Wednesday, 19 June 2024

Motions

Ombudsman referral

Evan MULHOLLAND (Northern Metropolitan) (15:40): I move:

That this house:

(1) notes:

(a) many aspirational Victorians have had their dreams of home ownership undermined by the unexpected insolvency of their builder;

(b) the Victorian Managed Insurance Authority (VMIA) has unreasonably refused, reduced, or prolonged domestic building insurance (DBI) claims without transparency;

(c) that as at April 2024, according to figures revealed under freedom-of-information requests, there were over 1600 outstanding claims with the VMIA in the construction, property and DBI categories;

(d) the VMIA has acknowledged there are 2158 claims currently unresolved, including 661 cases where an offer has been made but not yet accepted;

(e) a group of 30 families frustrated with the VMIA wrote to the Ombudsman in December asking for an investigation into how claims for DBI are handled;

(2) further notes that the VMIA has allegedly engaged in unhelpful practices in relation to DBI claims, including:

(a) promising remedial action to claimants but either failing to follow through or undertaking other actions that may be detrimental to a just insurance outcome;

(b) ignoring just and fair requests for transparency;

(c) breaching good faith by providing building quotes consistently below reasonable market rates;

(d) the use of non-disparagement agreements in order to pressure Victorians to settle their claims; and

(3) pursuant to section 16 of the Ombudsman Act 1973, requests that the Ombudsman investigate the VMIA’s management of DBI claims.

I rise to speak on this motion. To be honest, this is probably the most important motion that I have brought to this place. I have spent hours, days, weeks and months sitting down with families across the state, talking through with families their situation in their darkest moments, their position of absolute anguish that we have seen them go through in regard to builder collapse and then in regard to their insurance process. My motion is on the Victorian Managed Insurance Authority (VMIA). It is a referral to the Ombudsman for a proper investigation.

Late last year a group of over 30 families wrote to the Ombudsman seeking an investigation into the VMIA and its unhelpful practices in regard to domestic building insurance (DBI) claims. That was followed up with support for that letter to the Ombudsman with a letter by me, opposition leader John Pesutto and the Shadow Minister for Finance Jess Wilson. The claims these families have made and want investigated are promising remedial action to claimants but either failing to follow through or undertaking other actions that may be detrimental to a just insurance outcome, ignoring just and fair requests for transparency and breaching good faith by providing building quotes consistently below reasonable market rates.

We have also seen in the last couple of days media reports about the use of non-disparagement agreements to silence young families into settling, when all these families want is a just outcome. All these families want is to ensure that the process that they have been through with the VMIA never happens to any other families. I have spoken to so many that are so selfless in their advocacy on this issue that they are wanting to ensure that the VMIA is reformed, that the VMIA is properly resourced, so that what has happened to them never happens again.

We are seeing that this is an authority that is on the financial brink. It is $115 million in deficit. It has $374 million in negative equity. It was revealed this week that there are over 2000 outstanding claims with the VMIA. This is really important. Of those 2000 outstanding claims with the VMIA, 700 are families who have been waiting over a year. Over a year they have been waiting for a just outcome. You have got to remember that many of these families are paying rent somewhere else. Many of these families are paying a mortgage on another property. For many of these families it is their first home, and while they wait a whole year for a just outcome they have had to go back to living with their parents. They have had to find another place to rent nearby. They have had to pick up extra shifts. Where is the just outcome in that?

It is clear that when Labor cannot manage money, authorities like the VMIA are forced to throw the burden onto young families in their darkest moments. They are exasperated. They are stressed. This issue is compounded by Labor’s failure to ensure that dodgy builders have appropriate insurance to protect their customers, as we have seen with Porter Davis, Montego Homes, Chatham Homes and Apex Homes. For many families the great Australian dream has become the great Labor nightmare. Labor are dragging their feet on this. We need a proper investigation, which can only be done by the Ombudsman, to ensure and to scrutinise the management of DBI claims and some of the allegations that we have seen quite prominently in the media over the past few days.

I want to share a few stories, because it is all good for me to tell you why we need an Ombudsman investigation into the VMIA, but it is more important to talk about it. I want to talk about Sid, who wanted and endeavoured to build his first home in Richmond. He and his young wife Chetna commenced construction of their dream home in the inner north in December 2018. It was due to be completed in June 2020, but five years later there is no end in sight. Unfortunately the builder went into liquidation, leaving their unfinished home with substantial defects and in an incomplete state.

Despite the setback they were sure that the state-owned Victorian Managed Insurance Authority would have them covered. After all, the purpose of domestic building insurance from the VMIA was to cover people exactly in this situation – their builder having gone bust. They filed a claim with the VMIA in December 2020, and they were told by the VMIA that to have their claim approved they must sign a contract with the VMIA’s preferred builder. They were also provided with references for the preferred builder from the VMIA. This was despite the VMIA’s preferred builder’s early red flags, such as their quote being $250,000 lower than competing builders and, extraordinarily, lower than the original builder had remaining to complete the build. The builder only spent 30 minutes onsite making this assessment. Sid and Chetna again reached out to the VMIA for assistance when their project began running behind schedule because Ethos was asking for retrospective changes to deadlines and changes in terms favourable to the VMIA’s preferred builder.

