Friday, 14 August 2026

 David LIMBRICK (South-Eastern Metropolitan) (09:45): I am pleased to speak on the Consumer Legislation Amendment Bill 2026. This is an omnibus bill that amends an entire range of acts: the Australian Consumer Law and Fair Trading Act 2012, the Conveyancers Act 2006 et cetera et cetera. Suffice to say it does a lot of things. Some of those things are okay and technical. Some of those things are really horrible, and for some of those things we may end up with something very different, because I have received an enormous number of amendments for this bill and I think we only received them yesterday. My team has been working very hard to make sense of these amendments. So with that in mind, I will not be opposing this bill on the second reading. I will be paying close attention to the committee stage, and I will see how the bill looks after we have gone through all these amendments that we can see on the table here.

Suffice to say there are lots of things in here that I do not like. The one that I am going to focus on, though, is the one that I have spoken the most about, and that is the amendments to the Tobacco Act 1987. This bill will add new powers, such as short-term closure notices by the regulator or police, long-term closures by the court, offences for landlords if their tenants are knowingly selling tobacco illegally, landlord power to terminate leases on long-term leases et cetera and enabling pre-trial destruction of products. There are some very, very concerning developments in the tobacco wars in Melbourne that I am not sure the government is even aware of. Maybe they are getting a hint of it by the fact that we are seeing more firebombings and indeed we have seen kidnappings now. The government did not seem to understand the incentives that drove the tobacco wars in the first place, which was the excise tax, a failure of federal government policy and also a failure of state government policy because we washed our hands of vapes. Apparently the Victorian government has no responsibility whatsoever for vapes. They used to try and regulate them somewhat, and now they just say it is a federal government problem and it is not policed and you can buy vapes anywhere imported directly from Shenzhen, China.

The government think that they are going to enforce their way out of this. I have got news for them: they are not. It is not going to work, bringing in a whole bunch of new and very severe criminal penalties, a licensing regime and all these sorts of things. They really need to look at the history of alcohol prohibition in the United States. What happened there when they ramped up enforcement and fines and things like this? What happened was that it incentivised further violence and increased violence, and that is exactly what we are seeing now. You do not need to be a genius to figure out the incentives here. We all know that these criminals that run these tobacco networks are violent people. They think nothing of firebombing attacks; every morning we wake up and there is a new firebombing attack. They think nothing of standovers. They think nothing of these sorts of things – and these are only the crimes that we see. Actually most of the crimes that are happening right now are not getting reported. People are too scared to go to the cops. They are not visible – things like people getting threatened and people getting stood over – and it is all very, very quiet.

The tobacco licensing scheme has incentivised a new distribution model. Anyone that has got an Instagram account can see that what I am saying is true: illegal tobacco is being sold direct to consumers for home delivery and advertised via social media. I have no idea why Meta allow tobacco advertising for black markets and for organised crime, but they do. You do not have to be a genius either to realise that organised crime groups having a list of consumers’ addresses and delivering to their homes might pose a few problems. The fine for someone selling tobacco illegally is about $300,000. I do not know what the current price to carry out a firebombing attack, or indeed a murder, is in Victoria, but I imagine neither of those things cost $300,000. The government has set up incentives for violence here, and they have incentivised a distribution model that hands the home addresses of consumers to organised crime groups. It is happening right now. What is being done about it? They are operating with impunity. The government claims that they can enforce their way out of it. Organised crime is moving so fast that the government’s licensing scheme is already obsolete before it has even started.

The federal government was bragging about how they shut down a service station group because they were distributing illegally. They could only do that because it was a really large organisation. But I can tell you there is a service station of a different company right near my house that just openly sells illegal products. In fact they have weekly specials; you can get two for one if you buy on a Thursday. The consumers do not even know they are illegal products. They are openly displayed. The government’s laws are doing nothing, but okay, let us shut down all the service stations. Maybe they should have done something other than their fuel saver when they were getting data from the petrol stations. There are illegal tobacconists everywhere. They are still all in the city, but they are also moving online. This is really dangerous. For goodness sake, this is going to end in disaster. Organised crime having a list of consumers and their home addresses, what could go wrong? This is madness, what they are doing. The violence is going to increase because of the incentives set up by the government.

The government needs to abandon this scheme, and what they need to do is actually what the New South Wales Premier, a Labor premier, has been doing. He has been doing something good. He has been screaming at the federal government about the excise tax. He wants a review. We have got a new Premier now in Victoria. Why isn’t he doing that? At least show that you understand what is causing this problem. At least show that you understand the root cause of this issue, and you are taking action to pressure the federal government to do something about it, because ultimately, it is the feds that have got to do something about tobacco excise.

The public health bureaucrats that have pushed this policy need to be sacked. They have pushed this; they have caused this. They are continuing to say, and apparently influence members of Parliament into saying, ‘We can’t cut the excise tax. That would be giving in to big tobacco.’ Big tobacco is about to pull up stumps and stop business in the country because their markets are going to be totally eaten up by organised crime within two years. Organised crime already controls 80 per cent of the tobacco market. It is not big tobacco, it is big organised crime. They control this state at the moment, and we have got to do something about it. The licensing scheme is actually not going to help. It is actually going to make things worse. It is going to increase the violence. Please do not do this. It is crazy.

 Ingrid STITT (Western Metropolitan – Minister for Health, Minister for Mental Health, Minister for Ambulance Services, Special Minister of State) (09:53): I would like to thank all members who have made a contribution to the Consumer Legislation Amendment Bill 2026. I will be moving some house amendments which incorporate feedback from stakeholders to make these important reforms fairer and clearer for Victorians purchasing houses and living in residential parks. The house amendments also seek to modernise the Building Act 1993 by introducing amendments to reflect current industry practices and support improved regulations that give Victorian workers, businesses and consumers clarity and confidence in relation to modern methods of construction and complex plumbing works. Those house amendments in my name were circulated by Mr Tarlamis last night.

Victorians should not have to wait another year for practical reforms that make everyday transactions fairer, clearer and safer. These reforms bring together major consumer protection changes across residential parks, owners corporations, motor car trading, the property market, renting and illicit tobacco enforcement. Together, they are designed to make the system fairer, safer and easier for Victorians. There has been considerable discussion through this debate about the scope of the bill, but the breadth of the bill reflects the breadth of the issues that Victorian consumers, renters, homebuyers and residents are dealing with right now. These are not abstract reforms. They affect whether someone can understand the true cost of buying a home, whether a renter can leave a lease without facing unmanageable costs and whether an older Victorian in a residential park can plan for their future. They also affect whether a used car buyer can trust what they are being sold and whether enforcement agencies have the powers they need to crack down on illicit tobacco.

On renting, this government has already delivered more than 150 rental reforms, including the ban on rental bidding, the end of no-fault evictions, minimum standards before a property is advertised and longer notice periods. The portable rental bond scheme is now live, allowing renters to transfer their bond when they move rather than needing to find money for a second bond up-front. Rental Dispute Resolution Victoria is also operating, giving renters a free pathway to resolve bond repairs and rent disputes without needing a VCAT hearing.

This bill builds on the record in a practical way. It caps break-lease compensation for lost rent in agreements under five years so renters know where they stand and are not exposed to claims they cannot predict or afford. It allows renters to pay their bond directly to the Residential Tenancies Bond Authority if they wish, rather than relying on an intermediary. It creates an offence where a rental provider switches off a renter’s key or fob, because locking someone out of their own home as leverage in a dispute is unacceptable. It gives renters the right to an additional key or security device without unfair charging. And it strengthens protections for victim-survivors of family violence, including by clarifying bond provisions, enabling VCAT to make perpetrators solely liable for damage in appropriate cases and prohibiting discrimination against victim-survivors applying for rental properties.

On the property market, the bill makes information available earlier and more transparently. In most circumstances section 32 statements will need to be provided well before a buyer is asked to make a decision. Reserve or asking prices will have to be published before the auction or fixed-date sale. Sold prices will have to be published once the sale becomes unconditional. Statements of information will be more prominent, more useful and available for longer. The coalition has proposed that this bill alter the process for setting the reserve price and allow for the seller to revise the reserve price within seven days of auction. The government does not support this. The purpose of these reforms is to end the frustration that prospective buyers feel when they go to an auction and learn that the house was never in their price range. Even if reserve prices can be lowered within the seven-day limit, this causes its own unintended consequences by encouraging more buyers to participate without the same amount of time as other buyers who were able to afford the higher price range and do their due diligence. We want to make these decisions carefully, and we will continue with our 14-day reserve price range policy as set out in our amendment.

