Thursday, 22 February 2024

Building Legislation Amendment (Domestic Building Insurance New Offences) Bill 2023

Second reading

Debate resumed on motion of Lizzie Blandthorn:

That the bill be now read a second time.

Evan MULHOLLAND (Northern Metropolitan) (16:12): I rise to speak on the Building Legislation Amendment (Domestic Building Insurance New Offences) Bill 2023. The journey of how we have found ourselves here debating this bill is a long one and quite a gut-wrenching one. Too many Victorians have been put through absolute hell, shattered by an incompetent Labor government that is now just resting on its laurels after so many years. I have spoken to countless Victorians who have been shattered under the regulation of the domestic building industry by this Labor government, hardworking families that have had their dreams and their lives rocked by crooks, cowboys and collapsing companies that Labor have left unchecked right across Victoria. Each and every one of their personal stories is heartbreaking.

Too often it takes a crisis for the government to jolt into action. Naturally, it is always better to fix the problem before it occurs, but we know that is not always possible. It happens to federal governments, state governments, Labor governments and, yes, sometimes even coalition governments. There is no point pretending government is capable of stopping every crisis before it occurs. Some are entirely predictable and self-inflicted, like Labor’s 2026 Commonwealth Games fiasco. Others come without warning, like the terrible storm event we have just experienced. When a major crisis occurs, what is critical is that the government responds swiftly and competently, and what is so incredibly galling and heartbreaking about what has occurred in Victoria’s domestic building industry is the utter lack of urgency that this Labor government has shown and continues to show in addressing this crisis.

When you neglect to turn the tap off and then suddenly find the bathtub is overflowing, what do you do? Most people would turn the tap off, but that is becoming an all too painful habit for Labor – seeing an overflowing tub, deciding that because they turned the taps on they now cannot turn them off. So they just throw the towels down on the floor and then go downstairs and have a crack at a Sunday puzzle or sudoku or whatever they are into. Labor have simply lost all sense of urgency and priority when it comes to governing Victoria, particularly rectifying problems they have created and presided over, and the consequences are becoming increasingly devastating for so many Victorians.

Unlike this Labor government, the member for Brighton, the Leader of the Opposition and I and many members of the coalition have spoken to victims of collapsed builders. We have heard firsthand the gut-wrenching stories, and anyone who has heard these stories knows how important it is that the government takes action to stop them from happening to other people. Consequently the coalition will not be opposing this bill, even though it does not go far enough and comes far too late. We will not be standing in the way of some progress towards preventing more heartbreak being caused for more Victorians, even though I do not believe the bill will stop another Porter Davis or another Montego Homes occurring until the government fixes the enforcement issues in the Victorian Building Authority (VBA). However, I am moving a reasoned amendment, which I now ask to be circulated. I move:

That all the words after ‘That’ be omitted and replaced with ‘the bill be withdrawn and not reintroduced until the government commits to comprehensively protect victims and their families from rogue behaviour from a small minority of dodgy builders and the potential loss of their deposit if a building company collapses.’.

It is almost one year since Porter Davis collapsed into administration. More than 500 Victorians were left shattered when they lost their deposit, in many cases their life savings, as a result of Porter Davis having failed to take out adequate domestic building insurance on their behalf. Those victims of the Porter Davis collapse who lost their deposits have subsequently had the opportunity to recover their deposits through a scheme which was established in April 2023 and closed in August 2023. The coalition supported the establishment of that scheme; in fact the coalition dragged the government kicking and screaming, through my colleague Jess Wilson, to establish that scheme for affected Porter Davis customers. It was an appropriate response to assist the victims of a disgraced company, with a Labor government asleep at the wheel, to recover financially.

The obvious question that must be asked is: what has the government done over the last 12 months to stop history repeating itself? What has it done to stop more hardworking Victorians becoming victims of dodgy builders in the first place? The distressing answer to that is that there is nothing even approaching enough. The Porter Davis collapse did not jolt this Labor government awake and into action like it should have. It is only now, a year later, that Labor’s too little, too late bill has come before the Parliament. In the meantime the predictable and gut-wrenching has occurred: more and more dodgy builders playing fast and loose with the lives of Victorians who trusted them, by failing to take out adequate domestic building insurance.

In the last few weeks yet another major builder, Montego Homes, collapsed without insurance, wreaking havoc on the lives and livelihoods of more than 60 Victorians. I want to talk about just one of the victims of Montego Homes, Jess Rodriguez, who has been shattered by the collapse of Montego Homes, the latest dodgy builder to collapse. Jess is a single mum. Jess spent about nine years sacrificing mornings, afternoons, weekends and special occasions working incredibly hard all that time in pursuit of the great Australian dream to save up a deposit for herself and her nine-year-old daughter. She even went in with her mum to buy the house next door, so her mum could live next door and she could look after her mum as she got older. They bought a plot and a house and land from Montego – they went through Montego for their build – in beautiful Doreen in the northern suburbs of Melbourne. Montego crushed their dreams – they crushed the great Australian dream. Jess trusted Montego with her dreams, and so did her mum. That has been shattered now. She also trusted that government regulations would ensure that this could not happen. A lot of people out there had heard of the Porter Davis issue and seemingly presumed, because support was offered, that this could not happen again – it could not happen again after it happened to about 500 people under Porter Davis. It is just not possible. But here again we have another dodgy builder who has shattered the dreams of young Victorians.

I met with Jess and Alex and Tanya out in Doreen and inspected the plot where they had bought, and it is just absolutely heart-wrenching what these young families are going through with the lack of certainty in their lives right now. They have pleaded, they have spoken on 7News and they have shown up to the steps of Parliament. They were even in the parliamentary gallery as we implored Jacinta Allan to extend the customer support scheme to Montego Homes customers, because there is actually no difference between what happened to Jessica and what happened to Porter Davis customers, and you all know that. It was noncompliance and a lack of enforcement to pick up these things, to pick up the fact that the builder had not taken out domestic building insurance on behalf of these families and were still taking deposits. They were putting in client numbers for the Victorian Managed Insurance Authority that did not make the match the address of the actual land and property. A good regulator like the Victorian Building Authority should be able to pick up these things to ensure that people like Jess are not caught out in this game of chance – that is, achieving the great Australian dream. There is no difference between what happened to Porter Davis customers and Montego Homes customers, so we are imploring the government: support these victims in the same way that you supported Porter Davis customers.

I just want to talk about someone else who was affected, Chantelle Gizycki from Mount Duneed. Mount Duneed is a great part of the world near Geelong in the electorate of South Barwon, and it is where the majority of the victims are affected, at the Dalgona estate. These families have been left tens of thousands of dollars out of pocket. Chantelle paid a $15,000 deposit to Montego in 2022 after years of saving for a house-and-land package at the Dalgona estate in Mount Duneed. She is a 29-year-old pharmacist. She said that money was now gone after Montego failed to take out domestic building insurance despite legal requirements for them to do so. She is one of 12 parties within the Dalgona estate affected. She said:

This situation has taken a massive toll on both my physical and mental health, as I’m sure is the case for many others.

I also spoke to Hayden Plunkett and his wife Juli. They are not too far in age from me, in their early to mid-30s, and they paid a deposit of almost $20,000. Hayden said:

The whole thing is a mess …

We’re both suffering from anxiety … I’m not going to stop fighting to get our money back, but you have to weigh that against your mental health.