In September 2023 Ethos terminated the contract with Sid and Chetna and wanted more money in a new contract as further defects were uncovered. The remaining money was not enough for other builders to finish the project. So after the VMIA going with a lowball offer that was $250,000 less than all other quotes and not seeing the original defects, which other builders had, they then exited and wanted more money. The VMIA is now demanding they sign a non-disparagement agreement to receive insurance – so after failing Sid and Chetna, failing again and failing again, they now want them to shut up about their story. That is no way to treat young families in my community who just want to start the great Australian dream in Richmond and get on with their lives.

I also want to talk about Suzi Ralph. Suzi Ralph is a mother with two kids and is a former Porter Davis customer. She has been battling ongoing issues with the VMIA and says they are unresolved, unjust and unfathomable. She thought when things were wrong her insurance would protect her but has instead found herself in a David-and-Goliath battle with the VMIA, which has access to a top-tier law firm to fight claims. The VMIA massively underquoted Suzi, saying it would only cost $10,000 to finish her house when it would actually cost $100,000. Extraordinarily, the VMIA’s incomplete works quote even included pictures of another house. Get that right – the VMIA’s incomplete works quote included photos from another house that was not Suzi’s. Suzi became an owner-builder after her experience with Porter Davis, but the VMIA refused to pay her defect money after they had agreed to and instead wanted her to sign up with another builder. Suzi also reported a lack of transparency and poor communication with the VMIA, and often she would not hear from them for weeks, despite attempting to contact them through various means.

The only answer the government has to people like Suzi is to tell them to go to VCAT, which I have heard countless times from young families. Now, I want to make this clear: the cost for a young family in going to VCAT over a VMIA claim is actually more money. Mostly, in a large number of cases, the cost of going to VCAT is more than the fair and just compensation that they are looking to receive. You have got a case manager one day and another the next day. You have got a case manager one day, and then you have got a partner at a senior law firm sending them a letter in regard to their case saying, ‘The only option you have is to go to VCAT.’ These are people at their lowest of moments, at their lowest of lows, and this is the way they are treated by the VMIA. This is the way they are treated by this government.

I want to talk about Shontel and Jared Ford, another couple that faced a bad experience with the VMIA. They were forced by the VMIA to use a volume builder, because it was the cheapest quote. On the other hand, detailed quotes by non-preferred builders were $150,000 more, because they actually covered all the defects in the house, which the VMIA offer did not.

There is one family I spent a lot of time with. I want to mention Alex Perotta, who is a constituent of mine. He and his wife bought a slice of the great Australian dream in Craigieburn, a great part of the world. He and his fiancée had just put a slab down when Porter Davis collapsed, but they could not get a payment from the government because they did not have a quote. They tried multiple times, but no builder was willing to build on a Porter Davis slab, because it was someone else’s work that required demolition. They got the run-around from the VMIA on what their response would be, were given offers of false hope and then were refused again. They had to delay their wedding because of financial stress – they had to delay their own wedding. They had to move back in with their parents in Glenroy instead of building their dream home.

The VMIA then told them to go to VCAT. He was only seeking his deposit back in the end, and they did not even return a progress payment, so they had to get out of the property altogether, their dream of starting a new life in Craigieburn shattered because of the VMIA delays, go-arounds and stonewalling to say to go to VCAT. It is no way to treat young families. It is no way to treat young families in my electorate looking to just get a start in life, get married and settle down in a great part of the world. Now they cannot, and now they are out of pocket. They were paying a mortgage month after month as they waited over a year for the VMIA, paying $2000 – or something in that range – a month on their mortgage while trying to save for a wedding or just trying to settle down.

I also want to speak about Cheryl and Wayne from Berwick, who were caught up by the Porter Davis collapse. They were looking forward to retirement, planning to build their final home. They chose to go with a smaller local builder who they thought was the best fit for them and was quite reputable in the area. The VMIA pushed back against this and would only give a percentage of what they were entitled to, because they chose a trusted local builder. The VMIA rejected defects claims as ‘incomplete works’ when they were quite clearly defects and a number of other builders told them that they were quite clearly defects, but for some reason the VMIA thought they were incomplete works.

The only response from the VMIA is to ‘take it to VCAT’, which would cost more than they are actually seeking. I spoke to Cheryl and Wayne extensively. I met them with them here in the Parliament. They are a great couple, and I know they were under significant stress, because at the same time as they were trying to get into their new house and finish their new house, their landlord was kicking them out as well, which is a really difficult situation to be in, particularly in as financially stressful a time as they are going through.

I want to talk about the Mishra family. They believe they had been given an underquote from a volume builder, and instead of working with the family to resolve the issue, the VMIA engaged in lawfare to make the family prove that the VMIA’s preferred builder was underquoting. So the VMIA said, ‘Here is our quote,’ and they were saying, ‘No, this is what all these other builders are saying.’ And the VMIA were saying, ‘Okay. Send us the evidence that the VMIA’s builder is wrong.’ It is just completely awful what these people have gone through.

I want to talk about Tash. The VMIA underquoted Tash when using a volume builder who did a desktop quote. After being awarded by the VMIA, the VMIA’s preferred builder delayed Tash by 22 weeks and made claims for defect costs which were originally rejected by VMIA. It seems like VMIA provided their favourite builder with the second bite of the cherry, and Tash was left picking up the tab for more delays and costs from a dodgy VMIA quote.

We need to get to the bottom of this. We need a proper Ombudsman investigation into what is going on. We know that this is an agency on the financial brink. We know that this is an agency that has had to massively increase premiums recently – which will affect everyone across the state – by a massive 53 per cent, all because Labor cannot manage money and authorities like the VMIA are having to pass the burden on to young families.

