Kim O’KEEFFE (Shepparton) (18:04): I rise to make a contribution to the Building Legislation Amendment (Buyer Protections) Bill 2025. The bill is to amend the Building Act 1993, the Domestic Building Contracts Act 1995, the Sale of Land Act 1962, the Subdivision Act 1988 and the Victorian Civil and Administrative Tribunal Act 1998 and for other purposes. Some of the amendments the bill seeks to make include integrating domestic building regulatory functions into the Victorian Building Authority (VBA), conferring the function of administering part 4 of the Domestic Building Contracts Act on the Victorian Building Authority instead of the director of Consumer Affairs Victoria and to enhance financial protections for Victorian consumers through the establishment of a statutory insurance scheme that will be administered by the Victorian Building Authority in providing domestic building insurance on a first-resort basis for domestic buildings with a rise in storeys of three or less and further make miscellaneous consequential and technical amendments.
On this side of the house we agree that we do need to ensure that there are the right structures in place to support and protect the consumer as well as the builder. We want consumer protections and certainty that when purchasing or building a home, we are getting what we have paid for. We want people to be able to own their own home and to get more people into homes, and we know at the moment we are facing a housing crisis. There has never been a more important time to try and support the building industry to get that, to make more houses and to build more homes. We have heard the horror stories of people who have had devastating experiences when things do go wrong and the significant impact when a company collapses or a builder has done the wrong thing. We know that the building industry is already struggling with ongoing financial pressures, material costs, staff shortages and the restraints and frustration of bureaucracy and red tape. That is why it is so important to ensure that we do get this right and that we are not adding yet another barrier to the industry or building a house.
We do need to hear from the very industries that are impacted by these changes. The feedback that we have had on this side of the house is that there are many questions that are not answered, and it is no surprise that the government has failed to adequately consult and inform industry stakeholders about the proposed amendments that are contained in the bill, which will have a direct impact on the building and construction industry. Since the bill’s introduction to the house, there have been numerous stakeholders who have expressed their disappointment and frustration with the government, claiming that the bill has been rushed and the amendments contained in the bill are heavily consumer focused. So why hasn’t there been meaningful consultation with the industry before implementing such drastic reforms? Builders and developers need certainty, not further costs, regulations or red tape. The Housing Industry Association has raised their concerns, highlighting that the bill, while focused on consumer protection, may have severe consequences for home builders. The rushed nature of these reforms, combined with the excessive powers granted to the new regulator, could make it more difficult for builders to operate within a fair and predictable environment.
The Property Council of Australia, the Urban Development Institute of Australia (Victoria) and the Housing Industry Association are just three of the many groups that have criticised the government over this bill. Both the Property Council of Australia and the Urban Development Institute of Australia (Victoria) in a media release on 5 March called on the government to withdraw the bill from the house in order to allow for adequate industry consultation, which you would think is a reasonable request. In the media release, both organisations stated that they believe the speed at which the bill was developed and introduced in the house is concerning and delivers a reform package that is both unclear and unworkable. The Housing Industry Association also share the same concerns. They are concerned about the lack of progress on the related domestic building contracts legislation. The HIA are also concerned that the amendments contained in the bill are heavily consumer focused, and whilst in theory consumers will receive support from the new regulator, the impact on home builders could be devastating and the rushed and ill-considered nature of this bill as it stands poses a significant threat to the future of the Victorian housing market and the livelihoods of those within the building and construction industry.
These peak bodies representing thousands of professionals and businesses across the state have also called for the government to withdraw this bill until proper and adequate consultation takes place with industry. They have also pointed out the bill’s development leaves little time for meaningful feedback or scrutiny from those who will be affected by these changes. The Building Legislation Amendment (Buyer Protections) Bill 2025 also seeks to establish a new regulatory body, the Building and Plumbing Commission. This new watchdog would oversee several aspects of the state’s building and construction process, including a new developer bond scheme, the introduction of warranty insurance and expanded powers for the commission to issue rectification orders for up to 10 years. Whilst consumer protections are a vital part of any functioning market, these reforms have been introduced without sufficient thought or consultation with the wider industry.
The bill proposes to merge several assisting bodies, including the Victorian Building Authority, Domestic Building Disputes Resolution Victoria and domestic building insurance functions into the new Building and Plumbing Commission. The industry is concerned about the lack of clarity surrounding the commission’s new powers and their responsibilities. As such, the rushed nature of this bill has established this commission without clear understanding of its scope, and it could lead to confusion and a fragmented approach to consumer protection.
With the aggregation of existing personnel from VBA, the Victorian Managed Insurance Authority and Consumer Affairs Victoria and without reform to initial contracts there seems to be no guarantee that dispute resolution, quality management of projects and enforcement will be enhanced. No extra monitoring or management of building quality has been identified as part of the solution.
There are also concerns with the first warranty insurance scheme, the introduction of this scheme and its intent to provide greater protection to consumers. Industry is concerned about its viability. As with other state government insurers like the TAC and WorkCover, there is strong concern within industry that bureaucratic costs will not be capped; premiums will steadily increase; compliance costs, especially for small builders, will be burdensome; and premiums will be at risk of becoming a new tax impost on construction costs.
On top of this the new Building and Plumbing Commission will be able to use the need for their insurance as a lever to insist on certain actions and behaviours from builders. That could be unfair or unreasonable, especially during an unresolved dispute. The addition of yet another layer of insurance, particularly one that does not offer sufficient clarity or detail, could lead to increased costs for consumers and businesses alike. The proposed scheme could create a situation where well-meaning developers and builders who are already doing the right thing by their clients could find themselves penalised for factors that are beyond their control.
Another concern of this bill’s amendments is the power invested in the Building and Plumbing Commission to issue rectification orders for up to 10 years following the completion of building work. This provision does raise numerous considerable concerns held within the industry once again, such as the definition of defective work, which the HIA have expressed is now so broad that it could encompass a wide range of issues, like minor delays or unmet expectations rather than substantive defects. The uncertainty around what constitutes defective work will undoubtedly lead to disputes between consumers and builders, potentially resulting in significant financial and operational strain on businesses. Under the bill consumers will be able to lodge defect claims against builders for up to 10 years without clear definitions of what the word ‘defect’ can mean and without obligations for consumers to raise concerns and issues in a prompt and timely manner. As the member for Narracan pointed out, the life span of some of the things that could be classed as a defect may already have a short warranty. I note the member for Narracan’s contribution and the matters that he raised as a former builder, and the valid concerns that he shared with his knowledge and experience as a former builder with an in-depth understanding of the impact and negative consequences this bill will have on the building industry.
The requirement for builders to comply with rectification orders even during review processes places an unreasonable burden on small- and medium-sized builders. These builders, often operating on tight budgets, could face severe financial penalties if they are unable to meet the regulatory demands, even if they are in the process, as we said, of challenging the order, which is a significant concern. Builders could be held liable for work completed many years ago despite changes in ownership, building standards or market conditions. This level of uncertainty could have a chilling effect on the willingness of businesses to take on new projects, especially in an already uncertain market.
The bill also proposes a mandatory developer bond for multi-unit home building projects over three storeys. While the intention of the scheme is to ensure consumer protection, the lack of detail once again on how the scheme will be implemented is a major point of contention held by industry. Industry in particular is concerned about the financial burden that this scheme will impose on developers in an already challenging economic market, particularly the fact that the 2 per cent bond scheme as proposed will just add 2 per cent to the costs of building.
The speed with which these reforms have been introduced without sufficient consultation is concerning. The industry requires adequate time to understand, to comply with and to integrate these new requirements into their ongoing and future projects. What costs are going to be associated with these changes?