It is really, really heartbreaking, but this is because of Labor’s failure to fix domestic building industry noncompliance, and this is just because of a lack of heart. Have a heart and show the same support you did for Porter Davis customers. Porter Davis should have been a wake-up call to get your house in order, to get the VBA in order, to fix the issues. I can tell you these families are at their wits’ end. They have attempted over and over and over again to get in touch with their local Labor MPs. Don’t you dare let me hear again all this nonsense talk of how great this Labor MP is, how this person works hard for their community, how that member works hard for their community. The member for South Barwon has treated these families with contempt. They spoke about it online:

… he’s not really on our side … Or too scared of Jacinta to speak out

Harriet Shing: On a point of order, Acting President, we do appreciate a wideranging debate. However, if Mr Mulholland has an allegation, he should put that by way of substantive motion.

The ACTING PRESIDENT (Jacinta Ermacora): There is no point of order. It is not an allegation, but Mr Mulholland, if you would stick to the bill, please.

Evan MULHOLLAND: Yes, I will stick to the bill, and I think this is related to the bill: another one in the case of the Montego victims at Doreen. One of the victims was very, very unhappy with the member for Yan Yean. She said:

She’s too scared to … say anything and just keeps telling me she ‘talking to the minister about it’ but in four months, she hasn’t helped me at all …

in the process. Another of these victims said:

Agree, sucks living in a labor seat

I have spent hours, days, weeks, months speaking to these victims, speaking to their families, and for the life of me I cannot understand why the government has not stepped in to support these families. They are at a significant low point in their lives. They have had their dreams slip through their hands due to a failure to fix widespread domestic building noncompliance by this Labor government. Surely after the Porter Davis scandal, where you had to set up the customer support scheme, which cost millions of dollars to return the deposits of 500 people, you would look at the books and think, ‘Let’s get our house in order. Let’s make sure this doesn’t happen again and that we have got systems in place to stop this happening again.’ No – ‘Not our issue.’

The amount for the Montego victims: the average deposit is about $15,000 to $20,000. Again, there are only about 60 victims, of which about 30 have lost their deposits. So it is not a huge amount of money. I just do not understand why the Labor government has not come forward and offered support for these families. The Premier was asked weeks ago. She was asked during the last sitting week to support these families, because there is actually no difference between what happened to Porter Davis and all the other building collapses that the government included in the scheme and Montego Homes. They have closed the scheme, but it is not like the issues have been resolved. You have refused to make that commitment.

I would also speak about Tiana Hutcherson and Matthew Coppen from Clyde North. I know my colleague the member for Berwick Brad Battin has been in contact with them as well. Tiana and Matthew are a young couple who hoped to start a family in a larger home built by Montego in Clyde North after their wedding in eight weeks. They paid a deposit of $30,000 for a house and land package worth $600,000. They have lost their deposit and are now facing financial stress and uncertainty. They said:

Losing this deposit and trying to work out where we’re pulling the money from is an absolute nightmare …

Another person from Clyde North is Paul Elsharouny. Paul is an experienced construction project manager who did not see the collapse coming. He said:

I was in disbelief because I didn’t think that this would happen to me …

…

And when you approach government (for) support, the only reply you get back is ‘sorry we cannot help you’.

Cor Cordis, the administrator for Montego, on behalf of families actually contacted the Premier’s office to see whether the customer support scheme would be available. They reported back to families that they were told there is no money available. Then, only a few days later, the Premier said that she is having conversations with the Treasurer. These families cannot wait. These families are desperate for help and support. They are seeing financial counsellors. It is just an absolutely devastating position to find yourself in.

I want to speak about Nicole Clarke from Cranbourne East. Nicole bought a block of land in Cranbourne East and lost $13,825, which had taken her over a year to save. She was urged to pay for the deposit in January and found out about the liquidation a week later. She missed the government support scheme and lost trust in the industry. She is thinking about selling the land and giving up on buying a house. She said:

Trying to buy anything at the moment in this climate is just ridiculous. Almost impossible. So, saving money for a deposit and then losing it is pretty devastating.

I want to speak about Bruce Sharp from Mount Duneed, again in South Barwon electorate. Bruce is a self-funded retiree who had hoped to downsize into a townhouse near Mount Duneed. He paid a deposit of $20,000 for a block of land worth $300,000. He has lost his deposit and is now having to reconsider his retirement plans. He said:

The whole idea of doing the house-and-land package and selling our house was actually to move into a new home for retirement and be debt-free …

Quite frankly, I cannot go the journey to sign another building contract. At the end of the day, I’ve got to look at selling that block of land once it titles this year and re-thinking what we’re going to do.

I really, really hope that there are people within the chamber and outside the chamber, perhaps within the Premier’s office, the Treasurer’s office and the Assistant Treasurer’s office, that are listening to some of the stories of these families, that are listening to their heartbreaking tales, their gut-wrenching stories about saving for the great Australian dream and having it become the great Labor nightmare. That is what has happened to these families because the government did not consider Porter Davis as a wake-up call for them to actually do some work and fix building industry noncompliance, fix the noncompliance from the VBA. I mean, what are the VBA busy with – doing building inspections via FaceTime? This kind of stuff is just basic competence: to match the addresses on an insurance number to where the actual block of land is. It is basic level competence that seems to be largely more prominent and present in Victoria than anywhere else.

I saw that this is apparently the first in a suite of measures. We know that this bill does nothing. It will only increase the fines for dodgy builders. It will not actually stop a dodgy builder from taking deposits and then not taking out insurance. It will increase the fines afterwards.

Michael Galea interjected.

Evan MULHOLLAND: I will take up the interjection and give you an example. There is VBA action against Todd Searle from Montego Homes, and it is good that he has been deregistered. That is good. Given he has now declared bankruptcy, if this bill was in place, it would have done nothing to prevent him from doing the same thing. This bill actually would not stop another Todd Searle from going ahead, shattering the dreams of young families all across the state, stealing their deposits and not taking out insurance on their behalf. It does not actually do anything.

This government is not actually serious. It says it is the first in a suite of measures. Where is the rest of the suite that actually fixes the problems in the VBA on behalf of these families? The fact that the government is not here rocking up with a bill that does that or in fact is not just staring down the VBA and telling them to get their house in order is frankly outrageous. This bill is a news headline to look like they are taking action to stop another Porter Davis and to stop another Montego Homes, but they are actually doing nothing. This bill does not stop another Montego Homes. It does not stop another Todd Searle. The fact that they have come here with a news headline rather than a serious bill to fix the situation people like Jess have found themselves in is outrageous.

What is even worse is that they knew about Montego for a while – for weeks, if not months – and they have not yet offered those families the same support that Porter Davis customers received and that plenty of other customers of other building companies received. They have not. Those families in Cranbourne or Clyde North or Doreen or Wollert in my electorate or Mount Duneed are hanging on the edge. They are watching state politics like they never have before for that financial lifeline in their life, because that is all they have left: hope that they will be able to get their hard-earned back that they spent so long saving for just to get a foot in the door of the great Australian dream.

Unfortunately, the government has not prevented a Porter Davis situation happening again, because it keeps happening. They have not fixed the VBA, and I am hoping maybe some people in this chamber in goodwill could walk around to the Treasurer’s office or the Assistant Treasurer’s office or the Premier’s office and implore them: have a heart; look after these families. It is not even a huge amount. First, they could do that, and second, they could get the VBA in order to fix domestic building industry noncompliance, because this bill does not even do that. This bill is a news headline to look like they are doing something.

Another thing I will say is: we want to work with you on this. We are happy to work with you on this on behalf of these families, to get it right, because it is all of our jobs to get it right. We can bring in a bill that was designed for a news headline but does not actually fix the issue, or we can work together as a Parliament to actually fix the issue, which is why our amendment should be supported. We need to support families. We need to support people like Bruce from Mount Duneed, Paul from Clyde North, Nicole from Cranbourne East, Tanya from Clyde North, Jess from Doreen. We need to sort this out for them. I implore you to support my amendment. I implore you to do the work and offer the same support for these families as you did for Porter Davis.