As you can tell, there are some pretty heartbreaking stories from all across the state. I implore the government: you cannot ignore this anymore. You cannot just pretend that this is okay. Listen to these families. Sit down with these families as they have asked you to and do something about it. We should not have authorities like a public insurer stonewalling young families, threatening them, making false promises, giving false hope and then turning around and saying no or giving false hope and sending them to VCAT, where the cost of going to VCAT is more than the just compensation that they deserve.

I implore the government to come on board and admit there needs to be an Ombudsman investigation into the management of domestic building insurance claims, because I think everyone can agree the current process is not working. How anyone could think that it is working when you have got a case load of over 2000 outstanding and 700 people on that case load list have waited longer than a year to have their claim settled? Each one of those over 2000 people is a family. Each one of those is a story – a story of collapsed builders, a story of misfortune and heartbreak. They are families in distress, who deserve justice. They deserve justice. Alex from Craigieburn deserves justice. Suzi from Warranwood deserves justice. Sid and Chetna from Richmond deserve justice, because after what they have been through I do not know how they have gone on and continued to be so brave in speaking out. To those 31 families that wrote the letter to the Ombudsman – very brave in speaking out, not for themselves but for all the other families that are going through the same thing, who are voiceless, who are in financial stress and who do not have the capacity to speak for themselves – this is a really important motion. We deserve an Ombudsman investigation to look into the VMIA’s management of DBI claims to get a just outcome for families across the state.

Jacinta ERMACORA (Western Victoria) (16:00): I rise to make a contribution and some remarks on the Victorian Managed Insurance Authority and Ombudsman referral motion this afternoon. The Ombudsman has already investigated all of these claims, including the ones that are referred to in the motion, and the Ombudsman has found that the VMIA has acted fairly and appropriately. I am not sure why we should use up the time and resources of the Ombudsman to go over already thoroughly investigated claims. It must be go-around day today, because we had a shot at doing the flood study all over again as well.

The Victorian Managed Insurance Authority provides the state with insurance and advises on risk. Through the VMIA customers undertaking building and construction works can obtain domestic building insurance – and from my lay perspective probably ‘domestic construction insurance’ is a better description of the actual role that it plays, because it sounds to me like it is insuring the actual buildings. Previously, private insurers provided this insurance. However, the government stepped in when they vacated the space in 2010. The VMIA now provides 70 per cent of domestic building insurance in Victoria, so this is a fairly clear example of market failure.

Last year we saw the collapse of Porter Davis. The collapse of Porter Davis had a significant impact on domestic building insurance payouts from the VMIA. Porter Davis were engaged in improper behaviour by not insuring their customers appropriately – and when I say customers I mean the young Victorians who perhaps had saved up for a deposit and purchased a block of land and then handed over their deposit to a selected builder in good faith, only to discover that their builder was not appropriately insured. The stress levels alone for just being a first home buyer are pretty high, with a lot of the legal and regulatory processes and steps along the way. I have sympathy for first home buyers, but it is the same for anybody buying a second or third. It is still pretty stressful. For first home buyers it can be quite a mystifying and I think fairly scary process, so in addition to the normal process, for people to have to deal with noncompliance in the insurance space is definitely really stressful. Often these families have saved every penny to come up with a deposit.

The conduct of Porter Davis and a number of other builders was one of the most serious instances of corporate misconduct seen in Victoria in a very long time. They took people’s deposits, took their savings, but did not take out the insurance required to support the activities that they were undertaking for their customers. Those customers should never have been caught up in this nightmare. I do not seem to recall hearing those opposite saying anything about the horrendous misconduct of Porter Davis and others. The Allan Labor government stepped in to assist in April 2023 to give compensation to those customers of Porter Davis who were left without insurance and lost their deposits through the misconduct of Porter Davis. This Allan Labor government has gone on to establish the liquidated builders customer support payment scheme to assist customers impacted by builder collapses between 1 July 2022 and 28 February 2024. It is important to note that the Victorian Building Authority has investigations open into a number of builders, including Porter Davis.

This motion refers to underquoting. Let me just reassure those opposite that the VMIA only obtains quotes from reputable builders with the experience to do the work required that are financially stable. If a home owner does not want to go with the VMIA builder, they are free to choose their own, providing the builder can complete the works in line with the agreements set out with the original builder. It should be noted that the VMIA are more often able to provide a quote lower than other builders due to their supply chain and volume-based discounts. It is misleading and incorrect to label these processes as underquoting merely because the VMIA have given a substantially better quote. These lower quotes do not equate to a reduction in build quality.

With the significant impacts felt by those customers of Porter Davis and other builders, the VMIA is doing everything possible to ensure claims are processed as quickly and as simply as possible. The domestic building insurance (DBI) claims assessment team has been significantly expanded to address the increase in claims. Being thorough in addressing these claims gives home owners the peace of mind that they will have a safe, quality-built home. A rigorous claims assessment is critical to ensuring that claimants receive all the entitlements and benefits they are afforded under the policy. Since July 2022 the VMIA have resolved over 4000 domestic building insurance claims and extended offers worth over $218 million to consumers.