Through this bill the director of Consumer Affairs Victoria will also be able to collect and publish sale information, giving Victorians a free government-run source of this information. These are commonsense reforms and help level the playing field for buyers. The bill also repeals section 27 of the Sale of Land Act 1962 so commissions can only be taken from deposits at settlement or earlier with the seller’s express agreement. That matters because the deposit is the buyer’s money until settlement, and early release shifts risk in ways that can unfairly affect buyers. The opposition has proposed that we keep section 27, and we oppose this measure. Vendors and purchasers will still be able to negotiate the early release of their deposit in the contract of sale, but it is not taken as standard. Our amendment removes the incentive for estate agents to apply undue pressure on vendors and purchasers to agree to release the deposit early and gives purchasers and sellers more choice.

For owners corporations, this bill fast-tracks the financial hardship recommendations of the expert review. Owner-occupiers experiencing hardship will be able to access payment plans and receive statutory protection from penalty interest and debt recovery while a plan is in place. This is an important reform that recognises the realities faced by first home buyers, downsizers and pensioners. The opposition has moved an amendment on this to look at what considerations should be taken into account when creating a payment plan, which we will not be supporting. Our bill already ensures that the terms of a payment plan are set out in the request from the lot owner, who is in the best position to understand their capacity to pay. The approved form for requesting a payment plan will clearly set out the parameters of the payment plan, along with information about how the request will be considered and what happens in the event of noncompliance.

For residential parks, the bill addresses longstanding concerns, particularly for older Victorians. It defines and limits deferred management charges, ensuring they do not exceed 20 per cent of the purchase price paid by the resident. It creates a pathway for special rent increases through VCAT, establishes a public register of park operators, allows for a code of practice and removes forcing a resident to leave at the end of a fixed term without cause. These are significant and necessary reforms. The opposition has brought some amendments to this bill on residential part 4A parks which, for the record, we will not be supporting. Our bill is already working to deliver stronger protections for residents of those parks.

For used car buyers, the bill strengthens odometer tampering offences and requires traders to verify odometer readings before sale. We have seen the amendments circulated by the opposition to change these reforms, which we will not be supporting. Our bill will deliver the strong consumer protections Victorians deserve and will stop the dangerous tactic of winding back odometers. It simplifies consumer redress by transferring functions from the Motor Car Traders Claims Committee to the director of Consumer Affairs Victoria. It strengthens regulatory powers, including licence suspension powers and record-keeping obligations, and updates the law for online and auction-based trading environments. It has also been put to the government by the opposition that this committee should be retained, but we will not be supporting that approach. The director of Consumer Affairs Victoria already has access to the expertise they need to support those consumers going through the claims process and will be best placed to deliver fairer outcomes for Victorians. These reforms recognise how the market now operates and ensure that consumers are better protected.

The bill also contains important reforms in relation to illicit tobacco. These measures further strengthen Tobacco Licensing Victoria and Victoria Police’s powers to disrupt the illicit trade by allowing short-term closures, court-ordered long-term closures, stronger penalties for landlords who knowingly enable the trade, and earlier destruction of seized tobacco, while preserving fair trial safeguards and evidence. The opposition has put forward amendments to ensure a reasonable excuse defence for landlords who have done all the right things to prevent the illegal trade of tobacco. We will not be supporting this amendment, but we understand the intent of the amendment. I just point out that the offences in clause 116 already include a reasonable excuse defence that already addresses that issue. These are serious reforms aimed at serious criminal activity.

I will also be moving house amendments which will make changes to the Building Act to strengthen consumer confidence and promote innovation in modern methods of construction. To boost consumer investment in modern methods of construction, we are giving Victorians confidence that when they are buying a home with prefabricated parts, they will be held to the same standards of tradecraft as the traditional site. These amendments will give consumers a legal guarantee that they are always getting a high-quality build whenever they buy Victorian modern methods of construction.

These amendments also improve the regulation of plumbing in apartments and other complex builds. Current regulations do not differentiate between plumbing work undertaken on single-storey homes or high-rise towers. It will create a new head of power which will allow for changes to the regulations. The plumbing industry has long called for these reforms and I am pleased that the Carroll Labor government is delivering them. Further amendments make small administrative changes to allow for the smooth operation of subordinate regulations by delaying the commencement of changes to the Domestic Building Contracts Amendment Act 2025 as well as delaying the introduction of the developer bond scheme. This is as a result of industry feedback, allowing Victoria’s building sector enough time to implement the changes effectively. Some members have sought to frame those reforms as too broad, too ambitious or too interventionist, but the government does not accept this. This is a practical cost-of-living piece of work. It is all about giving consumers confidence across all areas of the economy while strengthening the position of industry.

It is the work of government to make markets fairer and to back consumers with clear rules. At its core this bill is about fairness. It is about giving buyers the information they need, renters more certainty and protection and owner-occupiers in hardship a fair process and providing stronger safeguards for older residential park residents and used car buyers while also cracking down harder on illicit tobacco operators. Our government has a clear record of reform in these areas, and this bill continues to build on that work.

Finally, I acknowledge and thank Mr Puglielli from the Greens party for working constructively with us on the bill and for putting forward the proposed amendment regarding proxy votes for owners corps. We are prepared to accept this amendment and look forward to discussing this further in the committee stage and working further on this.

Just before I finish up, there are a couple of points to make on the committee stage. Those that have been looking at this bill know that it is incredibly complex. It is probably about five bills rolled into one. I am sure we will all be patient and kind with each other as we work through what I think is a record number of amendments that we are going to be dealing with in committee, and we will all do our very best to acquit our responsibilities. That being said, I commend the bill to the house.

Motion agreed to.

Read second time.

 The PRESIDENT (10:06): Before we start the committee stage we need to deal with an instruction to committee motion. Considering the amendments on sheet IS40C circulated by Ms Stitt, in my view amendments 2 to 7, 10 to 20, 25 to 31 and 33 to 37 are not within the scope of the bill. Therefore an instruction motion pursuant to standing order 14.11 is required. As the house knows, an instruction motion is a procedural motion.

 Ingrid STITT (Western Metropolitan – Minister for Health, Minister for Mental Health, Minister for Ambulance Services, Special Minister of State) (10:07): I move:

That it be an instruction to the committee that they have the power to consider amendments and new clauses to amend the Building Act 1993 in relation to prefabrication work and prefabrication builders, complex plumbing work, developer bonds and minor matters, the Building and Plumbing Administration and Enforcement Act 2026 to make consequential amendments to that act and the Domestic Building Contracts Amendment Act 2025 to delay its forced commencement date.

Motion agreed to.

Committed.

Clause 1 (10:10)

The DEPUTY PRESIDENT: The minister has advised me that the government would like to take all questions on the Tobacco Act 1987 first.

David LIMBRICK: I have a few questions about the changes to the Tobacco Act. In the second-reading debate I spoke about the new distribution model being adopted by organised crime – home delivery. In fact I was just talking with my colleague next to me and showing him some of these advertisements that are happening, and you can buy anything in Victoria, it seems. How will these changes affect this new distribution model?

Enver ERDOGAN: I thank Mr Limbrick for his question and his longstanding interest in these matters. This bill is much more targeted to fixed and mobile premises. The issue you raised during your contribution to the second reading was more focused on using other modes of communication to distribute, and I think you gave the example of the internet and social media, understanding that the state’s ability to regulate the internet is limited because of our constitution. It goes back to an earlier point. We are probably getting a bit out of scope, but I think it is important to state that this is a national problem. We know that. We know that what created this sector was obviously some of the tax settings. We know it is entering into our borders at a state level. This plays out with crime, where police are usually on the front foot. This will stop the physical presence of stores, which is also having a detrimental effect, we know, on legal retailers. This is more targeted to physical stores. I think in the online realm it is probably better addressed to the Commonwealth, and it is an issue that we will take up. There is a national disruption group where state and federal agencies are working together. The example you gave was the big operation towards the service station. That was actually state and federal together; it was Victoria Police, federal agencies and Tobacco Licensing Victoria’s federal equivalents. But this bill is not focused at that end. This is really the physical stores we are seeing, and you gave a good example of a local petrol station. They are the ones that we want to target. We want to put up closure powers, because right now there are powers to go and take these products, but then people are saying, ‘But the store still is reopened the next day or the day after.’ This is to address that issue. It is a longstanding issue, and it brings us into line with best practice interstate.

David LIMBRICK: Although this new distribution model at a retail level is all done online through home deliveries, it does require distribution hubs, so warehouses. Assuming that these warehouses have tenants, would they be subject to these closure powers? They are not actually conducting transactions onsite; they are storage facilities, presumably, that deliveries are coming from.

Enver ERDOGAN: I think any premises which is selling or believed to be selling illicit tobacco will be able to be closed down, so to speak, for business. But more importantly, it will empower the landlords to terminate the lease. A warehouse is a good example. The problem is currently it is not so straightforward to terminate a lease on any rental agreement, for good reason – there are checks and balances – but I think in these instances this will empower the landlord to be able to terminate the lease for the premises.