Michael GALEA (South-Eastern Metropolitan) (16:42): I also rise today to speak on the Building Legislation Amendment (Domestic Building Insurance New Offences) Bill 2023. This is an important bill because it is a bill that does something. It is a bill that is, as Mr Mulholland even concedes, the first step of a suite of other legislation and a suite of measures that are being undertaken by this government, because this is a government that hears people, that responds to their needs and that does something about it.

I will return to some of the substance of the bill which was not covered in Mr Mulholland’s speech briefly, but I think firstly I want to respond to and address some of the things that Mr Mulholland has raised. At the outset I understand and I appreciate his evident passion. What I am very concerned about, though, is: if you come into this place and you claim to be so passionate about this, why would you put an amendment up that says to withdraw a bill that is going to make a real difference by imposing real penalties on this outrageous behaviour? If you oppose this outrageous behaviour, do not put an amendment up that says, ‘Actually, we’re going to remove this bill. It’s not necessary; we’re going to remove it.’

People are suffering when they have to deal with these situations, and this government absolutely recognises that. It is exactly why we responded to the Porter Davis situation last year, and it is exactly why we are currently having discussions with those liquidators. I note that, yes, Montego Homes have been in administration for a little while. They entered liquidation properly two days ago. This government is having those conversations. Nothing in this bill changes those conversations either way. Nothing in this bill prevented or precluded us from engaging with and providing support to Porter Davis customers last year. Nothing in this bill has any impact on those discussions at the moment that are being had by the government and with the Victorian Building Authority.

But what this amendment by Mr Mulholland will do, if it is successful, is actually remove a penalty. You cannot come into this place with all earnestness and seriousness, which I do believe and I will accept is genuine from your part, Mr Mulholland, to say, ‘This is a serious problem. We must fix it,’ and then put up an amendment that removes all the words after ‘that’ and says that this bill should be withdrawn. You cannot be seriously putting that into this place, because if that is what you are saying, then that shows that you are happy to play political games and that you do not care about improving these regulations, these laws, these penalties.

If you are serious about it – I appreciate your willingness to work with us – work with us and do not oppose good legislation that is the first of a suite of measures that are going to make a difference and that are going to send a message to the cowboys of this world, like Mr Todd Searle. I do join Mr Mulholland in condemning those actions. I absolutely join him in that. It is a despicable way to treat first home owners, who are usually first home buyers going through that process of building a home. I absolutely share his rage about that, but if you share that rage, do not oppose this legislation. This legislation is not the ultimate fix. This legislation, though, is a very important part of that fix. If you are serious about supporting these people, by all means we will have those conversations, but do not oppose this bill. Do not support an amendment which effectively wrings that bill to shreds. If you are serious about supporting these people, these first home owners, especially in the growing suburbs, you will not back this very unserious amendment. As I say, this is an important bill. This is a serious bill.

Evan Mulholland interjected.

Michael GALEA: It is a serious matter, Mr Mulholland, and I ask you to respect that. This is a serious matter that people are going through, that they went through last year, and this is a bill that responds to the issue and that responds to those needs. We have seen the ramifications of construction companies entering administration or collapsing outright, like we have seen with the examples put forward by Mr Mulholland. We have seen families who have saved their entire lives to afford deposits for a new home, oftentimes in new growth areas as well, and who are then left with a half-built home, their deposits and savings gone, with no way forward to getting the completed home they worked so hard to obtain.

Following the collapse of Porter Davis in March last year it was revealed that around 560 building owners or prospective building owners were at risk of losing their entire deposit due to the failure of Porter Davis to obtain the appropriate domestic building insurance on their behalf. There have been further disturbing and outrageous examples since, and there were reports and disturbing examples as well during the weeks, days and, yes, even hours before some of these companies entered administration. These instances of customers being blindsided by the financial state of the building companies facing imminent collapse have resulted in a substantial drop in public confidence in the construction and housing industry. In April of last year the government stepped in to help Porter Davis Homes customers get back on their feet by compensating them to do so. We have also set up the liquidated builders customer support payment scheme for customers of other builders whose businesses collapsed in that financial year where those customers were at risk of losing deposits because the builder had not obtained DBI.

To address the events that occurred last year and provide consumers with better protections, this bill introduces two new offences into the Domestic Building Contracts Act 1995 to be triggered when a builder receives money from a client in relation to the carrying out of domestic building work under a major domestic building contract without having obtained the required insurance for that work. Furthermore, the bill will also make amendments to the Building Act 1993 to ensure that the Victorian Building Authority, the VBA, can enforce and take disciplinary action with respect to the set of new offences under the DBC act. These two new offences, which will be inserted into domestic building contracts, will apply if a builder enters into an insurable major domestic building contract, which is defined as being for work costing more than $16,000, and receives money from or on behalf of the building owner before holding their required insurance.

The new offences are designed to stop cowboy builders like we are discussing today. The penalties will be up to $96,000 for individuals and up to $480,000 for corporations. Two different penalty levels will apply based on the seriousness of the conduct, with a higher penalty to be applied if the offence is committed knowingly or recklessly. The lower penalty applies at a standard of strict liability, which is where the offence is committed even if there was no intention to commit it. Those individuals that commit the offence will, though, receive a fine of up to 500 penalty points, which as I say is around $96,000, or 2500 penalty points – $480,000 – for body corporates. This differential in penalties is essential considering the instances in the past where builders have kept their finances from their customers. They knew that they were taking money at a time when they were in a difficult situation and likely to face insolvency, but they still took customers’ money, and they still took new customers’ money. It is only right that heftier fines apply to offenders who are not acting in good faith and who are knowingly putting their customers at financial risk for their benefit.

Beyond these new offences, this bill also institutes other reforms to improve the regulatory system and boost consumer protections. This bill gives the Victorian Building Authority the powers it needs to take decisive action against a builder for noncompliance with any of the new offences. This includes the ability to take proceedings against a builder who does contravene one of these new offences, and the VBA will be able to take disciplinary action against noncompliance with other offences, up to and including the suspension of their registration.

These changes were made and informed by the Porter Davis collapse, which exposed loopholes in the Building Act that some builders took advantage of. The practices of building companies that led to this situation continue to give all domestic home builders a bad name. It is a reputation that many, if not most, do not deserve, and I do want to acknowledge those builders who are doing the right thing by the law and are not taking advantage of their clients. Directors as well as individual building practitioners will be able to be held directly liable for infringement of the offences included in this bill, even if the company itself has entered into liquidation. To support this new offence, the VBA is continuing to audit compliance with those DBI requirements, and these new offences will give them the powers that they need to hold builders to account for failing to meet DBI requirements. These changes will also give the VBA more power to commence proceedings to ensure that builders comply with the new regulations and to allow them to enforce offences against noncompliant builders.

There has also been an expert panel set up on the foundational recommendations from the expert panel’s stage 1 report, which was set up with the passage of the Building Legislation Amendment Bill 2023, which many in this chamber also spoke on. In December last year the expert panel’s stage 2 report was released, providing 14 recommendations in order to deliver greater accountability and strengthen compliance and enforcement as well as improve insurance coverage in the home building sector. This government is committed to delivering a broad range of building reforms to ensure that Victorians have access to the quality homes that they need and that are safe and secure. This package also includes delivering a building system with consumers and home owners at the centre, with clearer roles and responsibilities, improved accountability, access to insurance and consumer support throughout the life cycle of a build, and stronger regulators that will ensure that the people who oversee building projects have the powers that they need to protect consumers and to hold builders to account if they do the wrong thing. It also includes more builders and contractors with the right skills to build our homes and that operate with the transparency and professionalism that Victorians rightly expect. It also includes a better approval process to ensure that all buildings built in Victoria are safe and built to last.