In the Allan Labor government’s 2024–25 budget we are building on our already significant reforms, with $63 million in a building reform package. The package will ensure increased access to DBI, delivering reforms to support modern construction methods and deliver new legislation. The package will strengthen the Victorian Building Authority as well as grow the number of VBA inspectors and auditors. This Allan Labor government is setting bold targets to build 800,000 new homes across the state over the next 10 years. That is 152,000 new homes in regional Victoria and 648,000 homes in metropolitan Melbourne. Already the backlog of housing approvals is over halfway cleared.

An expert panel has been convened to review the Victorian building system and has already provided advice to the Victorian government. The Victorian government is already taking up a number of recommendations. Last year the Allan Labor government passed the Building Legislation Amendment Act 2023, and the amendments made by it brought in stronger oversight of building approvals and established a building monitor. The panel has provided a further 14 recommendations that look to deliver greater accountability and greater insurance coverage and strengthen the compliance and enforcement frameworks. Work is being conducted to review the Domestic Building Contracts Act 1995, investigating legislative options to ensure that Victorians can build their homes with the knowledge and confidence that they are protected.

Those opposite want the Ombudsman to investigate complaints that have already been investigated, wasting the precious time and resources of the Ombudsman’s office at a time when we should be getting on with addressing the egregious conduct of builders like Porter Davis. I can only interpret this motion as a bit of an effort to stir up controversy in a space that has already been significantly worked through, and in some cases continues to be worked through, when we should be pushing along with reviewing how best we can protect Victorian consumers.

Samantha RATNAM (Northern Metropolitan) (16:10): I rise in support of Mr Mulholland’s motion today, and I thank him for bringing the matter to the attention of this chamber. This chamber and this Parliament need to respond to what is happening in the community, and this is a really good example of a good use of this chamber’s time and the levers available to us to support people who are experiencing quite significant hardship and difficulty that, on the face of it, looks entirely preventable. We too share the concerns that have been raised in this debate so far about what is happening with the Victorian Managed Insurance Authority. We have heard from a number of people right across Victoria ever since there was more attention brought to this issue with the VMIA over the last few days. There seem to be far too many Victorians who have sought assistance from the Victorian Managed Insurance Authority who have been met with obfuscation and cheap quotes. Many people ended up at VCAT trying to get a fairer outcome, but that only added to the stress and heartache they experienced on top of the issues they experienced when their original builders collapsed.

We do support this referral to the Ombudsman, as any claims – and the volume of claims that we have now heard – of intimidation by the VMIA and of the alleged use of non-disparagement clauses warrant further investigation. When you have this many people repeating the same story, in dire straits, it is worth us taking a moment to consider what is going on here. It certainly feels like there is something systematic that is occurring here, and if there is not, let an investigation rule that out. Let the community, especially the people at the heart of these building and insurance claims, have confidence that the process is as fair and transparent as possible to them. If this behaviour is occurring at a systematic level, it is completely unacceptable, especially for a government authority which is supposed to support people. People are supposed to have confidence in these authorities, and they must be held accountable if there are issues that are preventable that are causing this grief for so many Victorians.

I think it is really important to note that the VMIA’s alleged practices do not exist in a vacuum. There are issues that we have raised about the entire system of building and construction and development for a number of years. These issues, and the reason we are encountering them more frequently, reflect an operating environment and context. The authority has been under financial strain since the collapse of Porter Davis followed by the insolvency of several other builders, reflecting something that is happening more broadly in the building and construction environment. Many of these issues have arisen in the context of deregulation of a system that provides something akin to an essential service, which is the construction of homes. Homes and the right to housing should be considered a right and therefore an essential service, yet when you deregulate the provision of these essentials for life what you get is less accountability, less transparency, more passing of the buck and ultimately more people falling through gaps that emerge in this highly deregulated system.

We also know that the VMIA and the system around it does not even actually cover a number of people. For example, we are talking here about the people who are eligible to access the system, but the other context that needs to be considered here is the numbers of people who are not even able to access this system in the first place. Customers can only submit a claim if the builder is insolvent, has disappeared or died or has had their building licence suspended. If the builder is just incompetent and there are defects within the building, you cannot make a claim – you cannot even make them investigate it. So that leaves people completely stranded when they encounter that circumstance.

As I mentioned, we see the problems of deregulation writ large in this latest example of the system breaking down, allowing people to fall through the gaps. Building companies have interpreted the push for more housing as permission to relax building standards, sometimes cutting corners on the building codes to meet turnaround times, and this approach means essential sector skills are being lost along the way. Design, project planning and building execution have become quite fragmented. We have raised the issues of surveyors and surveying in this Parliament on a number of occasions. We have had the issue of flammable cladding and why that problem was allowed to arise in the first place. And all that does point back to deregulation and the need for more intervention from the people who have responsibility to Victorians, who are our governments at both local government and state government level. When you have a system that allows an emphasis on profit at the cost of the outcomes for people and the wellbeing of people, these are the kinds of problems that result from it.

We also know that as the VMIA struggles to stay afloat it has announced it will again increase domestic building insurance premiums. This cost will be passed directly on to people building homes, making the housing market even more unaffordable. This increase seems to penalise and place at risk builders who are still operating and warrants a further investigation too.

As I mentioned, we have been contacted by a number of people – and I have been taken aback by the number of contacts that we have received just in the last couple of days alone, and I understand that would represent a whole number of people who have not contacted us yet who are struggling through this system that they feel completely disempowered by. There are some very similar, consistent themes that are emerging from the contact that we have had from people who have been stuck in this system for years on end with huge bills racking up around them. They talk about a lack of transparency, timeframes not being held to and no communication from the VMIA as they try to get their homes completed so that they have a roof over their heads. They have made accusations of underhanded dealings and insufficient compensation for defects. One person wrote to us to say that they were told they would be covered for two months rent. They have been out of their house – so they have not got a home – for 24 months. That is just costs that are racking up. And we know that rents are going through the roof, so we know what kind of stress and pressure these families are experiencing.

