Building Leg Amendment (Domenstic Building Insurance New Offences) Bill 2023

06 February 2024

Acting Speaker Mullahy, great to see you in the chair. I rise to speak on this crucial bill, the Building Legislation Amendment (Domestic Building Insurance New Offences) Bill 2023, this bill being a significant step and stride towards the safeguarding of the rights and investment of home owners and home builders of this great state. As a government we have been working. As the member for Mordialloc has explained, this has been a long-term journey for this government to have reforms that are for our home owners, our renters and those who are building. We have talked about in this term and heard in this chamber today how this is not about just building frames, bricks and mortar; this is about people building their dreams, building themselves a future, investing in their communities and building in their communities to invest and be part of their communities. So it is a really important investment and decision for families when they are building a home or renovating a home. Just as a little side note, though, this building industry is really important for our economy here in Victoria. We need to have trust in the industry as well, and that is what this is about.

We know that there is no bigger issue than housing in the state at the moment, and with our landmark housing statement that we released last year we are setting bold targets and doing bold reforms to make sure that we are investing in that and delivering affordable housing in this state. As we work on this issue and continue to work towards this, we want to ensure that Victorians enjoy those vibrant and livable communities that they call home. I love where I live. I love the Bellarine electorate, and I know that so many who have moved recently to my electorate and those who have been there for a very long time love where they live, but it is the livability and standard of living that we have on the Bellarine that people want protected.

These building planning reforms that we are undertaking also provide opportunities to review the role of the regulators and improve the information that is given to consumers of the builders’ obligations, particularly, in relation to this bill, domestic building insurance. This initiative, as I have said, is part of an ongoing program to reform our building system. The vision is pretty simple but powerful: we need to instil confidence in those who are undertaking a build or renovating. It is to safeguard them and their aspirations and, in doing so, to build trust in this industry. The vast majority, as many have indicated, do the right thing. But we have seen issues here, and we have seen where there are issues this has exposed some gaps that we have in our system. This obviously is in response to the Porter Davis Homes Group last year and the realisation that hundreds of home owners were left very vulnerable. They had risked their deposits due to the absence of that building insurance. The commitment of this government really is to protect those consumers that are embarking on their journey. This government is resolute in holding people to account and that they face the appropriate consequences if they do the wrong thing.

On 31 March last year, as I have indicated, 500 home owners shockingly found themselves facing the loss of their hard-earned deposit with the neglect of their building insurance, but this was not an isolated incident, and it has unearthed some other really concerning trends with other builders as well. In response to that we took action. We compensated customers left stranded, and subsequently we had the liquidated builders customer support payment scheme, which was established to help those customers. Those initiatives were vital, but they also underscored the urgent need for reform, as this bill does.

I will just talk a little bit about the objective of the bill. This bill will give the VBA, the Victorian Building Authority, stronger powers to take action against builders who accept deposit money without first taking out insurance. It sets two new offences, to be inserted into the Domestic Building Contracts Act 1995, to apply if a builder enters into insurable domestic building contracts for work costing over $16,000 and receives money on behalf of the building owner before holding and requiring insurance. Two different levels of penalties will occur, and that just talks to the seriousness of the conduct. A higher penalty will apply, obviously, if the offence is committed knowingly. Individuals who commit an offence could face a fine of around $96,000, and there are fines of $480,000 for body corporates. Obviously, after this bill and the reforms that we are implementing, a vigilant monitoring mechanism has to be put in place. We need to give that confidence to consumers. This bill, as I said, will give substantial powers to the VBA, empowering them to take decisive action.

Last year when the Porter Davis collapse unfolded, like many MPs in this place I had constituents reach out to me who were affected and caught up in this. They all talked of the stress that this had caused. It was immense, and it was not just the financial stress but the emotional stress that this caused. One constituent said to me – and I could not put it better – ‘It felt like I hadn’t just lost money, but I had lost our dream.’ My husband and I have done renovations on homes and engaged with builders, and it can be a difficult process to navigate. I am very fortunate. I have a husband who has been in the construction industry as a plumber and who understands a lot of the regulations around these things. If I did not have him, I think it would be a really difficult process to actually understand. What I think is the key here is that you put a lot of trust in the builder. It is almost a trust factor. You read the contracts, you sign them and you think you are doing the right thing. You kind of have a hope that you are doing the right thing, and you trust the builder is there for your best interest. We have been very fortunate. We have had great builders and we have had great conveyancers and people to support us in any of the work that we have undertaken, but we have seen that that is not always the case for everyone.

As I have said, we are working towards a larger reform. This is just one piece of reform that we are doing. But if we continue to do nothing, the cost of the rectification work to building that is happening in Victoria will just become out of control.

It costs Victorians $675 million each year just in residential building costs when there are defects, so we need to do this work. But for this reform to happen we need a workforce that is skilled and experienced, and we also need enforcement of compliance. We are doing that work. We have introduced a building manual, where builders now have to provide more information and be more transparent to their customers. This is a positive change, not only for home owners but to give that trust for the sector.

We have heard some horror stories today, and I have got constituents who have gone through renovations who have explained the horror of their experiences. I will not go into the building details, but they have expressed to me the emotional stress that it causes the family. I will quote one of my constituents, who wrote to me and said:

The cost of defect rectification, the differences between contract price –

the old ones –

and the new contract, financial losses occurred whilst resolving the issues, as well as the toll it takes on peoples mental health, families, relationships and futures. All these costs these victims of the industry have endured.

It is absolutely important that we have this bill, a comprehensive approach to this and the safeguards. Work does not end here. We know that more needs to be done, and this bill is one part of reform to deliver stronger protections to Victorian builders and building owners.

In conclusion, this bill marks another step in our journey towards a safer and more accountable and transparent building system. In supporting these reforms, we are improving the system for a future robust and transparent building industry. We all here should be united and committed to protecting the dreams and the investments of our constituents. I know I am here for the residents of the Bellarine and future residents of the Bellarine who may be building in my electorate. I wholeheartedly commend this bill to the house.