In December of last year the regulator released a new regulatory policy statement, which also emphasises the VBA’s new approach to ensuring customers are always front and centre of the regulator’s work – as they should be. The new regulatory policy statement sets out the VBA’s objective to improve consumer outcomes, how it will use its powers and how it intends to regulate and ensure compliance with building regulations. Getting this right is an important thing for all Victorians. It is especially important for all Victorians as we embark on the journey under our housing statement, which will see 800,000 homes built in this state. This is a government that recognises the housing challenges that Victorians face, whether you are building a new home, whether you are buying an established home, whether you already own your home, whether you rent a home or whether you cannot get into the property market – rent or buy – at all.

We are investing because we know that the number one way in which we can improve accessibility to housing for all Victorians is by improving and increasing supply, and that does not just mean in our growth suburbs, although that is and should be a big part of it. It must also mean having mature conversations about planning and about how we get appropriate development in our established suburbs, and this is an area where I am sure Mr Mulholland and I will probably find some more agreement on. We need to do away with those who say that we need to have blanket controls over vast areas of inner metropolitan Melbourne and that despite having vast resources of tram stops and train stations at their doorstep there should be absolutely no development. We must have a sensible conversation about that.

Getting these reforms right and getting these building reforms right at this stage means that as we do embark on that program, as we do more and more and as we add to the houses that we are already building, we need to ensure that we have the regulations in place, that we have the safeguards for consumers and that we have the building framework as fine-tuned as we possibly can so that as this Big Housing Build happens, both privately and publicly, we have houses being built that not only meet the immediate housing needs of all Victorians but can actually provide safe, secure and resounding houses for all Victorians in the near future but also, just as importantly, into the medium and longer terms as well. Getting this right and getting legislation like this through is so important at this point, and it is why I call on members to reject an amendment that will only serve to further add to delay when we need to be acting now.

Gaelle BROAD (Northern Victoria) (16:57): I am pleased to speak to the Building Legislation Amendment (Domestic Building Insurance New Offences) Bill 2023. The Nationals do not oppose the intent of this legislation. The purpose of the building legislation amendment bill is to amend the Domestic Building Contracts Act 1995 and the Building Act 1993 by mandating that builders obtain domestic building insurance before accepting payments from building owners under any major domestic building contract. But evidently where a builder goes under and has not complied with a requirement for building insurance, issuing them a fine does not mean much, and this bill does also provide that builders who are found guilty of contravening certain offences under the Domestic Building Contracts Act 1995 may become ineligible for registration for a period of time.

This bill has obviously come about through very terrible circumstances. We know about the collapse of the builders, like Porter Davis that happened on 31 March last year and more recently Montego as well – another 60 contracts where the builder failed to take out the building insurance – and that just was devastating to the people that it impacted. I know my colleague Evan Mulholland has spoken about some of those cases, those real-life examples of people that have been impacted, and they have been to Parliament seeking a hearing to ensure that they get similar support to what was given to people that had been victims of what happened with Porter Davis. We know in Doreen Jess and her mother, who was also impacted, saved up over long periods of time for that deposit and were hoping to build on sites right next door to each other but found themselves victims in this situation. We know of more cases – $13,000 lost in a deposit, $20,000 lost in a deposit, $30,000 lost and left with nothing. These are people that have saved for years and have been left with nothing.

I know from speaking with Kim O’Keeffe, the member for Shepparton, of a local resident who is in northern Victoria in my electorate who lost $20,000, and these are life savings – incredibly disappointing. I think this is a huge failure under this government when you look at the lack of compliance under the Victorian Building Authority. I mean, just look at their website: it is vba.vic.gov.au. People trust that there are systems in place to help protect them in these situations, and this has been an absolute failure in this instance. It is a clear regulatory failure overseen by the Labor government.

Now, we need to have a framework that ensures transparency and adequately protects those everyday Australians who are building a home who become a victim of building groups collapsing and losing money because of the failure of the building groups in obtaining insurance. Whilst this bill is a step in the right direction, as we have said, it is not far enough. The opposition has consulted extensively with industry on this bill – with peak bodies, industry, professionals and contractors – and there is definitely a consensus that there is not enough being done, that the act is out of date with current practices and that further reforms are certainly very much needed.

The building industry is a big industry. There are great builders around. I know when we built our home many years ago, we had a fantastic builder who looked after the details. But I have also spoken to other people that have had very terrible situations, and we know in these cases that they have been very dodgy builders. But people do sign contracts in good faith, and you do need to be aware of what you are signing. But in this case, you put your money forward for a deposit, and you expect a house to be built. If they do not go ahead with building the house, then you would expect to get your money back.

When you look at the state at the moment – and I know in Bendigo, where my office is based, it is clear that Victoria does have a housing crisis. Rentals are going up. I had a lady contact the office who had applied for over 250 homes. I had real estate agents do a round table with me recently in Bendigo, and they talked about many of the issues that are confronting their industry. The rental properties are dropping – they are absolutely dropping – because this government seems to be obsessed with taxing property. Instead of providing incentives, they are actually shutting it down. I think the policies of the Labor government are pushing people into social housing, and we have seen that waitlist absolutely skyrocket. We have had under this government 53 new taxes. Twenty-three of them are actually related to property, so the windfall gains tax and the land tax. When you speak of the land tax, I recently had a constituent write to me, and they said:

I just got my Land Tax bill, what a rip off with a revaluation and surcharge, do these people thing the public in rolling in cash.

Seems we now pay rates to Council (and Get Very Little) and a probably more to The State Government and what do we get in return – NOTHING.

Last sitting I also raised concerns that primary producers were receiving land tax bills when they were exempt. I want to ensure that this government in its very desperate attempts to raise revenue does not tax innocent people, because under this government we now have the highest debt of any state in Australia. We are heading towards a debt of $171 billion and heading towards paying $28 million a day in interest. Now, under these recent changes to land tax by the state government people are being taxed for the very first time, and it is putting even more pressure on the property market in Victoria.

I know in northern Victoria builders have expressed concern about delays with the planning process with council and that it is holding up the building industry. Councils have also talked to me about the shortage of town planners. I know it was a coalition election commitment to have a planning squad to provide additional resources to help with some of that demand, but these are some of the practical issues that are happening that are restricting the property market in Victoria.

But saving for a deposit for a home is very hard. When you look at it, we have had Labor in government in this state for over 20 years – one term of a coalition. Under this government I know even my own kids, I know a lot of their friends aged 19, aged 18 or nearly 18, are looking at getting into the property market, and what they are looking at now is containers. My kids and my friends’ kids and my nephews and nieces are looking at how to utilise a container to make a home. I think the fact that we have got to this point in Victoria where our next generation are looking at how to make a container be a fantastic place to live in is extremely disappointing – but it is the policies under Labor that have led us to this point. And with such a massive debt I cannot understand – well, I can understand – why they are doing it, but they are putting a huge amount of pressure on the property industry, and we are seeing builders go under as well. But their housing statement – 800,000 homes in 10 years – I feel is just a statement. That is it; they love a headline. They promise big but they fail to deliver.

So as I said, the Nationals do not oppose the intent of this legislation, but we recognise that so much more needs to be done to get housing back on track in Victoria. I thank my colleague Evan Mulholland, who spoke to the amendments that we are putting forward for consideration in this chamber.

