the bill be now read a second time.

Melina BATH (Eastern Victoria) (15:04): I am pleased to rise and say a few words on the Building Legislation Amendment (Buyer Protections) Bill 2025 and to let the house note that consistent with the lower house and the lead speaker the Nationals and the Liberals do not support this bill. This bill has the intention of supporting consumers, of supporting clients, of supporting home owners and of supporting people who are renovating their homes, but it does not eventuate. It is flawed, and we cannot support its passage through the house. It is supposed to have protections, but it just has onerous implications for the building industry and does not solve that for the clients. The purpose of this bill is:

A Bill for an Act to amend the Building Act 1993, the Domestic Building Contracts Act 1995, the Sale of Land Act 1962, the Subdivision Act 1988 and the Victorian Civil and Administrative Tribunal Act 1998 and for other purposes.

The reason for this bill is to provide the transfer of the Victorian Managed Insurance Authority – in some places for some constituents that I have spoken with and dealt with the acronym VMIA for that is just a headache in waiting – domestic building insurance operations and the operations of Domestic Building Dispute Resolution Victoria to the Victorian Building Authority. In some circles these entities are not viewed with kindness, they are viewed with frustration. It is also there to establish a monopoly for the provision of domestic building insurance for homes, including in buildings of up to three storeys, by the VBA and establish a statutory insurance scheme.

The key thing that I think is important for us to reflect on at the moment is the importance of the building industry in our regions, in our cities and in our towns and communities. If you go into any regional town, it is the retail sector and down our way it is often the agricultural sector which are the prime motivators and prime industries that support our towns and communities. But it is also our building industry workers that line our shops and are out in the industrial sector, including our tradies, both men and women – and there are more women plying their trade these days in the electrical trades, plumbing et cetera. They fill our towns, they fill our football clubs and our netball clubs and they fill our cricket clubs. When the building industry is doing well, then our towns are flourishing. There is money in our towns, there are homes going up and if we are lucky there is still industry revving up in communities, so it is important to get it right.

This bill certainly seeks to address an important and genuine issue, and that is that new home buyers are not exposed by shoddy builders. I know quite a few builders in my local area, and they are the epitome of decent people with a great work ethic who really care about professionalism, delivering a good product and having continuity of service over the warranty period after the build has finished. As I said, they are very decent people. In our regional towns reputation is everything, and if you are a shoddy builder in a smaller town or even a reasonably good-sized town, then your name will get around. If you are a good builder, word of mouth will get you work, and that work will be critiqued and it will be talked about, whether it be down at the pub or in the supermarket or wherever. In metropolitan Melbourne there is a lot more provision to hide shoddy builders. People can move on, you can put out a new shingle or move to a new area and there is a lot more coverage for the shoddy. I am pleased to say that generally in the towns that I know well shoddy builders do not exist, but that is not to say that this issue is not real and should not be addressed.

I also know that in my electorate during Porter Davis – and then there were multiple other builders and building organisations that went to the wall – people came into my electoral office pulling their hair out with fear and concern for their families: how would their builds actually be finished and who would take that over? The VMIA’s role was really crucial in that, and I know I raised in this house the fact that they were quite tardy in going back and assessing that house so that it could be then picked up by another builder. And thankfully sometimes when you jump up and down things can come to fruition. I know my good mate Bill Schultz, who was in the house the other day for the petition, was in one of those situations where his builder went belly up, and he was quite distressed, he and his wife. Thankfully it came to fruition, but neighbours down the road were still in a very sad state.

So these are some of the things that the government needs to address. Shoddy builders and homebuyers left in the lurch are not warranted or needed in Victoria. But unfortunately this legislation does not do what it is stipulating it is going to do.

The bill comes also in response to longstanding concerns about the failures of the Victorian Building Authority and Consumer Affairs Victoria to adequately handle consumer complaints, particularly in developments over three storeys. And again, we are probably speaking more about those more dense areas in suburbs and metropolitan Melbourne, but it does not deliver that solution that the sector or the consumers need.

What we also know is that over time this government has put a very big platform about the Big Build and 80,000 homes a year, and then it was 800,000 over 10 years. We know that last year they certainly fell well short of that. It was in the vicinity of 56,000 to 57,000 homes that were built. And the concern that many in the building industry have is that it will pump up the cost of building, it will pressurise builders and they will leave the market. I will put some stats in a minute about how they have done that, but it will continue to drive up the cost of homes, units and apartments et cetera and not serve the community whatsoever.

Again, what we have heard with this piece of legislation, and we have heard it through the Master Builders Victoria and the Housing Industry Association, two of the peak bodies, is that there has been that real lack of consultation. They have some significant suggestions, and the Nationals last year had a great briefing with the peak bodies about some of the solutions moving forward. But they feel very strongly that this government has not consulted with them and has not listened to their very sensible ideas. Keith Ryan, the executive director of HIA, speaks about the government. He said in the media that the government announced these reforms and indicated that the new body, the building and plumbing commission, will have new tough enforcement powers and will focus primarily on protection for consumers with little regard to builders and the impact the use of these powers will have on them. He also went on to say it is disappointing that there was no mention in the government’s media release discussing this bill of any corresponding reforms for builders to resolve those payment disputes, and the proposed legislation is the second time in less than 10 years that the Victorian government has made major changes to the process for resolving domestic disputes. And he lastly said that last time they introduced Domestic Building Dispute Resolution Victoria, and we all know how unsuccessful that has been in resolving disputes but successful in preventing builders being paid for their work. We can only hope that the government has learned from their failure last time, and clearly many would say it has not.

In relation to our concerns about overreach and the monopoly on the insurance side of things, the bill proposes transferring insurance functions to the Victorian Building Authority and giving it the monopoly over domestic building insurance. As I have just outlined, it creates the Building and Plumbing Commission, but in effect, and we have heard it from Mr McIntosh, it is a one-stop shop. Yet many feel, including the Nationals and the Liberals, that there is no structure or culture of true reform or effectiveness. We have seen that happen in the past with the government-controlled insurance schemes, which operate without oversight. WorkCover and the TAC are not success stories, and I can give you a personal one from my son – but I will leave that for a later date – who happens to be an electrician and is helping build homes in our region as well.

Some of the concern that we have had is around that extension of the defect liability to 10 years but without a really clear understanding about what a defect is, and there is no obligation on consumers to report issues in a timely manner. I have just been speaking with someone who builds new homes, and they also have the sense that in the past – and I know Mr Farnham in the other house, as a former builder, very eloquently spoke about what used to happen and the way that there could be resolution between the client and the builder. An independent arbiter would come into the house and say what needs fixing – A, B, C – and there would be a resolution. In his words, it was quite successful in the past.

But the concern is that what is happening now is that the consumer can literally just not bother going to the builder but can go straight to this new entity, and then the builder can be slapped with all sorts of demands. Rather than solving it at the grassroots level, it is actually making more bureaucracy, more headaches and ultimately more costs on the builder. Speaking with my builder friend today, he said builders are going to have to build into the cost of production this forward planning and this forward cost impost based on the fact that these things will happen into the future. It does not mean that they do not happen, but this additional time with this uncertainty around defects is certainly going to make more of a cost impost.

As I have said, the Big Housing Build, social housing and all of that are still blowing out. The bill does nothing to address the permit delays, the infrastructure shortfalls and the staggering 42 per cent in government fees. We also know from VAGO that the current dispute resolution takes 110 days, with the estimate of an additional 15,000 disputes a year. This is what the Auditor-General is reporting to the Victorian public. The system is going to be overwhelmed and indeed we are going to see more builders – there are around 20,000 now in the state – exiting Victoria. It is too hard to do business in Victoria under the Allan government.

We genuinely want to see good reform to protect consumers and protect home owners. We need that good governance that supports home owners, but we do not want to see decent builders destroyed. We do not want to see costs skyrocketing in addition to every other input cost that is happening and in addition to taxes that this state government is imposing on Victorians. The Nationals will not support this bill.

Jacinta ERMACORA (Western Victoria) (15:19): I am happy to speak on the Building Legislation Amendment (Buyer Protections) Bill 2025. This is about Victorians needing homes, and many Victorians want to own the home that they live in. The Allan Labor government is setting clear targets to deliver more homes in Victoria over the next 30 years. Victoria needs 2.24 million new homes by 2051 to preserve the dream of home ownership for young people and workers and to make sure that there are enough rentals for those who need them. For most of us, building or buying a house is the most important investment we will make in our entire lives. It is probably the most emotional financial investment that we will make in our entire lives. To build more homes, we must first focus on building better quality homes. When home buyers, particularly those looking at off-the-plan apartments, are confident in a new home’s lasting quality, they will be more willing to buy. It takes trust to hand over your life savings and the future wellbeing of your family to a builder you may not even know. Unfortunately that trust has too often been broken by a very small number of unscrupulous operators in the building industry. These bad actors erode confidence for everyone. They provide fodder for television programs and occupy social media space.

This bill is designed to protect consumers and, in doing so, increase community confidence in the entire Victorian building industry. The bill will attack shoddy work. The current system often leaves home owners stuck with expensive repairs. If you google ‘ripped off by builders’, you will find many Facebook pages devoted to exposing dodgy builders and YouTube videos of people showing terrible examples. It is really quite frightening, and it can, quite rightly, distort the level of confidence that we have in our building industry. This bill aims to give authorities stronger powers to demand builders fix their mistakes and to penalise those who do not. I think the description that Ms Bath provided around what happens in country communities was a very good one, because I know that in Warrnambool it is largely word of mouth. As a tradie or a business operator, you generally cannot afford to do someone in because word gets around very, very quickly. But in big cities like Melbourne, as she said, it becomes harder, certainly with high-rise buildings where there are big corporate companies loaded with lawyers and financiers to protect themselves, and individual buyers might be, as I said, handing over the last of their hard-saved money for a deposit.

We have currently got a last resort. If an error or defect is identified, there is a really messy process to go through to try and get that rectified. It can take a couple of goes to figure it out. You might go to one entity and then another entity before you realise that you are in the right place to seek restitution. This bill holds builders to account, and it does so by providing stronger oversight and enforcement for dodgy builders.

The bill will also protect apartment buyers. For large apartment buildings the bill introduces a developer bond system, which is not uncommon in the sector. Developers of class 2 buildings, which are four storeys or higher, will be required to issue a 2 per cent bond to the Building and Plumbing Commission prior to applying for an occupancy permit. This process will involve the appointment of an assessor. For each new apartment an independent assessor will author an interim report on defective work within 15 to 18 months. For every single buyer there will be an inspection of the property, and if there are defects, the process will be triggered. The report will identify those defects and the developer and builder will be given an opportunity to rectify the defective work. Importantly, the second inspection will occur between 21 and 24 months of the occupancy permit being issued to check if the identified works have actually been rectified. This means that developers will be required to set aside funds to cover potential defect rectification costs, giving apartment buyers greater peace of mind.

All of these reforms will come together under the integrated building regulator in Victoria, which refers to the creation of the Building and Plumbing Commission. A new more powerful watchdog will be established to oversee the domestic building and plumbing industries across the state. I am very, very pleased to see this tidied up, and I am also very pleased to see that the checking of any defects becomes a front-end process rather than a back-end by default. It just allows people to opt in and get some of the things fixed if there is an issue. I think this is a really good reform, and it forms part of the bigger picture of legislation, strategies and programs that we have in place that support our housing industry but also the community who purchase their own homes. I commend the bill to the house.

David LIMBRICK (South-Eastern Metropolitan) (15:26): It is certainly the case, as many have mentioned, that buying a house, buying a home, is for most people the biggest financial purchase of their life. For many people this goes well; they buy a home, they are happy with it and they have a beautiful place to live for them and their family for the rest of their lives. But sometimes it goes wrong. Sometimes, as has been pointed out, there are a small number of operators within the building industry who do shoddy work and who rip people off. One only has to go on to Instagram channels like Siteinspection to see what sorts of things are going on out there in Victoria. There are some shocking examples of poor workmanship that is happening in Victoria.

Indeed I have met many constituents who have come to me with problems. In fact one of the worst ones was when I met a man recently who had purchased a home. It was built. They moved in. One of his children got very ill in the home. They checked it. It turned out that there were problems with the plumbing, and sewerage was within the walls and things like this. Mould was everywhere in the house. It was so bad that they had to evacuate and leave all their belongings behind in the house because it was all covered in toxic mould. That is still a nightmare for him, and the experience was just absolutely shocking. I cannot imagine how horrible it would be for someone to have to go through that – to have this expectation of moving into this beautiful new home that they have paid huge sums of money for and gone into debt for or whatever and then to have that happen, where they end up building a building which is toxic and all their belongings are poisoned, effectively. This is an absolutely shocking situation.

So yes, we do need reforms with regulations on building homes. Fundamentally, the Libertarians do not have a problem with the state being involved in enforcement of contracts. That is effectively what has gone wrong here – contract enforcement – in that a buyer has a product that they have a contract for and then the contract is not fulfilled to the expectations of the contract. To that end, I welcome the government at least acknowledging that the current system is broken and then doing something going forward. However, this bill also does something that I am not very keen on and that I think it is a very bad idea, and that is setting up a monopoly insurance company. Whilst getting involved in issues of contract enforcement is one thing, government getting into the insurance business is quite another. As has been mentioned by the opposition, there have been cases of this in the past. I do not like the idea of the government being in the insurance business. Economies remain competitive when there is competition. That is the same in the financial sector, and when you set up a monopoly like this it leads to all sorts of perverse outcomes. I think that this is the wrong approach.

For that reason, the Libertarian Party will not be supporting this bill today. That said, I do hope that it works the way the government intends it to work. I do hope that it fixes some of these problems, but I also hope that it does not add costs onto buildings so much that builders do not want to build in Victoria and that home prices get more expensive in Victoria, because no-one wants to see that. We all know in this place that there are not enough homes being built in Victoria. The last thing we want to do is scare away builders and developers from Victoria.

One of the problems with regulations is that they can stifle innovation. I would also urge the government to be very mindful of this. I think Minister Shing spoke about prefabrication technologies. There are lots of new home-building technologies which can dramatically decrease costs and improve the quality of home construction, and sometimes regulations can get in the way of that. In fact we had an example in a display in Parliament a while ago when I think it was actually the Legalise Cannabis Party that hosted a group of different hemp construction producers. I spoke to many of those people, and there were some really innovative products. One of the biggest problems they had was that their products were not covered by current regulations, so even though they might be fit for purpose and fantastic products, because they are new they have to go through all these processes. That was a real pain for a lot of these companies, and I hope the government can make that process better.

Similarly with prefabrication, many of the modern prefabrication technologies avoid a lot of these issues that we are having with sites. When you go out on a site many of the problems are through project scheduling – you know, getting the different tradies in at the right time. Weather is a big problem, and quality control. Factories can solve all those problems, because you can have specialists working in the factory. You are not dependent on the weather anymore. Factories are very good at managing quality control and this sort of thing. Modern prefabrication techniques are very, very high quality and can lower costs and decrease construction times. I would hate it if we overregulated to the point where, because they do not fit into some building code or something, we deny Victorians the opportunity to access these sorts of new technologies. Concrete 3D printing construction technology is moving at a very fast rate. I have watched many demonstration videos of this technology, and I think it holds a lot of promise for certain applications if you can rapidly build homes made out of concrete using automated systems. I think we should be very open-minded to all of these new technologies, and I hope that the government does everything that it can to make sure that its efforts to regulate and control quality do not stifle and deny Victorians the opportunity to access these new, modern construction techniques.

With that said, the Libertarian Party will not be supporting this bill, primarily around this monopoly insurance operator. We do not think this is a good idea. That said, I do acknowledge that there are serious problems that need fixing in this state with regard to construction and quality control. There are many people who have been left in awful, awful, dire situations. It is my hope, regardless of my support or not, that this bill will solve many of those problems. I hope also that it will not increase costs too much and scare away builders.

Trung LUU (Western Metropolitan) (15:34): I rise today to speak on this Building Legislation Amendment (Buyer Protections) Bill 2025, and I do so as a member of this place who is proud to represent many tradies and constituents in the building industry in my region. Before continuing with this bill, I just emphasise that I too am a homebuyer, and we had it knocked down and then rebuilt on our premises. It got to the stage where actually, in relation to the builder’s contract, during the contract we experienced difficulties with earthworks. After the build had been completed there were deficiencies which we negotiated, spoke with the builders about and had rectified as per the contract. As the years continued, there were things which did become defective, and having been outside the contract, I understand that the obligations were not the builder’s situation. Having said that, we do also experience and have seen in society that there are dodgy builders that do leave their clients in the lurch, and it does drag on to long civil litigation between both builders and buyers.

In relation to this bill, I have listened to many constituents and builders in my community in the western suburbs who have contacted the office fearful about the government’s overreach on this legislation itself. The thing is, in this chamber we are passing legislation. We have got to make sure it is fair and equitable for both parties – buyers and sellers – and make sure the economy proceeds with as minimal interruption as possible. However, with this bill as claimed, the builders and many traders in my community express that the Allan government has failed to consult the industries or even acknowledge the unintended consequences that may arise if this bill passes. Respected industry bodies like Master Builders Victoria, the MBV, and the Housing Industry Association, the HIA, are telling us that this bill, if implemented as it is, could create more issues for the housing sector than it seems to be trying to resolve.

We know we are in a building crisis at the moment, a housing crisis, and we need to build more homes. The bodies on record have condemned the proposal of this building legislation, labelling it, and I quote, ‘unfair and unworkable’. That is what exactly this bill is. We need to make sure this bill is fair and workable. In Melbourne’s western suburbs, which I proudly represent, we are home to some of the fastest growing suburban populations in Australia. Many young families are buying into the region. There are many houses popping up left, right and centre in areas like Wyndham Vale, Tarneit and Point Cook. These are young families and individuals purchasing their first home. In regard to the contract, they need to find the fine, detailed print of the contract – yes, we all do when entering a contract – but they want to do so knowing their dream home will be built free from defects and dispute. If it does arise, they expect peace of mind knowing that there is an authority to turn to to help to resolve a dispute in an amicable and timely fashion. This authority already exists in our building industry at the moment. Yes, there needs to be tweaks and adjustments in certain areas. But while it is not perfect in every situation, with some regulations needing to be tightened, as I mentioned, and with some reforms required to get a faster resolution between the client and the consumer and the builder, this legislation goes way beyond what experienced industry leaders consider reasonable.

It is possible to get the balance right, to protect consumers and not disenfranchise our builders – especially as we are in a housing crisis at the moment – who are already under considerable strain. We all understand the need to protect consumers and the need to do so and to have the processes in place to protect both consumers and builders when defects arise from poor workmanship. But this bill does not strike that balance. We need to make sure that there is a balance in there. In the industry bodies as mentioned earlier this legislation takes a potential sledgehammer to the rights of the builders. Basically this legislation is mainly focused on consumers.

We have seen in recent years the unfortunate collapse of building companies such as Porter Davis and Area Projects, who specialised in building new homes, townhouses and renovations. They went bust at a time when there was already a housing crisis due to lack of supply, at a time when the building industry was still undergoing significant pressures. This bill has the potential to make a bad situation worse, and I will go into detail in a moment on some of the key issues we on this side have identified and are concerned about, which will give the house more understanding as to why we are concerned about this bill.

Victoria already has the highest builder insolvency rate in Australia. If this bill goes ahead, it has potential to punish small builders and push them out of the industry, further increasing insolvency rates and accelerating our housing crisis – something we must avoid at all costs. There is a 63 per cent predicted increase in insolvencies in 2025 in the building industry alone. Just let that figure sink in – 63 per cent in 2025. Why would a government want to put pressure on an industry and make cash flow even harder? If this eventuates, how does the Allan government plan to improve the industry, to sustain solvency and keep house building continue?

Companies like Porter Davis have pointed to the rising costs in construction materials, labour costs and increasing taxes, to name a few, as causes of this demise. This bill touches on the payment of an additional 20 per cent bond under the new developer bond scheme, but it is unclear how long that bond will last. Developers need to pay 2 per cent of the actual build as a bond in case something happens down the track, but there is no specific timeframe as to when that bond finishes.

Builders will not be able to sign new contracts due to outstanding rectification orders, placing strain on cash flow as builders will be waiting months if not years to see the issue resolved. If this legislation proceeds, under the new rules a builder could be at risk of being subjected to rectification orders even a decade after the job is finished. Think about it: you purchase a product, you use it, you abuse it, and years and years later you make a claim that it is their fault. Materials deteriorate. Workmanship does not last decades down the track. That is why contracts are signed and understood by both parties. Certain things have a time span or life span, and certain things will last longer. Yes, we need to improve, but that is where communication between both parties needs to have a balance.

As this legislation stands, the new Builders and Plumbers Commission, set to be established, will be able to make a rectification order against home builders in response to any sort of complaint from the consumer with no need for the consumer to show cause as to the severity of the problem. Additionally, the builder has no rights under this legislation to challenge who is making that order.

Think about it: you purchase something, you build something, the client is happy, and years later – a defect – he makes a claim, and you have no defence. That is not a balance. That is unfair and unworkable in any market, in any economy. The ripple effects are quite clear. The wait time to build the houses that Victoria so desperately needs will blow out further. Families will wait much longer to purchase and move into their dream homes. The costs will skyrocket as builders will need to make sure they compensate for potential incidents or defects which might or might not happen 10 or 15 years down the track.

As a builder and as a business, you need to make estimates and considerations in case something happens, so that is when home owners and homebuyers will bear the cost. This will lead to an overall increase in construction price in an already inflated market, causing housing affordability to decline.

I thought the government would have looked at models elsewhere in Australia to realise that similar monopolies in insurance claims are inefficient. A good example is Queensland, which has a similar monopoly scheme. The result is an inefficient system with four-times-higher administrative costs which ultimately flow down to the consumers. As I mentioned earlier, one of the key components of this bill is creating the new Building and Plumbing Commission, the BPC, replacing the current Victorian Building Authority, the VBA. This new commission could be quite problematic in the long term, with the orders of rectification of building works, including post-occupancy permits, which are fraught with danger. In addition, with the establishment of the monopoly insurance scheme the government intends to hand over the Victorian Managed Insurance Authority, Domestic Building Dispute Resolution Victoria, consumer affairs powers and roles of the VBA, the Victorian Building Authority, to this new Building and Plumbing Commission.