David LIMBRICK: I watch these markets as closely as I can. One thing that I have noticed many of them advertising now is that their products are shipped directly from Brisbane, from Queensland. Would anything here actually affect that business model where presumably some warehouse is in Brisbane and it is being sold locally in Victoria? As far as I can tell, the Victorian government cannot do anything at all about that, can they?

Enver ERDOGAN: These reforms are about a real target, about the closure of physical stores. I think your example is a fantastic example of why I say it is beyond just a Victorian issue. It is a national issue that requires a national approach, because we are seeing products shipped from interstate and products shipped from overseas, and not all of that can be combated at a Victorian level. This is one more step. I am not going to pretend and say this is a silver bullet. It is not. But it will assist in getting rid of these stores in situations where they are really harming other neighbouring businesses. That is what will allow the physical closure powers.

David LIMBRICK: I thank the minister for that answer. Is it not the case that organised crime has already outsmarted the government with a new distribution model? It seems that the Victorian government cannot touch this distribution model, as far as I can tell. I imagine if I lived in Queensland, I would see ads saying, ‘Shipped directly from Melbourne, Victoria’. Similarly, these crime groups seem to have figured out that if you distribute from one state and sell into another, the local state authorities cannot really do much at all.

Enver ERDOGAN: I would not accept that they cannot do much at all. I think there is a lot that we can do and are doing. Nonetheless, I do take your point that it is clear that the criminal enterprises that are behind this, and some of them are transnational, have been quickly shifting their models of operation. Obviously enforcement takes time to adapt to new practices. We have seen that evolving over a good five years, probably even longer in Australia in every jurisdiction. These closure powers have been implemented with some success in Queensland, though. I have heard this anecdotally. As a minister I meet with stakeholders. One of the stakeholders I met was – I will not reveal who – one of the tobacco companies, who said that there is a direct correlation with the closure powers and strict enforcement. It is not just having the rules but actually joint operations with police and an uptick in sales of legal tobacco. Clearly there is some impact. Obviously with the long-term trend there will be other challenges, because it is clear that these criminal enterprises are not going to stop just because of closure powers. It will make life harder for them. This will allow us to collect more intelligence. I think that is what the biggest benefit has been of having a regulator in the first place. You have a better picture of who is selling these products out in the open, effectively, but that does not mean that they will not go back underground.

David LIMBRICK: I would dispute the idea that somehow Queensland is doing things better. I went up to Queensland last year and you could buy vapes and tobacco anywhere. The idea that it is somehow being shut down by the Queensland government through their licensing scheme is just wrong. Anyone can see it for themselves. You just have to walk into a shop and ask for a packet of whatever. I am not going to name the brands, but everyone knows what they are. Is it not the case that with every step the government has taken, both the state and federal governments, including the steps that we are taking right now, organised crime has been one step ahead, and they just keep adapting? Is it not the case that unless we attack the underlying root cause of this, which is the federal excise tax, you are never going to get ahead of it? The government cannot keep up with these distribution models. These guys are good at this. I was actually quite impressed when I saw this new distribution model. They are saying, ‘Oh yeah, ship from Brisbane.’ The Victorian government cannot shut down something in Brisbane. They sell it over the internet. You do not even know where it comes from. They are probably doing the exact opposite in Brisbane. I do not see how you are ever going to stop this. My question is: how are we going to measure success here? Estimates are that currently about 80 per cent of tobacco sold is black market. That is increasing. What is going to be a measure of success here for the state government?

Enver ERDOGAN: Mr Limbrick, there is an issue and I think I was one of the first ministers in the nation to talk about that. There are multiple factors for the growth of illicit tobacco in this country. One of the biggest factors is the price differential between the legal and illegal products. That is the biggest factor. Then the second biggest factor is the fact that it enters into our country in the first place. A lot of these products are not cultivated here. They are not produced here. I understand there has always been a small amount of illicit tobacco cultivation within Australia, but never at this volume. Without those levers, which state jurisdictions do not have, we obviously will continue to advocate and speak to our Commonwealth counterparts and pass on that message. It is not just me – Premier Chris Minns was very forceful in his view of the price differential, as you have said, Mr Limbrick, too. Some of these issues fall on the state jurisdictions to pick up the enforcement side, which is a very difficult challenge because of the demand side – the price differential is so strong. All we can do is try to target the organised crime elements, and I note Victoria Police has made a lot of arrests in relation to this. We have tried to increase the deterrence, so tougher penalties – before, people were getting lighter sentences than what they are getting in relation to these offences now. This is, again, about disrupting their business model, making life harder for them. But without taking a holistic approach – and there is a national approach; it needs to have a national approach – I do not believe it will make as big a difference as we would like to see.

David LIMBRICK: I do accept that the federal government have caused this problem, and they have left state governments to pick up the pieces on this. That is why when I saw how angry Premier Minns was about it, I was like, ‘Well, he should be angry,’ and I think the Victorian government should be angry as well at the position that we have been left in. We have been left in a hopeless situation, as far as I can tell. It is totally unenforceable. The government are trying everything that they can, but as I have said, I do not think any of this is going to work. In fact I think it is going to make things worse. The tougher penalties that the minister referred to I think are actually dangerous.

I have one question specifically around landlord offences. The idea is that there is going to be an offence if a landlord rents out a place knowing that the tenant is conducting illegal business. How would you know that the landlord knows this? What sort of evidence is going to be required here? Because I think that it seems that landlords – I do not know how they are going to do it – are going to make sure that they are ignorant of whatever is going on in their property. How are they going to know?

Enver ERDOGAN: Obviously everyone is innocent until proven guilty, so the same criminal standard will apply. We understand there is a lot of intelligence at the moment in this space because organised crime is involved. If there are intelligence reports – and we are talking federal police, VicPol, potentially the licensing agency – and they have proof or evidence that a landlord is complicit, then of course they will have to prove in a court of law to the criminal standard, beyond reasonable doubt, that they were involved. That would depend on whatever intelligence they have and they can prove in a court, because everyone deserves to be treated as innocent till proven guilty. So it is just a criminal standard, I will say.

David LIMBRICK: There are lots of law-abiding landlords out there who buy commercial property as an investment. How can a landlord protect themself against this offence? If I am a landlord and I want to make sure that I am following the law and I do not trigger this offence, how am I going to protect myself against this? Do I request an affidavit from the tenant or some sort of legal document stating that they are not selling illegal products? How is the landlord going to avoid this offence? Are they going to have to do their own inspections to find out whether their tenant is doing something dodgy? It just sounds really dangerous. If one of their tenants is doing something like this, putting the landlord in a position where they are effectively going to have to out dangerous criminals it seems might be a dangerous thing for the landlord.

Enver ERDOGAN: I get the point you are making, Mr Limbrick. I think we know with a lot of tenancy agreements that as part of the tenancy agreement, whether it be residential or commercial, there is an inspection, usually by the relevant agent acting on behalf of the landlord to go and inspect the premises. There are a whole bunch of conditions when you sign a lease or if you have ever been a tenant. I was a tenant not too long ago, and I remember the landlord would see the condition of the premises, and there are reports like that. I guess in some of those reports, if they were to discover something, like everyone, they would have almost an obligation to report it to the appropriate agencies. I guess that would be the proof point. But at the same time we know that some of the criminal syndicates behind this industry are very scary, and we have seen a lot of people being hurt, so there is that aspect as well. Like I said, there is a criminal standard that would need to be applied to be able to convict anyone of these charges. But I think landlords, in their normal course of business, do regular inspections, whether that be in a residential or a commercial setting, and if they become aware of something, then I guess the onus is on them to act.

David LIMBRICK: I do find the assumptions by the minister here to be very dangerous. If I am a landlord trying to comply with the law and I inspect a tenant’s premises and I find that they are conducting an illegal tobacco business and I am somehow obligated to report that because I will come under this offence now, aren’t I instantly a target for these criminals? They are going to face, what is it, at least a $300,000 fine. I know they are going to assume that the inspection is what caused it, so they have got a $300,000 incentive to silence me as the landlord. Isn’t this a dangerous situation that you are creating here?

Enver ERDOGAN: There are obligations that exist across society. If you see something illegal or wrong, I think there is an obligation to report it. That would be no different in this case. You are giving an instance where someone is too fearful to report it, effectively. That is a defence in any criminal setting. That is why I said it is a criminal standard, and I think they are factors that would be considered in any prosecution. That already happens across a number of sectors where we do see bad actors and people not willing to come forward because they are fearful. I think that is why you have a criminal standard, and it needs to be beyond reasonable doubt and all those other considerations. But they are really questions for prosecution. I think these powers are to try and make it easier, and I think it is making it easier when there has clearly been a conviction already or if someone has been found to be breaching already, with or without the landlord, and they are able to move them on, because right now it is very complex to terminate a lease agreement.