Trung LUU (Western Metropolitan) (17:06): I rise today to speak on the Building Legislation Amendment (Domestic Building Insurance New Offences) Bill 2023. This is a very important bill. It not only addresses the current situation but will have a great influence on our generations to come and the confidence of the market and the confidence of Victorians when they proceed to build a home for the future for their family.

I would like to continue with this recent poll of Victorians. More than two-thirds of Victorians believe young people who do not currently own a home may never be able to buy a home due to high costs. Already we are in a cost-of-living crisis and a housing crisis. The mentality, the way, the attitude – how Australians, Victorians proceed forward – is essential to building a home, their dream. What this bill does is assist in providing confidence to people in how they proceed. It also addresses the risk-takers, the dodgy builders, who influence people’s attitudes.

Victorians’ most important decision is building their first home, their dream of home ownership, and under this government, with the cost-of-living and housing crisis, it is an uncertainty. One needs to ask: how can a competent government allow a major builder to operate without insurance? When big builders collapse, it crashes hopes and dreams. Most of these Victorians are in my constituency. When it happens, the dream of ownership is gone. Under this Labor government we need to address this and bring that confidence back.

Now, I do see this bill is looking to address some of the issues, which is long overdue, but it does not go far enough. Yes, it is providing new offences, which have been a long time coming, to prevent those cowboy builders going to builders and taking deposits without having insurance. It does regulate builders, but after the collapse of Porter Davis surely this government will recognise and implement regulations to prevent it happening again. Now, that was just an iceberg, a wake-up call, but then this government let it happen again over the past 12 months. Montego Homes and Chatham Homes collapsed. A1A Homes collapsed. Now all these victims are still in limbo at the moment regarding their financial loss.

After the Porter Davis collapse the government stepped up and assisted those victims. Unfortunately the liquidated builders customer support payment scheme closed some time last year, and all these other home collapses are still waiting for the government’s response. The victims of Porter Davis have received some assistance and are slowly recovering from that experience, but the victims of Montego Homes and Chatham Homes are receiving crickets from this government. This government has poured millions of dollars into projects which have no business case, millions and millions of dollars into the SRL, the Suburban Rail Loop, and hundreds of thousands of dollars into jobs for their mates. Yet victims and families who saved to build the Australian dream home are still waiting for an answer. Zero dollars – zero financial assistance at this stage.

One of those struggling families – and I would like to quickly mention this because this family has tried to speak to all their local members and none of them seem to be able to assist them – has reached out to me. The Strachan family, Louise and Brett, who have a combination of 20 years of primary teaching experience and who have a six-month-old baby and a three-year-old child, saved up their life savings to build in Gisborne. After the Chatham Homes collapse four months ago, their deposit is gone. They have tried to reach out to the government for assistance, asking it to extend the assistance scheme, which would allow them to recover their losses, yet they get no answers.

My other concern in relation to this bill is that the bill seems to legislate around issues of builders and insurance but does not do anything to address the concern about the current state of the act, especially for those who, as I mentioned, bought since the collapse of Porter Davis. But the other concern I have is in relation to the VBA. This bill gives the VBA, the Victorian Building Authority, explicit power to enforce disciplinary action against builders. But who and which body oversees the VBA? That is my concern, because at the moment the VBA is appointed by the government. The interim commissioner who is looking after the VBA at the moment is former Labor planning minister Justin Madden. So I am just a bit concerned in relation to the mismanagement history of this government and in relation to various overblown planning and major project budgets. It is the VBA’s responsibility to ensure that building acts are in the interests of Victorian families. I just have serious questions about the independence and integrity of the body we trust to oversee this industry, the interim commissioner of the VBA and all the issues in relation to overblown budgets and the overseeing of all the projects here at the moment. So that is my little bit of concern in relation to the actual bill itself.

So what I ask is: will the current Minister for Planning recommend to the Governor in Council that a replacement is sought to clean up the industry? The power lies in their hands to suggest a new commissioner who can restore trust in this process. Those are just some of the concerns I have in relation to this bill itself. I do commend it in relation to trying to create new offences which are long overdue, including those regarding designated insurers.

But I will keep this short. In closing, in relation to this bill, the events around the bill demand urgent action be taken. I hope the government does address all of those victims of Chatham Homes, like the Strachan family, and Montego Homes victims and give assistance like they did with Porter Davis, which will allow working families, young Australians and young Victorians the confidence to continue building their dream homes in Victoria. Also I ask the government that with this bill they need to make sure that leaders have responsibility and accountability, demand justice for those affected and work towards rebuilding trust and confidence in the construction industry. I do hold some reservations and concerns on this bill, as I have mentioned, and in relation to some of the recommendations that have been put forward it does not really go far enough to prevent rogue builders from continuing to do projects without insurance. Yes, there is a fine, but it does not go far enough. So we do not oppose this bill, but I do recommend the government consider the reasoned amendment put forward by my colleague Mr Mulholland.

Ann-Marie HERMANS (South-Eastern Metropolitan) (17:16): I too rise to speak on the Building Legislation Amendment (Domestic Building Insurance New Offences) Bill 2023. As many of my colleagues have mentioned, we feel that this bill is actually not going to do anything in particular. It is actually a bit of a literary exercise, and we find that that is really failing Victorians. I do want to speak on some of the people that were raised earlier by my colleague Mr Mulholland. Before I do, I want to talk a little bit about how this bill is impacting, why we have to have bills that impact the regulations that we have and why this one is not going far enough to actually make a difference.

The Porter Davis collapse should have been a wake-up call. It meant that there were many Victorians that were out of pocket. We understand that through that the victims of the Porter Davis Homes collapse had the opportunity to recover their deposits through a scheme, which is great, but what about the victims of Montego Homes? We are extremely concerned that nothing has been done for them. The victims of Porter Davis have rightly had access to government support, but the victims of Montego Homes have been basically told to take a hike. The victims of these two disgraced companies are in the exact same boat except for one crucial difference: Labor cannot spin its way out of responsibility for this one. Whilst this government may try to argue that it could not have foreseen the Porter Davis collapse coming, it has absolutely no excuses when it comes to further building companies going under. We are told that there is unlimited money for the back-of-the-beer-coaster Suburban Rail Loop, which explodes in cost almost every day – it is continually blowing out – but there is not a single dollar to rescue the Montego victims.

We are really concerned when we look at this legislation, because we feel that there are people who are not going to be helped, that this is not going to go far enough and that we are going to see the same things happen time and time again. In fact I do not understand why once again we are having to put through this house bills that are inadequate, incomplete and not really meeting the measures. It is always ‘Just vote for this now and we’ll figure out the rest later.’ That just seems to be the mantra of Labor governments these days: ‘Oh, just trust us. Just vote for this, and then we’ll figure it all out afterwards.’ We are not going to oppose this bill, because we actually care about the people who have had an issue in this area, but we just do not feel that this is going to make a particular difference. That is why we have our amendment, because we feel that more work needs to be done and that you actually need to have us involved in that as well. It is already law that builders have domestic building insurance, and once again this government has failed to enforce the existing laws. What we are doing here is not really making a bit of difference; we are simply going to be making it continue on and on.

I do want to mention some of the people that were mentioned from the Clyde North area, who I have had the great privilege of meeting. In particular I want to speak about Nicole. Nicole’s story really touched my heart. She had been so excited; she went with a friend to look at a display home. She told me she is just over 50 and it has taken her not a year but actually a lifetime to get to the place where she was going to be able to buy her first home. She was excitedly going through the display home and realising that she now had enough money available to put a deposit on a house. She went to do that, and she told me that at Montego Homes – and this was in January of this year, and she should have taken it as a warning, but it never occurred to her – when she was going to sign the papers the gentleman said to her, ‘Oh, by the way, this company is as solid as a rock. It’s not going under.’ He said that to her only a matter of weeks before it did.