Of concern, especially during a cost-of-living crisis, are the rights of registered builders, who will have their rights stripped away to challenge orders by the new BPC regarding any outrageous claims that clients wish to make. A reminder to the chamber is that these claims can be made against the builder under these new laws up to a decade after the works are completed and carried out. Under these circumstances, what incentive is there for any builder, especially small builders, to enter into market contracts with the risk of regulatory and insurance intervention? What protections will there be in place if a client makes a defect claim against a builder, immediately escalating into an insurance claim without being resolved through proper contract processes? Currently dispute resolution takes on average 110 days in Victoria, with an estimated additional 15,000 disputes likely to occur a year. Once this is implemented, our system will be overwhelmed.

The government should focus on improving oversight of existing authorities, not bringing in further burdensome regulations. This means enhancing inspections and enforcement to prevent defects from the outset and beefing up independent mediation processes for contracts between builders and their clients. Have inspectors, have enforcement, check while the works are in process what is going on. That is where you cut down any issues down the track so that we do not end up with legal processes and disputes down the stream.

I would also like the government to look at increasing transparency mechanisms for processing fairer claims and have our builders front of mind – not just clients, both builders and consumers – when making these decisions.

As is clear, the Allan government has very little intention of improving the industry or making it workable. It is focusing on one party. It should be, on the basis that I mentioned earlier, fair and equitable for everybody. Those on this side of the house have grave concerns with this bill, and I would stress we need to make legislation and pass legislation that is equitable, workable. At the same time, do not slow down our economic process of building new homes. Make sure people are willing to take the risk, enter into contracts and proceed with the building of houses in Victoria. With 30 seconds left, I do urge the chamber members here to consider our amendments to this bill.

Ryan BATCHELOR (Southern Metropolitan) (15:49): I am very pleased to rise and speak on this Building Legislation Amendment (Buyer Protections) Bill 2025, because this Labor government is absolutely focused on getting more and more Victorians into home ownership. We are getting more Victorians into home ownership by approving more homes to be built than any other state. We are getting more Victorians into home ownership by completing more homes than any other state, and our reforms to planning and to building are creating the homes that Victorians need and want, and there is more to come.

This bill is a part of that package of planning reforms and building reforms. As we get more homes being approved and built, it is vital that we maintain and improve the building standards for the newly built homes here in Victoria. We do not want to be a government that just gets more Victorians into homes, we want Victorians to get access to quality homes, because that is what the buyers of new homes expect and deserve. We know that confidence in the system builds confidence in the system. Confidence in the system builds confidence amongst buyers to keep buying, developers to keep developing and builders to keep building. That is what we want to see here in Victoria, because that is how we are going to solve the housing crisis – building more homes and building more quality homes.

This legislation introduces reforms that will strengthen the regulatory system, simplify the system, reform domestic building insurance, establish a developer bond scheme and strengthen enforcement powers for the regulator to take action against developers whose buildings are not up to scratch. It amends a variety of acts. It changes a fragmented regulatory system to put much more focus on having an effective regulator that can adequately and properly deal with issues that emerge in the building industry. This legislation paves the way, through subsequent legislation, for the new Building and Plumbing Commission.

Other speakers in the debate have spoken about just how significant home ownership is and how the purchase of a home is often the biggest purchase that an individual or a family will make in their lifetime. It is also done in an environment where often the homebuyers exist with considerable asymmetries of knowledge of information about the system and expertise. Homebuyers are not experts in building. Homebuyers are not experts in insurance and regulation. What this legislation is doing is helping to fix the system to empower those homebuyers and provide them with more confidence, to make sure that the system is always about reinforcing the need for high-quality workmanship and high-quality construction and to make sure that there are effective regulatory arrangements in place so that can occur.

There are a lot of things the bill does. I do not have a lot of time, and a lot of things have been canvassed across the debate. I think one really important thing is being done here. One of the frustrations that many people have who build new homes or have work done on existing homes is that when they get their occupancy certificate when the works are completed, the builder has gone and the defects have become apparent and there is often a long time and process that they have got to go through to try and get those issues fixed. We know it is already against the law for a builder or developer to supply a new home that is substandard and that they have already got a legal responsibility to fix identified defects after the issuance of the occupancy permit. But we know people still have significant problems, which is where this legislation is so important.

It introduces the power for the regulator to issue rectification orders after occupancy permits are issued – rectification orders that will compel builders to fix or finish work which, in the regulator’s expert opinion, is deemed to be seriously defective. I know that Mr Luu in his contribution just now was concerned about what this might do to cost. I think the point that we want to make here is that the quality of the work that has been done is the solution to this. This is not about minor defects. This is not about little disagreements about colour and tone. This is about serious defects that an independent building inspector has identified as ‘must be fixed’. The best way for builders to avoid those issues is to make sure that the work is done to the spec required in the first place. That is how we are going to solve these issues. If that is what these reforms drive in terms of confidence, if that is what these reforms drive in terms of culture in the sector, they are absolutely, absolutely welcome, and we think they will have a significant impact.

The last thing I will talk about is the new developer bond scheme, which is being introduced here. Developers are going to have to pay a bond of 2 per cent of the total construction cost for the development, which is going to be held in trust by the regulator, operating in the same way that a tenant in a rental property pays a bond to cover the cost of any damage that may occur to the property during the course of their tenancy. This developer bond scheme will ensure that if a defect is found in a home the developer has already put some money aside to fix it. There will already be money available to fix it so that home owners are not left in what sadly is an all-too-common occurrence, where defects are identified but there is no money there to fix them for a range of reasons.

As I have said, this is about driving better standards in the building industry, giving more confidence to home owners and creating a more effective, efficient regulatory system. Solving the issues that we have got in the building industry is one of the critical ways we are going to help solve the housing crisis here in Victoria. Labor are backing people’s aspirations for home ownership, and we are backing those new home owners to ensure that the homes that they buy are high quality and that they have confidence that their dream can be realised.

Georgie PURCELL (Northern Victoria) (15:57): I rise to speak in support of this bill today. The Victorian population is growing exponentially, and the housing industry is booming as a result. It is essential that new housing construction is done properly and is done safely. We have seen trust in the industry completely eroded, in some instances due to a small group of dodgy operators. Individuals and families place a huge amount of trust in handing over what usually is their life savings that they have worked so hard to achieve and attain to a company, with the promise of getting their dream home. As a result of dodgy builds we have seen people ending up millions of dollars in debt, trying to fix mistakes and going through the ongoing and stressful process of VCAT. In some cases they are suffering from respiratory and skin problems, and in the worst-case scenarios they are even hospitalised or have lifelong health problems from the presence of mould.

The current defect resolution process is long and it is confusing. Many either give up or just do not bother doing it at all. In the meantime, those construction companies are continuing to operate and continuing to build houses in the same way, affecting more and more people. We know that these dodgy builds are already far more likely to affect vulnerable Victorians. Most of our new housing construction is taking place in Melbourne’s fringe on land that is susceptible to flooding and to fire risk. After already having to deal with the immediate fallout from a faulty build, having to then go through a long administrative process is absolutely soul crushing. We have seen people being hospitalised because of mental health issues related to this process.

It is something that I can actually very personally relate to from when I and my ex-partner bought our first home. At the time I was in my very early 20s, and we saved up enough deposit to buy a small townhouse in Brunswick. I am sure members can imagine how nervous I was taking on so much debt at such a young age. I was a university student, I was only just entering the workforce and we had really saved up to buy this home and then budgeted around our mortgage repayments. Within about six months of living in the home we noticed that our home was a dodgy build in a townhouse complex. The balcony had been built – as is often the story for many people – with improper sealing, in fact no sealing at all. Slowly but surely over many months and a year we saw our roof and our walls leaking and full of mould, and we just could not get any action from the builders or from insurance. Not only were we seeing the value of our home disappear before our eyes but we were also incredibly concerned about resale value and most importantly about our health if we continued to live in the home. We soon gathered that it was not just our home in the townhouse complex that had this problem – every single home had been built incorrectly.

I cannot overstate the impact and the stress that going through this process had on our mental health. We felt as if we had saved up all of this money as young people to invest in something that was not going to pay off and we were going to lose out on it. We were lucky enough to find a process with insurance, but we had to fight for it and we got rejected on multiple occasions. We thought it was not going to be possible. Then when it was approved we had to move out of the home and find alternate housing. It is one of the worst experiences that I have ever been through. It should not be this hard for people who just want to have their own home, who just want to have a roof over their head, who have the dream of owning their own home, which so many young people do and which is becoming increasingly less common. By fixing this today, we are building that trust and that confidence for the people who do do it, that their investment, which will be the biggest investment that they will ever make in their lives, will be safe, it will be comfortable and in the worst-case scenario, they will have a pathway.

It also flips the onus from individual workers involved in builds to big development companies that absolutely have the resources and capacity to comply with rectification orders. That is the impact that it will have. Those are the people who will have to front up to this process. By curbing bad practices in the housing and construction industry, we will help to build confidence and better protect vulnerable Victorians. For that, I commend the bill to the house.

Evan MULHOLLAND (Northern Metropolitan) (16:02): I rise to speak on the Building Legislation Amendment (Buyer Protections) Bill 2025. There is absolutely need for reform and improvement in the way that we deal with the relationship between consumers and builders, particularly in the domestic home building market. In a former role, when I was the Shadow Minister for Home Ownership and Housing Affordability, I saw firsthand some of the issues in this portfolio, a lot of the failures of the Victorian Building Authority (VBA) and of the Victorian Managed Insurance Authority (VMIA) process, and a lot of the failures particularly of this government to enforce existing regulations in the market.

One example that we saw of that was the collapse of Montego Homes, which left over 50 Victorian home buyers stranded. I said earlier today that for this Premier things only ever become a problem when they are a political problem for the Premier, and this was a classic example. We went through months of young families contacting the government and walking into electorate offices, like those of the member for Yan Yean and the member for South Barwon, begging them to offer the support scheme that was offered to Porter Davis Homes families. The response, whether by email or in person, was absolute silence because they did not think it was an issue or they thought the issue was too small, that it would not become an actual issue. But for many of these families, this was their entire livelihood. This was their entire life savings they had put into a home thinking they had VMIA insurance. Then they realised, once the builder went bust, that what had been submitted through a portal was a global VMIA policy number, not a VMIA policy number for their specific lot. So they were not able to get their deposits back, deposits they had spent years and years and years saving up for what was the biggest purchase of their life and the biggest dream of their life – to finally get into a home or get a plot of land where they were going to live and they were going to raise their families

It really was only because of the months and months of advocacy by me and the homebuyers that the Labor government finally expanded its support scheme. We know this because the government refused to over and over and over again. They said Porter Davis was a one-off and they would not be expanding the liquidated builders customer support scheme. It took stories like those of Jess from Doreen, who made it quite clear in the media that the government should offer the same support as it did for Porter Davis customers and that they were no different. That was on the front page of the Whittlesea Review, and I stood side by side with her on 7NEWS out in Doreen with a whole bunch of the families there, calling on the government to do something. The government response was, ‘That was a one-off.’

Then we saw people like Chantelle and Hayden from Mount Duneed in the electorate of South Barwon, with their stories told on the front page of the Geelong Advertiser and the hardship that they were going through because they had handed their money, their deposit, over to a builder thinking they had insurance – actually seeing they had insurance – only to find out they did not. I want to also acknowledge my colleague Mrs McArthur, because I know that she advocated as well on behalf of those families. It was only really after then that the government acted, because it became a political problem. It was a political problem for the government because people saw how heartless this government was regarding a situation where its own laws had led builders to steal deposits off young homebuyers. That in itself was contemptible, this small number of dodgy builders fleecing money off hardworking young Victorians.

Unlike this government, I actually sat down with a lot of these young families at the time, and in the end we did force the government to extend the liquidated builders customer support scheme until 20 February 2024. There was a lot of communication between me and Danny Pearson at the time. They in fact even botched that request and that advocacy. They did. They extended it to 20 February and then had to go back and change it to 28 February because they forgot to include Chatham Homes, which had collapsed a couple of days after the date that they had set and had backdated to. Those people were not going to be able get their deposits back, yet we were able to achieve that as well for those Chatham Homes customers. Make no mistake, that would not have occurred – just like with the Porter Davis customers, and I want to thank my colleague Jess Wilson, who advocated on their behalf – without the advocacy of the Liberal Party and the opposition actually sitting down with those families like Jess from Doreen, Chantelle from Mount Duneed in South Barwon or many other families. I want to read a card that they wrote to me afterwards, which says:

Dear Evan,

Thank you for advocating for all of us in Parliament! Your support has been instrumental for us getting our deposits back. We now have a second chance at the Australian dream of building a house! Just wanted to let you know we greatly appreciate everything you have done for us!

…

Thank you … from the bottom of our hearts!

…

Chantelle, Jess, Lisa, Louise + all of us other Montego victims

With that came many pictures, a collage of pictures of young families with young kids, young people in their late 20s and early 30s that just wanted to get on with their lives but had been victims of poor government regulation when it comes to domestic contracts, when it comes to insurance. I would say that process that we went through together is one of the proudest achievements of my relatively brief parliamentary career but an important one on behalf of those families. I really felt for those families, because what they went through no-one should have to go through.

I want to particularly point out the comment from Master Builders Victoria that:

… it is not possible to fully assess the impact of the rectification order provisions in the Bill, without knowing the outcome of the review of existing consumer protections and domestic contracts.

We still have not seen that review that Danny Pearson was talking about back then. This house passed an ombudsman inquiry into the VMIA’s management of DBI, domestic building insurance, contracts, which has all of a sudden we find out today been delayed for release until later this year. You have got two concurrent reviews that could inform the government of its process, but it is still wanting to ram through a bill that deals with this section. We cannot forget that many of those Porter Davis customers, Montego customers and others that stacked up through the VMIA process were awfully treated by the VMIA, which sent aggressive legal letters, had short conversations and then made decisions and argued that they would have to go to VCAT if they wanted to challenge their decisions. Many of them, even though they were promised, were not able to get their money back and were treated incredibly poorly by the VMIA, who I understand have recognised a number of flaws when it comes how they treat people. Porter Davis should have been a wake-up call for this Labor government and the issues with domestic building insurance noncompliance that were clearly not addressed.

Let us not forget: if you speak to anyone in the industry, whether it be the HIA or the Master Builders Victoria or others or builders themselves, they say absolutely this issue has been compounded by the government’s wasteful Big Build, which is sucking up, hoovering up, all of the available supply materials and labour for its mismanaged Big Build sites with $48 billion of blowout. When you create an inflationary environment in the building and construction sector, you are going to get bad outcomes. You are going to get dodgy operators who cut corners because of costs, and this is what has happened. The community and Victorian people ought to know that it is the government’s mismanaged Big Build that has caused a lot of these issues that mean it is more expensive for them to get into the housing market and it is more expensive for them to buy a home.

Under this bill consumers will be able to lodge defect claims against builders for up to 10 years without clear definitions of what the word ‘defect’ can mean and without clear obligations for consumers to raise issues in a prompt and timely manner. A lot of people on social media have built up an awareness for dodgy builders. I would like to pay particular credit to Site Inspections, and many of the flaws that he highlights with noncompliant builds – I will not say it in the way he says it – are on the fringe suburbs of Melbourne, many in my electorate, and many of the issues he highlights are with the VBA as well, who are not at fault in this. We all remember the VBA – the same VBA that was going around doing site inspections on FaceTime.

There is also great concern in the industry at a time we need to absolutely get more homes built, and we want more and better homes built, and one of the keys to doing that is engaging and working with the small builder market. Monopolies are not a good thing, generally speaking, and so with other state government insurers like TAC and WorkCover there is a strong concern that the bureaucratic costs will not be capped, premiums will steadily increase, compliance costs – especially for small builders – will become burdensome, and premiums will be at risk of becoming a new tax impost on construction costs. While there are a lot of players in the insurance market, private sector competition does not serve to act as a check against unreasonable monopolistic price gouging.

Instinctively I am pro-competition. It delivers the best outcome for the consumer, but we have seen a terrible track record from this government. Additionally the new Building and Plumbing Commission will be able to use the need for their insurance as a powerful lever to insist on certain actions and behaviours from builders that could be unfair or unreasonable, particularly during an unresolved dispute. The bill allows for a developer bond scheme, which aims to protect apartment purchasers in buildings over three storeys high. While this bond scheme seeks to address the real problem of holding builders responsible for their work, the mechanism as proposed is clunky and not well coordinated with existing accountability structures such as those remaining in place under the Building and Construction Industry Security of Payment Act 2002.

I will finish it there. It is a complex area of law, but we will be opposing this bill.

Sheena WATT (Northern Metropolitan) (16:17): Thank you very, very much for the opportunity to rise today and make a contribution to the Building Legislation Amendment (Buyer Protections) Bill 2025. It is one that I would like to say marks a defining moment in the history of housing in Victoria. It really is a monumental step forward in protecting buyers from dodgy builders, restoring community confidence in the construction sector and putting in place the kind of consumer-focused regulatory framework that Victorians rightly expect and absolutely deserve.

Let us be clear from the outset: buying or building a home is, well, for many Victorians, the biggest financial decisions most will ever make, and yet for too long that decision has been shadowed by uncertainty. Too many families have seen their dream home turn into a financial nightmare. This bill is about turning the tide. It is about putting the consumer at the heart of our building system, making sure that the builders who do the wrong thing are held to account and giving families the peace of mind they deserve.

At the core of this legislation is the creation of the Building and Plumbing Commission, or BPC, a new integrated building watchdog with real teeth. The current regulatory environment has been confusing at best and utterly disempowering at worst. Consumers are bounced between the multiple agencies of the Victorian Building Authority (VBA), Victorian Managed Insurance Authority and Domestic Building Dispute Resolution Victoria when something goes wrong; it is all too much, and it stops now. The BPC will be the one-stop shop with the power to investigate, enforce and rectify poor practices. We are not just creating a regulator, we are creating safeguards. Rectification orders will give the BPC the power to compel builders to fix defective or incomplete work, even after the occupancy permit is issued. There is no more ducking responsibility, no more blaming someone else: if it is not up to standard, it must be fixed. When rectification fails, insurance will step in, not as the last resort but as a first resort. The first-resort domestic building warranty will ensure that homebuyers can access support when they need it, not without waiting for their builder to go bust or disappear into the night. This is a massive shift from a reactive system to a proactive one.

For apartments four storeys and above we are introducing a developer bond scheme – a 2 per cent bond held by the regulator to be used if the developer fails to rectify serious defects. Think of it like a rental bond but for multimillion-dollar developments. It is fair, it is practical and it puts consumer protections first. Let us not forget why this reform is necessary. A small group of dodgy builders and developers wreaked havoc across our state. They cut corners, they exploited loopholes and they left families absolutely devastated. The opposition had a chance to act a decade ago. They promised similar reforms, but they backed down at the first sign of pressure from their mates. They failed to act when they had a chance, but we are acting right now. While I have heard in contributions here and in conversations out there in the public lines parroted from industry lobbyists – pretending to care about homebuyers while defending the very practices that harm them – we on this side are standing up for working Victorians. It is not just supported by government; it is supported by consumer groups, by good builders – yes, good builders – and most importantly by unions.

I want to take a moment to speak directly about the critical role that unions have played in advocating for safer, fairer outcomes, not just for workers but for the community as a whole. Often there is scaremongering from those opposite about unions in the construction sector, but let us be honest, if it were not for the tireless advocacy of the building and construction unions like the Plumbing and Pipe Trades Employees Union that I spoke of yesterday and the Electrical Trades Union, we would not be having this debate today. It is unions who raise the alarm about unsafe work sites. It is unions who push for rigorous inspections, licensing and stronger enforcement mechanisms. It is unions who have been standing alongside consumers and workers when these buildings have been left unfinished, when defects have gone unfixed and when wages have gone unpaid. Too often unions are attacked for being too loud – ‘You’re too bold. You’re too disruptive’ – but the truth is they were standing up against some really systemic negligence. You have to be bold and you have to be loud, because silence is what lets these dodgy operators thrive. This bill is about holding bad builders accountable, but it also, at its heart, honours the thousands of construction workers who take pride in their craft and who want to see high standards upheld. It honours our apprentices for learning their trade the right way and who deserve a future in a respected and well-regulated industry. This government has backed our young Victorians to develop their trade with free TAFE, free car rego and free support and mentoring for first-year apprentices in priority TAFEs.

We know that when the Liberals championed the Australian Building and Construction Commission, an agency with no jurisdiction over domestic building and whose sole purpose seemed to be union busting, not consumer protection, there was really no interest in fixing the building industry. Their only interest was in weakening the power of the collective voice of workers. We on this side absolutely take a very different view. We believe that when unions and governments work together we can build an industry that is safer for workers and stronger for consumers. This legislation is informed by input from unions – I had the good fortune only last week of speaking to the head of the plumbers union – and it does incorporate the real experiences of workers on the ground. I actually spoke to apprentices that had started their career – they were on day one – and they were excited to work in an industry that is supported by a government that backs them.

It is backed by the knowledge that safe work sites and quality builds go hand in hand. There has certainly been some concerning trolling from those opposite about the VBA. I just want to take that on. It was Labor that took the tough decisions to rebuild trust. We appointed Anna Cronin as the commissioner, and under her leadership there has been enormous reform: faster complaint resolution, stronger inspections and tougher prosecutions. We are going further, replacing the VBA with the BPC to embed these improvements into a single powerful authority. The data speaks for itself. Are you ready for it? There were over 2400 medium- to high-risk site inspections this year. Frame stage inspections are up. The time taken to resolve investigations is down. Fines are being issued, unregistered practitioners are being caught and called out and the most egregious offenders are being prosecuted. This is a regulator that is working, and it needs more power. This bill delivers just that.