David LIMBRICK: I actually like the part about being able to terminate lease agreements more easily; I think that is good. It is still dangerous, though. Can I just clarify then that if a landlord feels they are under either explicit or implicit duress because of bad people that are renting their property, that would be potentially a defence against this offence?

Enver ERDOGAN: Mr Limbrick, I am not going to talk case by case, because obviously we are talking hypotheticals here. But I think that exists in common law when someone is forced to do something because they are under threat or fear threat. That would be a criminal standard that the prosecution would need to consider the evidence of in each case.

Melina BATH: I thank Mr Limbrick, because he has asked some questions in that space that I was thinking of as well. Just let me recap – I know we have been discussing this. There is protection in this bill around a landlord who does discover that there is illicit activity happening and he or she reports it to police or the regulator and takes every step available to stop it. What I have heard from your discussion is that there is a defence if it continues on and he or she has done everything within his or her powers, correct? And then the other one would be in terms of liability for conduct that they do not authorise. If they are not authorising an illegal activity in their premises or not knowingly permitting it, again there should be some level of defence. Can you just assure the house that that occurs in those two separate situations?

Enver ERDOGAN: Do you want to just repeat that last bit, sorry?

Melina BATH: They have a defence if they neither authorised the activity nor knowingly permitted it, yet it happened. There needs to be a line of defence for the landlords.

Enver ERDOGAN: I think that is why I talked about it being proven to a criminal standard, because there would need to be, first of all, evidence that they actively were participating and knowingly allowed their premises to be used for those improper purposes. The onus would be on the prosecution to prove that. If they could not prove that, then they would not get a conviction or would not pursue the person in the first place. Obviously, as a defence, I am sure they would get legal advice in these circumstances, and everyone’s circumstances would be different. Unfortunately, we have heard stories. One of the most harrowing stories is of small businesses that have been targeted and coerced. That, in a criminal common-law principle, is a defence, that fear aspect that Mr Limbrick talked about. That is why I say ‘criminal standard’.

Melina BATH: Moving on, in relation to needing to take a tougher stand on landlords, we will say, in the jurisdictions of Queensland and New South Wales there seems to be a tougher stand than Victoria regarding landlords who knowingly allow those tenants then to sell illicit tobacco. This bill allows the termination of a lease by a landlord where a tenant incurs a long-term closure – that is my understanding – by written notice. If you compare with Queensland and New South Wales, landlords may terminate a lease with a tenant for much lesser short-term infringements. Why has the government come to this position, and could you expand on the rationale of the difference and why you chose not to go with the tougher Queensland and New South Wales situations?

Enver ERDOGAN: When we were drafting this legislation we had the benefit of seeing how it was applied in different jurisdictions. The time and length of the settings we went for were actually quite similar in fact – up to 90 days – and that is what is in New South Wales and Queensland. So we would say our settings are almost identical in relation to the closure powers – up to 90 days. There might be a reason for a court to make it a lesser amount, but we feel up to 90 days is the short-term closure. Obviously for longer term closures there would need to be an application to a court for a court order to provide the court with flexibility. In fact I would say we have gone tougher, to a certain degree, because we have not set a maximum. Some of the jurisdictions have set a maximum of up to 12 months in the court process for long-term closures, but we have provided flexibility to the courts. They might say a longer closure period is needed for a premises. We would say that our short-term settings are comparable to Queensland and New South Wales, and to be honest we looked at theirs in drafting ours. In the longer term we have allowed the court jurisdiction to determine the length.

Melina BATH: In Queensland and New South Wales law a closure order states that a person must not supply smoking products as well as illicit tobacco, work in a smoking products business or supply any other service. From my understanding – and talking to the shadow minister in this case, Mr Tim McCurdy – the bill before us allows for a tenant to continue trading those other products, which could be smoking products other than illicit products. Why did the minister not go to that length? What was the rationale behind that, and would you consider upgrading that in the future? Why did you cap it?

Enver ERDOGAN: That is a really good question, Ms Bath. That was something that I, as minister, really did think over a number of times. It was actually done more for remote areas, in terms of regional Victoria, or more peri-urban areas, where you do not have as many options. Let us say there was a grocer – sometimes inside businesses there are smaller business operations. If you close down the whole premises, the community still needs the other amenities, whatever other groceries they are selling. It was to not disadvantage the community and to provide that flexibility. Maybe after application you would see how it works, but that was really a big consideration for me in concluding that this is the best approach, because obviously in metropolitan Melbourne, if you close down one grocer, you can just walk down to the next one. That might not be an option in more remote parts of our state.

Melina BATH: Rounding out this discussion, Minister, in this bill there is a focus on premises closure, landlord penalties and disruption. Queensland, by contrast, has a broader enforcement package which includes seizure of illegal smoking products found alongside illicit tobacco. Why did the minister not consider those, and what about a separate enforcement schedule to the bill – powers to seize compromised legal stock found alongside that illicit stock – in terms of really removing that supply chain? What was the rationale behind not going to that extra extent in the way Queensland have completed theirs?

Enver ERDOGAN: We are giving closure and seizure powers. They already exist at Tobacco Licensing Victoria and Victoria Police. In fact you might see some of the powers in relation to holding the stock in storage and destroying some of the product seized, so there are existing powers for Tobacco Licensing Victoria regulators and also Victoria Police to seize products. The big issue with tobacco is that it is highly flammable, and storage has been a long-term bugbear of agencies. So this legislation also has got a clause in there about allowing us to, once we gather the appropriate evidence, use a seizure process. If the person does not appeal it, then we can destroy most of it, just keeping enough evidence for testing et cetera for the prosecution stage, because storage is a big issue. I think the issue is if we seize too many products that are not tobacco alone, that creates a storage issue and a safety issue, because a lot of these products are highly flammable.

Melina BATH: This is the last one for me on tobacco. Minister, I asked you a question in question time the other day in relation to the real danger that is occurring when you have got illicit tobacco stores in regional Victoria, for example – across the city but also in regional Victoria. The thuggery around those and the criminality around those means that people can be walking down the street and can be potentially abducted. How, within this bill and more broadly, will government tackle that? It is a really evil space that people are having to live in. What do you see is needed to work with police at a greater level to stop this? You did make comments – I am not saying that you are not sincere about it – but clearly it is unsustainable that you have got people walking down the street being abducted and dumped because of this illicit trade.

Enver ERDOGAN: Thank you, Ms Bath. I again want to express my deep sympathy to your constituent. That is a harrowing story, and I was also made aware of it. It is scary to see what can happen to innocent community members, especially small businesses that have been greatly affected. As minister, I have heard a lot of stories of, like I said, innocent small family businesses that have been caught up in all of this.

I think the goal is to strengthen the criminal justice settings. That happened last year with some of the tougher sentencing, because sometimes we are seeing a lot of repeat offenders in this space, and it does mean stronger coordination with our intelligence agencies. Some of the ringleaders that are behind this and the recruitment of young people are offshore, but now we are seeing that through partnership with the Commonwealth we need stronger action across federal and state agencies. We need more arrests. I think we need a visible deterrent. That is why the operation that Mr Limbrick referred to was led by a group called the national disruption group, which brings together state and federal agencies. I think over the coming months – I do not want to pre-empt their work or reveal anything operational – you will see more arrests both internationally and locally of some of the ringleaders, because it cannot continue. We have seen too many innocent people hurt, and I want to see it end. I think this provides another tool towards that, but we know this is really insidious. States have been left, because of the broader national settings, to deal with this issue at a local level.

The DEPUTY PRESIDENT: If there are no further questions on tobacco, we will move to questions on any other topic in the bill.

Melina BATH: Minister, this relates to the reserve price in clause 26. Under clause 26, if a vendor decides on the day of the auction that they want to reduce their reserve price, are they legally able to do so and proceed with the auction that day?

Ingrid STITT: The simple answer is yes, they can. The publicly disclosed reserve price is not binding, leaving it open in practice for vendors to choose not to accept bids that reach or exceed the reserve price or to accept an offer below the reserve price in response to live market feedback on the day.

Melina BATH: Just confirming that if a vendor does then make a decision to lower their price on auction day, there is no requirement to comply with the seven-day reset. They can do it on the day. Is there any stipulation that you are aware of that has a lower cap or a lower limit? Could you just slightly unpack that ability to lower that reserve on auction day?

Ingrid STITT: Would you like me to cover off what the process is for setting and publishing the reserve price as well? I can do that. The reserve price is set by the seller, obviously. However, an estate agent will be required to offer advice on what a reserve price should be, as they are likely to have a better understanding of the property market and what a property is likely to sell for. The intention of this step is to ensure the seller has the information necessary to make an informed decision. The obligation is on the estate agent to publish the reserve price given to them by the seller. In respect to questions around whether the seller’s reserve price is binding, the purpose of setting a reserve price is to provide better pricing information to auction participants at least one week out from the auction. The reserve price is the only situation where a vendor’s estimate of their property value will be communicated to the market, rather than the price range determined by a real estate agent. Making it a requirement for a vendor to sell at their disclosed reserve price would severely restrict a vendor’s ability to make decisions regarding the sale of their property. The intent behind this amendment is to make the system fairer for buyers while also not making it unfair for vendors.