She bought this block of land; she has lost $13,825. It is not just a year that it took to save; it is a lifetime of dreams, it is a lifetime of hard work. She was going to be living in my region. Nicole, I was looking forward to you living there too. I am really sorry that you have gone through this, that this government has done nothing and that this bill is just a surface token gesture. She was encouraged to pay that deposit only last month. She missed the government support scheme. She was thinking about selling the land, and as has been quoted:

Trying to buy anything at the moment in this climate is just ridiculous. Almost impossible. So, saving money for a deposit and then losing it is pretty devastating.

In fact it was actually more than devastating to her; she said it was just unbelievable to be put into that situation.

I also want to speak on behalf of Tiana and Matthew. Like many young couples that move into the South-Eastern Metropolitan Region, Tiana and Matthew are a young couple who had hoped to start a family in a larger home built by Montego in Clyde North after their wedding, which was eight weeks away. Can you imagine? A wedding in itself is just so expensive, but to pay a deposit of $30,000 on a house and land package and then to have nothing to show for it. They lost this deposit, and they are now facing financial stress as they go as a young couple into a marriage. Most of us understand how incredibly difficult that would be, how shattering, and what extra tensions and pressures they have. For some marriages this type of financial pressure ends the marriage, and here is a young couple trying to go into a marriage with this terrible, terrible situation.

I just want to say a couple more things before I finish up. I am really concerned that under this government we find time and time and time again that it is not managing the money that it is given. Victorians are paying these higher taxes, and yet we have a bill here that is not really going to compensate these people or ensure that they will actually get their money back, because it is not going to find a way to enforce the law to make sure that builders have to have their insurance and that there will be significant penalties that will be enforced upon them if they do not. I think that that is a genuine concern, and it concerns me that we are now in a place where Victorians are paying about $24,000 for this net debt – every Victorian – which is now at $177.8 billion. Yet in that whole process we are still allowing businesses to go under and to not compensate and to deceive good, hardworking Victorians, who do not deserve to be treated with such contempt.

We do have an amendment. I do implore the house and encourage them to read this amendment. We are asking that this bill be withdrawn and not reintroduced until the government commits to comprehensively protecting victims and their families from the rogue behaviour of a small minority of dodgy builders and the potential loss of their deposit from building company collapses.

Harriet SHING (Eastern Victoria – Minister for Housing, Minister for Water, Minister for Equality) (17:25): I want to thank everybody who has made a contribution to the discussion of the bill this afternoon, including those members opposite who have spoken in favour of the amendment, which seeks to have the bill withdrawn until such time as further work can be undertaken. For avoidance of any doubt, this was an amendment that was put in the Legislative Assembly debate, and I do not intend to reprosecute the arguments that were put there in confirming that the government does not support this amendment. Mr Galea has amply canvassed these matters in his response, and I think that they well acquit the objectives of this particular bill and the creation of the offences on the one hand whilst also challenging the utility of an amendment which would in fact remove the protections afforded by this bill were that amendment to succeed. It is important to note also that, as others have indicated, this is part of a suite of reforms, and the introduction of these two offences are part of a broader framework to identify that power asymmetry that many people have spoken to this afternoon and to provide a measure of support and comfort to people who are adversely impacted by the conduct of operators who fail to ensure that there are adequate protections in place prior to commencement of a build or a renovation.

The liquidated builders customer support payment scheme is one example of actions being taken to provide a measure of support and relief to people impacted by the actions of large-scale builders, and we do know, Montego Homes being an operator currently in liquidation, that those conversations do need to continue. We have a sector and an industry which, not dissimilar to that which operates in other jurisdictions, often has very lean margins and often relies upon very, very quick turnaround for various parts of development, and there have been a range of factors that have obviously affected the way in which business is done across this part of the sector. This is something which again at a federal level and internationally has been the subject of a lot of public discussion and debate, and the work that we did following the liquidation of Porter Davis last year really did expose the way in which building companies were taking deposits from customers without having that required insurance policy in place. We know that in Montego Homes’ situation we have got around 64 consumers that are anticipated not to have had the required insurance taken out, and government is continuing to work through what that impact looks like and the way in which we are understanding possible remedies available for those affected consumers.

There were questions raised by the opposition in the course of the Assembly debate around coverage of the offences in the bill and the extent to which the definition of ‘builder’ would be covered. Just for avoidance of any doubt, and this may assist those opposite, perhaps to truncate a committee stage at this late stage of the week, the offences will apply to every class of registered domestic builder, noting that those offences will apply only where the registered domestic builder is carrying out domestic building work under a major domestic building contract and where the cost of the domestic building work under that contract exceeds $16,000, being the amount specified in the domestic building insurance order, and the domestic building work to be carried out under the contract is not excluded from the insurance requirement by the DB insurance order.

There has been a lot of stakeholder feedback. I would hate to see that the record rested unchallenged around feedback provided by the Housing Industry Association, which has been misquoted in a couple of instances, including in the debate the other place. I just want to perhaps put to rest any concern around positions taken by the HIA. Mr Keith Ryan, executive director of the HIA, has gone on the record to say that:

… buyers could take confidence from new legislation that would require builders to take out insurance once they signed a contract with a buyer, reducing the risk of being caught without coverage as happened to some in the collapse of Porter Davis last year.

We are in the process of continuing our work to develop progressive reforms and a suite of responses to this issue. At the heart of this issue and what prompts our work are human stories, and I want to thank everybody who has shared their personal stories of loss and of incredible frustration, grief and anger. As consumers, people have worked really hard to save deposits and worked really hard to get into a position to enter, in many instances for the first time, the domestic property market. We do want to make sure that we are in a position not only to assist people through a measure of compensation, such as that paid out after the Porter Davis collapse, but also to provide the Victorian Building Authority (VBA) with the powers that it needs to take strong action against a builder for noncompliance with the new provisions, including taking proceedings against a builder in relation to the new offences or disciplinary action against a registered builder for noncompliance with these new provisions, including immediate suspension of registration as warranted.

These are provisions which are sensible and which are in the aggregate part of broader work and reform. They also reflect the reality of an expectation that consumers will have a framework of regulation, of compliance and of the creation and enforcement of offences that sends very clear messages that the sort of rogue behaviour that we have seen, where that might include mismanagement or failure to act, is able to be acted upon by the VBA and that that is underpinned by the work of an expert panel. It was interesting to hear someone call Ms Anna Cronin’s credentials into question around perhaps not being independent. She has had a very significant career and has made a significant set of contributions to public administration. Her work is indeed commendable in that regard.

I am looking forward to seeing this bill have a speedy passage, and I wish it all the best, noting that we oppose the reasoned amendment.

Council divided on amendment:

Ayes (11): Melina Bath, Gaelle Broad, David Davis, Renee Heath, Ann-Marie Hermans, Wendy Lovell, Trung Luu, Joe McCracken, Nick McGowan, Evan Mulholland, Richard Welch

Noes (22): Ryan Batchelor, John Berger, Lizzie Blandthorn, Katherine Copsey, Moira Deeming, Enver Erdogan, Jacinta Ermacora, David Ettershank, Michael Galea, Shaun Leane, David Limbrick, Sarah Mansfield, Tom McIntosh, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam, Harriet Shing, Ingrid Stitt, Lee Tarlamis, Sonja Terpstra, Gayle Tierney

Amendment negatived.