It is hard not to feel cynical when you hear those opposite claiming to care about homebuyers – because this is the same party that voted against this bill in the lower house, right? It is the same party that watered down protections when they were in power, the same party whose members are on the record as opposing new homes, opposing public housing, opposing safety reforms and campaigning – yes, campaigning – against apartments developed in their own electorates. They say they want more homes but oppose the legislation that would make those homes safer. They say they care about affordability but oppose measures that would stop insurance premiums from rising due to bad building practices and shonky operators. In fact some members of the opposition have themselves fallen victim to dodgy builders. You would think that would make them more empathetic, but instead they have chosen to side with the very cowboys that did them over – what is that? One member even had his kitchen stolen during a build gone wrong, yet when given the opportunity to stand up and support meaningful reform, he voted against it. It is not leadership, it is cowardice.

This bill is part of a broader strategy that includes $6.3 billion of investment in our Big Housing Build, the Regional Housing Fund and the establishment of the future of housing construction centre of excellence, one that I know apprentices were particularly keen on. We are training the next generation of tradespeople, upskilling our workforce and delivering on the promises of safe and affordable housing for all. We are not just reforming laws, we are changing lives. While some cling to failed practices of the past, we are building for the future, brick by brick, policy by policy and reform by reform. Behind every line of this legislation in this bill is a real person, a real family, a couple, a first home buyer and sometimes a woman who has made that brave choice to go it alone and buy her first place and take it on. To you, sister, I say: good on you; you have placed your trust in our building sector and our building system, and with this bill we are backing you.

It is easy to get caught up in legal definitions and regulatory structures, but at the heart of this reform is a very human question: what happens when your home turns into a disaster? I have heard the horror stories of the young couple or the solo single saving for years, only to have their off-the-plan apartment handed over with leaky walls and mould growing week by week; a retiree building their dream home left thousands of dollars out of pocket when the builder just vanished when the job was done; a family of four living in a caravan while they fight for justice that is years away in VCAT. This bill is about stopping those stories. It introduces clear, fair and fast systems to protect the people behind the paperwork. It gives homebuyers a direct line of support through the BPC. It ends the bureaucratic ping-pong nonsense between agencies. It stops the dodgy builders who hope that they can hide behind slow legal processes. Well, you know what, it is over. This restores confidence to buyers who until now felt like they were gambling with their financial future.

Let us not forget renters. These reforms will also help improve rental stock by lifting the overall quality of new developments. Safer and more secure homes do not just help owners; they help tenants, neighbours and the broader community. This is a people-first reform, and when people have trust in the system, everything else – investment, supply, industry, growth – follows. This is how we build not just homes but fairness and dignity into every brick laid. I have got to tell you this bill is what good government looks like. It listens to victims. It is standing up to vested interests. It is protecting consumers. It is supporting good builders, and it is restoring trust. I say to apprentices: this is about you too. It acknowledges and values the indispensable role of unions in shaping a fair, just and safe building industry. It is not just a technical bill. It is a bill that absolutely speaks to our values. It speaks to whom we stand for: working families, first home buyers, renters, tradespeople, apprentices and communities across Victoria who want homes they can trust and a system that has their back when things go wrong. I commend this bill to the house.

Rachel PAYNE (South-Eastern Metropolitan) (16:30): I rise to make a contribution to the Building Legislation Amendment (Buyer Protections) Bill 2025. I will say from the outset that Legalise Cannabis are happy to support this bill. The bill aims to improve regulation of Victoria’s construction industry, imposing greater obligations on builders and developers and strengthening the regulator’s power to ensure compliance. It aims to simplify the process for consumers facing issues with their builders to have those issues resolved. Consumer advocates are generally supportive of this bill, as it represents a definite uplift in consumer protections. Ultimately the bill aims to restore confidence in our building industry, which as we know, has been rightly subject to a lot of criticism in recent years.

Buying a house is probably the major investment that most of us will make in our lives. It will be our biggest financial asset. As well as representing a huge financial commitment, it is an emotional commitment. It is a commitment to a chosen community and a place we call home. When things go seriously wrong with our home, it can be a source of great anxiety, particularly if remediation drags on. We know that the majority of builders practise ethically and are doing the right thing by consumers, but we have seen far too many documented cases of building practitioners producing substandard work that failed to meet the most basic safety standards. We have also heard the most heartbreaking stories from people who have been unlucky and ended up having to deal with unscrupulous builders. In the process they have accumulated massive debts, suffering severe financial, emotional and physical distress and spending years of their lives battling with their builders to try and get them to fix the defective work. I am not talking about situations where there has been a misunderstanding between the builder and the client. I am talking about cases where the builder has clearly behaved unethically, is in clear breach of legislation and is ripping off their client.

Unfortunately, under the current system, when a consumer reports building defects to the regulator, the Victorian Building Authority, they find themselves in another world of pain, being bounced around between different under-resourced departments, often without any satisfactory outcome. The failings of the VBA were covered extensively in the 2023 review of the Victorian Building Authority report The Case for Transformation. The report exposed a fragmented regulatory system with a toxic culture within the VBA. It highlighted delays in progressing claims, with consumers having to wait years for a building inspector to review their complaint and ultimately no action being taken against the practitioner. This is a quote from that report:

Some complainants were told they should contact DBDRV or go to VCAT about non-compliant work. VBA staff told some complainants that they should provide their own expert reports for VBA to review or that the VBA would not investigate the matter if such evidence was not provided.

Expert reports can cost thousands, by the way. Then, in a further blow to the complainant, once an occupancy permit has been issued, the VBA has no actual power to get the builder to rectify their work. Owners are forced to take their matters to VCAT, where they may spend years trying to get an outcome. Consumers have been consistently failed by the state regulator and left to fend for themselves.

The bill before us seeks to restructure the regulator to better protect the consumer. The Victorian Building Authority, the Victorian Managed Insurance Authority and Domestic Building Dispute Resolution Victoria will be reconstituted under the new Building and Plumbing Commission. The BPC will be the single source of advice and direction for consumers. It is a one-stop shop, which is good from a consumer perspective. In relation to complaints, the BPC will be available to investigate complaints and has the power to order builders to rectify their defects up to 10 years after completion of the building. This is a substantial win for consumers, as currently the regulator has no power to order a builder to rectify their defective work once an occupancy permit has been issued. Under the new scheme, when a complaint is received, the BPC will assign an inspector to the case. After the inspector has verified the defect, the builder will receive a verbal direction to fix. If they do not comply within a certain time, they will be issued with a direction to fix, which is a binding legal document requiring them to fix the defect. If the builder does not comply, the BPC can contract a builder within their panel of builders to do the repairs and the negligent builder will be liable for the costs.

Noncompliance with the direction to fix may also be grounds for suspension of the builder’s practising registration, so there are a few good incentives for builders to comply. A builders can still challenge a decision at VCAT, but this will not stay their direction-to-fix order. The builder will still need to rectify the defects even while the matter is before VCAT. This should go some way to preventing builders from drawing out these matters, as often happens now. Defects will need to be addressed within a certain timeframe, which will be determined in the regulations.

In relation to insurance, this bill makes substantial changes to the domestic building insurance model, with all DBI to be managed by the BPC. Currently domestic building insurance operates under a last-resort system whereby insurance is only paid out to owners in the event of the death, disappearance or insolvency of the builder or if the builder fails to comply with a court or tribunal order. This puts consumers at the back of the queue. Under the new system insurance will be first resort for consumers, meaning that claims made by the building owner for defective, noncompliant work will be met without the owner first having to sue the builder in VCAT or court or wait for the builder to become insolvent. This change is likely to result in far less court time, because the owner will be able to claim on insurance rather than having to pursue the builder through VCAT or the court. First-resort insurance applies to buildings under three storeys and estates of single dwellings. For apartment buildings over three storeys, so four to 10-storey apartment blocks, a developer bond of 2 per cent of costs will be applied, which will be returned to the builder after two years if no defects are found in the building. We have seen a disproportionate number of defects in four-storey-plus apartment buildings, which are not currently protected. Defects in relation to balconies, waterproofing and roofing are quite common. The BPC will retain rectification powers for these buildings for two years after completion, so it is a great incentive for building practitioners to rectify their defects to get their bonds back.

The bill introduces a new pathway for dispute resolution. Complaints made to the BPC will be investigated to see if they are suitable for dispute resolution. Risks to life, limb or health and safety will incur automatic rectification orders, but for applicable defects, dispute resolution will be managed between the builder, consumer and conciliator. Two-thirds of cases that go through the process will come out with a resolution. Otherwise, for applicable defects, the conciliator will issue a rectification order. If there is no defect, the case will be closed.

The bill makes significant changes to the domestic building landscape in Victoria, but many of these provisions are already taking place in other jurisdictions. Post-occupancy rectification orders apply already in Queensland and New South Wales, for example. In fact the scheme has been operating successfully in Queensland for 40 years. We need a stronger framework to regulate the domestic building sector in this state, particularly with all of the construction that is going to take place over the next decade. Building owners should not have to go broke or commit years of their lives trying to get builders to fix their incomplete, noncompliant or defective works. It is the job of the regulator to hold dodgy practitioners to account and maintain consumer rights. We are hopeful that the new Building and Plumbing Commission will offer those protections for consumers which have been sadly lacking under the current regulatory system. We are hopeful that through these measures, we will start to see some trust restored in an industry where trust has been eroded over time. It is a good first step. We will be asking some questions during committee-of-the-whole stage to get some clarity around some of the more nuanced provisions of the bill. I commend the bill to the house.

Gaelle BROAD (Northern Victoria) (16:40): I rise today to speak on the Building Legislation Amendment (Buyer Protections) Bill 2025, a bill that in principle addresses a deeply felt need for reform but in execution falls short of protecting the consumers it claims to serve. We built a home over 20 years ago, and our builder was fantastic. It was an amazing experience. He had a real eye for detail and did an incredible job, as did the whole crew. But I remember at the time speaking to other people who had had terrible experiences, and we know today that that continues to be a problem. A home is more than just bricks and mortar. It is for most Victorians the largest investment they will ever make. But beyond the economic value, it holds immense emotional and psychological significance. It is their sanctuary, their safety, their future. And when that trust is breached – when the roof literally caves in or water floods the ceilings – Victorians deserve to know that the system is there to back them up. But sadly, far too often it is not. This bill claims to address those failures. The government’s stated purpose is to strengthen protections for purchasers of new homes and those engaging in domestic building works. The bill introduces a new insurance scheme and oversight of domestic building contracts and attempts to simplify and clarify obligations in the sector. But intentions are not enough. As drafted, this bill appears to be more about administrative reshuffling than systemic change.

I would like to share the experience of a couple from Bendigo, whose story underscores why buyer protections are not just overdue but urgent. In 2022 this couple purchased their home after receiving a prepurchase inspection that revealed no defects. Days after settlement rain poured in through the roof. A cascade of stress, financial loss and institutional frustration followed. Three licensed roofing plumbers assessed the damage and unanimously concluded the roof was riddled with defects and needed complete replacement. The prepurchase inspector, it turns out, was not even registered with the Victorian Building Authority, the VBA, and astonishingly there is no requirement in Victoria for such inspectors to be licensed or qualified. This is in stark contrast to other states. How can we possibly claim to protect buyers when we allow unregulated operators to perform inspections on six-figure purchases? The couple paid $47,000 out of pocket for a replacement roof, only to find that the work was also defective.

The second plumber – licensed this time – admitted he had signed his own certificate of compliance and thought it would be okay. Let me be clear: it was not. It was substandard, noncompliant and failed to meet the Australian standards. Yet when the couple lodged a formal complaint the VBA advised that no action would be taken unless a pattern of poor workmanship could be established. A one-time failure, apparently – even one that costs tens of thousands of dollars – is not enough. Only after months of independent research did they discover the existence of the ministerial order governing plumber insurance. The VBA did not guide them. The consumer affairs department did not assist. The Australian Competition and Consumer Commission said the issue was too small to matter. They eventually settled an insurance claim for $63,000 – still $12,000 out of pocket – for a roof they had already paid once to have fixed. They described the entire claims process as opaque, drawn out and riddled with contradictory advice, even from senior officers within the VBA.

This is not a theoretical example. This is a real Victorian couple who tried to do everything right and were failed at every step. Their experience reflects not only regulatory gaps but a cultural problem within our consumer protection bodies – polite disinterest, shifting responsibility and a reluctance to prosecute even clear misconduct. We must remember that the background to this bill includes well-publicised failures in the building sector: scandals involving dodgy builders, collapsed companies and devastated consumers. The Porter Davis collapse is fresh in the minds of many – a builder with active permits and deposits collected from over 1700 home buyers, who suddenly found themselves with no house and little recourse. This bill, for all its intent, does not go far enough to stop history from repeating. These residents and I support the intent behind the bill. We agree that reform is necessary, but reforms must be real. They must be effective, and they must address the root problems.

They have raised some key points about what they believe is needed to genuinely protect Victorian consumers. These residents that were affected suggest mandatory licensing and registration for prepurchase inspectors – without qualifications inspections are worthless and dangerous – and a ban on self-certification. No licensed practitioner should be allowed to issue compliance certificates for their own work; that is a conflict of interest, not consumer protection. My constituents also suggested stronger enforcement powers for the VBA or its successor and a cultural shift that prioritises consumer protection over bureaucratic box ticking; real support for consumers navigating the insurance system – not just vague webpages but accessible, accurate, consistent guidance and help; penalties for those who lie about their qualifications or submit fraudulent documents – at present the cost of dishonesty is borne by the consumer, and that must change; and an honest assessment of who should manage the new insurance scheme.

Another local resident has also fallen foul of the system that was meant to protect her. They purchased an off-the-plan unit in California Gully near Bendigo in June 2021, and a certificate of occupancy was issued in November 2023. The purchaser asked a qualified electrician to meet with the building supervisor. It was established by the independent electrician that the building had various defects. They asked that these be remedied prior to occupation. In March 2024 the conveyancer advised that the property settlement would occur. However, the list of defects was not remedied. These defects were not small items. They included no heating and cooling systems installed, exposed bare wires and a smashed window. They found the builder to be in breach of the contract and appointed a lawyer to advise them that the property was incomplete and they would not proceed with the purchase. Eventually they were forced to either accept an incomplete build and pursue building insurance afterwards or refuse settlement altogether. The builder is on a credit watch list and has also been taken to VCAT previously for incomplete property. A hearing was held in the Bendigo Magistrates’ Court in October 2024. My constituent was then told that they would be countersued. Another hearing was held in January this year. The builder has since sold the house to someone else, along with two others on the same plan, and kept all three deposits. This saga caused great distress to my constituents, who feel completely let down by the system.

The concerns raised by my constituents and industry experts are not minor. They include fears that the new insurance scheme will replicate the failures of the old one – that delays in payment will persist, that consumers will be left in the dark and out of pocket, that oversight bodies will continue to prioritise risk avoidance over accountability. My colleagues in the lower house recommended two reasoned amendments: first, that this house declines to pass the bill until the amendments to the Domestic Building Contracts Act 1995 are made public, and second, that the bill should not proceed unless a two-year legislative review is written into the act. I am afraid these reasoned amendments were defeated, and they were defeated despite major concerns.

The Liberals and Nationals undertook significant stakeholder consultation on this bill, including major builders, industry bodies, developers and insurance. The feedback was overwhelmingly critical. Stakeholders reflected the view that while reform is needed, this bill does not represent the right reform. The proposed 2 per cent developer bond on residential apartment buildings over three storeys is meant to safeguard apartment buyers. However, this scheme is widely criticised as clunky and poorly integrated with existing mechanisms like the Building and Construction Industry Security of Payment Act 2002. There is near universal concern it will simply add to project costs without delivering proportional consumer protection. Another major concern is the introduction of a 10-year window for defect claims without a precise definition of what constitutes a defect or reasonable reporting timeframes. This ambiguity increases legal risk, deters builders and inflates construction costs.

The establishment of the new Building and Plumbing Commission – essentially a rebranded aggregation of existing staff from the VBA, Victorian Managed Insurance Authority and Consumer Affairs Victoria – risks being little more than a cosmetic change. Without genuine reform this change will not deliver improved outcomes for consumers. If we pass this legislation without addressing the core weaknesses and without the consultation, the clarity and the consumer focus it desperately needs, we risk repeating the same failures that led to the Porter Davis debacle and the heartache of home owners. Without these changes we risk entrenching the very failures we seek to correct, creating a system that is more complex, more costly and less effective for the Victorians it is supposed to protect. Reform without implementation is merely a promise unfulfilled. Consumer protection without enforcement is just a headline. This Parliament must do better. Let us get it right not just for the sake of public policy but for every Victorian whose roof is leaking, whose savings are draining and who looks to us in this place for justice.

Lee TARLAMIS (South-Eastern Metropolitan) (16:50): I also rise to make a contribution on the Building Legislation Amendment (Buyer Protections) Bill 2025. I will not make a lengthy contribution. I just want to add my support to this bill and acknowledge how significant it is in terms of reform. I echo the sentiments that have been expressed by the many speakers in this chamber today who are supporting this bill and who have used many examples of experiences that either themselves or their family members have had or even that their constituents have had. I think it has been clear from the contributions across this chamber that, wherever they stand on this bill, members have had representations from constituents with bad experiences that they have had with purchasing a home or building one.

I will not go through all the elements of the bill, but I will touch on a few elements in support of the proposed integrated regulator, which will improve the consumer experience and the system and ultimately work to improve the quality of new buildings. It will empower consumers more. As we have seen, the current system is very complex and confusing, and it has led to a minefield that customers are forced to navigate, which has caused inconvenience, uncertainty and much frustration.

As has been said, building a new home will likely be the biggest purchase of your life. For many it is a dream come true. I know through personal experience that when you put your heart and soul into designing something that is going to be your forever home and you see it transform, you cannot wait to move in and start to enjoy your new life in that place. Many people have made contributions today and spoken in reference to shoddy builders and the small number of shoddy builders that are out there. I think by and large builders do the right thing or try to do the right thing, but what has not been picked up in the debate today is that there are systemic problems within the building industry at the moment. Sometimes we see in the media examples where shoddy builds have taken place and people cannot live in them and all those sorts of things. There is a systemic issue, because of the power imbalance, where builders, whether they be small or large, cut corners to get the build complete and to move on to the next build. Then you have a situation where you are trying to navigate this system where you have paid your money, the house has been handed over to you, the builder has moved on to the other houses that they are building and when you try to get rectification works done they say they cannot get trades to do the work. They can find trades to continue to do the other homes where they are receiving incremental payments at various stages, but they cannot get trades to come back and do warranty work. When you are in your new home and you are having all these defects – or you cannot actually physically move in, effectively, and live in the home because of all the disruption that you are having from trying to get works done – it can be very taxing on your family and lead to all sorts of other issues.

It is interesting that those opposite give examples of all these issues that have happened with people who have raised concerns with them about their experiences. Some seem to be saying in their contributions that we cannot possibly hold builders to account because if we do and we make them rectify their shoddy work that will be a financial impost on them. Well, I am sorry – do it properly the first time. Do not do shoddy work. Sometimes it is simply a matter of cutting corners. If it is because of the conditions that are set by the builder on their trades where they put time pressure on them to get jobs done, they are still responsible for that, because they allow it to occur and they do not pull it up.

I have done a knockdown rebuild recently, so I have had a lot of experience. I could sit here for hours and tell you about the experiences that I have had and the frustration that those have caused. There are situations where plumbers have come out five times for one particular item and told us after each time, ‘That’s the best we can do.’ When we prove to them that it is not the best they can do and they can do better and they come back again, on the sixth time the supervisor came out and said they should have just done it properly the first time. That was us being disrupted six times – this is one small example – when they could have done it properly the first time. That is increasing costs for the company, which they will build into their cost structures and pass on. And it is not just the matter, it is the concealment.

In another example we had a situation where our front door was so far out of alignment that the wall had cracked, and what they had done, rather than fix it, was remove the seal from one side of the door so the door would actually close. If they had left that seal on, which is supposed to be there on one side of the door, the door would not have been able to close. Our upstairs bathroom has had several tiles removed, and it has been that way for five months. The underfloor heating wires are exposed, and they have been sheared from when they removed the tile, so it is not safe. When the inspector came out he would not turn it on, because it was not safe because it could arc. That has been like that for five months. We could not use the shower in our ensuite for eight weeks. We have had roof leaks, cracked pipes – all sorts of things. We go for months on end without actually getting a response – email silence. Because I have raised so many concerns, my customer liaison officer will not talk to me over the phone. And as you know – you have experienced me – I am not an aggressive person, I am fairly calm. I come across in a calm manner; I am not an aggressive person. I simply ask questions: ‘Is this good enough? When are you going to address this?’ – these sorts of things. But apparently that is not appropriate, so I can only communicate through email.

I am not going to name the company today – I may on another occasion – other than to say they are a large-volume builder. Trades have come out and they have looked at these things and said, ‘You know what? This is nothing. You should have seen what I was working on last week’, in terms of rectification works. And I said to them, ‘Well, why didn’t they just get you to do this in the first place?’, and they said, ‘Don’t know. We do the maintenance and the repairs. We don’t actually do the front-end work.’

It is quite telling when we had to have all of our floorboards ripped up and replaced and we had to move out of the house, and it was only by chance that I went back into the house while these works were being undertaken and found that there was an issue with the subflooring, and I raised a concern about it and they sent trades around to have a look, and the tradesperson came in and looked at the floor and said, ‘I reckon the problem is there, there and there.’ I said, ‘Oh, really? But you haven’t pulled up the floor yet and had a look.’ And he said, ‘I don’t need to. There’s a whole bunch of nails banged in there, there and there that aren’t supposed to be there.’ So clearly there were issues with the subflooring, but rather than rectify it at the time before they went on with the build, they simply bashed in a whole bunch of nails and hoped it would not be a problem. Well, it was a problem, and it meant we were out of the house for four days. Then when the floorboards were down, we had to repaint the house, all sorts of other things as well, which we are still waiting for.

These are just a few examples that I am raising here today because they are examples that get raised with me by constituents all the time. It is why we need a powerful regulator with teeth. It is why we need to empower the consumer and hold builders to account so that they do not have built within their systems the situation where they say, ‘Let’s just get the house fixed. We can deal with these issues later on, and if we put enough pressure on, enough delay, nine times out of 10 people will just fold and give up because there’s too much hassle and move on.’ That should not be an acceptable situation that we are in. The want and the need for more houses should not come at the expense of quality. It should not be a trade-off; it is not an either/or. We need to build more houses and we need to do them right. And as I said, if you build them right the first time and do not cut corners, you will not have to come back and do it again, which will run up costs exorbitantly for these companies.