Melina BATH: I will move on to section 27 of the Sale of Land Act 1962, in relation to confirming that repealing section 27 does not prevent the early release of a deposit but instead removes the existing statutory process and leaves early release to contractual arrangements. Can you confirm?

Ingrid STITT: The bill provides that vendors and purchasers are free to agree to a condition in the contract that facilitates the early release of the deposit. This means that purchasers can disagree to releasing the deposit early for any reason, rather than a specific reason set out in section 27. This is not a new concept. It is the same approach taken in New South Wales, and it ensures that the early release of a deposit is not simply taken as a right. The bill adds further consumer protections by removing the incentive for estate agents to apply undue pressure on vendors and purchasers to agree to release the deposit early, by prohibiting estate agents from retaining their commission from the deposit prior to settlement. The government’s house amendment will address stakeholder concerns by clarifying that agents may still be paid their commission prior to settlement if the vendor agrees to pay it.

Melina BATH: Thanks, Minister; I appreciate that. I am going to move on. We have got a lot of amendments and still a lot of discussion. My next is around Motor Car Traders Claims Committee independence. What evidence does the government have that the existing Motor Car Traders Claims Committee is failing consumers? Can you expand on your decision within this bill? Why is it preferable for the regulator that administers and investigates the scheme to also be able to determine claims in the first instance? Why have you removed that Motor Car Traders Claims Committee?

Ingrid STITT: The government acknowledges that the committee has been successful in resolving issues for consumers who lodge a claim for compensation, and it has resolved many of those matters promptly. But the government’s decision to transfer the claims process to Consumer Affairs Victoria has been known for some time, and we have dealt with that through other legislation. The reasons for the change are that Consumer Affairs Victoria will be able to leverage their strong reputation for supporting Victorian consumers and provide a much more simplified end-to-end pathway by consolidating functions and powers for determining claims in the established regulator with existing compliance and enforcement functions in relation to motor car trading. The director of Consumer Affairs also manages the claims process for compensation claims against estate agents and conveyancers under their respective legislation, and they will be able to use that experience that they have and apply it to consumers that are dealing with these sorts of claims as well.

Melina BATH: Just unpack this, Minister. In terms of bad operators in this scenario, the amendment brief indicates that the industry evidence points to bad operators rather than a demonstrated failure of the committee model per se. Is this a kind of rationalisation approach, or had the committee failed? I am seeking to understand that with a bit more clarity, please.

Ingrid STITT: In terms of how these proposed reforms were developed, there has been quite a bit of work done. There is a recent research report from Consumer Affairs Victoria which found unlicensed traders were purchasing high volumes of used vehicles through auction houses and advertising them for sale online at high prices, with some posing as private sellers. There has been quite a bit of engagement with stakeholders, including the Consumer Action Law Centre and the Consumer Policy Research Centre. There have been a number of issues identified with the regulatory framework, including that consumers often lack awareness about what their pathway is to seek redress. Even when the pathways are used, they kind of operate separately and are at times duplicating and quite confusing for consumers. That was certainly one of the take-out messages from that stakeholder consultation. There was a high volume of consumers experiencing faults with their motor cars, with some of these faults discovered during the first year of ownership. There has certainly been a lot of stakeholder feedback about strengthening consumer rights in this space. That is one of the reasons why the government has taken the decision to transfer these claims to CAV.

Melina BATH: First of all, I am interested that you have mentioned the Consumer Action Law Centre. I am interested to understand what other industry stakeholders were taken into consideration when making this decision. That is the first question. While I am on my feet the second question is: if the feedback has been that consumers have been unaware of their rights or their pathways, how is this bill going to change that so that consumers can be better informed and have a better understanding about where to access that knowledge so that they will not be ripped off and there will be a better outcome for those consumers?

Ingrid STITT: Just in terms of the range of consumer and industry stakeholders that were consulted in developing these particular reforms, as I mentioned, they include the Consumer Action Law Centre, Consumer Policy Research Centre, the Federation of Community Legal Centres, Westjustice, the Australian Automotive Dealer Association, the Victorian Automotive Chamber of Commerce, Pickles auctions and Slattery Grays auction group. In terms of the benefits to consumers, I think I touched a little bit on that in answer to one of your previous questions, but clearly having the ability for CAV, with its resources and expertise in compliance and enforcement but also education and support of consumers, we believe is justified, given some of the emerging issues that we are seeing in this area, particularly around the concerning practice of bulk-buying from an auction house and then onselling very quickly, with some dubious practices uncovered.

Melina BATH: I am going to move now to section 32 in relation to the evidence that the minister in charge took on in relation to why 14 days was selected, rather than seven days or another period. What had been that stakeholder consultation? What was the rationale? Have there been any other circumstances in other jurisdictions where 14 days was decided on, and what identified consumer harm was that particular period intended to address? Why 14 days?

Ingrid STITT: Noting of course that we have got a house amendment that covers this issue, our house amendment will allow sales to take place in circumstances where a vendor and purchaser agree to a sale but the section 32 statement has not yet been made available at the required time because the sale is to occur earlier in the campaign. This will balance stakeholder concerns that sales not be delayed, and it ensures that section 32 statements are made available earlier in a campaign than they are required to be now. If the sale is to be conducted via auction or fixed-date sale, the statement will need to be made available for at least 14 days, and this timeframe was selected based on stakeholder advice that it can often take up to 14 days for a purchaser to receive that legal or conveyancing advice on the statement’s contents. We think that the house amendment strikes the right balance in making sure that vendors have the time to do that.

Melina BATH: Can I just go back a tiny step: did you say that the reserve price would be published but it is not binding? Is that something that I heard? If you do not mind, just go back and refresh that for clarity.

Ingrid STITT: I think you asked me about the day of auction and whether, if a vendor decides on the day of auction that they want to reduce their reserve price, they are legally able to do so, and the answer is yes, they can. Publicly disclosed reserve prices are not binding, leaving it open in practice for vendors to choose not to accept bids that reach or exceed the reserve price or to accept an offer below the reserve price. That can be, obviously, in response to the live market feedback on the day.

Melina BATH: Minister, we still have an amendment, I believe, around the 10 per cent range. I will update the house shortly. What consumer harm would arise from allowing a vendor to publish a transparent reserve range of no more than 10 per cent, provided any increase above that range restarts the seven-day disclosure period? What was the minister’s and therefore the government’s decision in relation to vendor harm in making this occur?

Ingrid STITT: Noting I am not the minister, but I am trying my best to channel the minister today – so taking a step back, the purpose of the reserve price disclosure reform is to provide additional information to prospective purchasers in addition to the indicative selling price, which is a 10 per cent range, so prospective purchasers can determine whether the reserve price is within their price range and whether they should spend money and time on due diligence such as inspecting the property and arranging for an independent building and pest inspection. Allowing disclosure of reserve price as a range we believe would diminish price transparency and will not achieve the intended outcome of the reform, and we will get to that when we get into the details of our various amendments, soonish. But I hope that answers your question, Ms Bath.

Melina BATH: There have been some questions in relation to clause 62, which have been in consideration of concern around caravan residential parks, so we might just have a look at those and see if we can expedite them while still covering off on them. In relation to clause 62 and fixed rent increases, options for how rental increases are applied to a part 4A site are included in section 8 of the Consumer Affairs agreement. This clause 62 would require all new part 4A site agreements to limit the annual percentage increase to a government-prescribed cap or CPI, whichever is greater. Can the minister speak to and explain the overall rationale behind clause 62, noting that there has been some concern from Caravan & Residential Parks Victoria?

Ingrid STITT: The bill clarifies how rent may be increased to make costs more predictable for site tenants on fixed incomes, noting of course that we know that a lot of our residents in residential parks are – not exclusively, but many would be – on an aged pension, for example. The bill proposes to limit rent increases by a fixed amount to the higher of CPI or a prescribed percentage. This change ensures increases remain reasonable and transparent. The bill also proposes to remove the ability for park owners to increase rent by non-fixed amounts to ensure that the proposed fixed rent increase reforms provide the intended protections and certainty for site tenants. There are a range of options for any disputes in relation to these matters, but also if a site owner wishes to increase rent above CPI or a prescribed amount, they will need to get the support of at least 75 per cent of affected site tenants, and if they cannot get that support, they must apply to VCAT.