We have also had accusations of heavy-handed tactics resulting in Victorians having to use VCAT, and we know VCAT can be costly. When you add lawyers and other legal fees on top of that, you are starting to get mounting bills on top of the building bills that are now surrounding these people who through no fault of their own have been left with incomplete homes and huge and rising costs.

We also know of the delay in getting claims processed, and we are hearing of issues about people having to go back and forth with the VMIA, with poor communication transparency and no justification for their decisions – remembering that every delay delays a person being able to get their occupancy certificate to be able to live in their home. Clearly the relationship between the VMIA and the people that need them the most has broken down. I do not think you would get this volume and consistency of complaint from a broad range of Victorians from all across the state if not for something more fundamentally wrong going on, which is why an Ombudsman referral and an investigation of this nature is warranted, even if it is to rule something out. If what the government is claiming is that there are no problems, there is nothing to see here, well, it would give people more confidence that something else might be going on. But I suspect that what we are going to find is that something has gone wrong and it needs to be fixed. And we have the power to fix it, because it is an agency managed by the government.

On that note I would just like to once again reiterate our support for this motion. I am really pleased this matter has been brought before this chamber with the urgency at which it has been brought. Hopefully it will provide some consolation. I know it is little consolation to the many Victorians really struggling right now. Just imagine being in this situation, where your builder has gone bust, you have been told there is some reprieve, you can go through the VMIA, only to be met with this kind of brick wall of no information, no transparency, on top of your stress wondering when you are ever going to be able to build your home. With mounting costs as inflation rises and interest rates rise, people are struggling to put food on the table. Just imagine how stressful this would be to experience month after month for years. We know that building a home takes more time than everyone anticipates as a starting point. Now add the crises that descend upon people when their builder collapses, when the agency and the government that promised they would provide some support are saying ‘You have to go through our process’ and when despite people saying that process is not fair, it is not transparent and it is really, really stressful they are being met with responses like, ‘It’s just the system, and it’s a system that we have to deal with.’

Something is clearly going wrong. We welcome an investigation to get to the bottom of it and to hopefully, ultimately, get some relief for so many Victorians who are doing it really tough right now, who just want to be able to move into their home.

Tom McINTOSH (Eastern Victoria) (16:20): Well, the greatest trick the devil ever played was convincing the world they did not exist, and that is exactly what the Liberal Party are trying to do here, trying to make out as though they care about standing up for consumer protections, because we know they do not. That is not in the Liberal Party’s DNA one bit. Some of the lines we are hearing have been interesting at best and dubious at worst. When we talk about consumer protection and when we talk about insurance, we talk about putting a small fee – and in this case I think it is 0.6 per cent or something – on the cost of a transaction to protect the broader base of consumers. This is something time and time again that the Liberal Party have stood against. Consistently we have seen over decades when businesses want to try to get away with practice and want to try to get away with operating their business in a way that lets consumers down, the Liberal Party have consistently been nowhere to be seen.

We have gone through basically a four-year period where, no matter what industry but particularly in construction, due to the pandemic and due to wars and conflict around the world we have seen inflation around prices of materials. We have seen a shortage of labour supply. We have seen increases in costs in construction. This has led to the situation we have found in recent years where we have had builders and companies become insolvent. Some of these have acted completely inappropriately by not ensuring that insurance has been provided for their customers, and it would be good for the Liberal Party to point out the cases where they have called that out, where they have called out their mates in the public domain for business not acting appropriately, for businesses not ensuring that their customers have the appropriate protections in place.

There are many instances where we have seen good consumer protections being put in place by the Labor Party, whether that is state or federally, to ensure consumer protections. If we go back to a simple philosophy, or a simple example, things like seatbelts, things like basic consumer protections – you can talk about insurance or you can talk about things that actually keep people safe in their daily lives – time and time again the Liberal Party stand on the side of big business and do not want to see any minute or slightly bigger additional cost that would be there, even if it would protect consumers.

As I said, we have come through a period that has been like no other in living memory, a once-in-a-century pandemic, and that has impacted on costs. Yes, that has seen this heightening of demand, this heightening of costs, but it is being worked through. Referrals have been made to the Ombudsman and have been investigated.

I think it is very interesting that in this conversation we are talking about quality building outcomes for consumers yet we do not hear the other side talking about the assurance of a good pipeline of workers. We do not hear the assurances of ensuring that our workers who are working in our building industry have the best qualifications they can have and have the best skills they can have so that Victorian home builders – anyone looking to build, anyone looking to renovate – can get the best possible outcome for the hard-earned dollars that they are investing. We know that over subsequent years we have seen what the Liberals will do to TAFE when they have the opportunity; they will slash it. That does not enable the many, many forms of various trades coming through to have the appropriate skills and qualifications they need.

