Collateral Building Damage


Our diminishing take up rate of trade apprenticeships and pending future skill shortages has been a hot topic in media reports of late. However, this in fact has been an issue for well over a decade.

There are two glaring circumstances leading to this problem.

The first of these is the mandatory Builders Warranty Insurance (BWI), whereby builders are assessed on an annual basis, only giving them tenure in their industry of 12 short months. This flies in the face of a four-year commitment required to employ an apprentice. Most builders now encourage their children to take up other professions because of the BWI regime.

Secondly, the rationale of private building industry companies’ investment strategies in apprenticeships and training is seen as being a waste of time when no registration or licensing exists in so many of the trades.

In Victoria, there has been much conjecture over recent years in terms of why the building trades should be registered as they are in all major jurisdictions in the nation.

Logically, all those who work in the building industry should be registered as their trades contribute to the buildings we build, and therefore their professions should be protected and held to account if the need arises.

The bureaucracy – including the VBA in conjunction with Housing Industry Association – are the only entities who are out of step with the whole of industry, which includes the Master Builders Association of Victoria, who see common ground with the concept of registration.

The argument put forward by the bureaucracy and HIA is the fact that it’s too expensive to register trades and creates an exorbitant amount of work for VBA with its underutilized resources. This is a statement without credibility or foundation.

The Association of Wall and Ceiling industries together with the Master Painters Association have joined forces and commissioned a comprehensive report titled is Build Better, authored by none other than Steve Griffin who amongst other appointments ran the NSW and Queensland building industries for several years and is eminently qualified to pen such a document.

This document demonstrates the economic and practical benefits of licensing the trades and the wider industry will embrace these benefits. Reputable industry members are all too aware that the conduct of some trades is to the direct detriment of both consumers and the registered builders. These benefits also will protect and enhance those businesses which run a high standard ethical professional workplace, but which are currently being economically driven to lower their skill set bar to win their work.

Much of the detriment suffered in the building industry today is bought about by trades who lower the ethics and skill sets and the quality of work suffers but anything will do to get the job done in the quickest time. These operators have been the angst of all within our industry as they know they are rarely ever held to account, nor will they be sued by the principal contractor as it is simply not cost effective and such an action would be a woeful business decision.

The case for regulating the trades is compelling!

The residential building sector forms an integral part of the Australian economy. Data from the Australian Bureau of Statistics showed that Australia’s expenditure on new residential construction in 2015-16 totalled $66.5 billion. This spend on residential construction accounted for approximately 3.8 per cent of Australia’s GDP.

While HIA suggests registration would be too expensive, the Build Betterdocument found in its research that registration of trades would not be an impost on industry:

“Cost estimate: The costs of registration are estimated at $5.0 million per annum. Given that 103,000 trade contractors are expected to be registered, this would imply registration renewal fees of the order of $49 per practitioner if a full cost recovery fee were to be set.”

A domestic builder in Victoria today pays some $250 per annum for the privilege of a building licence for a 12-month period, but only if he or she has BWI insurance eligibility which is mandatory for any project over $16,000. Most builders have projects worth more than the that threshold, but if they don’t meet the VMIA insurance criteria they languish in no man’s land unable to build. There is no data to reflect how many builders are in this position.

In NSW, some 47 per cent of builders do not have BWI eligibility

The opposing view to registration of the trades is based only on opinion without any supporting data to justify the opinion, while the Build Betterdocument has sourced data since the trades were licenced in the late 1980s’

“Since the late 1980s finishing trade contractors and other sub-contractors have been licensed (registered) in New South Wales, Queensland and South Australia. Data has been obtained from these jurisdictions”

Clearly, the declining dispute rates in both Queensland and New South Wales when compared to the increasing trends being experienced in the other jurisdictions supports the hypothesis that better outcomes in terms of lower building defect complaints and disputes are being achieved in those jurisdictions where trade contractors are licenced (registered).

The current unregistered and unlicensed trades may offer short-term gains and a quick fix for skill shortages, but offer complete misery for consumers and those who have invested in reputable businesses over many years.

Add the 457-quick fix and you have the disaster we all have witnessed over the last decades. The solution is easy if common sense can prevail and government starts listening and engaging with those who work in the trades and not the Quasi trade groups whose only interest is bolstering revenue streams at everyone else’s cost including that of the wider industry.

A clear start in Victoria’s case is stop spreading building industry control over three ministries (Treasury, Planning, and Justice).

Our Victorian Building industry equates to over 20 per cent of gross state turnover and it deserves a single Minister for Building which will bring the Victorian government to account and stop the finger pointing the public servants have enjoyed for the last two decades.

The change must start now to arrest the decline to a third world building governance.

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