Melina BATH: In relation to this, we do know – I think I raised it in my second-reading speech and you have rightly said – that there are many people on pensions or reduced incomes who really value these as their home and also being part of a community, which can be really good if you are a single person as well. I just want you to walk through the assessment of this, clause 62, on housing supply, both in residential parks in the regions and in peri-urban Victoria. This is a larger statement, but clearly parks have to continue to make a profit. We do not want to see residential parks deteriorate where amenity starts to really fall apart and things are not working. So there has to be that balance between making a profit and not overcharging tenants so that they do have that security. What has the government considered in drafting this part of the bill?

Ingrid STITT: Maybe the way I can address this is just to talk to getting that balance right. Rent increases, in our view, are not an appropriate way to recover urgent and substantial expenditure. Residential park operators have a range of ways that they can raise urgent funds, including by having business insurance for unforeseen events. We have heard clearly from residents that special rent increases should not be used as a substitute for maintaining that kind of insurance. We certainly have, in the development of these reforms, had a very keen eye on the recommendations of the Life in Residential Parks report, which did find that site tenants are quite confused about price and concerned about cost affordability, with 57 per cent of residents surveyed saying they were concerned about site fees including rent increases. The report did recommend a single method for calculating rent increases. The bill goes further than that with the recommendation to protect consumers by capping rent increases at the higher of either CPI or a prescribed amount. This, as we have been discussing, really reflects the reality that many of the residents in parks are on fixed incomes. The reforms also recognise the specialist nature of the residential park sector. Unlike the private rental market, a site tenant is not able to easily move sites as they own the dwelling and that makes them quite vulnerable to rent increases.

I just want to clarify – my team has just reminded me, for clarity, that our house amendments remove the voting component from this section of the bill. My apologies, there are a lot of amendments, a lot of moving parts.

Melina BATH: We have a long day to go, so I will keep moving through some of these questions. On owners corporations, can we go and put our owners corporation hat on? How does the bill ensure that a payment plan for one lot owner does not result in other owners having to carry that owner’s share of essential insurance, safety or maintenance costs?

Ingrid STITT: Payment plans spread payments of a lot owner’s fees over a longer period. They do not mean the person does not pay. This will assist lot owners in temporarily financial hardship from the risk of spiralling debt and provide owners corps with a low-cost and collaborative pathway for recovering arrears that may otherwise never be recovered. In the case of a payment plan requested by a lot owner who is not an owner-occupier, the owners corp may use its discretion to accept or refuse a request for a payment plan. In the case of a request by a lot owner who is an owner-occupier for a payment plan of less than 12 months, the owners corp may refuse the request based on the financial circumstances of the owners corp. These will be detailed in the regulations and designed around the owners corp’s ability to meet its statutory obligations and planned expenditure around its annual budget. This will protect other lot owners from impacts on the owners corporation’s ability to meet essential costs.

Melina BATH: This can occur in smaller communities where you have got quite small owners corporations. For example, you may only have four owners in that owners corporation. What happens, and how is there protection? Can you explain, if one of them goes into arrears or is on a payment plan, how that risk is shared, and what does this bill do to support that situation?

Ingrid STITT: Just going one step back, noting of course that the payment plan reforms will apply to tiers 1 to 4 owners corporations – that is, all owners corps with at least three lots; that, I am advised, covers about 91 per cent of lots in Victoria – all lot owners in tiers 1 to 4 owners corporations can request a payment plan under the framework in the bill with the associated protections from debt recovery action and being charged penalty interest. Owners corps will continue to be able to exercise their own discretion when deciding whether to accept a payment plan request by a lot owner who is not an owner-occupier. So there is that flexibility built in. This is really about trying to ensure that genuine financial hardship payment plan arrangements can be entered into in a way that does not adversely impact any other occupier.

Aiv PUGLIELLI: I will just pick up a couple of points on reserve prices and then go on to some other questions. Minister, you mentioned earlier that the reserve price declaration is not legally binding. Can I ask: does this also mean a seller can raise the reserve price on day of sale?

Ingrid STITT: Just bear with me; there is a bit in this. In terms of the reserve arrangements, as I have already indicated, I think in answer to a question from Ms Bath, there is the ability of course to change the reserve price on the day of auction or sale depending on the market conditions on the day. The reforms build on the notion that there will need to be adequate notice given if there is a change to the reserve price in other circumstances. I am just going to check with my team for one particular detail on that.

The question was: can a reserve price change after being published to respond to changing market conditions? The answer is if a seller wishes to change the publicly disclosed reserve price before the auction or fixed-date sale, the clock will reset and they will need to wait a further seven days before conducting the sale. This ensures that purchasers have a full seven days to consider whether to engage in the sale process. Allowing changes to the reserve price without changing the date would undermine the policy intent of helping prospective purchasers determine whether the minimum selling price is within their price range and whether they should spend money and time on due diligence and attending auctions or submitting offers.

Aiv PUGLIELLI: Apologies – there were a few things going on in the midst of that. I am just trying to make sure I have definitely understood what you are saying. Per this bill, a reserve price is declared. Then we get to the day of a sale, and based on what I think you have said – the market conditions of the day – the seller can change the reserve price provided they give adequate notice. Could you elaborate on what you meant by that and what then would transpire for people trying to purchase that property?

Ingrid STITT: I would take you back to the answer I was just giving. I have already gone through the circumstances and the arrangements in place that would be required if the reserve price changed after being published to respond to changing market conditions. The specific questions that Ms Bath was asking me were in relation to if the vendor decides on the day of auction that they want to reduce their reserve price, are they are legally able to do so. The answer to that scenario is yes, they can. Publicly disclosed reserve prices are not binding, leaving it open to practice for vendors to choose not to accept bids that reach or exceed the reserve price or to accept an offer below the reserve price in response to live market feedback on the day. There are reasons why you would want to try to give as much certainty to purchasers as possible by being transparent about the reserve, but also you have got to recognise that, the market being a market, there needs to be that ability to change on day of sale or auction.

Aiv PUGLIELLI: Will this mean that sellers will not have to accept offers made at the declared reserve price if they have then gone on to raise the reserve on the day?

Ingrid STITT: Sorry, can you just repeat the end of that question?

Aiv PUGLIELLI: Maybe I will flip it the other way around so it is easier. If, on the day of sale, the reserve price has been raised, will this mean that sellers will not have to accept offers made at the originally declared reserve price?

Ingrid STITT: If the seller wishes to change the publicly disclosed reserve price before the auction or fixed date sale, the clock will reset. If they are wishing to change the reserve price on the day of auction – if they want to reduce it – they may do so. The distinction here is we have been talking about whether the vendor accepts bids or not that reach the reserve. Of course that is not binding. They can choose not to sell the property.

Aiv PUGLIELLI: Are there elements of this, though, that undermine perhaps the government’s stated intent with respect to these divisions of providing consumers certainty of the reserve price for a property they are going to buy, as opposed to what happens at the moment where buyers go endlessly to auctions without that certainty of it being even within their price range?

Ingrid STITT: I think the best way to address that question is to really go to why these reforms are being made and why the government is trying to make these changes. The reforms, we believe, will support enforcement of underquoting while also minimising the impact of underquoting on consumers where that still occurs. The reform is about letting consumers understand if the property is in their price range and allowing them to do their due diligence. I think that there has been plenty of stakeholder feedback and consumer experience of when they think a property is within their price range based on the advertised range and they spend a lot of money on due diligence, including things like building and pest inspections, only to then find that actually it has been lowballed and underquoted. This is another mechanism to be able to give consumers that certainty, and it is a critical element of the reforms, obviously.

Aiv PUGLIELLI: On certainty, though, if the originally declared reserve price, then, on the day of sale, based on market conditions of the day, as you have stated, can be increased, is there certainty for the consumer, or is it the government’s view that this is just better than what happens now?

Ingrid STITT: I did not say that it could be increased on the day. I did not say that. The reserve price could be decreased. That was the question that Ms Bath put to me, and I clarified that the clock would reset if you were trying to increase the reserve on the day.

Aiv PUGLIELLI: I am definitely not trying to put words in your mouth here. Perhaps to clarify: if the clock resets and then a new higher price is declared, then what happens?

Ingrid STITT: There would need to be seven days notice for that. But perhaps, if it helps, if there is a higher bid, the vendor can accept that, but the reserve price itself cannot be increased on the day.

Aiv PUGLIELLI: Just to round off this line of questioning, if the declaration of the reserve price is not legally binding, can the government provide a justification of why it is still legislating it?

Ingrid STITT: I think I have answered that in relation to what the motivation is here for the government to pursue this change. It is about letting consumers understand if the property is within their price range so people do not waste their weekends at auctions that they would have been all along unable to afford. It is about transparency and giving more certainty to people who are trying to break into the property market, or anyone, for that matter, who is trying to purchase a property. It is probably the biggest purchase they will ever make in their life.