We know, and I mentioned it in my previous contribution, that when things like the SEC are dismantled we lose a whole generation and a whole pipeline of workers. Workers do not work for a company for a lifetime; they end up going from contract to contract. When you have that movement of the workforce you do not have that knowledge being passed on; you do not have that generational knowledge, and when people are moving around you are less likely to have that commitment and that quality outcome that is seen. I remember when I started my apprenticeship the tradies that were older than me and those still in overalls had spent 20, 30 years in one company. They were in their career for life, and they were with a company for life. They were very committed to the outcome of their work because it was a reflection upon them, the quality of work that they did for the company they worked for and also for the customers who were receiving that work. Again it just brings me back to this point of the philosophy of those opposite as to what they want to deliver for consumers, whether it is the quality of the work being done by those actually doing the work and delivering the work or whether it is to actually deliver the business component of it, the contracts, and ensure that that insurance is there.

The Victorian Managed Insurance Authority’s financial position is sound. As I have said before, it is working through a backlog and has been working through that over recent times. That was obvious through the items that I commented on before, which led to the situations in the industry, and we have seen global inflation right around the world across the industries. The important thing is that – I have made comment on this before, and we have heard a lot of union bashing on the other side today – you can look, you can see and you can touch, feel and smell projects that are quality builds, and they stand the test of time. When we have quality products being built by trades that have quality training and skills and by companies that have the proper insurances and proper culture within them in the way that they operate as businesses, we get good outcomes for Victorians. We want to see homes that are built today lasting for generations, because it is not a good economic outcome for anybody to see a house with defects in only years to come or houses having to be torn down in decades to come.

We want to see houses built. We want to see houses that are built to a high quality – something again that those opposite stand against. They do not want to see houses that are well insulated, houses that are energy efficient or houses that are going to save consumers money year after year. They would rather cut corners up-front so that builders who are not as interested in consumer outcomes as they are in the bottom line can get a house up as quickly as possible and as cheaply as possible and flip it over and move on to the next one.

Ryan BATCHELOR (Southern Metropolitan) (16:30): I rise to speak on Mr Mulholland’s motion on an incredibly important issue – that of ensuring that people who are seeking to build a home for their family have a place that they can in fact call home and that provides them with the safety, the security, the comfort, hopefully, and the nurturing environment in which to house their family in a community that they choose to live in. I think we all want that for all Victorians and particularly understand and have heard on too many occasions the stories of individuals and families who have encountered difficulties in the building process. I have absolutely no doubt that those stories that we hear, the tales that are relayed to us, are real and genuine and distressing for those individuals concerned, and absolutely we need to do what we can as representatives and as governments, as members of the Parliament, to assist in what is the biggest contractual obligation, decision and discussion that an individual is likely to undertake in their life – that is, the decision to build a home or to undertake extensive renovations on a home. So we can understand the importance of these issues and absolutely understand how critical they are for many Victorians, and we take them exceptionally seriously.

There have obviously been, in the terms of the motion, issues with the way that the domestic building insurance claims process is handled and managed by the Victorian Managed Insurance Authority and the way that those claims are processed and assessed and the consequences of when decisions are taken in terms of remedial action in relation to houses – obtaining quotes for remedial work and the like. Clearly in any system that is building a lot of homes, as we are here in Victoria, there are going to be instances where not everything goes according to plan, and processes like this are important and put in place in an important way to make sure there are safeguards, that there is protection and that there is support for those individuals in one of the biggest financial decisions that many of them will make over the course of their life. We know from the terms of this motion that there have been concerns raised and families who are frustrated with the VMIA process and the length of time it has taken. Mr Mulholland’s motion seeks to, legitimately, give voice to some of these concerns and then seeks an investigation by the Ombudsman to further look into the claims management processes of domestic building insurance by the Victorian Managed Insurance Authority.

What we do know is that the Ombudsman plays a very important role as part of the integrity and accountability framework here in the state of Victoria as an independent body who can receive complaints from members of the public, take action, commence investigations and make recommendations on particular issues with an extensive and broad set of powers. For 50 years we have had the office of the Ombudsman here in Victoria. We have had over that time some absolute champions of the rights of Victorians to receive fair process from the government, and I think it is inarguable that ombudsmen past and present have been willing to stand up and highlight problems where they see them existing. That is why the office of the Ombudsman exists. They play a very important role. The motion itself goes into this in a little bit of detail.

I should also say that the Ombudsman is obviously acutely aware of the importance of the building and facilities matters that come before it. The Ombudsman’s office and the Ombudsman herself, as it still is, take great interest in these matters. In the last financial year, according to the Ombudsman’s annual report, building and facilities was the number three issue complained about here in Victoria out of the top 10 complaints, so there is an expertise in the Ombudsman’s office in dealing with these sorts of matters.

I raise this because it is clear from the terms of the motion that families reached out to the Ombudsman in December last year seeking the Ombudsman’s assistance in further investigating the complaints that are before it about the practices of the VMIA. We do know, because we were advised by the VMIA that the Ombudsman took up these complaints and started looking into them – in fact looking into all of them – and requested further information from the VMIA, as it is supposed to in accordance with the law and the expectations of this Parliament; that is, that the Ombudsman will respond to complaints of people who complain to it, will ask questions of agencies, in this case of the VMIA, in respect to these 30 claims. And we are advised by the VMIA. I would be interested if Mr Mulholland has any further insights as to what those complainants have received by way of response from the Ombudsman since those complaints were lodged in December according to the terms of the motion. I think it would illuminate the debate if we knew what response they have had from the Ombudsman to the complaints that they have made, because the information that we have received from the VMIA is that those complaints were the subject of further exploration.

Documents and materials, using the Ombudsman’s powers, were requested from the VMIA, were received by the Ombudsman, and as we understand it, the decision was taken that no further investigation was required. We think it is interesting. Obviously this was taken in December, and we know that there was a change of Ombudsman earlier this year – Deborah Glass stood down in March and Marlo Baragwanath took over shortly thereafter. We know that the previous Ombudsman, who would have received these complaints, was exceptionally diligent in the receipt of complaints. I think it really beggars belief that any reasonable person could believe that that Ombudsman or the current Ombudsman would not be diligent in the exercise of their powers. I find it hard to believe that, which brings us to what this motion is requesting, which is that the Parliament ask them to go and do it all again – that the Parliament says, ‘We know you’ve received complaints. We understand that you’ve taken a look at these complaints and requested information from the VMIA.’ Again, if Mr Mulholland has any further evidence, if he can, I would be really interested to hear that, because it is an important feature of the system that the Ombudsman has powers to do this on her own motion in the receipt of complaints or when systematic and systemic issues have been illuminated.

There was a report just last year tabled in November into complaints around building permits, so this is not a topic that is foreign to the Ombudsman or her office. We do think that these are incredibly important issues. We do know that they are important for the individuals concerned. We expect that the VMIA does its job properly and it does its job with due care and it does its job with due consideration for both the policyholders and the system overall and makes sure that it supports under the terms of the insurance policies people who need help in the housing industry. We also expect that the Ombudsman is doing their job, and we expect that they are, and that is why we would welcome any further information that may exist about how investigations into this have occurred over the course of the time since December last year.

Michael GALEA (South-Eastern Metropolitan) (16:40): I rise to make some contributions on the motion put forward today by Mr Mulholland in relation to the Victorian Managed Insurance Authority, the VMIA. In doing so I would like to preface my remarks by noting that whilst we can get into the discussion – and I will go into a few points – at the outset I think it is really important to note that at the heart of these cases are people who have gone through difficult situations with their builders, unfortunately, in some cases, dodgy builders. We know that the vast majority of building practitioners are ethical and do the right thing, but where that does not happen, that is a gravely disappointing thing and it brings absolute shame onto those who would seek to exploit their customers, who would be putting their life savings – and indeed heavily mortgaging, in a lot of cases, quite a bit more than their life savings – into their long-term home. To be treated in such ways, to be let down by those builders where that does happen, is a deeply, deeply shameful thing, and I note indeed that one of the purposes of the VMIA is to support people through those difficult circumstances.

From the outset I do, as a principal point of view, welcome opportunities in which we can make that as robust as possible and ensure that the VMIA is doing its job. That unfortunately does lead me to my central point of concern with this motion, which, as Mr Batchelor was just outlining as well, is that the cases which we are discussing today have actually already been investigated by the Ombudsman, and they found no wrongdoing on the part of the VMIA. As I understand it, they have investigated each of those complaints. There have been numerous different, individual complaints to the VMIA from people who have gone through that most painful and difficult situation of dealing with defects or other issues as a result of dodgy practices on the part of their contractors and have had to go through this process.

Of the 739 complaints which have been open for more than 12 months, 229 have had an offer made that is waiting for customers to make a decision, and the bulk of the other open claims – I believe 288, based on the facts that I have – relate to defects on multi-unit claims, which are somewhat more complicated due to their intrinsic nature and the role of the VMIA and the various groups of customers to navigate those complex defects like cladding or water issues that may be of concern. The VMIA needs to negotiate with the owners, various strata bodies and other body corporates as well as tenants to inspect and resolve those defects – indeed, in cases of expert technical advice on the claim, to make a liability decision; to inform the scope of works; to seek permission from, as may be the case, multiple home owners and indeed tenants to get access for the inspections that are required; and indeed as well to find suitable, qualified builders to perform those quotes and to perform those measurements and other works that are required to take place. Obviously those sorts of rectification works are a relatively specialised field in that space.

I will reiterate the question that my colleague Mr Batchelor asked, which was: what is the issue out of these complaints which have already being investigated by the Ombudsman? What is the defect in their existing answers that you are seeking to address here by putting this motion forward today? I do have faith that the Ombudsman has done its job, as it is statutorily engaged to do, and that the Ombudsman has actually properly considered these complaints as they have been made. Again, as Mr Batchelor said, we do not actually have any particular evidence to show that they have not done their job thoroughly and appropriately, as we would of course expect them to do.

In the time I have it might be worth outlining a little bit about what exactly domestic building insurance is. It is an insurance product that covers building customers when their builder is in some way incapacitated, whether they are subject to an unfortunate medical incident or an unfortunate financial incident – if they become insolvent – or otherwise make themselves unavailable. It can generally assist customers in three ways: firstly, if the building works have not yet begun, it can cover the entirety of the legally prescribed maximum deposit of 5 per cent; secondly, if the building works have commenced, it will cover the completion of the rest of the build up to a maximum of $300,000; and if the home has been completed, in the third instance, it will cover defects for a period of six years.

The VMIA provides DBI – domestic building insurance – to over 70 per cent of the Victorian building market on the direction of the government. In 2010 nearly all private insurers left the Victorian market, requiring that the government step in to stop what has been a clear market failure – and that is something that this government takes very seriously, again, for the reasons I outlined at the commencement of my speech.