I do not accept this argument that if you make builders come back and fix the work that they have done shoddily the first time it is an impost on that builder. No. In fact the consumer should be compensated for the time that they lose when they have to keep coming back, because once handover occurs it is on them to make themselves available to let them into the house to come and do the repairs. If they come and say, ‘We’re coming tomorrow,’ and you say, ‘I’m sorry, I can’t get time off work to come and do that,’ they say, ‘Okay, we’ll see you in two months. We gave you an opportunity.’ That is not acceptable. As I said, I could go on for hours with all sorts of examples, but I am not going to today, because we have been here for a long time, other than to say that this bill is a very important bill. These changes are very important, and they will have a real impact on people and customers and will address that power imbalance. I wholeheartedly support it.

Harriet SHING (Eastern Victoria – Minister for the Suburban Rail Loop, Minister for Housing and Building, Minister for Development Victoria and Precincts) (17:00): We have heard so many contributions in this place today in the course of the debate on these reforms that speak to themes of disempowerment, of distress, of financial loss and often of enormous anguish for families who have often saved for many, many years to get into a home of their own, only to have their hopes dashed and their wallets emptied and to be left high and dry.

It is with more than a small measure of alarm that I have listened to the contributions in this place from those opposite, who have spent considerable periods of time whilst on their feet talking about the impact of builders who are dead, dodgy or otherwise insolvent, only then to say that with these reforms, geared exactly as they are to addressing the shortcomings that have been the subject of voluminous contributions from the coalition, they will not support a bill that is geared entirely toward addressing some of the very worst aspects of a system that really has ended up for all the wrong reasons on the front pages of papers and in prime-time television slots, telling the stories of people with tears running down their faces and looking at sites where, frankly, work has been passed off as suitable, passed off as accessible and passed off as amenable to compliance with contracts but which has on any reading, by people like me, who are not registered builders, been quite disgraceful.

That is not to say that we do not also have an interest in making sure that the industry is recognised for the work that it does in delivering better and best practice outcomes in domestic building contracts. I have said on a number of occasions in discussions with those stakeholders, including stakeholders that have been referred to in contributions around this place and in support of arguments against this bill, that the vast majority of builders take enormous pride in their work. They work hard to attain the skills and to deliver the work that they themselves would choose to enjoy were they to live in the homes that they are building or with the adjustments they are making to the homes that are there already.

Again reform is needed where a race to the bottom has enabled too many disgraceful operators to get away with the sorts of practices that mean that government intervention is needed, is fair, and is warranted. When Porter Davis disappeared, it was the government that provided support to people who were left high and dry. Again a large-scale company, not having had the foresight – to put it at its most charitable, perhaps – to have the relevant insurance product in place, broke the hearts of people who just thought that a builder could be relied upon. Similarly, when Montego Homes left people high and dry in similar situations, government provided an extension to the supports that had been provided in the course of the Porter Davis imbroglio so that people affected by that builder could get a measure of restitution. Then Chatham Homes was a further example of substandard practices, engaging with consumers in a way that provided them with no measure of certainty or consistency about the recourse that they might be able to avail themselves of. That is one example of the case for reform. It is also crucial that we address the need for certainty across the industry in providing a one-stop shop – a consolidation of a variety of services.

I want to commend Anna Cronin, who, having taken on a role at the Victorian Building Authority in 2023, has worked tirelessly to create, drive and sustain operational and systemic change; to make sure that sunlight, as the best disinfectant for bad practice, could be applied to the workings of the VBA; and to make sure that the people in the VBA who have worked tirelessly and who do take pride in their own work around regulation, around assessment and around assistance to people needing support, are given the support that they deserve in order to do their job. There are components of this bill which increase the volume of auditors and inspectors to do the work necessary to ensure that the better quality and the best quality outcomes for a consumer-focused system are able to be delivered.

There are transitional provisions in this bill, which will also enable us, as we work towards the development and the finalisation of regulations, to manage insurance – first resort, last resort – to work towards the developer bond scheme, the 2 per cent scheme, which is consistent with what is happening in New South Wales, and a decennial operation as part of a longer term transition, and then also to make sure that information is able to be accessed in a transparent fashion and that people can understand what is happening as part of builders warranty work and as part of the standards that ought apply across a range of the steps and processes that are involved.

Dispute resolution will also be at the heart of this work, because we know that where consumers are required to or are left with no choice but to head to VCAT this is a situation that is often incredibly intimidating. We are often talking about people who have scrimped and saved in order to get a home of their own suddenly being faced with a quasi-judicial tribunal, which can be an enormous deterrent to seeking any kind of remedy. A one-stop shop, with a capacity to build in dispute resolution, initial work to have all reasonable efforts undertaken to work with a builder to resolve a matter, and then also rectification orders – the way in which those orders are issued and the expert, reasonable and measured approach that will be taken to the issuing of those orders – sitting alongside developer bonds and first-resort insurance, will give people, again, that measure of certainty.

That certainty is being provided not only to consumers. Laudably, Anna Cronin and the VBA, including as they continue the transition through to the work of the Building and Plumbing Commission, which will ensure upskilling, training and efficiencies over the coming months, have also worked to provide that measure of certainty and security to stakeholders. There has been lengthy discussion. Again, I have heard a number of contributions that have claimed that consultation and discussion with stakeholders has not occurred. There have been lengthy discussions. There have been meetings and discussions with me, with staff, with the department, with agencies and with the VBA to talk about the positions and the priorities of stakeholders across the spectrum of the issues of regulatory reform and oversight.

Consultation does not mean veto, however. Consultation does not mean that everybody providing their view will achieve every outcome that they desire. Consultation and discussion about the development of these reforms has sought to strike a reasonable and carefully calibrated balance between the importance of being able to do business in Victoria and continuing to deliver the record number of homes that we are building and that we are approving, the downward pressure that is placing on home costs and on the price to purchase, the things that we are doing that are working through the housing statement and the fact that Victoria is achieving 98 per cent of its targets under the Commonwealth’s nominal target of 1.2 million and that we are outstripping the approvals of other states, including New South Wales and Queensland, but also to provide certainty around what will happen from here so that as we move to increase the scale of buildings, whether that is up to three storeys or whether it is anything higher than that – to which a 2 per cent developer bond would apply – we have a measure of rigour in the system and that we continue to apply definitions that have been operational for decades here in Victorian statute but that we take the best of what has also been adopted in other jurisdictions. We know that, with a measure of clarity and transparency and with the opportunity for the VBA to become the Building and Plumbing Commission to bring in insurance functions, dispute resolution, assessment and support for consumers and builders, we will see a magnitude of improvement that consumers deserve. We will see that as we expand as a city – to a city the size of London by the 2050s – we are providing people again with a confidence in a market that matches the aspiration that has caused people to save for that deposit in the first place.

The development of this bill is part of ongoing reform. There will be a considerable component of discussion as regulatory work continues. As we move toward understanding the way in which stakeholders, consumers and other parts of the system of regulation operate, these conversations need to continue, and they should. The way in which we get better outcomes for systems-based reform is assisted immeasurably by that process. So I want to thank people who have been part of this discussion. I want to thank those people within the opposition and across the crossbenches who have engaged with us to share the stories of people who have come to their offices, often in states of high distress, talking to, not only from a consumer perspective, the loss and the disadvantage and the uncertainty and in many cases the trauma that they have suffered in relation to the home – the dream home, often – that never materialised. But also those builders who bemoan the fact that their reputation is being indirectly affected and compromised by the actions of others who simply do not hold themselves to the same standards that those taking pride in their work are at great pains to do.

I am looking forward to a committee discussion in this matter. But again, what I would say – this bill and these reforms stand for the propositions of the levelling of a power asymmetry that for too long has been a source of enormous distress. These reforms crystallise the desire that we have, not only to address the challenges of insolvency or of bad builds or of dodgy practices, but also to make it clear that from here systemic reform will enable us to get ahead of these issues, to prevent them and to have a practice of early intervention that gives people a measure of comfort and of confidence.

[NAME AWAITING VERIFICATION]

To people like Kane Perry, who have seen the practices of dodgy builders firsthand: this reform is for you. For people like those who have visited the offices of people on the other side of the chamber today: this reform is for you. For those builders who work so hard, not just to earn a living, not just to have a business that stands the test of time as we see upward pressure on materials and challenges around workforce, but also for those builders who deserve better than to be lumped into the same bucket as those builders who have absolutely no regard for the quality of standard and compliance that is reasonable to expect: these reforms are for you. To staff at the VBA, again those staff who have done the right thing, often in very, very challenging circumstances, those staff who have persisted, who have worked alongside Anna Cronin in making sure that we can build a system that is more rigorous, that is more accountable, that is more transparent and that has better oversight: these reforms are for you. And for anybody who is contemplating putting that deposit to good use in making an opportunity for themselves and for their families in taking advantage of the work that we have done, for example, in off-the-plan stamp duty exemptions and concessions, in the sort of support that we are providing to people around first home buyers grants, the sort of assistance that we are giving to people in ways that have translated from the home buyers equity fund in Victoria through to the Help to Buy scheme at a national level, those 11,000 people who have accessed the scheme in Victoria: these reforms are for you. These reforms are for the many, many people who will dream of home ownership and who deserve homes that are free from defects and deserve processes that enable defects to be addressed, addressed promptly and addressed to a standard of compliance that can be reasonably expected and relied upon.

These are important reforms. These are reforms that are based in a desire to deliver a better set of outcomes for people, often with less than the amount of power that might otherwise enable them to take action to achieve those outcomes themselves. On that basis, I commend the bill to the house.

Council divided on motion:

Ayes (19): Ryan Batchelor, John Berger, Lizzie Blandthorn, Katherine Copsey, Enver Erdogan, Jacinta Ermacora, Michael Galea, Anasina Gray-Barberio, Shaun Leane, Sarah Mansfield, Rachel Payne, Aiv Puglielli, Georgie Purcell, Harriet Shing, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt

Noes (15): Melina Bath, Jeff Bourman, Gaelle Broad, Georgie Crozier, David Davis, Moira Deeming, Renee Heath, David Limbrick, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Evan Mulholland, Rikkie-Lee Tyrrell, Richard Welch

Motion agreed to.

Read second time.

Committed.

Committee

Clause 1 (17:23)

Aiv PUGLIELLI: If it is all right, I will ask all my questions on clause 1. That would be great. My office has been in touch with someone who has been struggling with a very defective apartment building. They are in the middle of a huge mess at the moment trying to rectify these defects. They tell me that when the certificate of occupancy was issued, the one-page building site inspection report literally said:

[QUOTE AWAITING VERIFICATION]

From the inspection, completed works generally appeared satisfactory.

This does not sound like a very high bar to be setting: ‘generally appeared satisfactory’. Can I ask what is being done to make sure that final building inspections are always done and to a high standard?

Harriet SHING: It is very difficult for me to comment on the content of a report that, firstly, I have not seen about a building that I do not know anything about based on an experience that you have referred to here. When a report is issued it is required to identify the detail of any defects that might be evident to the person who has undertaken the report, and this is also why we want to make sure that in the course of these reforms – and that is not part of the changes, that is the standard of assessment that is required and is reasonable to require – the work that we have done is making sure that reports will have the necessary rigour and that processes will have the necessary, I suppose, depth to them that people like the person you have referred to should be able to expect. We have got an allocation of $63.5 million over last year’s budget to assist the Victorian Building Authority with an uplift of inspections by 50 per cent, so this will then mean that we have an opportunity for more inspections to be undertaken but also to make sure that people are getting a measure of responsiveness and then also detail in the reports that are provided. When we do have an assessment in a report about the quality of an inspection that identifies defective, noncompliant or incomplete work, there are opportunities for claims to have first-resort insurance accepted, and if the regulator is not satisfied that a building owner has suffered loss, a claim might be refused, and then there might be an opportunity to appeal a decision of a regulator to refuse a claim at VCAT or also to look at dispute resolution. So this is intended to accommodate a range of different processes, a triaging process through the VBA and the Building and Plumbing Commission (BPC) to assist people in the first instance with raising a matter for review directly with a builder. We want relationships to be able to be preserved and to operate functionally while defects are remedied but then, in the absence of that work, to have first-resort insurance or further action from the VBA.

Aiv PUGLIELLI: While I appreciate what you have said in relation to the particular scenario, in the scenario the reports are saying ‘Generally appeared satisfactory’ and what they are describing is something that was clearly defective, in this instance it has led to a very poor outcome. Can I ask: as part of future reforms is there going to be any further work done to make sure that building inspections are done thoroughly and identify defects where possible before a certificate of occupancy is issued?

Harriet SHING: One of the things that these reforms do, one of the things that is most important I think, is in serving the interests of consumers we want to make sure that the regulator can order the rectification of defective, noncompliant or incomplete building work. The regulator will be able to use rectification orders if it is satisfied the circumstances necessitate it and without a mandatory dispute resolution process. So that means that consumers will not need to spend time and money seeking orders from the Domestic Building Dispute Resolution Victoria (DBDRV) or VCAT if the regulator is satisfied the building work needs to be fixed and a genuine attempt has already been made between the owner and the builder to have the work rectified. So at the moment the VBA’s powers to issue a direction to fix are limited to before an occupancy permit is issued, which is the issue that you have just covered there. The bill provides the regulator with new powers to issue rectification orders to people who carry out building work – as I said, that is defective, noncompliant or incomplete – and rectification orders can be issued to whoever is responsible for carrying out the building work. That includes registered builders, unregistered persons including subcontractors and owner-builders, as well as developers in certain circumstances, and we may well get to that, and they can be issued to any class of building. They can be issued at any time during the construction phase and up to 10 years after the issue of an occupancy permit or a certificate of final inspection. This is again a really, really important measure of certainty for people, particularly with regard to latent defects, and I think we heard from a number of people, including Ms Purcell as I recall, about latent defects and the lack of clarity about how a remedy might be able to be pursued in those circumstances.

I hope I have covered that off in relation to the power to issue rectification orders to people carrying out that building work in those circumstances where it is defective, noncompliant or incomplete. The granular details about insurance and operational matters will be further prescribed in the regulations, and there will be consultation with key stakeholders. This is a bill that sets out the principles of the reform. So as we are talking about large-scale, long-term, systems-based reform, including as we adopt the provisions of frameworks that operate in other jurisdictions, we are creating as much room as we possibly can to consult with stakeholders around what that looks like in practical and operational terms.

For class 2 buildings, the Building and Plumbing Commission will be advised when an occupancy permit is being applied for, and the Building and Plumbing Commission can go in and do an inspection. So if there are serious defects, then the occupancy permit will not be issued. Serious defects: again, there is a very significant process around the determination of something which is a defect of a serious nature. We are not talking about the wrong paint colour here. We are talking about something of serious and significant impost upon the capacity to occupy a building, for example, and there are other situations in which that might apply. But the Building and Plumbing Commission will be using their own intelligence analysis programs. Again we are talking about high level expertise in matters that I and maybe you are not necessarily qualified to go into the detail of. But we do want to make sure that we are targeting those higher risk issues like, for example, balconies and waterproofing. That is the kind of scenario that we are talking about.

Aiv PUGLIELLI: Further on rectification orders, if a rectification order is issued once people are already living in a building and the works are significant and require residents to move out for weeks or even months, can I ask: who is responsible for these costs?

Harriet SHING: Mr Puglielli, just by way of clarification, it appears to me that you are asking about costs sustained by somebody who has sustained loss because of that defective work and where a rectification order is issued and that work needs to be undertaken, requiring them, for example, to vacate a premises.

A rectification order can be issued around workmanship issues or building work not complying with plans and specifications. Matters unrelated to workmanship or variances with plans and specifications set out in a contract, such as cost disputes or contract variation disputes, are not within the scope of matters for which a rectification order can be issued. Domestic Building Dispute Resolution Victoria, again coming under the umbrella of these reforms, will be the appropriate pathway for parties to seek to resolve these types of contractual issues. The objective of rectification orders is to ensure that, where this is undertaken and a rectification order is complied with, that a regulator is able to be satisfied that work has been improved to a standard that is acceptable.

Incomplete work, for example, means building work that is not complete according to the contract for the carrying out of the work, except for any omissions or defects that do not prevent the building work from being used for its intended purpose. ‘Noncompliant’ means building work that does not comply with the Building Act 1993 – again we are talking about existing definitions here – the regulations, any building permit issued for the carrying out of the work or any binding determination that applies to the carrying out of the work. ‘Defective’ in relation to the building work other than domestic building work, includes a failure to maintain a standard or quality of building work specified in the contract under which the work is carried out. In relation to domestic building work, ‘defective’ includes a breach of any warranty listed in the relevant section of the Domestic Building Contracts Act 1995 (DBCA). A rectification order can be issued during the construction process and up to 10 years after either the occupancy permit has been issued, the certificate of final inspection has been issued, or for building work that does not need a building permit, the date of practical completion.

Aiv PUGLIELLI: Just further on rectification orders, can I ask: what protections are there for seriously defective building work that is identified in a building where there is no way to rectify it? For those circumstances, how will this be addressed and how will consumers be protected?

Harriet SHING: The granular details of insurance and operational matters will be prescribed in the regulations, as I indicated to you in answer to a question earlier. The bill sets those principles, and we are creating as much room as we possibly can to make sure we can consult with stakeholders to get this right. Under the first-resort domestic building warranty, the Building and Plumbing Commission will be able to arrange for the rectification of defective work, and that may include the demolition and reconstruction of work that cannot be rectified. The specific details of cover will be determined, as I said, in regulations and of course subject to consultation.

It is accepted that buildings should be built properly and not require rectification work post the occupancy permit; that is kind of the whole underpinning of this piece of reform. The bill moves in this particular direction by enabling the regulator to step in to prevent the registration of a plan of subdivision or the issuing of an occupancy permit. If an apartment building is affected by serious defects, then the developer will not be able to sell the apartment until those serious defects are fixed. There are significant incentives for a developer or a builder, firstly, not to get it wrong, and secondly, if something does happen, to rectify it promptly in order to secure the resolution, settlement and occupancy of a premises that they have been responsible for delivering changes to under a contract.

A rectification order may be issued to rectify defects, and multiple parties responsible for carrying out the defective work can be issued with the order. The way in which that is apportioned will be a matter that is relevant to the parties who are set out in that rectification order – they will be jointly and severally responsible. But again, where that involves a number of parties, that would be the subject of discussion between them. In addition to that, financial contributions from other building professionals, such as engineers, draftsperson, building surveyors et cetera, could be pursued by the owners on the basis that they failed in their responsibilities by delivering a house which is defective and requires total demolition and reconstruction. It is also really important that builders satisfy themselves that the plans and designs that they are receiving – that is, the remit of their work for the purpose of that contract – are compliant with the standards that apply to a builder in being able to deliver to an acceptable standard.

Aiv PUGLIELLI: Just on to developer bonds, there have been concerns raised with my office by owners that a 2 per cent bond might not be sufficient in all cases. For a higher end building that might cost in the tens of millions of dollars to build this would only be developer bond of a few hundred thousand dollars which, as they have described, would not go far enough should there be significant defects or issues. Can I ask: how will these types of builds be protected with the current level of bond?

Harriet SHING: The current level of bond or the 2 per cent as prescribed in the legislation?

Aiv PUGLIELLI: As in the bill.

Harriet SHING: Okay. Mr Puglielli, as I understand it, you are asking about whether essentially 2 per cent of the construction cost is sufficient to address the remedy that might be required. The developer bond scheme (DBS) itself operates, as you would know, for the development and delivery of buildings that are four storeys and above. It is going to operate in a way that requires the developer to issue a bond in favour of the regulator before applying for an occupancy permit. That is, as you quite rightly pointed out, set at 2 per cent, the cost of construction of a residential apartment building. I just want to be very clear in the point that I am about to make: the bond amount was initially set at 3 per cent. We had very careful discussion with a range of stakeholders, including the HIA, Master Builders and others, and as a consequence of those discussions and as part of good-faith consultation, discussion and engagement, that was reduced to 2 per cent of the cost of constructing a residential apartment building.

Developers will appoint an assessor if their nomination is approved by the owners corporation, and in some instances the regulator might be required to appoint a building assessor. Within 15 and 18 months of the issuing of the occupancy permit, the building assessor will carry out a preliminary inspection and prepare a report identifying any reportable defects. After the preliminary report is completed, the developer will be given an opportunity to rectify the identified defects – that is, without reaching into the quantum of the 2 per cent of construction costs that is required to be remitted to the regulator at the outset. The developer must then appoint the same building assessor to carry out a final inspection and report between 21 and 24 months of the occupancy permit issuing. That is able to be deployed as a measure to incentivise a developer to actually address any issues around defects that might arise. On completion of the final report, the owners corporation will be able to make a claim on the bond on matters, including the rectification of outstanding defects, and it will be as a bond returned to the developer if no outstanding defects are identified or if the preliminary report – that is, the report undertaken between 15 and 18 months – does not identify any defects.

Any proposed future increases to the bond would occur through regulations, and that then needs to go through a public consultation process because it will not be a matter that occurs above and beyond what is set in the bill at 2 per cent. The bond could be active for a period that would require its release sooner than two years in certain circumstances, so where the preliminary report does not identify any details. The form of the 2 per cent bond, again just to be to be clear about what that looks like, can be, for example, a bank guarantee issued by an authorised deposit-taking institution, a bond issued by an insurer approved by the regulator – and in New South Wales, which has a bond scheme, it is actually usually a bank guarantee and not an insurer bond – or another form of security that is prescribed in regulations. It could be, for example, if the regulations allow it – and that is yet to be determined – that it might also be able to be paid to the regulator in cash.

Aiv PUGLIELLI: Just on to another matter, in a media release announcing this bill and the changes that it will bring I understand you are quoted as saying:

It’s essential that consumers are protected and supported when buying or building their home, and we’ll continue to work with industry to get the balance right, and deliver quality homes of a consistently high standard.

Can I just ask if you could clarify this statement and explain what you mean here? What balance needs to be struck with regard to consumer protection?