Aiv PUGLIELLI: I will move on to another area of the bill. I am looking at the owners corporation payment plans. The legislation, as it stands, makes provision for payment plans. This is a meaningful reform that will go a way to supporting people experiencing financial distress. Critically, the reforms do not mandate that they actually be offered; rather, it is assumed that the consumer is aware of them and is able and willing to ask. Minister, case studies provided by Mortgage Stress Victoria show Victorians facing the loss of their homes over owners corporation debts as small as $5700. One auction was stopped with just 1 hour to spare. Can I ask: why does this bill not require an owners corporation to proactively offer a payment plan before it can commence legal proceedings that could make someone homeless?

Ingrid STITT: Of course this is an important change, because it does provide, for the first time, an option for a payment plan. This is in recognition that we know that there are many people in these sorts of housing situations who are in arrears. It is one way to try to address the stress and financial hardship that can come from that situation, and it is an important step in the right direction. I was talking, in answer to some of Ms Bath’s questions about this particular part of the bill, to there being a range of opportunities for small owners corp residents to be able to request that they go onto a payment plan. In the case of a request for a payment plan by a lot owner who is an owner-occupier, the owners corp, it is true, can refuse, but they can only refuse the request if the lot owner has not provided the prescribed financial hardship information, the lot owner has an existing payment plan, the lot owner has not complied with a payment plan in the previous two years or accepting would result in prescribed financial circumstances for the owners corp, such as being unable to meet its statutory obligations. We have certainly sought to try to make it as fair as possible for those that we know are in financial distress, and many of them, as I indicated, can be in arrears.

Aiv PUGLIELLI: The legislation as it stands makes provision for payment plans. Critically, the payment plans, though, are limited to 12 months. There are many circumstances where that would not be sufficient, and the limitation on payment plans in the bill does not recognise that those financial situations change over time. For example, there is a grandmother in Melbourne, a pensioner, who has been hit with a $50,000 special levy for essential building repairs. Her owners corporation agreed to let her pay over five years. Under this bill’s 12-month cap that would be impossible. Two-thirds of her pension already goes to her owners corporation; she will work until she is nearly 80 to keep her home. Why has the government chosen a hard 12-month cap when, for example, New South Wales allows further extensions? Why is Victoria starting from a position that is worse for vulnerable owners than models like the one New South Wales has?

Ingrid STITT: There are just a couple of points to make on this. A payment plan for an owner-occupier is for a maximum term of 12 months, but they can then immediately enter into a further 12-month payment plan. I would also point out that owners corporations may, at their discretion, enter into payment plans of any length. This is, we say, a good start and something that has not been available to these sorts of owner-occupiers in the past.

Aiv PUGLIELLI: Looking more particularly at commissions and referral fees for owners corporation managers, the government’s own expert panel recommended a full ban on commissions and referral fees for owners corporation managers. They found conflicts of interest are systemic and disclosure has failed. The government has deferred this, and the change has not been included in this legislation as it stands. Can the minister explain to the thousands of Victorian apartment owners out there whose fees are inflated by these conflicted remunerations why the government has rejected its own expert panel’s recommendation?

Ingrid STITT: In relation to our amendments on owners corps, what we are doing in this bill is only the first two amendments in a much larger body of work. We will continue to work on this. We have accepted this recommendation in terms of that report that you have referenced. This is already quite significant reform, but the government is obviously committed to continuing to reform in areas we know and have accepted need further protections. I hope that answers your question, Mr Puglielli.

Aiv PUGLIELLI: Just to confirm, from your response, is it the case that the government intends on implementing a full ban on commissions and referral fees for owners corporation managers, and is there a timeline for when this would be delivered?

Ingrid STITT: I am advised that the government, as I have already indicated, supports in principle the need to further regulate the role of owners corp managers and the role they play in procuring third party goods and services and other issues that you have raised. My advice is that the Department of Government Services is undertaking further work to assess the market impacts of banning commissions in Victoria. I am unable to put a timeline on that work at this point, but certainly there is a lot of work being done to look at what other reforms can be developed over time.

Aiv PUGLIELLI: Just to clarify further from that response before I move on, is it the case that the government feel they do not have sufficient evidence from the existing work of the expert panel to make this amendment in the future?

Ingrid STITT: I can see why you are trying to get me to go further, but this is complex work, and we have got to do the policy work, including the economic analysis.

Aiv PUGLIELLI: I will move on. As you are aware, some of the amendments permitted as out of scope to this bill before us amend the Building Act 1993, Building and Plumbing Administration Enforcement Act 2026 and others, bringing those more into play. Minister, I want to return to a matter I briefly raised in this chamber back on 12 May. I asked at the time whether it was the government’s intention that developers might avoid liability where consumers had acted proactively and already rectified defective works in their buildings, for example, because of safety compliance or the continued use of the building. The answer I was provided in the commencement of the government’s response was that the short answer is no. There are owners and owners corporations that are experiencing problems now, so can I just clarify what the government intends to do about it?

Ingrid STITT: The government’s new developer bond scheme will cover residential apartment buildings above three storeys for noncompliant and defective work for a period of two years after occupancy. This scheme will commence in 2027. It addresses a gap in the current protections that require consumers and owners corps to pursue these costs civilly. It cannot be applied retrospectively as no bond has been paid in these circumstances. However, civil channels for compensation remain available to these owners. The rectification order (RO) power allows the regulator to order builders or developers to return and rectify defective work for a period of up to 10 years. This is designed to cause rectification and is not designed to discipline practitioners. The commission has other powers to discipline rogue practitioners, and it regularly exercises those powers.

Aiv PUGLIELLI: Just to elaborate a bit further, take an existing residential apartment building over three storeys where defective work is within the applicable 10-year period. The owners have already paid to rectify it, and the builder is insolvent or otherwise not a practical source of recovery. Can you inform the chamber what statutory mechanism presently allows those owners to recover their reasonable rectification costs directly from the developer? If there is no such mechanism, does the government accept that the gap identified earlier this year in this house remains unresolved?

Ingrid STITT: The government’s own expert panel on building reform recommended back in November 2023 that consideration be given to extending the statutory warranties in section 8 of the Domestic Building Contracts Act 1995 to developers, allowing purchasers to bring proceedings directly against a developer for defective work. That recommendation is now almost three years old. The government has also now acknowledged that the present outcome for consumers who acted promptly was not intended. The changes that we are bringing are about giving an avenue for owners where they currently do not have one.

My apologies for that confusion, Mr Puglielli. I will take the blame for this. I was confused by going back to a previous statement I think you referred to, and I am not sure if that was in relation to a previous bill or whether it was a question to a minister. But perhaps we can try again on your follow-up question and I will get a clearer answer on the record for you.

Aiv Puglielli interjected.

Ingrid STITT: As in the gap identified. I just need a bit of clarity. The developer bond scheme, we say, does cover the gap.

Aiv PUGLIELLI: Hopefully this assists – perhaps I will rephrase. If we look at an existing residential apartment building that is over three storeys and the defective work is identified within an applicable 10-year period and the owners have already paid to rectify it, yet the builder is insolvent or otherwise not a practical source of recovery, does the government accept that this falls within a gap in terms of current legislation?

Ingrid STITT: So it is about an insolvency scenario? Yes, thank you. That is clear now.

Mr Puglielli, thanks for your patience. Essentially this will come down to whether building insurance was taken out. If it was, there will be the ability for redress for the owner.

Aiv PUGLIELLI: Just to follow that to its logical conclusion, if there was not that insurance, there would be no redress for the owner. Is that correct?

Ingrid STITT: It is a requirement to have that building insurance. They are reforms that the government has previously enacted through the Building and Plumbing Commission (BPC).

Aiv PUGLIELLI: You actually touched on this earlier in one of your responses. I am looking at the expert panel on building reform – the recommendation from November 2023 that consideration be given to extending statutory warranties in section 8 of the Domestic Building Contracts Act 1995 to developers, allowing purchasers to bring proceedings directly against developers for defective work. That recommendation being now almost three years old, can I ask: when will the government implement that particular recommendation by way of legislation giving affected owners a direct statutory remedy against developers while broadening the powers of the BPC so that it can investigate defects that have already been rectified and, where appropriate, require a builder or developer to reimburse or contribute to the reasonable rectification costs that have already been incurred?

Ingrid STITT: Leaving aside the million acronyms that are flying around here, Mr Puglielli, the DBS provides protections from 1 July 2027, and then you also have the new RO powers. And of course this set of amendments before the house today includes the developer bond scheme, which we have already touched on. So we are making significant progress in what is before the house today.

Aiv PUGLIELLI: Minister, noting those points that you have just highlighted, does the government accept, though, that there is still a cohort out there who have fallen through a gap currently because they, being responsible owners, acted and incurred financial costs before a regulator or any other body was present to intervene?

Ingrid STITT: Unfortunately, yes, Mr Puglielli. But the reforms that our government has pursued over not just this term but the previous term are all about trying to address those gaps and making sure that home owners in these sorts of dwellings have more rights available to them and that we are building a framework and regulators with teeth.