I am very privileged to represent across vast regions – as we all cover large numbers of people in this place – people in suburbs such as Clyde North, Cranbourne and areas around there where there is a significant amount of new housing build. Quite frequently I will be raising both the growing constraints that these areas have as well as the solutions that this government is delivering. Indeed this morning I was speaking about an intersection in the suburb of Clyde North at Soldiers Road and Thompsons Road that many, many locals have written to me and otherwise contacted me about to express their concerns over what is a small intersection that was fit for purpose when the area was surrounded by farms 20 years ago but is no longer fit for purpose with estates popping up all around. These are council roads, so I have been in discussion with Casey City Council and have appreciated their interest in driving this project forward. There is a proposal to extend the new Bells Road, which will considerably alleviate this issue, and as part of that too we will see significant improvements in travel time for people in those suburbs. I will not go into them now lest I stray too far from the topic at hand, but there are a number of other state government investments in that particular region as well, such as the new roads, bus routes, schools, health services and the like.

When it comes to areas like these we do have huge numbers of people, thousands of people, moving into the outer south-eastern suburbs, and for many, many families as they do so that process involves the building of a new home. It should be a very exciting thing, and by and large I know that it is a very exciting thing for people. It was certainly the case for many people I have spoken to. But too many people do get let down by their builders, and that is where something like domestic building insurance really comes into play. It is that added safety net. As I have said, despite the clear and apparent market failure that occurred in 2010, it is good to see, as part of many of the functions and many of the responsibilities that are conferred onto the government of Victoria by this Parliament, that support for such people building their homes is provided for through domestic building insurance, and that is provided for through recurrent funding through the state government.

It is a very important thing for people to have that faith as we are well and truly on the mission towards building those 800,000 new homes over a 10-year period, as was announced in the housing statement last year. It is important – in fact it is imperative – that people building these homes can have the confidence that they rightly deserve that these homes will be built to a high standard, and that is part of what this system is designed to achieve, as well as the various other reforms that we have brought in in terms of minimum space requirements for apartments and other things and other discussions that we have had around granny flats and broader planning reform too as we shift to having more of that growth focused on existing parts of our capital city and indeed our other regional cities as well.

There are a lot more exciting things that I can talk about, but as I said, this particular matter is one that is very important to a number of people. However, I am concerned that the way in which the opposition have framed the motion today fails to actually reflect the reality and the history of what has already been undertaken by the Ombudsman.

Evan MULHOLLAND (Northern Metropolitan) (16:50): We have heard a wide range of contributions, but I want to thank all of my colleagues for contributing to this very important motion. Rather than take a whole lot of sledges, I thought I would use my contribution to echo and amplify the voices of young families that are being heard. I am grateful to Dr Ratnam for doing the same and amplifying voices of young families in both of our electorates and across the state that have faced really heartbreaking situations as a result of Victorian Managed Insurance Authority (VMIA) delays.

We heard Ms Ermacora say that it is all because of Porter Davis. It was not just because of Porter Davis that the VMIA is strained. When we pointed out earlier in the year that there were 1300 outstanding claims, the government acted like that was the peak of the claims. There are now over 2000 outstanding claims, 700 of which have waited over a year. We saw the story of Steve Yates, I think his name was, on the ABC, a fellow who waited three years for the VMIA. We have seen that there have been a number of investigations –

Harriet Shing: You don’t remember the name of your talent, Mr Mulholland?

Evan MULHOLLAND: I have not spoken at a presser with him, no.

Harriet Shing interjected.

Evan MULHOLLAND: No, no. He wasn’t.

They were saying that there have been a number of investigations. We are still waiting on Danny Pearson’s audit of domestic building companies. That still has not arrived. Mr McIntosh was quite laughable in trying to suggest that the shortfall in labour around the state has been caused by the war in Ukraine. Explain that, when we know it is because of their mismanaged Big Build. Labour makes up the majority of the cost or half the cost of new housing, so when you have a mismanaged Big Build sucking in all the labour it means that it is harder to build a home and it adds cost to building a home. He spoke about the need to ensure a pipeline of workers, and the mismanaged Big Build has ruined that. Even the Treasurer has acknowledged that it is having an impact on domestic builds. Even the Treasurer acknowledged that that needs a supposed slow down.

I want to come to points that Mr Batchelor and Mr Galea made in regard to the Ombudsman and previous responses to families. The Ombudsman actually did not acknowledge the substance of the letter from over 30 families. They responded to one case, and to others that emailed the Ombudsman they gave a form response that they had to go to VCAT. Can I just point out that the reason the Ombudsman did not investigate is that you have to exhaust all options that are there in the dispute. The response to these families – this is an important point – was that it is not unreasonable to take proceedings to VCAT. For these families, it is completely unreasonable. To go to VCAT would cost them more than the just compensation that they deserve that they are hoping to receive. It is completely unreasonable to say that that is an option for a young family to take, a young family like Alex from Craigieburn, who had to delay his wedding, who was paying $2000 a month for a mortgage on land and a slab in Craigieburn that he could not even live in. It is completely unreasonable to go to VCAT. For many families this is absolutely not an option. To suggest that they have not exhausted all options – it is completely unreasonable for them to go to VCAT. That is not something that is left for these families to do. They are in their darkest moment and in financial distress, and we are meant to think that VCAT is an option for these families. This is what that side of the chamber thinks. Of course it is unreasonable to take the proceedings to VCAT. The VMIA is sending families to VCAT. The VMIA is stonewalling young families with partners in expensive law firms saying, ‘Your only option is to go to VCAT.’ It is not good enough. We need an Ombudsman investigation.

Motion agreed to.