A Bolt from the Blue: The VBA Class Action

The announced demise of the Victorian Building Commission (BC) in November 2012 came after the exposure of a raft of issues.

These issues included a culture of extravagant spending that in part led to a $3 million budget shortfall, conflicts of interest involving senior commission officials, and a failure to act on warnings that unregistered inspectors were approving questionable work on thousands of homes. The BC had initially been named the Building Control Commission (BCC), and for reasons unknown the word control was dropped and it became just the BC.

The Victorian Building Authority (VBA) was formed as a replacement with high expectations that this new entity would in fact be the silver bullet that would instill confidence and deliver a regulator that would apply its given powers to regulate and be seen to regulate an industry that had previously spiraled out of control.

Expectations of both builders and consumers was high and support was given willingly, but it soon became evident through the multiple failed appointments and the direction the new entity was taking that there may be a continuing issue with the building industry, including its management, and its delivery of expectations.

There is no doubt industry’s concerns are being dealt with using only spin and tokenism.

On the other side of the equation, we have the consumers who are appalled with the current situation and the attempts of the VBA to shut them down by now rejecting some as they are not affected consumers.

On June 1, the VBA were served with the Range View Supreme Court writ. This action is unprecedented and its outcomes will determine the shape of the building industry for many years into the future.

How did it come to this for such drastic action to be taken by consumers?

A consumer building a home, which is a very personal undertaking, and expectations are high. In some cases, they may be too high, but in most cases the delivery is acceptable and issues are minor and resolved.

But in several cases the building process is a complete disaster that sees the building consumer compromised so badly, with issues languishing for so long, it almost becomes a vendetta for the consumer as he or she is pushed from pillar to post by an industry management regime called Builders Warranty Insurance (BWI) that delivers only despair in place of a resolution. Justice is completely evaded.

Every sector of the Consumer Protection Framework in Victoria is at the very heart of the failure and collapse of the building industry consumer protection, as there is no element that can be considered acceptable. The management of our industry also fails to address the glaring issues of concern such as registration, where we have multiple training organisations competing for a share of the building industry training for builders. Of course, “training” is a term used loosely as profit appears to be the main focus for most of them, and for a fee you can become a builder in no time at all. VBA response is ‘not our issue!’

Then we have the conduct of some builders whose actions can be considered appalling but as the years roll on we fail to deal with them from a regulatory point of view. Some continue to wreak havoc for consumers, such as the builder exposed in a recent A Current Affair, who has taken some four years to be brought to a hearing brought on by the police and not the VBA.

The key plank to the Housing Industry Association BWI system implemented in July 2002 was for tribunals to deal with builder complaints. In Victoria we have VCAT, which was initially implemented to provide a forum for self-representation for both the builder and the consumer together with a timely process. However, over the years the legal profession and VCAT have morphed into a full on legal process that sees both sides expending huge sums that in most cases far exceed the cost of the initial dispute. Cases languish for years, keeping the lawyers very happy.

The emotional, mental, and financial costs to society is immeasurable.

In a recent ABC News story, the VBA’s Prue Digby stated “The system has proved to be very difficult and complicated to navigate when they do have problems” but pointed to the number of building permits issued every year as evidence that the industry was not in disarray.

While a slip of the tongue by VBA could be attributed to the number of permits issued each year – 110,069 in the 2015/2016 year and 105,431 in the 2014-2015 year (those numbers include all permits both domestic and commercial) – the inference to the listener was that complaints to the regulator were so miniscule it was not an issue.

That certainly gives a false impression.

This style of presentation appears rife by the bureaucrats that are charged with administering our building industry. And it appears they are supported by the trade associations who under all circumstances want the status quo to remain to ensure their precious income streams from the provision of a product of dubious value but one that definitely holds sway of the builders of this industry and leads consumers into false sense of security.

Neither HIA nor MBAV have ever provided a position on the health of the building industry or its consumer protection. They remain seated on the sidelines and only speak out when the government of the day suggests the builders warranty scheme has failed and must be changed. Such a statement generates political threats and outrage from them and when the government of the day withdraws, all is quiet again as the status quo remains and our industry continues to suffer. This political abuse of power is undermining the role of the regulator.

The number of consumers affected by a builder’s failure is a closely held secret, if in fact VBA have any idea of the numbers, but there is no doubt the total is totally unacceptable irrespective of the number of permits that are issued. VBA are more than aware of the magnitude of this issue and all the issues surrounding the failure of the consumer protection and no amount of fiddling will ever resolve this issue.

Both the builders and consumers have had enough, and as the class actions mount, the VBA may finally understand the role of a regulator as the Supreme Court will be the final judge of their performance or the lack of it.

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