Harriet SHING: As I said in summing up the second-reading debate, the principles that are driving these reforms are based on better visibility of consumer priorities and of consumer concerns and misgivings about the regulation of the system, confidence in the way in which regulation occurs and consistency of outcomes. It has also been about making sure that we can, wherever possible, simplify the engagements that people have with the system of regulation, which is where again in bringing together insurance functions, dispute resolution and compliance measures, we have essentially that – I really hate this term, but it is true – one-stop shop. We really need to make sure that people are not having to go to various parts of the system, which has previously been the case. It is enormously complex. It is really time consuming. And again if we are talking about consumers, for example, who are from culturally and linguistically diverse communities, people who speak English as a second or third language, the system can be impenetrably difficult.

This is where, again, when we are talking about that power asymmetry that is often applied with families who are time poor and resource poor, dealing with large-volume builder situations along the lines of what we have heard about here in the debate today that led to interventions from government – even understanding what the standards are that apply for the purpose of an acceptable build or an acceptable rectification – can be very difficult. This is where again online resources, clarity of information, accessible detail as to process and that triage from within the regulator will all help to strike that better balance. That also provides certainty and a greater line of sight effectively for the industry. It has also not been without its challenges for builders and for contractors to understand the way in which a system needs to be navigated. This is where again direct discussion between consumers and builders is the starting point for what can, hopefully, be resolved by way of an outcome without recourse to a more formal process, whether that is a call on first-resort insurance, a rectification order or indeed some form of prohibition or sanction from the regulator in the event that works are not performed or somebody refuses to actually comply with an order made by the Building and Plumbing Commission or the VBA.

Aiv PUGLIELLI: Just moving on to the issue of phoenixing, can you speak briefly to what is being done to prevent builders from phoenixing? And have you considered making business directors personally liable to reduce the opportunity for businesses to disappear before they are held to account?

Harriet SHING: This is a big one. Again, phoenixing is a challenge. We had reforms introduced in 2019 that enable the VBA to refuse applications for new registration or the renewal of registration if the applicant is suspected to have engaged in illegal phoenixing activity. Again, we have seen situations where assets are emptied from one corporate structure and transferred to another for it only to pop up with people being left with no effective recourse or meaningful recourse because they are taking action essentially against a dead entity. The changes that were introduced in 2019 mean that the corporate activity of building practitioners who have served as directors, secretaries or influential persons of companies within two years of the company or companies entering external administration may be deemed unsuitable for registration or renewal, and there are similar deeming provisions in a range of regulatory frameworks. The corporations act, for example, has a range of pretty significant sanctions there.

That then goes on to the other question that you have asked about personal liability, but this is a really fraught issue in the industry, and it really harms consumers. That is why the bill is about providing protections with that first-resort insurance scheme and then also streamlining dispute resolution. This is about measures that help to protect consumers no matter how dodgy a builder might be with phoenixing. It is really hard to effectively police, but the bill is about putting measures in place to protect consumers from harm even where the phoenixing still occurs – again, the developer bond, and that framework is also there to provide that measure of security in the same way that a residential tenancies bond operates, as I think one of the government speakers referred to earlier. If claims pursuant to developer bond insurance policies are made, the new regulator will seek financial recovery from builders and have an ability to track directors or individuals to ensure they are held financially accountable and identify them if they seek to engage in illegal phoenixing activity. As you know, the developer bond scheme provides an incentive – it is a 2 per cent incentive to continue trading beyond completion. Set aside that 2 per cent – that is one component – and if they want to continue trading and if they do not want to attract the attention of the regulator, including, for example, by bringing the broader industry into disrepute, there is a significant incentive for that to happen. For a major development of $50 million, for example, the developer would be required to lodge a bond or bank guarantee of $1 million.

In terms of personal liability, the Building Act includes a duty that nominee directors of a company registered as a building practitioner have to ensure that the body corporate complies with the requirements of the Building Act and also the regulations. This means that there is a penalty of 500 penalty units – that is that is about $98,000 – that applies for breaches, so the director is accountable as well as for the actions of the company. It is an offence for nominee directors of building corporations to not comply with a rectification order, so that is baked in with penalties set up to almost $500,000 per offence. There are some frameworks in there that are designed not only to incentivise and to encourage good behaviour but also to deter and to have sanctions that apply to substandard or offending behaviour.

Aiv PUGLIELLI: I have about three questions left – just flagging for the room. I move on to first resort insurance, which you mentioned with regard to that scheme. Would you consider or have you considered indexing payouts to construction inflation?

Harriet SHING: This is detail that we would go into as part of the work on consultation. We do want to make sure that we are getting it right around the way in which the scheme operates, and this is also where any kind of detail around what this means in material terms needs to be worked through and should be worked through. That is how we get a better product. That being said, if an insurance claim has been accepted by the first resort domestic building warranty scheme, the regulator will be able to arrange for the rectification of defective or noncompliant building work or incomplete building work or the payment of compensation. The priority of the regulator will be to rectify the defect, so this is a remedial space. We do want to facilitate outcomes that put people in the position that they would otherwise have been but for that defective or incomplete work, rather than pay compensation, so that primary issue is resolved.

If a payout is required, the quantum of any payout would be based on quotes to complete the required rectification work, and they would reflect current construction costs for the rectification work. Anyone who has been to any kind of major hardware store in the last few years will know very directly and very personally, as a microcosm example of the cost of changes to primary materials or building materials, that there is a huge amount of volatility in the system on pricing. Before insurance payments are triggered, the builder responsible would be issued with a rectification order giving them an opportunity to fix the issue at their own cost. That will be point in time dependent. The experience of the Queensland Home Warranty Scheme – that is also a first resort scheme, which I think, Ms Payne, you referred to in your contribution earlier – shows that the majority of builders comply with rectification orders if they are issued. This is not something which is blithely ignored by the sector, based on the experience of other jurisdictions. That in turn reduces the need for insurance payouts and drawdowns on the consumer’s cover limit. Coverage of the insurance scheme will be dealt with in regulations, and this will give government a measure of flexibility to be able to respond to, monitor and react to market forces. That is the same with any legislation where regulatory frameworks apply. Everything from a penalty unit through to periods of time by which the impact of legislation can be assessed is often and very appropriately set out in regulations for exactly that purpose.

Aiv PUGLIELLI: My remaining questions relate more to implementation provisions in the bill. Minister, are you confident that there will be sufficient capacity at the new Building and Plumbing Commission to efficiently handle all of its new functions in a timely manner?

David Limbrick: That is one of my questions.

Harriet SHING: I will attribute it to you as well, then, if you like. Thank you, Mr Puglielli – and Mr Limbrick as well – for a question which may well anticipate one of Mr Limbrick’s questions and therefore remove the need for it to be asked, although I am happy to repeat this. Given that you are in the chamber, Mr Limbrick, you may not require me to. We allocated, as I indicated earlier, $63.3 million to this work in last year’s budget, the 2024–25 budget, to establish and operate the integrated regulator, and additionally staff from the Victorian Managed Insurance Authority (VMIA) and Domestic Building Dispute Resolution Victoria – there are so many initialisations in this entire sector, so I do apologise; I will try to spell it out as we go – will transfer to the regulator. That will ensure the regulator has access to staff with the right skills and continuity of service delivery. Anna Cronin will also be continuing as the commissioner through to the CEO, and that will be a big part of that continuity.

The regulator will also be resourced with additional boots on the ground, so there will be a 50 per cent increase in auditors and inspectorate staff as part of this envelope. Subject to the passage of this bill, all of the staff that are currently with Domestic Building Dispute Resolution Vic and the VMIA’s domestic building insurance (DBI) business will transfer across to the VBA. Additional staffing will really depend on the level of demand that we have for Building and Plumbing Commission services. That organisation will fund the recruitment of new staff via a number of revenue streams, and that will include the building permit levy and insurance premiums. Forty-two staff are expected to transfer from the VMIA to the VBA. So 92 staff of a part- or full-time nature in an ongoing mode of employment and 30 casuals are expected to transfer from Domestic Building Dispute Resolution Victoria to the Victorian Building Authority. That is something that we will continue to work through. It is also about the operational changes and the resources, and much of that information will be deployed, made more efficient and combined to remove or reduce duplication.

Aiv PUGLIELLI: This last question I think largely overlaps with the response you have just given, so forgive me. Are you able to just confirm how much additional funding has been committed already for the delivery of the provisions under this bill? Can you also speak to what additional resources will be provided into the future so that the intentions of this bill are achieved?

Harriet SHING: One of the things that we are doing here with the allocation of the $63.3 million is establishing the framework by which these new functions can operate under one roof. As we designed the merger of the building regulation bodies under the VBA and then into the Building and Plumbing Commission, there was some really careful consultation with the relevant union, the Community and Public Sector Union, around the preservation of jobs. There are specific protections for workers who are being transferred between those bodies. Staff will continue to be employed on terms no less favourable than those which were in existence before they were reassigned. I cannot comment on any future funding envelopes. I suspect that if I were to try to do that here we would see the Treasurer straight into this chamber with some very choice interventions and seeking that I be turned off at the mains. I hope that gives you a measure of certainty around the $63.3 million at least being locked in as part of assisting with the operationalisation of these changes.

David LIMBRICK: I have a few questions for the minister which are rather specific and technical. I refer to clause 73, new subsection 45(1A)(a), where it reads ‘in respect of which a claim under the statutory insurance scheme may be made’. Could the minister explain the operation and intent of this particular section?

Harriet SHING: Essentially this is about making sure that, to bypass what might other otherwise be conduct by a builder that seeks to delay the delivery of an insurance claim, the claim itself is made directly by the aggrieved party to the regulator, which is again where first resort applies. That is the essence of that particular provision, so the party who is not the building owner must obtain the authority’s consent to the claim before making the claim – that is, there would need to be an engagement with the VBA before the matter is referred to the Domestic Building Dispute Resolution Victoria or to the extent that the matter could be or is the subject of a claim under the statutory insurance scheme (SIS). Matters that do not relate to potential claims on the statutory insurance scheme – they might be contractual matters like payment disputes between a building owner and a builder – will not be prevented from progressing to dispute resolution, if that helps.

David LIMBRICK: If I can provide a scenario which has been raised with me. if a home owner has not paid their final payment for their house and yet they have an insurance claim put in through the statutory insurance scheme, would it be the case that before attempting to obtain that money from the home owner, the final payment, they would need the authority’s consent? Is that the case?

Harriet SHING: That would appear to be a contractual matter rather than one within the scope and the contemplation of an insurance matter, so it is not appropriate to comment on the specifics of the granular detail of the question that you have been asked. But it does not in and of itself appear to relate to incomplete, noncompliant or defective work in the scenario that you have just outlined.

David LIMBRICK: Just for further clarity then, if there is an insurance claim by a home owner and the builder may be owed money, they would still have the ability to enforce their normal contractual rights without first obtaining consent from the SIS. Is that correct?

Harriet SHING: Yes.

David LIMBRICK: That was good for clarifying that. The next question I have is on clause 74, new section 45GA, suspension of referral. If there is a dispute resolution process through the DBDRV, then that would be effectively paused or stopped if there was an insurance claim. Is that correct?

Harriet SHING: The section applies in relation to a suspension of the conciliation of a referred dispute or a relevant matter under the part, pending a decision about a claim under the statutory insurance scheme if there is a matter that has been accepted as a referral, and after that matter is accepted the referring party claims assistance under that insurance scheme in respect of the building work to which that referral or matter applied. So it is a first resort scheme, if that helps.

David LIMBRICK: I thank the minister for clarifying that. However, doesn’t this create a sort of perverse incentive in that if a builder has sought dispute resolution through the DBDRV and then if the home owner wants to delay that process, for example, if they can launch an insurance claim through the SIS, doesn’t that suspend the normal conciliation process?

Harriet SHING: Given the consumer focus is actually geared toward providing remedies to consumers, it is outcomes that consumers are seeking rather than prevarication. Consumers have told us and have told other jurisdictions repeatedly that it is the lack of certainty, the lack of transparency and the lack of a clear pathway as to how to resolve disputes rather than how to avoid them that is cause for so much advocacy around the reforms that are set out in this bill. This is where DBDRV is for contractual disputes and insurance scheme work is for noncompliant, defective or incomplete work, if that helps.

David LIMBRICK: But effectively, the contractual disputes and the insurance disputes through this clause are sort of intertwined, because if there is a contractual dispute – like let us say the builder has not received final payment and then the home owner initiates an insurance claim – then the contractual dispute is suspended until that insurance claim is completed. Is that not the case?

Harriet SHING: Mr Limbrick, if the builder’s claim is about contractual issues, it will not be delayed by an insurance scheme claim. Does that give you the clarity that you were after? Yes.

David LIMBRICK: Clause 84 is basically around the definition of ‘defective’. There has been some concern from some people that ‘defective’ is a very wide term. In the second-reading speeches, including my own, everyone was talking about very bad, severe defects like mould and these sorts of things, but a defect could also be that the shade of paint was slightly different to what you thought or imperfect or maybe the tiles were not exactly the colour that you thought, so there are a whole range of things that could be classified as defects. So what I am concerned with is everyone has been talking about, including the government, how this is intended for severe, major things, so how do we prevent this scheme being used for things that are minor defects compared to major defects?

Harriet SHING: I was wondering who the first question about tiles would come from, and I am glad it is you, Mr Limbrick. The section 8 warranties in the Domestic Building Contracts Act are really long established and understood. They have been in place for 30 years. Similar protections are also available under the Australian Consumer Law. So this is not an issue that sits out as a unique example of ambiguity here. The warranty period under the Domestic Building Contracts Act is 10 years, and that has existed for 30 years, and that will not change under the bill. DBDRV currently conciliates disputes about the section 8 warranties, including the inspection of domestic building work for breaches of warranties, and they also indemnify building owners against loss or damage resulting from a breach of the section 8 warranties, including for defective domestic building work. So for the first time the building regulator is able to enforce the 10-year warranty period rather than leaving consumers to pursue a builder through the courts to enforce warranties, and in protecting consumers from defective work carried out by the builders it is also about making sure that we are clear that this is not reasonable, this is not wear and tear, and we are not talking about maintenance, we are not talking about matters that might otherwise fall beyond the scope of the definition of the DBC act as it has been applied.

The issues that we have heard from consumers and from the industry up to this point have not been about the definition of ‘defect’. We have been hearing about the loopholes in the system that have allowed dodgy builders to send working families into tens and hundreds of thousands of dollars of debt. That is not a tile that is a different colour to the one that you anticipated; we are talking about waterproofing, we are talking about balconies, we are talking about the sorts of things that create more than perhaps an aesthetic inconvenience.

The loopholes also devalue the work of the vast majority of builders. As I said in my summing-up, as so many other people have said in speaking to this bill, the vast majority of builders strive to provide a high-quality product. So again, back to the question about tiles, it is not about the colour of the tile. It might be about the way in which a tile is laid such that a room that ought to be waterproof and that ought to be fit for purpose and that ought to be able to be used for its intended purpose is not, rather than what shade of ceramic you chose to put into your bathroom.

David LIMBRICK: I accept the intent of what you are talking about there, but if the government is having – a term that the minister has said that she hates – a one-stop shop, wouldn’t all consumers go to the one-stop shop for every problem that they saw? Surely that is that is what would be incentivised, right? If I had some problem with my house, wouldn’t I just go straight to the statutory insurance scheme and make a claim, no matter how big or small, because that is the one-stop shop?

Harriet SHING: The idea of a one-stop shop is intended to create traffic to assist people with understanding what their rights and obligations are. That applies for consumers and also for builders. That is not dissimilar to Consumer Affairs Victoria. People bring all sorts of questions to that particular body all the time. They are skilled human beings who have experience in managing the provision of assistance to people and also in making informed decisions and assessments about the issuing of rectification orders to ensure that that is not unfair and unreasonable.

This is about decisions that are taken by reference to the circumstances in play in any given situation; they require an appraisal of circumstances and of the way in which circumstances have come to be in existence, and we are putting forward a less alienating regulator. This is actually about a user-friendly interface with regulation for people, again, who often will not understand what rights they have or what obligations and responsibilities that they have, and in order to access that information a user-friendly and accessible model of regulation is the thing that we are going for here. It is about human and industry expertise, and again we are working with the increase of 50 per cent in people qualified to do that to make sure there is not only the scale within the system to accommodate what may well be an increase in the number of inquiries that come through but also the capacity of the system within that one-stop shop to be able to address and respond to those inquiries as part of a triage and an escalation or referral pathway.

Jeff BOURMAN: Minister, as you are aware, I have been approached by an industry body to ask some questions. The first one is to do with rectification orders. Can you please describe the process for builders to be given an opportunity to rectify defects before a warranty claim is submitted and guarantee that the process will be included in the regulations?

Harriet SHING: It is good that we are in a position in the committee stage to be able to have these conversations. It is disappointing that you were not supportive of moving into this committee stage in relation to the second-reading debate.

In practice at least four opportunities will be available to rectify defects before an insurance claim is triggered. In the first instance, in the majority of cases consumers will attempt to informally resolve defective work by speaking to their builder. Then if the builder refuses or fails to rectify the defect, the consumer will be required to serve a notice on the builder, stating the facts of the matter. It is also really important, as we provide that balance – referring back to the quote that Mr Puglielli provided from the announcement as it was made at the time – to provide the builder with a reasonable opportunity to rectify those defects. Again, it comes down to what is reasonable, and that will vary in the circumstances. An insurance claim will not be decided until that notice period has expired, and this is similar to Queensland. Thirdly, if the Building and Plumbing Commission progresses the insurance claim, there will be a site inspection, and standard practice is for the builder and the owner to be present. That would then enable each party to put their case forward. Again, this is what Queensland does. The fourth step: where the work is defective, the Building and Plumbing Commission will issue a rectification order, but before it does that, the commission will give the builder an opportunity to provide reasons why they should not be issued a rectification order. Again, this is about an assessment of circumstances in play – assessments that are undertaken by human beings with relevant industry and real-life experience. If the BPC determines that issuing a rectification order is reasonable in the circumstances, it will issue the order and specify a period of time for the builder to comply. Where we do not have compliance in time, there will be an insurance response that is triggered.

Jeff BOURMAN: This process, is it written out somewhere, Minister? I believe it is not in the bill, but would it be included in the regulations?

Harriet SHING: I will not foreshadow what is in the regulations, because to do that would be to present them as a fait accompli, and the very process of consultation requires that that not be the case.

Jeff BOURMAN: I want to move on to the dispute resolution process. Can you assure us that the Building and Plumbing Commission’s consent is not required to refer contract disputes to the DBDRV, Domestic Building Dispute Resolution Victoria?

Harriet SHING: Mr Bourman, the Building and Plumbing Commission’s consent is not required to refer contractual disputes to Domestic Building Dispute Resolution Victoria. Payment disputes are contractual disputes. Consent, though, from the Building and Plumbing Commission would be required if a builder wanted to refer a matter relating to domestic building work to conciliation. The term ‘domestic building work’ is defined in the act, and it does not include payments, just to be really clear there. The purpose of those new sections is to ensure that consumers who have a claim for defective domestic building work under the scheme are not brought into Domestic Building Dispute Resolution Victoria conciliation proceedings, given the policy intent of the warranty scheme is actually about resolving defective work issues quickly, without the need for people to enter into conciliation.

Jeff BOURMAN: Moving on to insurance triggers, Minister, given the very limited time for comment on this legislation, can you assure us that the regulations will be written to ensure clarity over insurance triggers and define expectations for both consumer and builder?

Harriet SHING: I do not accept that there has been a very limited consultation in relation to this bill. I have been in numerous conversations and discussions with stakeholders. This has been part of ongoing work from government in relation to reform. We have heard speakers from the opposition talk about how this has been going on for years. The response has been part of development for years, and this is something which we will continue to develop as part of the proposed regulation development process. But again, just for the record and to be really, really clear, we have worked with industry, with stakeholders, with consumers and with people who have experience of the impact and the damage that shoddy practices have caused, not only to the sector but also to people who have and should continue to have the right to get what they pay for and have access to a process that they can understand and that facilitates better outcomes.

Jeff BOURMAN: Thanks for the comment about the limited time stuff. These are someone else’s words, as you are aware, but I am still not entirely sure whether we covered the part about whether the regulations will be written to ensure clarity over insurance triggers and to define expectations for both consumers and builders.

Harriet SHING: The objective of developing regulations is to provide clarity, and that is where a process of consultation will inform the delivery of that clarity. But again the purpose of regulations is to regulate and to do so in a way that achieves primary purposes that are geared back to achievement of the principles set out in the bill.

Jeff BOURMAN: As you are aware, these are other people’s concerns. Minister, can you guarantee there will be appropriate opportunity for real consultation with the industry before the regulations are finalised?

Harriet SHING: I addressed this in my summing-up with the hope that other people’s words would not be required, and to that end I am happy to reaffirm that as part of my job in this portfolio it is incumbent upon me to ensure that I am continuing to engage with industry. I take my obligations in this portfolio very, very seriously, as does the regulator; Anna Cronin has worked tirelessly with industry and with stakeholders to work through the practical and the operational details of the scheme and of the reforms as they progress. This is also about making sure that we are maintaining and improving the exchange of information and the goodwill within the sector that we know is essential to its success over time. Nobody wants to see these reforms fail, unless of course they are looking for a cheap political gotcha moment. I think that is something which is far eclipsed in importance by the certainty that consumers deserve and by the transparency that the sector is calling for.

Jeff BOURMAN: Minister, we understand the bill relies on the definition of a defect, which I am not going to go into, described in the Domestic Building Contracts Act 1995. This includes a breach of warranty as listed in section 8 or a failure to maintain a standard or quality of building work as specified in the contract. This assumes that the contract adequately defines a standard of work which most domestic contracts without a superintendent do not adequately do. Section 8 of the act refers to implied warranties and proper and workmanlike manner. These descriptions are subjective and invite dispute. How can these 30-year-old definitions be relied on when this bill requires the building to be defect-free for 10 years post occupation? Many of the products and materials included in the building do not carry warranties of this length. This leaves a high likelihood of dispute as to what constitutes a defect, particularly later in the stages of the warranty. How can the builder be held responsible for warranties for a period longer than that offered by the manufacturer? Would the minister consider updating the Guide to Standards and Tolerances 2015 to ensure that it meets current date needs, defines and clarifies expectations for both parties, particularly in respect to warranties, and reduces the opportunity for dispute?

Harriet SHING: The definition of ‘defect’ is being used in this bill because it sufficiently captures the type of work that should be considered for rectification orders. Again, the definition of ‘defect’ has not been front and centre for the duration of the 30 years that it has been applied in the act, and the Domestic Building Contracts Act 1995 has been something that has been able to be deployed, interpreted and understood over the course of that time in a relatively settled manner. Defective domestic building work is currently inspected by DBDRV assessors, and the chief dispute resolution officer issues dispute resolution orders to enforce breaches of domestic building work requirements if a mediated outcome between a consumer and a builder is not possible. Again, that is done by reference to the circumstances in play at any particular time and done on a case-by-case basis. DBDRV relies on the Guide to Standards and Tolerances when making a determination about whether domestic building work is defective. If we were to use the regulations to define ‘defective’, we would then see inconsistent definitions of ‘defect’ in the Domestic Building Contracts Act 1995 and the Building Act. That is, if nothing else, going to cause ambiguity, going to cause opacity and going to be contrary to the principles that have underpinned these reforms. It would lead to inconsistent definitions of ‘defect’ for the rectification order power, again creating potentially a morass of legal uncertainty, the first-resort domestic building warranty scheme works and the developer bond scheme.

Consistent definitions are part of the work that we do in seeking to provide a better alignment of various parts of the statute book. This is what we do here, and it is part of the constant discussions that we have on any number of different pieces of legislation across any number of portfolios. Inconsistent definitions, we all know – and industry works hard through the regulator to avoid them – create confusion, and they weaken the ability of the regulator to effectively enforce defective work, in particular when we come back to that one-stop shop. This is where continuity is as important, when we have an assessor undertaking a preliminary report and then a final report and assessment. So between that 15 and 18 months, and up to a 24-month period, you have to have the same assessor. Again, there is a significant risk that if we have various definitions, inclusive or exclusive of ‘defective’, based on various parts of a system, that we will see perverse and unintended consequences that actually go against and fall foul of the principles that have underpinned this act. So given the rectification order is an enforcement power with penalties for noncompliance, the act must define ‘defective’.

Jeff BOURMAN: I actually do not dispute anything you said, but the question was: would the minister consider updating the Guide to Standards and Tolerances 2015, which does not actually get to defining a defect. ‘Defect’ is covered in the Domestic Building Contracts Act. So basically the idea is that if the Guide to Standards and Tolerances – I am projecting the thought processes of the people that asked me the question – was updated and clarified expectations, it may just reduce the possibility of any morasses. I am accepting your comments about the definition of ‘defect’, but there is a guide which I think would help sort it out, which is not necessarily about definitions but expectations.

Harriet SHING: I would not necessarily accept your characterisation of expectations sitting out somewhere separate and distinct from definitions. In order to deliver on an expectation, one needs to know what that expectation is, and in order to know what that expectation is, one needs to have a definition. I appreciate where you are coming from, but I do not accept the characterisation of the distinction there.

Nonetheless, the VBA is reviewing the standards and tolerances to support transparency, and again, that is one of the underpinning measures of this work. We want to make sure that industry is given every measure of support that is reasonably available to assist in making these reforms work – and work well. We do not want to see this fail. This is why we will continue to do the work that enables us to provide clarity to the sector, consistency in decision-making and transparency.

Just to just to be really clear, that information is already available on the VBA website, so this is something which is in the public domain. We will continue to deploy a range of methods to ensure that information continues to be freely available but also that people can ask questions, whether that is with a consumer focus – people calling up to have a telephone conversation, people accessing online materials or the warranty scheme terms being published – or whether it is about working with industry to ensure that good practices are also supported, because, again, this is not only about cracking down on dodgy builders, it is about amplifying good work, and it is about making sure that we are supporting a sector that supports so much economic growth and prosperity but also the delivery of, fundamentally, people’s hopes and dreams in bricks and mortar.

Sitting suspended 6:31 pm until 7:32 pm.

Jeff BOURMAN: My final question for the minister is: can the minister explain how the BPC proposes to administer the insurance scheme and clarify the relative roles and responsibilities?

Harriet SHING: Again, that is a matter that will be dealt with as an operational matter through the regulations.

David DAVIS: There are a number of questions I want to ask, and with the leave of the committee we might try and focus on clause 1 for expedition purposes. There are a number of issues. The most immediate one I think here is the impact of possible amendments on the Domestic Building Contracts Act, which is one of themes that I want to pursue. The proposed section 316 of this particular building amendment seems to preserve builders’ existing DBI eligibility limits. Is that right?

Harriet SHING: Save for the work that will be covered for minimum financial requirements for builders registration, yes, that is correct.

David DAVIS: Will the minimum financial requirement system on 1 July 2026, or whatever other commencement date, preserve the existing eligibility limits or the capacity to buy policies and therefore sign contracts to build homes? If not, what process will be in place to ensure home builders have the capacity to take on new work to help Victoria achieve its targets?

Harriet SHING: In establishing a statutory insurance scheme for first resort domestic building warranty for residential buildings up to three storeys, first resort domestic building warranty enables building owners to submit an insurance claim for defective, noncompliant or incomplete work, subject to time limits. Minimum financial requirements will be the registration process for builders, so they will be set in regulations to be developed later this year, but cover will come into force where a building owner enters into an insurable domestic building contract valued at $20,000 or higher with a registered building practitioner, and that contract is deemed to be covered even if the builder has not paid an insurance premium.

David DAVIS: The proposed definition of ‘insurable domestic building contract’ includes a higher threshold of $20,000. Ideally the similar thresholds for contracts being major domestic building contracts and a builder needing to be registered will also change. There is already significant confusion about the existing thresholds of $16,000 and $10,000 for insurance and building contracts being different. How will that be addressed?

Harriet SHING: The threshold is being increased to $20,000 in recognition of the increased cost of building work, and this will bring Victoria into line with New South Wales. The previous threshold of $16,000 had not in fact been increased for many, many years, so this is effectively about an intention to make sure we have got an alignment with another jurisdiction but also to review the threshold during the Domestic Building Contract Acts review.

David DAVIS: The repeal of sections 25AB(3)(b) and 25AB(4) of the Building Act means that if a subsequent builder is engaged, the relevant building surveyor does not need to check whether insurance has been obtained by a subsequent builder who has been engaged once the building permit has been issued. This suggests that insurance cover is issued only once for each job. Does this mean that a subsequent builder never needs to worry about their eligibility limits being impacted if they take on work rectifying or completing another builder’s work? Therefore I ask: how will this risk be priced in premiums?

Harriet SHING: You do actually need insurance per project. That applies to each entity undertaking a project.

David DAVIS: Even a partial project?

Harriet SHING: A partial project is still in and of itself a project.

David DAVIS: The definition of ‘speculative domestic building work’ covers homes built by a builder but seems to exclude the scenario where one of possibly many homes is being built for occupation by the actual builder. It also seems to exclude a build-to-rent scenario. Is that deliberate?

Harriet SHING: On what basis do you say it seems to exclude build-to-rent? Can you just put a bit more context on the record?

David DAVIS: It does not seem to be captured.

Harriet SHING: Sorry, Mr Davis. For the sake of clarity, I am just wondering the basis upon which you are asserting that build-to-rent is not covered where a developer might be part of delivering that particular project.

David DAVIS: It just does not seem to be there.

Harriet SHING: The primary purpose of the scheme is to provide a measure of regulation for developers and projects, irrespective of whether they are build-to-rent or not. I am very happy to feed this into the process of the development of regulations, however, to put that beyond doubt. But again, the developer still has to operate within their limits and within their thresholds as they apply to any project and under any mechanism.

David DAVIS: Proposed section 137K sets out when a consumer is entitled to assistance under a statutory insurance scheme. This is when they have suffered loss arising from or in connection with domestic building work that is incomplete, defective or noncompliant. There is no reference to rectification orders here. On face value the section does not require that a rectification order be made. It is subject to any provisions in part 9A or the regulations. It seems that regulation-making power in section 137ZL(a) would be the provision that allows for regulations to set circumstances in which assistance could be provided. Is that a fair summary?

Harriet SHING: I am struggling to get my head around it. There was a lot of context in what you have just said in terms of the overarching provisions.

David DAVIS: Do you want me to read it again?

Harriet SHING: Yes, if you could.

David DAVIS: Proposed section 137K sets out when a consumer is entitled to assistance under an SIS. This is when they have suffered loss arising from or in connection with domestic building work that is incomplete, defective or noncompliant. There is no reference to rectification orders here. On face value section 137K does not require that a rectification order be made. It is subject to any provisions in part 9A or the regulations. It seems that regulation-making powers in section 137ZL(a) would be the provision that allows for regulations to set circumstances in which assistance can be provided. Is that a reasonable summary?

Harriet SHING: Because of earlier provisions in the act, the Building and Plumbing Commission will actually have the power to make rectification orders here subject to regulations, so again, the regulation-making process will be part of what informs the way in which the BPC can enact that power.

David DAVIS: What happens if regulations are not made or are disallowed? How is the risk to be managed, as I cannot imagine the SIS will be able to manage a free-for-all claims regime?

Harriet SHING: There is a significant element of speculation that you are inviting here based on regulations that are yet to be developed. Again, I do not want to foreshadow what those regulations might say or the way in which that might be countenanced in the development of those regulations. Again, as with an answer to Mr Bourman that I gave earlier, for me to presuppose what the regulations might say would be to undermine the very purpose of the consultation that is intended to assist in delivering them.

David DAVIS: New section 137L describes who is excluded from claiming SIS. Interestingly, a builder who pays the applicable insurance premium is excluded by paragraph (f), but a builder who does not pay the premium is not excluded. Does this mean a builder who obtains a building permit under false pretences without insurance is able to claim SIS?

Harriet SHING: It is reasonably open to conclude that if a builder has obtained a permit or any form of approval under false pretences, then they would not be able to be the beneficiary of any advantage that would flow from something delivered in bad faith, in error or in contravention of the law.

David DAVIS: I think the minister is right.

Harriet Shing: Can we just say that for the record again? I like the sound of it.

David DAVIS: It is all right; I have said it once. Under the SIS the assistance provided includes payment of compensation directly. Does this mean that a consumer may be paid compensation, sell the home without carrying out rectification works and leave another consumer, a future owner, at risk? What measures will be in place to ensure that a subsequent consumer does not find themselves left bearing costs of repairs that should have been funded by the previous owner of the home?

Harriet SHING: The point of rectification is to restore the person to the position that they would have been in but for the defective, deficient or unsuitable work. The point of compensation is not to create a windfall opportunity for an owner or a consumer. It is to work toward the resuscitation or preservation of a relationship as an alternative to action by the regulator for breach. Where a purchaser of a property receives a home that is not fit for purpose, then if it comes within the scope of the time period within which, for example, a developer bond might apply, then there may well be a remedy available there. There may well also be remedies available through contract, particularly a contract of sale, and there may well be remedies available in a pre-sale inspection, for example, whether that is about somebody coming in to assess waterproofing work or the structural integrity of stumping.

David DAVIS: I am not sure that is a perfect answer, but we move on. The offence for entering into a contract and being paid a deposit is being replaced by a new offence. This is no longer a link to the deposit being paid and instead the SIS must be obtained 10 days after the contract is entered into or before work starts, whichever is earlier. This will change industry practices in dealing with untitled land contracts and other contracts where the commencement of building work may be significantly delayed. In good times about 20 per cent of these contracts are cancelled. I doubt that many builders will be able to accommodate at least 20 per cent of their eligibility being committed for jobs that may not proceed. Whether consumers or developers benefit from consumer loss, losing access to price certainty for their home building contracts when they purchase their land, is a question. I think the point is made. Is this to be addressed? How will this be addressed, this issue?

Harriet SHING: It might help if I just give you a little bit of broadbrush information to assist. A measure of remedy provided under the SIS will largely be for the rectification or completion of building work. Compensation can be paid to consumers – in the example you just gave, for example – for lost deposits or accommodation costs, and that goes to a point that was made in earlier questions. The regulations will set out the scope of that assistance provided under the SIS, and that is where, again, that process of consultation will be important. There is a new section 137O, and that provides the builder with more time to pay the applicable insurance premium, compared to current arrangements in which a builder must take out a domestic building insurance policy before being able to demand or receive money under a major domestic building contract. The builder will only be able to take on domestic building work within limits, subject to those current arrangements within the DBI, and a builder taking on work beyond their maximum construction limit can actually in any event lead to solvency risks and also expose insurers to financial risks as well.

David DAVIS: Will a premiums order under section 137Q be a legislative instrument and subject to parliamentary or other scrutiny? After all, the BPC will be a monopoly.

Harriet SHING: Premium orders will be subject to ministerial approval and oversight. It is important to note that they still need to be within the manageable ceiling, but again, that is a process for ministerial engagement and decision-making.

David DAVIS: Just to be clear, does that mean they are a legislative instrument and subject to parliamentary scrutiny?

Harriet SHING: No, it is ministerial approval and oversight.

David DAVIS: Parliament cannot disallow or change in whole or in part.

Harriet SHING: No.

David DAVIS: Just let me say that that is a lot of power for a minister. The SIS cover starts on the earliest of three dates. The third option is the date on which the parties agree that domestic building work is to be carried out. This may mean that in contracts with a variable commencement date, the date a builder is expected to commence, and not the date they do commence, is the start of cover. It is not clear why this is necessary or what impact it will have. Would the minister explain?

Harriet SHING: Mr Davis, the third option covers scenarios where deposits are paid after the builder and the owner agree to the domestic building work but before a contract is signed, and this responds to issues that were identified with the collapse of Porter Davis – again, a matter which includes an overlap of the subject matter that you have discussed in your question, which was part of a number of your colleagues’ contributions around the basis for parts of these reforms and the need to continue to improve the transparency, rigour and accountability of the system overall.

David DAVIS: New section 137T requires that a SIS notice of cover be provided by the BPC to the consumer as soon as practicable after it is issued. New section 137U makes it an offence for a builder to represent that a notice of cover has been issued when it has not. This may catch out builders if BPC does not send the notice of cover to the consumer or there is a processing error. It would be preferable for the builder to also be sent a notice of cover, and this should be legislated and not left to good administration.

Harriet SHING: Can you just put that question at the end?

David DAVIS: I am just saying: is that a fair concern?

Harriet SHING: Okay. Thank you, Mr Davis. When you sat down you asked whether that was fair. The offence in new section 137U that you have referred to could only be enforceable if the builder or any other person actually knowingly misrepresented that a notice of cover had been issued. The Department of Transport and Planning will consider whether the regulations can prescribe that a notice of cover be also sent to the builder.

David DAVIS: New section 137V allows for the BPC to revoke or vary notice of cover if domestic building work is being reduced. This is not a term used elsewhere, but presumably it is intended to capture a situation where the work to be done is being reduced and not the price paid to the builder. If the latter were the case, this would create an incentive for a consumer to vary a contract to remove work from the builder and give it to another person, who may be another builder. There is also provision for the cancellation of cover. This seems similar to the existing informal rules, though the definition of ‘domestic building work’ will be critical for the purpose of subsection (1)(d), as the existing definition includes some preliminary work, such as preparing plans and specs. This may be resolved – I just want your reflection on that – by the DBCA review.

Harriet SHING: The revocation or varying of a notice of cover is referred to in new section 137T(3), and that covers instances where a notice was issued for building work that is not domestic building work. New section 137V, as you have quite rightly pointed out, specifies what the Building and Plumbing Commission must do with any insurance premium paid in circumstances where the notice of cover is revoked or varied, and that should be read in tandem with 137T(3). So in essence, yes, 137W(1)(d) may be resolved by the DBC act.

David DAVIS: New section 137X requires an additional premium payment to be made if the value of the domestic building work will increase the value of the domestic building work by $5000. This seems to require the builder to pay an increased premium if a variation exceeds $5000 in value. Presumably it will become more common for variations to be split up and not exceed $5000 in value, if possible. The bill and the regulation-making powers seem to have no provision to require builders or owners to report the variations which trigger this process. It is also unclear why the amount triggering the increase in SIS premiums is not consistent with that in triggering increased payments of the building permit levy. We know from past experience that differing thresholds for similar transactions create confusion. Is there a reason for this, or is it just a juxtaposition that actually may create confusion?

Harriet SHING: Section 137X places an onus on the builder to pay any additional premium if the contract is varied and increases in value, as you have indicated, by $5000 or more. So the onus will be on the builder to report the variation, noting there is a penalty for failing to pay additional premiums if the contract is varied by more than $5000. That $5000 figure represents 25 per cent of the minimum value of $20,000 of an insurable DBC, so a higher threshold can be prescribed in regulations for building work with a higher value. A variation to the premium is required to manage those financial risks to the insurer in providing cover due to the increased value of the building work, noting that premiums are actually the primary source of finance available to meet insurance liability. The building permit levy, for example, is collected for distinctly different purposes.

David DAVIS: I am just trying to keep this moving along. I could ask further questions, but I will not. New section 137ZD allows the BPC to recover payments from the builder or any other person through whose fault the claim for assistance arose. This would seem to purport to allow the BPC to sue any third party, such as an insured building surveyor, engineer, architect, supplier or an uninsured subcontractor to recover for their negligence as a debt. Is that possible, is my first question. And it is assumed that the BPC’s right to recover payments made to a consumer from a third party will need to go through the courts and not VCAT. What happens if these matters go to a trial and the court finds that the claim was the fault of a person other than the builder? Will the builder be compensated, if they are still in business, if the court finds the claim was not their fault?

Harriet SHING: There is a lot in what you have just asked me about a range of decisions, including any orders that might be made by a court or tribunal, and I do not want to get into the weeds on those scenarios because they are so deeply hypothetical and speculative. But what I can confirm to you is that 137ZD enables the Building and Plumbing Commission to pursue any person who is at fault for the claim. That is consistent with new section 137K(2), which entitles a building owner to seek assistance if they have suffered loss from or in connection with an act or omission of any person engaged by the builder. These matters around judicial intervention or order are so granular and so speculative that I think they are probably beyond the scope and the remit of the bill for the purposes of this committee discussion.

David DAVIS: Except that it does set up this regime where claims can be made for any other person. That does, it seems to me, go through the courts. So I do not think that is speculative.

Harriet SHING: You are asking about what a court might do and what might happen after a court might do something.

David DAVIS: It may well be that a future court finds in certain cases – not in all cases but in certain cases – that someone else is at fault. How will that be applied?

Harriet SHING: Again, Mr Davis, I will just take you back to the provision of the bill. The BPC can pursue anyone who is at fault for a claim. That is consistent with 137K(2), which enables a building owner to seek assistance if they have suffered loss from or in connection with either an act or an omission of any person engaged by the builder. There may well be separate proceedings that a party wishes to pursue in certain circumstances, but you are inviting a level of speculation that presupposes an abandonment of the separation of powers. The courts will do the work that they do with the remit that they have. As I have said, if a court finds that someone else is at fault, then the builder can also go through the courts to seek compensation. We are talking about two fundamentally different streams of remedy, recourse and process.

David DAVIS: I am not going to labour the point. I do think there is an issue here, but I will just leave that. Proposed section 137ZH provides that the BPC, when deciding when to discipline a registered builder, is not to have regard to any adverse consequences for the statutory insurance scheme as a whole or any particular aspect. This would mean that if the BPC knows that imposing a suspension or cancellation of registration is going to push the builder into insolvency and therefore trigger the SIS claims, it cannot take this into account in making a decision. This of course does not mean that the BPC cannot take into account the suspension or cancellation of registration – that the suspension or cancellation of registration will lead to potentially hundreds or thousands of consumers not having homes finished or being impacted – regardless of whether SIS exists or not. Am I looking at this correctly here? Is that a fair summary?

Harriet SHING: Decisions about whether to take disciplinary action are a matter for the VBA – the Building and Plumbing Commission. Proposed section 137ZH, which you referred to in your question, removes adverse consequences for the SIS as a factor in the VBA’s decision-making to take disciplinary action, so my view would be that, no, you are not looking at it correctly.

David DAVIS: On a different matter, proposed section 137ZJ allows the BPC the discretion to seek tenders for carrying out building work. This leaves open the question of who actually engages the successful tenderer to carry out the work. The Domestic Building Contracts Act would seem to require the building owner to enter into the contract and not the insurer. It is not clear if this is a common practice in the insurance industry, as we hear anecdotal evidence that insurers use non-DBCA-compliant contracts without any evidence of harm to consumers. I am just trying to understand – again, is that a correct summary?

Harriet SHING: Proposed section 137M provides that assistance under the SIS is for rectification of defective or noncompliant work or the completion of incomplete domestic building work by or on behalf of the VBA, so that provides the Building and Plumbing Commission with flexibility as to whether it contracts directly with the builder or approves a builder chosen by the owner.

David DAVIS: Moving on, it is welcome to see that a person affected by a SIS decision may apply to VCAT for a review – this presumably means a builder as well as a consumer. Does it also possibly mean a third party, since the BPC will have the power under section 137ZD to pursue claims against them as a debt? Presumably if a party is dissatisfied with the decision of VCAT, it has the right to seek a judicial review by a court. The bill is silent on this matter, and I am just presuming that that is the case in the normal course.

Harriet SHING: Essentially, Mr Davis, yes. Any person who is affected by a decision to provide or not provide assistance under the SIS can seek a review of that decision in VCAT, as you have identified. VCAT decisions can be appealed if a party believes that VCAT has erred in its decision, and you are well aware of the framework by which VCAT interfaces with the court. Action under proposed section 137ZD would usually be through the courts, so the relevant person has the chance to respond to any recovery action being undertaken or sought to be undertaken by the Building and Plumbing Commission.

David DAVIS: On to a different matter: the amendments to the DBCA are seen by some as problematic. The existing section 45 of the DBCA allows for a party to a domestic building work dispute to refer the dispute to the DBDRV. This allows a builder to refer a payment dispute to the DBDRV. This is recognised by section 44(2)(e) of the DBCA, which lists:

an alleged failure to pay money for domestic building work performed under the contract.

It is, I think, fair to say that very often it is perhaps critical to realise a payment dispute will be accompanied by a consumer issue. This will happen even if there is no genuine cause for a consumer issue, as a consumer’s reluctance – and I am not suggesting all consumers; obviously it would be a small class – or inability to pay is potentially rationalised by finding a reason to justify their action. This approach could be supported in certain circumstances by building consultants. Clause 73 of the bill disrupts this process. If a builder has to make a payment claim, it will always be related to domestic building work in respect of which a claim may be made under the statutory insurance scheme by the consumer. The proposed section 45(1A) of the DBCA will require a builder wanting to lodge a payment dispute to first obtain BPC consent to that claim before making the claim. There only has to be the possibility that a claim will be made. The circumstance where a claim has been made is covered separately in the section.

Harriet SHING: I will respond to that and to the statements that you are reading into the record. Proposed new section 45(1A)(a) is only engaged if a claim under the SIS may be made. Payment disputes will not be covered by the SIS, and therefore a SIS claim in relation to a payment dispute cannot be made. This allows the builder to refer a payment dispute to conciliation. Section 44(2) of the DBCA defines a domestic building work matter to mean:

any matter relating to a domestic building contract or the carrying out of domestic building work …

New section 45(1A) only applies to domestic building work. Payment disputes would be a matter about the domestic building contract, so it is acknowledged that a builder seeking to refer a payment dispute will likely be accompanied by a building owner raising an issue about the building work. In that scenario, the owner could either make a SIS claim or seek a referral for conciliation. If a claim under the SIS is made, that would not prevent the payment dispute from reaching conciliation if that referral is actually accepted. The Building and Plumbing Commission can determine, through operational guidance, the criteria that it will use to decide whether to consent before a matter can be referred.

David DAVIS: If a DBDRV conciliation is underway, the proposed section 45GA of the DBCA also stops conciliation until a subsequent SIS claim is accepted or rejected. Is that correct? Once again, the builder is stopped from pursuing a payment claim during that halt. Any delay in conciliation, however caused, will add to the financial pain for a builder and increase the compulsion to settle regardless of the merits of the claim against them.

Harriet SHING: Payment disputes will not be covered by the SIS. Similarly, matters relating to the domestic building contract will not be prevented from being referred to conciliation. Essentially this is about building disputes, just to bring you back to the distinction there around the payment dispute notion that you have just outlined versus the building dispute and the matter at issue.

David DAVIS: Clause 80 prevents a builder from applying to VCAT to stay a SIS decision while a review is underway – VCAT is banned from ordering a stay. Essentially a consumer could be paid money or indeed work could be undertaken while the builder awaits the outcome of the review. We assume there is no mechanism to compensate the builder if the review application is ultimately successful. Is that right?

Harriet SHING: People can apply to VCAT to seek a review of a decision to issue a rectification order, but the decision cannot be stayed. That ensures that the building work is rectified as quickly as possible for the consumer. Defective building work could render the building unsafe to occupy, and it is important that these matters are able to be resolved in a timely manner. Allowing these decisions to be stayed would delay rectification for many, many months, which is an experience which too many people understand on a deeply personal level. In some cases they have endured that situation for years. That results in really significant detriment for consumers who have to live with defective work during this period or, as we covered in the answers to previous questions, possibly seek alternative accommodation in some instances. Again, I spoke with a gentleman earlier this evening who has been in precisely that situation, and the impact upon him and his family and his kids in particular, while they have awaited the removal of mould, has been something that has severely compromised their quality of life and the certainty that they deserve around finding a place to call home that is safe and that does not in and of itself create all sorts of hazards for them.

At times we have had unscrupulous builders using the VCAT process to prolong dispute resolution, and they have incurred huge amounts of legal costs and debt for working Victorians on top of often moneys sunk in managing the impact of that work. The process through DBDRV and then VCAT often runs 18 months to two years, so we are determined to make sure we are striking that balance. To go back to the first principles in this act and the basis for these reforms, the way in which we are removing that capacity to seek a stay is geared toward providing certainty and comfort fundamentally to people who are often in situations of very, very high distress and financial disadvantage and often in a very, very precarious financial situation as a consequence.

David DAVIS: Clause 82 repeals the power for a relevant building surveyor to stay a direction to fix if the building work has been accepted for conciliation by the DBDRV. It is unclear why this is proposed. This is only a discretion and does not allow for a possible injustice to be prevented if the RBS has erroneously issued a DTF and the conciliation process resolves the issue.

Harriet SHING: Where building work has been found to be noncompliant by a surveyor or the regulator, a referral to conciliation should not be used to defeat or delay compliance with that direction. So the removal of an ability to stay a direction to fix is consistent with the approach in rectification orders in the bill and a situation where a rectification order is not stayed during the review process. Unlike rectification orders, noncompliance with a direction to fix is not grounds for immediate suspension of the relevant builder, but it is grounds for disciplinary action under section 179(c).

David DAVIS: The proposed new section 75A defines ‘defective’ very widely. This issue has been well stated before, and it is worth stressing that the statutory warranties in section 8 of the DBCA are very broad. New section 75F in particular can easily be used to assert work is not to the quality specified in a contract and therefore defective. The definition allows for a rectification order to be made for even minor issues with building work. Note that the proposed section 75B does not require that it even be proven that the builder is responsible for the defect and the building work simply needs to have been carried out by them. So I guess what I am saying here, or what has been put to me by others, is that this very broad definition can result in relative or more minor things. I accept that there are many major things – I will come to that; I have got an example I want to talk about later – but there are many of those. But this is also possible under these definitions. What protection is there for builders in this respect?

Harriet SHING: I am sure we will get to ‘serious defect’ and the definition of ‘major building element’, for example, and the impact of serious defect on the building process. As I have addressed in answers to previous questions, the definition of defect is broad because it sufficiently captures the type of work that should be considered for rectification orders. It is aligned with the definition of defective that has been in the Domestic Building Contracts Act 1995 for the last 30 years. This is a definition which has been in operation literally for decades, and this definition is defined as having, as you have indicated, the same meaning as the term used in the DBCA. It is currently inspected by DBDRV assessors, and the chief dispute resolution officer issues dispute resolution orders to enforce breaches of domestic building work requirements if a mediated outcome between consumer and builder is not possible. DBDRV rely on the guide to standards and tolerances when making a determination about whether domestic building work is defective. That is a publicly available document on the VBA site, and of course this is part of undertaking processes of transparency and clarity that we are in a position to be able to review the work of access to that guide to standards and make sure that we are providing assistance with the way in which that guide operates.

But again, I just want to be really, really clear that if were to change the definition of defect to be something inconsistent with the DBC act and the Building Act and inconsistent for the purpose of the rectification order in the first-resort domestic building warranty scheme and the developer bond scheme, we would create an enormous set of potentially cascading circumstances of complexity and potentially legal challenge that would weaken the ability of the regulator to effectively enforce defective work in its new role, again seeking to be a one-stop shop building regulator. So the act needs to define defective, and given that the rectification order is an enforcement power with those penalties for noncompliance, it needs to sit within the statute.

The scope needs to cover the scope of possible claims under the SIS, and the SIS covers building owners for loss suffered due to work that is defective in prescribed timeframes. It is one of those areas where, again, the ministerial order and related powers also use the same definition of defective as that in this bill, and consumer protection available through last-resort and future first-resort insurance relies strongly on the established definition of defective in the DBCA. The definition of defective for the rectification order therefore has to be consistent with that. That is what I hope will give you a measure of clarity about the definition. A rectification order is issued to persons who carried out the work; it would not be issued to builders who did not carry out the work.

David DAVIS: Another definition of interest is the definition of ‘developer’, and this has an overlap with the definition of ‘domestic builder’. Note that new paragraph (c) defines developer as:

the person responsible for the coordination and control of the carrying out of the building work …

Is this not another way of saying ‘managing’ or ‘arranging’ of the carrying out of the domestic building work? Wouldn’t a person captured by paragraph (c) in new section 75A need to be a registered builder?

Harriet SHING: No, but they could be. The activities that are described are broad enough that they can be undertaken by a range of persons who are not building practitioners.

David DAVIS: The definition of ‘incomplete’ is not linked to a point in time. It is intended that the work can only be incomplete if the builder claims the work is complete and it is not. The expression according to the contract may require the builder to have claimed that the work is complete by perhaps claiming payment, but this is not clear. What happens if a builder suspends work due to non-payment and the client claims this means the work is incomplete and can trigger a claim for a rectification order?

Harriet SHING: Whether it is complete or not comes down to the contract, and the stage at which the building work is complete can be inferred from the contract. Similarly, whether at a point in time or a stage of construction it is not is something that is anchored back into the contract. The circumstances where building work may be incomplete can therefore vary. A builder could, for example, abandon a project or refuse to continue until demands for additional payment not agreed to in the contract are met. But the starting point there, Mr Davis, for the purpose of determining ‘incomplete’ would be what is set out in the contract – the milestones and the extent to which there may be a departure from those milestones – in seeking to assert that there might be a right to seek additional payment.

David DAVIS: The proposed section 75B sets out when the BPC may issue a rectification order. It quite rightly goes beyond the registered builder who is named on the building permit. With many home building projects it is not uncommon for the consumer to either undertake work themselves or engage another party – for example, the client may be a trade or have a relative or friend who is a trade. It must be noted that a rectification order (RO) can be made against a builder who carried out the work if the BPC is satisfied that the building work is incomplete, noncompliant or defective. It is not necessary for the BPC to show that the builder is at fault. This is, according to some who have spoken to me, problematic, as the builder actually may not prove to be legally responsible for the problem. For example, an architect, designer or other engaged by the client may make a mistake, and this may lead to a defect. The order may still be made against the builder.

A builder may have options to pursue other parties, but this will take much longer and be without the owner having an interest in pursuing the rights. This amendment transfers to a builder the risk that should be imposed on an architect or draftsperson engaged by an owner directly. It is potentially a problematic outcome that the owner’s architect or draftsperson, who may also administer the contract for the owner, can avoid responsibility for defective plans or designs. If the builder is compelled by an RO to rectify the fault, the fact that DBDRV, VCAT or the courts may months or more likely years later order a different outcome is likely to be of little help to a home builder.

Subsection (1) also requires the BPC to only issue an RO to the person who carried out the work. This is important because it means that any recipient of the RO has the right to assert that the RO is invalid as it has been issued against a person who did not carry out the work. With many home building projects with occupied homes it is very easy to imagine scenarios where building work has been carried out by a person other than the registered builder named on the building permit. For this reason alone any deficiencies in the appeal process for an RO will create potential unfairness for a builder if they are simply issued with an RO because they were named on the building permit. This question of agency here I think is a very real one. Minister, you may want to indicate whether my summation there is correct – that there is an issue of agency and potentially builders being held responsible for the errors of others.

Harriet SHING: The bill does not impose any additional liability on the builder that builders do not already carry. In cases where the owners carried out work themselves or engaged another party to carry out works – for example, where an owner has put in a garden bed because they want to grow a heap of parsley and it has had an impact on the structural integrity of the home – the VBA would consider this in their decision on which party or parties to issue a rectification order for. So the VBA have that discretion; they can issue the order to the builder named on the building permit and/or to any other person who carried out the work – in that instance, around relevant subcontractors. But again, it is about the VBA actually looking at the totality of circumstances where there has been more than one party involved in the work as well as what has happened in relation to conduct by the owner.

The bill does not actually address the causative effect of faulty designs in defective or noncompliant work, so if a builder is issued a rectification order for a matter that they believe is attributable to designs prepared by another person – so to the example that you referred earlier, an architect – they still need to rectify the work. This sits very squarely alongside the existing legislative obligations under the section 8 warranties that we went to earlier and in section 16 of the Building Act – that builders need to ensure that their work complies with the Building Act and building regulations. If they have got concerns about the designs that others have provided for the work that they are undertaking, they need to be raising those matters with the building surveyor and their client. This is something I addressed in the sum-up and in answers to earlier questions.

David DAVIS: Proposed section 75C allows the BPC to apply to VCAT for an extension past 10 years to issue an RO. There is no cap on that extension period, no right for the affected party to be heard on the matter and inadequate controls over when VCAT can make the order. This leaves home builders never 100 per cent certain that their responsibility is at an end. The bill does not clarify whether a rectification order can be made if the work is carried out before the new laws commence. It seems possible the BPC could issue an RO for building work that was carried out before the new law commenced. Is that correct, and is the other problem also true?

Harriet SHING: The regulator can apply to VCAT for an extension to the 10-year period in which a rectification order can be issued. VCAT has to be satisfied that the regulator’s reasons for the application justify the extension being approved. This proposal enables the regulator to take enforcement action for significant latent defects that only become apparent after 10 years or in cases where enforcement action has been delayed due to court or tribunal proceedings. I covered this off, again, in my sum-up and also in answers to previous questions in committee. It is anticipated that the regulator will only make these applications in relation to significant defects, and the bill provides that the regulator may decide not to issue a rectification order if it would be unfair or unreasonable to do so. Again, it is the balancing of various considerations in the circumstances, which may vary on a case-by-case basis.

David DAVIS: Proposed section 75E sets out what a RO may require. It does not seem to limit the scope of the RO to building work that is the responsibility of the recipient of the RO. Proposed subsection (2) allows for conditions on the consumer to be specified. This would allow for a consumer to be expected but not, by the looks of it, compelled to allow a builder access to the site. It is not clear what happens if the condition is not complied with. There is no clear mechanism to excuse the recipient of a RO for compliance if the consumer has not complied with a condition. Further, proposed subsection (3) states that a RO must be complied with within a prescribed number of days. If no regulations are made, the BPC may specify a period that it considers reasonable. This leaves open the risk that regulations will prescribe one or perhaps a few types of period and leave the BPC with no discretion to specify a reasonable period of time. Is that correct too?

Harriet SHING: Proposed section 75E(2) provides that the person who has been issued with the rectification order is not required to comply with the order until the conditions on the other person are complied with – the builder would not be required to comply with a rectification order until the other person has complied with conditions that apply to them, providing access to a site, for example. Any potential regulatory options to prescribe a number of days for the purpose of proposed section 75E(3)(a) will be subject to consultation with industry stakeholders before the finalisation of the regulatory impact statement. It is possible that no regulations will be made for this matter, meaning that the number of days for compliance with a rectification order will be what the VBA considers to be reasonable. Again, that will apply, by virtue of the circumstances, in potentially a number of ways. Proposed section 75E(4) relates to damage caused by the original building work that is noncompliant or defective. It does not cover subsequent damage caused by action of other parties or wear and tear.

David DAVIS: Proposed section 75H sets out the contents of a rectification order. It does not, however, include a requirement that any conditions required by proposed section 75E(2) be included. It also should provide a statement as to why the BPC is satisfied the recipient of the RO is the person who carried out the work or is the developer. A RO is replacing, in effect, a judicial process to determine responsibility, and it is not unreasonable to expect a regulator, given some broad power, to be required to explain how it came to its decision. If the builder was found responsible by VCAT or a court, there would be an explanation as to why that finding was made. Will that sort of practice be followed with this section?

Harriet SHING: The regulations can prescribe additional information to be included in a rectification order.

David DAVIS: Including an explanation?

Harriet SHING: That is the process of development of regulations.

David DAVIS: Proposed section 75J applies if an RO overlaps with a DTF, emergency order or building order. This does not entirely make sense as an RO or a DTF could be issued to the builder but an order is issued to the building owner, so this provision may only apply to a spec builder or developer. Subsection (2) purports to require the recipient of an RO to also comply with the DTF, building notice, building order or emergency order, but the original instrument may not be issued to the same person. Does this provision purport to no longer make the owner responsible for a building order or similar? Perhaps the minister would clarify this point.

Harriet SHING: Proposed section 75J applies in cases where the person is issued with both an RO and either a direction to fix, emergency order or building order. It does not apply if one party is issued with a rectification order and a different party, like the scenario you just outlined, is issued with a building notice, for example.

David DAVIS: Proposed section 75K allows for the BPC to extend the time to comply with an RO. It needs to provide that if another person, the consumer, has not complied with a condition, then there should be a right of an extension. Otherwise the consumer can frustrate a legitimate attempt by a builder to rectify so they can gain access to insurance. This potentially unfairly exposes the builder to the risk of disciplinary action because the consumer did not want to have the builder back on their site. While there will be cases where the actual builder may need to be replaced by another builder, it is not necessarily appropriate to allow consumers to frustrate the intent of that builder or their agent to have an opportunity to rectify before insurance money may be claimed. I think that is a fair summary.

Harriet SHING: The VBA, just to be really clear, can extend the number of days within which a rectification order must be complied with upon its own motion. There does not need to be a request made in order to do that, and a builder would not be required to comply with a rectification order until, for example, any condition, such as granting access, has been complied with. A builder who is issued with a rectification order must be given access in this scenario to the property so that they are able to comply with the order, and the regulator can specify conditions to be met by other people, including access to the site, before the order is required to be complied with.

David DAVIS: Proposed section 75O creates a rectification costs order process. This means that the BPC has the power to demand that the builder or developer pay for not only the costs of putting the RO together but also carrying out any investigation before issuing the RO. This is extremely broad and would essentially require a builder or developer to pay for the costs of being investigated for any breach of the building laws if an RO is issued. This provision creates an incentive for the BPC to issue an RO, even if only for a minor issue, to allow it to achieve cost recovery for investigations. There is risk of the perception that an RO has been issued to recover money – it is a significant one – could discredit the regulator. This attempt to cost recover for enforcement activity has the potential to unfairly discredit the regulator or other law enforcement agencies. The minister may wish to comment on that risk and the potential perception that is created.

Harriet SHING: I would like to put it to you in a slightly different way. It is not fair to compliant builders or developers that they bear the cost of the VBA’s management of rectification processes that do not apply to them. Those costs should, fairly and reasonably, fall on any builder and developer who carried out the defective building work. Accordingly, the bill provides that the regulator can recover costs directly from the builder whose work requires rectification and the developer who commissioned that work. That is similar to the powers provided to the New South Wales regulator in its legislation. It is also about making sure that we can ensure coverage of complex investigations that often require destructive testing or the sourcing of expert technical advice.

If rectification orders and costs orders are issued, it is because the VBA is satisfied that the party that issued the order is responsible for that defective or noncompliant work. Again, this is about putting a very clear focus not just on consumers and on remedies and rights to rectify losses and to make good but also on an industry which deserves a measure of consistency and accountability in recognising good practices, better practices and best practices but also in finding, isolating and addressing bad practices – the practices, again, that so many people have spoken about in the course of this debate.

David DAVIS: The right in proposed section 75S for a consumer to review a decision to not make a rectification order could create some challenges. In particular, what happens with the dispute resolution process through DBDRV? Will it be put on hold pending the review, or will it continue? What happens if the building work is still underway and the builder is contracted to continue working on the site? Will the building work need to stop pending the completion of a VCAT review?

Harriet SHING: The ability to review a decision not to issue a rectification order will not affect processes at DBDRV.

David DAVIS: The ban on VCAT staying an appeal against an RO effectively makes an appeal pointless for a builder. There is of course no corresponding impact on consumers who appeal a refusal to make a rectification order, and presumably any recovery action by a builder for payment will continue to be blocked. It is not clear why VCAT cannot be trusted to decide whether the stay of an RO is appropriate. Why is that?

Harriet SHING: Mr Davis, I would not characterise this as trust or lack of trust in VCAT. We have covered in quite some detail the practical consequence of delays. A building owner’s decision to seek a review of a VBA decision not to issue a rectification order is not going to affect a cost recovery action by the builder. That is because review of the rectification order and a builder seeking payment are actions that are handled by separate bodies. On the one hand, we have got a review of an RO being a matter for VCAT, and a builder who is seeking payment would be a matter for DBDRV in the first instance. That would also involve different parties. Again, just to be really clear, this is not a question of trust or lack of trust in VCAT.

David DAVIS: I have got more of those, but I think I have done a fair effort. I am now interested to understand about developer bond schemes. The value of bond determination is one issue. The DBS is designed to protect purchasers from defects in the constructed building; therefore a 2 per cent bond should only apply to costs associated with erecting the building itself. Should the DBS exclude demolition works?

Harriet SHING: There are a range of scenarios here where demolition or deconstruction or preconstruction or site preparation may be different parts of a project or not. Again, that would be a matter that could be considered throughout the development of the regulations. The regulatory impact process is something I think that might be able to give some clarity to circumstances in which a definitive answer could be given as far as the method for calculating the cost of work to be prescribed goes.

David DAVIS: In determining the bond value of mixed-use developments I would presume this should hinge on apportioning contract value, so should the DBS only apply to the residential portion of a development in accordance with its stated objectives? There would obviously need to be a detailed breakdown. For example, the building where my electorate office is has got a large supermarket and commercial zone and then some commercial offices and so forth and then a residential tower. It seems to me that the bond scheme should apply to the residential component of such a development.

Harriet SHING: Again, this is a matter of some potentially considerable complexity, because the bond amount, as you have identified, will be set at 2 per cent of the cost of constructing a residential apartment building. In the scenario that you have talked to there is retail and possibly commercial on the same footprint as the residential building. Anything about first-resort insurance and the developer bond scheme I think is most appropriately dealt with in the regulations, particularly because we want to make sure that the more granular we get, the more –

David DAVIS: This is going to be a common issue.

Harriet SHING: yes, the more we can direct our discussions through to the regulations, because again regulations need to have a measure of dexterity to them in responding to the way in which we build, how we build and the models for building, as they need a measure of flexibility and dexterity across every other part of the statute book. I would say that is squarely a matter to be addressed through the regulations and through that process of consultation. To that end I am well aware of stakeholders who will be keen to participate in that process, particularly around the way in which we develop that method for calculating the cost of work.

David DAVIS: I will not enter into a long-running discussion about whether things are better done by regulation or by clear legislation.

Harriet SHING: You can table it if you want.

David DAVIS: No, I could go for a while. Anyway, we will just leave it at this hour. The matter of bond exemptions: some say the bill should exempt build-to-rent and purpose-built student accommodation developments. The key purpose of the developer bond scheme is to protect individual unit purchasers in a strata scheme from defects after settlement, but build-to-rent and purpose-built student accommodation have no individual purposes existing. The developer retains ownership of the entire building, so they carry the risk of defects themselves. Is it the government’s intention that such groups in such circumstances would carry the risk, or would they be clobbered with the 2 per cent as well?

Harriet SHING: The objective of the developer bond scheme around providing apartment owners with a pathway to having defective work rectified while we move to introducing that mandatory decennial liability insurance scheme is something which would tend toward that application of the term ‘owner’ given its plain and ordinary meaning. But again, this is something where in a range of scenarios the regulatory development process and the impact statement work would be well deployed. Your point is well understood, and this is where, again, I do not want to pre-empt the outcome of the regulatory development process. This is where what that impact statement work and the consultation work looks like and how it is concluded will no doubt include issues just like this one.

David DAVIS: I just want to talk about the stage at which a bond payment should be shifted to and whether that should be, in general, later in the process. Defects cannot easily be assessed during an active construction phase. Lodging a bond during construction creates unnecessary cost and red tape, some would argue. A developer should be only required to lodge the bond before an occupation certificate is issued. Is that the government’s intent, or is this bond to be required to be lodged at a much earlier point?

Harriet SHING: Developers will be required to issue a bond in favour of the regulator before applying for an occupancy permit.

David DAVIS: With bond security lodgement, are developers permitted to provide bank guarantees or an insurance bond from a third party? It is a bit unclear as to whether developers may use a third party bank guarantee or insurance bonds to satisfy the DBS requirement. If permitted, these providers should be approved by the Building and Plumbing Commission to ensure financial reliability. Clarity is needed regarding acceptable forms of bond payment and the process for provider approval.

Harriet SHING: The developer is responsible for obtaining the developer bond and issuing it in favour of the regulator, and it can be in forms like a bank guarantee issued by an authorised deposit-taking institution, a bond issued by an insurer approved by the regulator or another form of security that is prescribed in regulations. Regulations prescribing other forms of security are currently being explored.

David DAVIS: Will the regulations set out the details of any fees, including the exact cost of lodging the bond, processing, administration and facilitating inspections?

Harriet SHING: That will be a matter for the regulations.

David DAVIS: Curious. When it comes to the appointment of a building assessor, the BPC should maintain, I would have imagined, a pre-approved panel of qualified building assessors allowing an owners corp. to select an assessor from that panel. Is that the way the process will operate? And this would, I would presume, help unbiased and quick assessment.

Harriet SHING: The prescribed qualifications for building assessors will be settled in regulations that are subject to a public consultation process, and regulations will prescribe the qualifications required to perform the role of a building assessor. Options for who can perform the assessor role will be developed in consultation with industry to ensure there is an adequate pool of assessors to meet the requirements of the developer bond scheme.

David DAVIS: If subcontractors are utilised by assessors for specialist inspections – for example, fire safety or waterproofing – will subcontractors also need to be licensed or certified?

Harriet SHING: The assessor will ultimately bear the responsibility for work of specialist subcontractors, but again, this is a matter for exploration in the regulations. There will be scenarios where there are quite intricate levels of expertise, often from a very small pool of people with that level of expertise, so hydrogeological expertise or everything to, I do not know, disaster management mitigation expertise. Again, this is one of those areas where the regulations will come into their own, but the assessor is ultimately the auspicing arrangement for any further work that is undertaken as part of that assessment.

David DAVIS: Will assessors be required to hold high levels of professional indemnity insurance?

Harriet SHING: The bill establishes that if a process similar to New South Wales is utilised where eligible professional associations maintain a panel of appropriate assessors, then that association is not liable for anything done or omitted to be done in good faith when accrediting a person. If necessary, alternative immunity provisions may be included in a future bill.

David DAVIS: That would require some sort of protection against Supreme Court action, I would have thought – no? No. Okay. Will assessors be engaged contractually or statutorily?

Harriet SHING: I will take you to new section 137ZS, functions of the building assessor, whereby:

A qualified person may be appointed as a building assessor to carry out any of the … functions under this Part …

It goes on to detail them, and a developer must nominate an assessor, so it is an appointment as a building assessor.

David DAVIS: What constitutes a reportable or serious defect is a question that has been raised with me. Does it need to affect health and safety? Does it include poor finishes that breach the building code or amenity expectations? Are DBS assessors expected to review code compliance and build quality? As put to me, the question is: why might this be important? The building might technically meet code but still be poorly built and finished – for example, uneven tiles. It has been put to me, a clear and consistent definition of ‘a serious and reportable defect’ is critical to guide assessors and prevent long, lengthy disputes, and it should not include cosmetic or minor issues. I just wonder if you want to indicate how that idea of a reportable or serious defect is to be defined.

Harriet SHING: Mr Davis, as I have said in answers to questions that have been put to me along these lines before, perhaps by stakeholders who are sharing a range of concerns and priorities, the definition of serious defect is:

a defect in a major building element that is caused by non-compliant work; or

a defect in the building work or in a building product used to construct the building work that –

is attributable to –

defective design; or

defective or non-compliant building work; or

defective materials; and –

this is the key –

has caused or is likely to –

cause the building to be uninhabitable or prevent it from being used for its intended purpose; or

cause the building or a part of the building to be destroyed; or

cause the building or a part of the building to be under threat of collapse; or

the use of an unsafe building product; or

a defect …

of any kind that is prescribed by the regulations.

I just want to also give you a bit of context here as a counterpoint to use of the term ‘cosmetic’, which you referred to earlier. A major building element includes a fire safety system within the meaning of the Building Code of Australia; waterproofing; an internal or external load-bearing component that is essential to the stability of the building or a part of the building; a component that is part of the building enclosure, being a part of the building that separates its interior from the external environment; or any aspect of the mechanical, plumbing or electrical services of the building required for compliance with the National Construction Code.

David DAVIS: When it comes to the issues around inspections and reporting, the assessor should consider prescribed information that could relate to building defects, including complaints, maintenance reports and pre-existing defects lodged. What contributes to a comprehensive defect inspection? Does that include the views of all affected stakeholders, for example? What else contributes to that comprehensive inspection?

Harriet SHING: It is really important to keep in mind that a rectification order can only be issued for building work that is carried out in a noncompliant or defective manner or is incomplete. Any damage caused after completion, such as general wear and tear or lack of maintenance, is not grounds for issuing a rectification order. The bill also provides that the regulator has discretion not to issue a rectification order if it considers it would be unfair or unreasonable in the circumstances to do so. Fair wear and tear or lack of maintenance would be sufficient grounds for the regulator to refuse to issue a rectification order. In Queensland, where similar provisions exist, the Queensland Building and Construction Commission imposes limits by internal policy on when directions to rectify for non-structural matters are issued, and we would expect the regulator to develop similar policies. Again, I would have a look, if I were you, at 137ZZD(2).

David DAVIS: Another question in this vein is: can assessors engage in destructive work, that is, cut open walls, floors or ceilings if they need to to uncover hidden defects? And how will right-of-occupier laws apply if destructive work affects a private dwelling?

Harriet SHING: The regulations will be able to provide further guidance on the way in which inspections can be undertaken. Again, there is some complexity there around the practical circumstances whereby the state, safety or condition and the likelihood of any compromise to that, in accordance with the definition that I have just read out, might be a matter warranting exploration in a way other than visually.

David DAVIS: If an assessor identifies a serious defect, they should be, I imagine, legally required to report it to the BPC. Is that correct? Does that ensure better oversight?

Harriet SHING: We have gone through this in answers to previous questions, but there will be a preliminary inspection process 15 to 18 months after the issue of the occupancy permit. Then there needs to be a report prepared about the reportable defective work. The developer will then be provided with a period to address the defective work identified in the preliminary work. Then a final inspection needs to be conducted between 21 and 24 months post occupancy – I assume you are talking about a post-occupancy period – with the assessor checking whether the defective work identified in the preliminary work has been rectified. Any work that has not been rectified will be listed in the assessor’s final report, and the owners corporation can then make a claim on the bond to pay for the cost of fixing the outstanding items listed in the final report.

David DAVIS: On the issue of bond claims, when defects are found and the bond is enacted, the owners corp should be required, I imagine, to obtain multiple quotes for the rectification works. Is that how that will operate?

Harriet SHING: I will take you through to 137ZZO and 137ZZS. Where an owners corp applies to the regulator to claim on the bond, the regulator will be either able to approve the claim, approve a lesser amount than what was claimed or refuse the claim. If an owners corporation and a developer are in dispute about the amount to be claimed on the bond, the regulator can commission an independent report to determine the appropriate amount that needs to be claimed, and an owners corporation must use the bond payment only for the purposes that it was approved for, and any unused amount is to be returned to the developer. So again, there is an interest in making sure that this is not an auction for the purpose of obtaining the most expensive quote in undertaking those works.

David DAVIS: If the original builder of the property was responsible for defects, would they be permitted to quote on rectification? Another question that comes out of this section: an inspection commissioned by a builder should not be accepted as qualified grounds to trigger the release of the developer bond. To explain that a bit more, the request to release funds should only be made through an independently approved building assessor. Is that correct?

Harriet SHING: If I have understood you correctly, Mr Davis, you are asking about how there might be any actual or perceived conflict of interest that is managed when appointing a building assessor. Is that correct?

David DAVIS: Yes.

Harriet SHING: Yes, it is. Okay. The relevant building surveyor for an apartment development will not be able to undertake the role of a building assessor for the same project. Preventing conflicts of interest is obviously self-evidently important, and developers will not be able to appoint a person who is an associate, contractor or employee of the developer or has been within the two-year period preceding the person’s nominations as a building assessor. They will also not be able to appoint anyone who has been involved in the design, construction or certification of the building work carried out for or in connection with the construction of the residential apartment building. The fact that a person is or has been appointed by the developer as a building assessor for a residential apartment building does not make that person an associate of the developer. Following the first inspection report, the builder-developer has the opportunity to fix the defects, which they should actually be doing in the first instance.

David DAVIS: Is the legislation framed in such a way that it will only apply to contracts awarded for works after the bill takes effect? Is that the case, and if so, when is that likely to be? To explain, the reason I ask that is because I think there is a lot of complexity here, and there will need to be a time period to deal with this. A number of the property sector groups bitterly oppose developer bond schemes, but I think they make a reasonable point about the time period that it will take to put this in place.

Harriet SHING: Yes. Mr Davis, I appreciate where you are coming from, and that has actually been part of the rationale for really extensive discussion and engagement. One of the things that we will continue to do as we develop the regulatory impact statement is consult with industry and key stakeholders, and that builds on more than 60 major industry and consumer bodies to engage with the bill and the drafting process on over 19 sessions in the last four months, and that has included round tables and working groups and facilitation sessions and one-on-one engagements, including meetings that I have had with people directly. Stakeholder consultation sessions have occurred in December, January, February and March this year, and I have continued to meet with people in the months following that, and we will continue to have conversations around the way in which transition periods are developed and required for certain provisions. Again, arrangements for commencement of scheme application to developments is a matter for the regulations, but more broadly, the measures commence in a staged fashion.

The first stage, to integrate insurance, regulatory and dispute resolution functions into the VBA, will occur by August this year, and that includes transferring DBDRV services and VMIA’s domestic building insurance operations to the VBA. The second stage will implement the developer bond scheme and rectification orders by December this year. And the third stage will close the DBI market, introduce minimum financial requirements and implement first resort warranty schema by no later than 1 July next year. So obviously there is a regulation development process built into that staged approach, and that is where further industry and stakeholder engagement will continue.

David DAVIS: I have largely finished that list there, but I just want to, by way of example, bring to your attention a particular case. I think it is useful because it fleshes out some of the problems that exist now, and some parts may be helped by the bill, but other parts may not.

The case relates to a builder, Donnellan Constructions Pty Ltd – Heath Donnellan. There is a registration number.

A member: His brother.

David DAVIS: No, I do not believe it is. I am not suggesting that in any way. It was put to me:

[QUOTE AWAITING VERIFICATION]

I am writing in regards to losing our house and all our belongs. See attached photos. By way of background this contract was signed in 2017. The builder failed to build the house in nine months. In 2018 we went to the DBDRV and got VCAT certificates. In 2019 the builder abandoned the house and we went to VCAT. We engaged another builder to finish it. In 2022 my entire family got very sick and my kids were hospitalised. Experts found our home to be contaminated by sewage and toxic mould, rendering it uninhabitable. Mould experts found a cut in the sewer pipe. See photos –

I am not going to tender the photos in the chamber here –

Raw sewage had flooded the wall cavity and under the floor. Lab tests revealed toxic mould had contaminated all our belongings and was present in dangerously high levels in our bodies. We lost all our possessions and had to move out with nothing into emergency accommodation. The insurer refused to pay out, despite being covered for escaping water. They blame the builder. From 2019 to 2025 the builder has repeatedly disregarded the VBA and VCAT, breaching 38 VCAT orders. The VBA have investigated. They have called in their own experts and are sitting on it. Other families have also come forward with similar complaints about this builder.

The questions here are: why hasn’t the VBA acted against the builder and taken away his licence, given its significant powers? But the deeper question for our committee here is: how would cases like this be dealt with differently? I think there is probably a constructive answer to that first question. The second question is: why has VCAT failed to hear this case in a timely manner, given it first went to VCAT in 2019 and the builder has breached some 38 VCAT orders without any consequence? I am told that this will go there again in July.

The delays at VCAT in this circumstance have been extraordinary, and nothing in this bill deals with that delay that is occurring at VCAT. I am just wanting to get an answer in a sense to what has happened here in this case. Would this bill fix this sort of problem? How would it fix it? The second thing – the linked matter – is: how does this bill deal with the delays that are in fact experienced at VCAT?

Harriet SHING: Thank you to the person who has shared with you what sounds like just the most awful experience. I am really sorry to hear that this person has gone through so much, not just as that relates to substandard building work and risk to health, the loss of possessions and the uncertainty of needing to move out into emergency accommodation but then the delays and the prevarication and what sound like some truly persistent and damaging patterns of behaviour. I am not able to comment on this particular case because I do not have the detail and nor do I want to overstep any requests for privacy that the person may have.

David Davis interjected.

Harriet SHING: Well, Mr Davis, I take your point that they may not be interested in privacy, but nor would it be appropriate or responsible for me to speculate on what might be incredibly sensitive matters involved in the case that you have just referred to. In this scenario, and without having all of the detail available to me, that person would likely – and it is not definitive, because again, there is a significant caveat here that I am wishing to put on the record – have been covered through the SIS, and the Building and Plumbing Commission could issue a rectification order to the builder.

To your second point, Mr Davis, about VCAT and about persistent breaches and the delays that have occurred, this bill is not about VCAT, it is about closing precisely the loophole of abuses of VCAT processes which, based on what you have said here tonight, is occurring as a result of the builder’s intransigence. Again, I do not have any means by which to verify what you are saying or what has been put to you. Under our bill and as I have explained in answers to you in previous questions, the rectification order cannot be stayed at VCAT for this precise reason – for this precise reason – and the builder would have to rectify. I have been through the offence penalties provisions of the bill in talking to its operation and the intent to bring this back to a consumer focus.

What I would say to you, Mr Davis, in light of the example that you have just talked to here and the very human impact that appalling practices constitute and the fact that these cases are not occurring in isolation, that there are families who are experiencing this level of loss, distress and disadvantage all too often – you just have to talk to the VMIA to know what is happening; we have got Efy here tonight, who leads a team at the VMIA, who is so used to hearing these stories of heartbreak – is that this is the basis for the reforms. This is about providing a consumer-focused framework for proactive early intervention and prevention of these practices and recognition and reward of good and better and best practices but also remedies for people like this person through the form of a SIS or a rectification order.

What I will say, Mr Davis, based on what you have just said, is I would find it extraordinary if, in light of the reforms that are set out in this bill, the opposition were not to support it. Because if you are not to support this bill, Mr Davis, then ostensibly you are saying that the experience of the person whose story you have just read into the record is something that does not deserve to be addressed or remedied or recognised or, for the purpose of the candour that they have displayed, respected. So I would encourage you, Mr Davis, using the quote and the experience that you have just put into Hansard yourself, to invite your colleagues to stand in support of this bill when it moves to the third reading. What you have explained is precisely the rationale for the reforms, and to the person who shared that story, I would say: these reforms, they are for you.

David DAVIS: I have just heard the set of comments from the minister there at the end. I intend to stop asking questions now, but I intend to make one further comment, and that is that the government has been in power for almost 11 years now. This case that I have given to you now began in 2017. There have been two state elections since then, and the government has chosen not to deal with many of the points that have been raised by this case. As I have said in this chamber many times, there has been case after case after case, and my office is no different to offices of other MPs. The question of whether this bill actually fixes these points is a separate question, and there are real questions about aspects of the bill. I think it is a bit rich for the minister to point at the opposition when her government has been in power for almost 11 years. Two elections have gone through this particular case, but the government has chosen not to act through most of that time. The question of whether this bill does the trick is a different and legitimate question. But no, the government is actually responsible for the regime that is in place because it has not acted for more than a decade.

Harriet SHING: This is a set of reforms that we invite you and your colleagues to support in signalling a unified departure from the regulatory framework that has, by design or by omission, failed to provide support for people when they have needed it most. I recall, Mr Davis, that there was nearly identical legislation brought to Parliament in 2013, and it was abandoned. Mr Davis, it was not a Labor government in 2013.

Mr Davis, we have worked to understand the breadth, the scope, the cost and the impact of shoddy practices, of hazards and of risks ever since we were elected in 2014. Whether it is flammable cladding and the cladding rectification work, whether it is this bill here, whether it is increasing, enhancing and providing a measure of dignity in the apartment design standards or whether it is the work that we are doing to make sure that codes are understood and are developed and that we ensure compliance with them across building and construction, we have worked assiduously to understand and not to walk away from or to turn away from the issues and the problems that are felt in very real, very human ways by people just like the person who has sent you that case study.

Mr Davis, it does not stand to reason that if you are saying that these reforms are needed, there is any reasonable basis upon which you should refuse to vote for them. It is inexplicable that you would identify so many problems, so much heartache, empty wallets, broken hearts, incomplete builds, people living in emergency accommodation, people at their wits’ end and people with no money and no sense of hope and vote against this legislation. As I have indicated to you, the statutory insurance scheme, rectification orders, the developer bond scheme and the work around assessment and inspection are all geared towards making sure that consumers have precisely the remedies that would address, prevent and provide early intervention too in the case study you have outlined.

Mr Davis, I am not going to make any further remarks, because I do know that you like to have the last word. But what I will say is that if you wish to be part of a better system and if you wish to be part of the work being done under Anna Cronin at the VBA and under the work of teams that every day are pulling towards better outcomes, then you will vote for this bill. And if you do not vote for this bill, Mr Davis, then any number of the platitudes that you have provided to this chamber and that your colleagues have talked to in the case studies that have come before this place, which are in Hansard forever, will have counted for nothing. I commend this bill to the house, Mr Davis, and I look forward to the opportunity – the hope – that you will stand in support of it when it comes to the third reading.

David DAVIS: I thank the minister for her homilies delivered in that little presentation. I will make a couple of very quick points; I will not labour it. 2013 was a time when the government at the time faced significant mischief from the opposition, which broke up the process of legislation coming through both houses of Parliament. So I would not necessarily blame the government of the day for a lack of progress with certain legislation; I would be blaming Daniel Andrews on many of those points, actually. But leaving that narrow point aside, the fact that there are real problems with the system and the government has failed to act for more than 10 years – nearly 11 years – does not mean that the government’s solution is the perfect one. It does not mean that the government’s solution is the right one. That is the point that I would make – that there does need to be change, but the government’s approach is flawed.

Harriet SHING: Thank you, Mr Davis, and thank you to everybody who has asked questions and made contributions in the course of this debate. It is a somewhat unorthodox step that I am about to take, but I think it is important to put some names on the record – those people who have been such an integral part of the development of these reforms, who have been working towards these outcomes that we may well, hopefully, see achieved shortly after decades – 15 years, 20 years – of work:

[NAMES AWAITING VERIFICATION]

Kane Perry, Ada Young, Rob Bosinovski, Thomas Sanky, Vishal Chopra, Craig Fernandez, Megan Peacock, Callum Wilkinson, Shareen Harper, Alyssa Duncan, Peter Parsons, Jenny Gabriel, Sam Owens, Angela Iannicelli, Chris Archer, Miles Hutchinson, Nick Prenn, Efy Karagiannis – who has been in the gallery for the entire debate – from the VMIA and her team, Lachlan Cloak, Alex Sutton, Peter Holding, Sean Cleary and Leo Gifford. Thank you for all of your work, your effort, your advocacy, and most importantly, the very, very human approach that you have had to understanding where people are and what needs to be done from here.

Clause agreed to; clauses 2 to 106 agreed to.

Reported to house without amendment.

Harriet SHING (Eastern Victoria – Minister for the Suburban Rail Loop, Minister for Housing and Building, Minister for Development Victoria and Precincts) (21:38): I move:

That the report be now adopted.

Motion agreed to.

Report adopted.

Third reading

Harriet SHING (Eastern Victoria – Minister for the Suburban Rail Loop, Minister for Housing and Building, Minister for Development Victoria and Precincts) (21:39): I move:

That the bill be now read a third time and do pass.

Council divided on motion:

Ayes (19): Ryan Batchelor, John Berger, Lizzie Blandthorn, Katherine Copsey, Enver Erdogan, Jacinta Ermacora, Michael Galea, Anasina Gray-Barberio, Shaun Leane, Sarah Mansfield, Tom McIntosh, Rachel Payne, Aiv Puglielli, Georgie Purcell, Harriet Shing, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt

Noes (15): Melina Bath, Jeff Bourman, Gaelle Broad, Georgie Crozier, David Davis, Moira Deeming, Renee Heath, David Limbrick, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Evan Mulholland, Rikkie-Lee Tyrrell, Richard Welch

Motion agreed to.

Read third time.

The PRESIDENT: Pursuant to standing order 14.28, the bill will be returned to the Assembly with a message informing them that the Council have agreed to the bill without amendment.