Motion agreed to.

Read second time.

Committed.

Committee

The DEPUTY PRESIDENT: Just before we start, Minister, just in the summing-up, you mentioned that you thought somebody had called Anna Cronin’s credentials into question. For clarification, I checked with Mr Luu, and he was referring to Justin Madden, who was the interim commissioner, not the current head of the Victorian Building Authority (VBA), Anna Cronin.

Harriet Shing: I will take that as a comment.

The DEPUTY PRESIDENT: Just for clarification.

Clause 1 (17:39)

Evan MULHOLLAND: I will just direct all of my questions to clause 1. Minister, given how many building companies have multiple directors but a registered building practitioner only requires a single director to be registered with the VBA, what is to stop a single company or set of directors from alternating between directors if a building practitioner is suspended?

Harriet SHING: The provisions of the bill that relate, Mr Mulholland, to your question will ensure that directors as well as individual building practitioners will be able to be held directly liable for contravention of the offences introduced in the bill, even if the company itself has entered into liquidation. There cannot be a circumnavigation of the obligations as they relate to the actions of a company where a director has been acting under the auspices or the authority of that company.

Evan MULHOLLAND: How does the government see the operation of the bill working in scenarios where a builder is becoming an ongoing concern? For example, Montego Homes was still taking deposits when it was clearly going into administration. Why would this bill affect the behaviour of Montego when the fines will be paid by the company rather than its directors?

Harriet SHING: When you talk about the actions of specific companies, there are a number of examples that have received a lot of public coverage around the way in which certain conduct has been engaged in while the trading health of that entity has been under question. The VBA is empowered to undertake audits in the situation of any doubt around builders meeting their insurance requirements, and as a consequence of the collapse of Porter Davis the VBA undertook a compliance audit of Victoria’s largest builders, including using coercive information-gathering powers under the act to procure information about builders’ contracting and deposit-taking practices. The VBA is in the process of finalising its enforcement response to those cases, and the new offences in the bill will actually ensure that the VBA has the powers it needs to hold builders to account for not meeting those domestic building insurance (DBI) requirements.

Obviously there is a range of investigations that the VBA can and indeed does undertake, and the VBA is in a position to take action before court proceedings are initiated. The VBA auditing an individual nominee director’s processes also means that individuals can be held to account for the action of the company, so – again, to go back to my point earlier and the individual named in various contributions this afternoon – that might then relate to that person in that role as director in the course of conduct being undertaken by the company that imperilled the deposits or indeed the financial contributions of people who have been affected.

Evan MULHOLLAND: Given that we just spoke about that person, I note the VBA took action against the director of Montego Homes, Todd Searle. Given he has now declared bankruptcy, how will this bill stop another Todd Searle from doing the exact same thing, given that he would be unable to pay the fine?

Harriet SHING: In the first instance there are requirements for people who wish to be directors of companies to be fit and proper people for the purpose of undertaking those obligations. They are very clearly established in the Corporations Law, and indeed there are offences for failing to meet those standards as regards being a fit and proper person and acting for proper purpose. This is where, again, the requirements for directorship are one mechanism by which conduct can be regulated, including through a deterrent factor and including through audit functions of the VBA and other regulatory bodies. There are also these offences within the act that enable individual directors to be pursued, and this is where, again, the provisions and the offences as they relate to both strict liability and absolute offences relating to individual and body corporate activities are not insignificant in terms of the penalties that apply there.

Mr Mulholland, what you have identified, however, is a concern and a challenge not unique to the building industry, where we have people who for improper purposes act in a terrible way to essentially rip people off, whether directly, intentionally, recklessly or through omission or oversight. There is always a challenge about how it is that any level of regulation can crack down on that behaviour. The provisions in this particular bill and the creation of these two offences do create those penalties and do empower the VBA to undertake certain functions, including in relation to audit and compliance measures, and this is where, again, they are intended to operate alongside a suite of other reforms in the Domestic Building Contracts Act 1995 to be triggered where a builder receives money from a building owner under a contract with a value of above $16,000. It is about making sure that the VBA has the powers that it needs to hold a builder to account who does the wrong thing by accepting that money without taking out the required insurance.

Evan MULHOLLAND: From the bill briefing I understand that liability can fall on directors for the contravention of offences introduced in this bill. Can you explain the mechanism by which individual directors are held liable?

Harriet SHING: Yes, Mr Mulholland. This is ordinarily a process in the course of court proceedings that will reveal the extent to which individuals have been part of decision-making, whether as natural persons or indeed as bodies corporate. The penalty levels apply based on the seriousness of the conduct, and as I have referred to in an earlier answer, where we do have a knowing or reckless commission of an offence, those penalties are higher commensurate with that. Where we have a strict liability offence, that will be a lower standard applying there. That is specifically where the offence is committed even if there was no intention to commit it. Now, intention is a difficult thing to impute in the context of conduct other than by a natural person, but there are maximum penalties the court can impose depending on the type of offences that are committed. Those offences and the penalties that apply are set out in the bill, and they have been well canvassed in the course of the second-reading debate and contributions in both chambers, but court proceedings will help to determine the extent to which there has been involvement, decision-making, action or omission, recklessness and/or intention by an individual, by a group of individuals or indeed by a body corporate, with the offences being reflected commensurate to penalty.

Evan MULHOLLAND: I just want to touch on a point that was mentioned before. Are all directors of the company that is a registered building practitioner held liable or just directors that are registered with the VBA?

Harriet SHING: Again, this will come down to the circumstances in play in any given situation. There may well be, for example, a director acting on a frolic of his or her own, in which case it may be a more difficult evidentiary proposition to establish an offence that applies more broadly than to one particular director. However, in the event that a person is acting within the scope of the operation of which he or she is a director, that may well be shored home to others as part of that joint liability operation and the obligations set out in the Corporations Law as well as in this legislation.

Evan MULHOLLAND: Regarding the suspension of a building practitioner, what duration of suspension is the VBA able to apply?

Harriet SHING: The VBA can immediately suspend the registration of a registered building practitioner if there has been a commission of one of the two new offences or indeed both. An immediate suspension continues for the period specified in the suspension notice, and the revocation of that notice or indeed that notice being set aside following an internal review or review by VCAT is the means by which that might otherwise be lifted or varied. Importantly, again, we want to make sure that where we have builders needing to be registered with the VBA there is a consistency there. To go back to the question you raised before on multiple directors and how that would operate with companies where there may well be provisions that apply to all nominee directors, that might well contemplate a situation of a suspension in the terms that I have just referred.

Evan MULHOLLAND: You mentioned immediate suspension, but you also mentioned a notice being set aside. If I am to understand your answer, that would basically be decided by VCAT?

Harriet SHING: Yes. I might clarify that a little if I may. The order itself will be issued by the VBA, and that will set out the period upon which that revocation might occur from VCAT. The VBA sets the suspension, and that might otherwise be varied or revoked by VCAT.

Evan MULHOLLAND: Is there a maximum suspension that the VBA is able to apply or a range? Is it immediate to ‘X’? And what is ‘X’?

Harriet SHING: The person who has been suspended cannot apply for a period of three years after being issued with such a notice, and they cannot recommence in that work until such time as they have demonstrated to the VBA’s satisfaction that they are fit and proper to undertake that work.

Evan MULHOLLAND: If the suspension is short – say the suspension is three years – do you believe that being suspended for three years is a significant deterrent to failing to purchase appropriate insurance?

Harriet SHING: I am not sure, Mr Mulholland, whether asking me for an opinion will assist the committee stage of this debate, but someone will have to actually reapply, so it is not a matter for me sitting here in this committee stage to determine whether somebody is in a position to resume that activity. It is a matter for the VBA to determine by reference to a range of different circumstances – the very circumstances which prompted the development of these offences in the first instance. Again it will come down to the severity of the situation, the circumstances in play and a variety of other factors to which the VBA will no doubt turn its mind over the course of investigating any matter of this nature.

Evan MULHOLLAND: When a building practitioner is suspended, what steps are put in place to ensure directors of that building company are not able to be a director of another building practitioner?

Harriet SHING: Well, Mr Mulholland, you have to be a registered builder in order to be able to undertake any of the functions set out in the domestic building framework, and the way in which the legislative framework operates is that without that recognition you are not able to undertake those activities, with the VBA being the arbiter of your capacity to do that work. So I am not sure whether there is another –

Evan Mulholland interjected.

Harriet SHING: I am sorry, can you stand up and just put it on the record?

Evan MULHOLLAND: In this situation the building practitioner is suspended, but I am talking about other directors of that building company being able to go and be a director for another building practitioner.

Harriet SHING: The Building Act is pretty clear about a range of circumstances around who can do what under that legislation, which is the overarching framework under which these provisions apply.

Evan MULHOLLAND: Porter Davis’s situation happened almost a year ago. What additional enforcement measures have been put in place since then?

Harriet SHING: In addition to these particular changes effected by the bill and the creation of the new offences, we have got a range of protections that have been provided to home owners in the event that the building project cannot be completed or if there are defective works which cannot be rectified – if, for example, a builder has died or has become insolvent or has disappeared or has failed to comply with an order of a tribunal or a court where DBI was issued by the VMIA on or after 1 July 2015. So DBI is mandatory for contracts where the contract price is, as I said, for an amount over $16,000, and current practice is for the DBI to be taken out by the builder on behalf of the home owner. This is where audit and compliance functions undertaken by the VBA are important for the purpose of understanding that measure of compliance.

So coercive and information-gathering powers have been exercised by the VBA already under the act to procure information about compliance. This bill will in fact give them the powers to act when noncompliance is identified. Again, this is a situation which will not capture everybody all of the time. What it does do, however, is enable the VBA to reach into the activities and the acquittal of obligations and responsibilities of an entity or indeed of a natural person acting as a director or nominee director in order to determine compliance or otherwise and then to be able to take action in a way that represents imposition of penalties and therefore has a deterrent component to it.

Evan MULHOLLAND: Since the Porter Davis collapse, have there been any changes to the VBA’s resourcing?

Harriet SHING: We have had, through the work being undertaken by Anna Cronin, a refresh of the work that the regulator is doing, and this involves being able to increase the range of compliance measures and activities being undertaken and will enable the VBA to continue audit work that flows through to compliance activities. So this is a continuation of the work that was begun prior to Porter Davis and, again, in identifying areas of need around a greater measure of accountability from within the sector. We do have from the top, really, as far as the CEO’s work goes, a performance and culture within the regulator to identify and to weed out noncompliance and to take action. The mechanism by which that can now be undertaken relates to the enforcement provisions and the offences that are set out in this very bill, which then enable a follow-through of the VBA’s work to the most meaningful and deterring application possible, which as much as anything is about making sure that other builders do not follow suit and indeed elect to do the right thing by way of DBI in the first instance.

Evan MULHOLLAND: Minister, it has been mentioned several times and acknowledged in public government documents, media releases and contributions by my colleagues here that this is the first in a suite of responses. When can we expect the next suite of responses to this?

Harriet SHING: We are actually considering strengthening the VBA’s powers as part of the Building Act review, so that is work, as a number of people have referred to, that is underway right now. This is also not a static situation. Again, as people will well understand – as the constituents you have referred to in your contribution well understand – we are in a dynamic landscape in terms of the way in which building is occurring, the way in which standards are applied, the way in which audits and compliance are being undertaken and completed and now, with these offences, the additional layer of imposition of offences and prosecution or proceedings against natural persons or bodies corporate. So this DBC act review process has got public consultation that is open until the end of this month, and next month we will have more to say after that.

Again, we want to make sure that in consulting on these changes and what we do across the sector and with consumers we are getting it right, and that is why this process of engagement and consultation is so important. The VBA is well equipped to be able to continue the work that has already begun, and it is an incremental aggregate set of improvements that will enable it to do more to crack down and to deter dreadful behaviour, this predatory behaviour or reckless behaviour, and to make sure that people have recourse to, at the very least, action being taken against those who have committed offences or are alleged to have done so.

Evan MULHOLLAND: Thank you, Minister, and I certainly agree with the commentary about the despicable nature of what has occurred by these cowboy builders. I know some of the victims are watching online; usually it is only political nerds that watch the chamber online. It was said by some, I think including Mr Galea, who was contributing, that now that Montego Homes is liquidated the government is having those conversations on how we can support those victims that have been affected by the collapse of Montego Homes. I am just wondering whether you can provide an update on those conversations and confirm that those conversations are occurring.

Harriet SHING: You are absolutely right, Mr Mulholland. This has been another devastating chapter in the lives of more Victorians who have saved so hard for their own homes. In the case of Montego we are working with the liquidator to understand the situation that Montego is in. The company only formally went into liquidation a few days ago. What we are doing through action and response from the VBA is working through a suspension of registration to the director to protect those consumers while there is a disciplinary process being undertaken, and they are continuing to work with liquidators to understand the deposit-taking practices of Montego Homes. This is something which also, as you may recall and as others may recall, occurred with Porter Davis. There will be ongoing work as it relates to Montego and to people who have been affected by its decisions. I do not want to pre-empt the outcomes of that work, but there has been a lot of intensive work undertaken, including following the company going into liquidation a few days ago.

I do not, however, want it to go unsaid: the impact of this is devastating. People are so anguished by what has happened. It is a process that is often all too straightforward for us in Parliament to talk about as far as numbers are concerned. This is about families. It is about people who saved through working multiple jobs, as you rightly pointed out in your contribution; people who have done everything to compromise on the nature, the location and the configuration of their home to get a toehold into the market. We are under no illusions about the anguish that the conduct of various builders has led to. This work will continue as far as impact goes. When Porter Davis went into liquidation we acted quickly. When further instances of builder misconduct came to light, we acted quickly. Is it fast enough? No. However, are we working through it as thoroughly as we can, as carefully as we can, to understand the impact and to ameliorate impact? Yes.

What I would say to people who are looking to buy their own home is to make sure that they have a good measure of satisfaction that domestic building insurance has been secured by a builder. There are also a range of other initiatives that we are working on for people as consumers to understand what their rights are as well. It is not something that is confined to domestic building. It is really important that when and as people make purchases, large and small, they are aware of their rights, of how to exercise them and of the obligations and responsibilities that companies have to make sure that their own statutory remit is also, at the very least, met.

Clause agreed to; clauses 2 to 19 agreed to.

Reported to house without amendment.

Harriet SHING (Eastern Victoria – Minister for Housing, Minister for Water, Minister for Equality) (18:09): I move:

That the report be adopted.

Motion agreed to.

Report adopted.

Third reading

Harriet SHING (Eastern Victoria – Minister for Housing, Minister for Water, Minister for Equality) (18:09): I move:

That the bill be now read a third time.

In doing so I want to thank everybody who has been part of its development and in particular those people who have shared their stories with a view to creating a better system that provides more people with remedies and indeed with deterrence against the sort of awful behaviour that has led to the situation that we are in now as far as a number of builders are concerned.

Motion agreed to.

Read third time.

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