Aiv PUGLIELLI: As you highlighted, this is a matter of progress. Is there a timeframe the government can provide wherein further reform will be considered to address the financial position of people within this cohort who have incurred costs trying to rectify matters taking it upon themselves?

Ingrid STITT: I think the important point to make is that rectification orders are retrospective up to 10 years after issuing of an occupancy permit, and developer bonds are only applicable to new builds and as such cannot be retrospective. I just want to be clear on that. Through the Building and Plumbing Commission, there are a range of dispute and mediation services that are available to owners and builders and developers, as well as through VCAT, to ensure that consumers are not left exposed to dodgy building works, and of course the Building and Plumbing Commission is always available to meet with people and discuss cases and provide assistance wherever possible. I reiterate that there are some important reforms coming forward and reforms that have already been made to significantly strengthen protection for owners of properties in this sort of category.

Aiv PUGLIELLI: Given that you have identified and acknowledged a cohort that exists who have already financially incurred costs trying to take reasonable steps for rectification within their building – you have acknowledged that that cohort does exist – does the government accept that further legislation for this cohort is needed, and is the government prepared to commit to doing that work?

Ingrid STITT: I think I have already been clear on the issues around this. The government has acted, and there are key changes and initiatives that are being implemented. Some of these have retrospective power, but there are limits to that, and of course the government will continue to regularly look at ways that we can strengthen consumer protections, as evidenced by the vast volume of amendments that are before the house today. But I think I have been pretty open about where we are at with these reforms right now.

Aiv PUGLIELLI: Just one more from me for the minister: will the government commit to ensuring that owners presently suffering the types of losses financially that I have spoken about are included in the solution, rather than introducing prospective reforms that primarily assist future consumers?

Ingrid STITT: I think I touched on this. A couple of things: the Building and Plumbing Administration and Enforcement Act 2026 introduces expanded powers for the regulator to enforce compliance and pursue costs, and the new act includes a provision for damages for a person who suffers loss. Those changes come into effect on 1 December 2027. And I think I have touched on this issue as well, but just for completeness, rectification orders are retrospective for up to 10 years after issuing of an occupancy permit. Developer bonds are only applicable to new builds and as such cannot be retrospective. And through the Building and Plumbing Commission there are a range of dispute and mediation services available, which I have already covered off, as well as of course the option for action through VCAT to ensure that consumers are not left exposed to dodgy building works.

Aiv PUGLIELLI: I move:

1.   Clause 1, page 3, after line 18 insert –

“(iii) in relation to proxy voting; and”.

I touched on this in the second-reading debate. This amendment will limit the number of proxies that any member of an owners corporation can hold to one per person, except for the current exemptions for family members. Currently, this is the case for buildings of up to 20 units and for any larger owners corporations from 21, right up to those 1000-unit apartment towers that we have in the CBD, Box Hill in my electorate and places across Melbourne. In these settings one person can collect proxy votes for up to 5 per cent of owners, and as I have highlighted in my speech, this can mean that one person can harvest a significant number of proxies with the intent of influencing and potentially controlling decisions of an owners corporation. This is leading to poor outcomes for owners of apartments, with real estate agents, developers and the like farming preferences and controlling decisions of owners corporations in their own interests rather than the interests of all owners. It is my intention, on behalf of Greens colleagues, that we end this practice, and limiting proxies to one per person we hope will achieve this.

Ingrid STITT: The government will be supporting this amendment. I would like to thank you and the Greens for working collaboratively with us on this. There is already a proxy cap under section 89D of the Owners Corporations Act 2006 that prohibits a person acting on behalf of more than one lot owner if there are less than 20 lots or more than 5 per cent of lot owners if there are more than 20 occupiable lots. This provision was introduced in 2021 and has made a significant difference to proxy abuse in owners corporations, preventing the easy formation of voting blocs through proxy farming. However, examples remain showing calculated bad behaviour from developers and owners corporation managers, for example, where the developer collects proxies in multiple blocks of 5 per cent to secure a majority of committee positions to control the committee and vote on actions that affect the developer. The amendment does work to address this, and the government response to the OC act review supports further solutions to these known issues by restricting multiple employees and associates of the same organisation from exercising proxy votes beyond the existing proxy cap and introducing penalties for breaching the proxy cap. These reforms will be progressed as a priority during the implementation of the government response early in the next term of government.

Melina BATH: The Nationals and Liberals will also support this amendment. I note that in last evening’s second-reading debate Mr Davis went into great detail about this and read some case studies in relation to this. I think it is a worthwhile inclusion in this bill.

Aiv PUGLIELLI: I thank members for their contributions and their constructive manner with respect to this amendment.

The DEPUTY PRESIDENT: The question is that Mr Puglielli’s amendment 1, which tests amendments 5 and 6, be agreed to.

Amendment agreed to.

The DEPUTY PRESIDENT: Ms Bath, I invite you to move your amendment 1 on your sheet 57C, which tests all the amendments on that sheet.

Melina BATH: I move:

1.   Clause 1, page 4, after line 28 insert –

“(iv) in relation to the conduct of public auctions by auctioneers; and”.

I am sure we are all going to be acting in a similarly collegiate manner right now. I would like to speak to all of these amendments, noting that this, the first in clause 1, tests everything. These amendments are in relation to the reserve price disclosure reforms. They keep them, without a doubt, but they make them more flexible and transparent. Instead of requiring a single reserve price, vendors can, through this amendment, publish either a single price or a reserve range of up to 10 per cent. They also introduce greater transparency during auctions by requiring auctioneers to disclose reserve prices and pre-auction offers. The amendments add public auctions to the objectives of this bill; allow the seller’s reserve price to be expressed in either way, as I have just mentioned; further prevent the reserve price from being set below a rejected offer already received or the agent’s estimated selling price; and protect against reserve prices being used to facilitate underquoting.

Amendments 11 and 13 in this tranche allow a reserve price to be reduced without triggering an offence or delaying the auction, provided it remains within the disclosed framework. It also, in section 42A, requires that the auctioneer must announce the final reserve price at the start of the auction. The auctioneer must announce when bidding reaches the reserve. The auctioneer must disclose any pre-auction offers. It updates any other amendments to this bill as required.

Ingrid STITT: The government does not support the proposed amendments to the reserve price disclosure amendments in the bill as they will not improve outcomes for Victorian homebuyers. In relation to determining the seller’s reserve price, the government does not support the proposed amendment that would alter the process for determining the seller’s reserve price as this could result in vendors not being provided appropriate advice to inform their decision-making and instructions to their real estate agent. Under the process set out in the bill in clause 26, which inserts new section 47AG, estate agents will be required to offer advice on what a reserve price should be as they are the experts on the property market and have a better understanding of market conditions and what a property is likely to sell for. The intention of this step is to ensure that the vendor has information necessary to make an informed decision. The responsibility to set the publicly disclosed reserve price ultimately rests with the vendor.

The government does not support the proposed amendment that would allow an estate agent to revise a seller’s reserve price downwards but not upwards without meeting the seven-day period before an auction or fixed-date sale. The government does not support this. The purpose of these reforms is to end the frustration that prospective buyers feel when they go to an auction and learn that the house was never in their price range. Even if reserve prices can be lowered within the seven-day limit, this causes its own unintended consequences by encouraging more buyers to participate without having the same amount of time as buyers who were able to afford the higher price range to do their due diligence.

Allowing changes to the reserve price without impacting the date of the auction or fixed-date sale date would undermine the policy intent of helping prospective purchasers determine whether the minimum selling price is within their price range and whether they should spend money and time on due diligence, such as inspecting the property and arranging for an independent building and pest inspection. This includes situations where the seller lowers their reserve price within the seven-day period. A lower reserve price may open the property up to buyers with lower budgets who would not have participated at the previous higher reserve price. Delaying the auction after the change in the reserve price would provide these new prospective buyers with time to conduct due diligence prior to the auction. This is an important protection, as those who buy at auction are not entitled to a cooling-off period. Auction contracts tend to be unconditional. As we discussed in committee, I note that the publicly disclosed reserve prices are not binding, leaving it open in practice for vendors to choose not to accept bids that reach or exceed the reserve price or to accept an offer below the reserve price in response to the live market feedback on the day.

Aiv PUGLIELLI: I will state from the outset that I want to congratulate Ms Benham for working on some of these amendments – a really constructive approach. It has made it very helpful, given the scale and scope of this bill, having them all individually set out the way they have been. I just want to put that on record; my colleagues and I are appreciative of that approach.

We are not going to be supporting this particular amendment. We went into the reserve price declarations in a bit of detail earlier in the committee stage. As it stands already I have concerns about whether the government’s provisions meet their own intent around certainty for consumers. However, I am not sure that this would make that any better. There are already concerns I have, and this does not address those. We are not in a position to support the amendment.

Council divided on amendment: