Cutting Red Tape: Cause and Effect


Much has been said in the past regarding the prospect of cutting red tape, and the defence is always there are cost savings that benefit home affordability. That may be the case on the surface but what is the real cost to the industry, and where are the impacts?

Government argues 95 per cent of consumers benefit from the removal of red tape, and only five per cent may be adversely affected. Yet the Chairman of the ACCC, Rod Sims, has now agreed privatization that underpins the removal of red tape has not worked.

The hidden cost and flow on effect is far more reaching and is undermining the whole community.

We can target many sectors that are suffering today, such as compliant materials, training, consumer protection, apprentices, skill sets to name just a few.

Yet the benefit from the cutting of red tape is isolated to an illusion of cost savings to home affordability. Those who benefit are the insurance industry and the brokers, such as the industry associations who support the status quo, and are often responsible for concocting schemes to benefit their income streams such as the current Last Resort Builders Warranty Insurance.

One of the biggest losers are the building consumers, as the regime that delivers our consumer protection is in total disarray. This is reinforced with endless stories in the media that demonstrate regulatory failures which continue to amaze everyone. Although every state and territory government has launched enquiry after enquiry, rebadged their building regulator, made all the right noises, the trajectory of regulatory change at the moment will never catch the rising J curve of complaints and building failures.

Tokenism and spin continue to be today’s buzzwords, with very little real change ever occurring. Those brave enough to challenge or push for change walk a sometimes-lonely but well-worn path that many before them have travelled.

The government and regulators’ doors open and close with the passing of time, and most give up the crusade, tired and worn out. Those who have endured the journey inspired by hope of effective change are let down again and again with either change of government or CEOs moving on. And thus, the lobbying, meetings, stakeholders groups fall into the basket of tokenism and are really a muse for your newly elected politician.

Therefore, the pathway via the corridors of government and the regulators is a time-wasting journey which has been proven to waste everyone’s time over the last two decades.

We have had Senate, Parliamentary, Ombudsman, and Attorney General enquiries and review after review, and still the J curve of disharmony continues to grow.

What will it take for real effective regulatory change to regain control of a once proud industry? We must clearly illustrate the cause and effect. We have heard and seen the many stories and epic failures. The consequences of red tape removal have continued to make headlines across Australia. So why does the public continue to accept ongoing regulatory failures?

  1. The majority of so-called industry stakeholders have little interest in genuine consumer protection.
  2. Stakeholders/peak bodies have more interest in revenue streams and profits at any cost to the public.
  3. Very few of the industry peak bodies represent those who actually work at the coalface – less than 15 per cent.
  4. Fragmentation of the industry is an ongoing problem.

Thankfully, with enough public outcry, we have seen that change can be forced in any situation. How can we do it? Obviously, the media has an important role to play and can be a powerful tool if used effectively.

So we must draw the landscape with clarity and show the real consequences. It does not stop with the consumer. The cutting of red tape has destroyed long standing family businesses in the building industry and many today question the viability and credibility of the industry as a whole.

The building industry’s playing field has seen many of its rules and umpires removed, giving those chasing profits at any cost succeed ahead of our quality long standing building firms. Does the public understand this consequence? Probably not.

Add to this the warped and grossly unfair chain of responsibility for litigation when things do fail. What intelligent human being would ever enter this industry?

Unfortunately, due to most consumers being isolated via the current system and put through so many hoops, they feel hopelessly lost and fall by the wayside through litigation fear with nowhere to turn for help.

Then we have building products being imported without checks and balances, and when these products fail, a scapegoat must be found. This is typically the builder or the surveyor, as is the case with the Lacrosse building and its fire-prone exterior panels or the faulty infinity electrical cable that’s been installed in thousands of homes which could be a disaster waiting to happen.

The list of detriment goes on and on, and the damage to industry escalates, but those at the helm who allow the issues to flourish are not embracing change.

More seriously is the approach of the Victorian Building Authority (VBA) – ‘the regulator’ – which allows issues to languish for over 18 months, such as the property that is a potential breeding ground for Legionnaires’ disease, or the Rangeview Estate, where over 60 homeowners have been impacted. The VBA and the Building Practitioners Board have been less than helpful in seeing appropriate justice take place.

The VBA has now been in existence for the past three years and  has firmly established its operation, but what has it achieved?

New seats at the various VBA boards have been filled by public servants (mostly from WorkSafe), lawyers, and obscure so-called consumer groups. The missing technical expertise continues to be a third tier consideration.

Nothing has changed except possibly the VBA’s shameless Teflon approach to the many serious building disasters occurring day in and day out, clearly demonstrated in a press release where the VBA suggests you should do your homework if you are thinking of buying a house or a building, and recommending you consider a professional inspection to make sure it is safe and meets the building regulations before you buy.

Their comment raises another area of detriment: the building consultant that is unregistered and unaccountable, and who in fact in many cases causes more pain for the consumer or builders through unprofessional conduct that sometimes could possibly be akin to extortion.

All that said, what on earth is the role of the VBA?

Highlights of the last 12 months have included explaining to multiple innocent new apartment and house owners they will need to pay for the rectification of their properties due to legal shortfalls, and explaining to the innocent house owners adjacent to the MT Waverly excavation disaster that their house will need to be demolished due to the 10 statutory check measures which failed to be put in place or monitored by the regulators.

We have existing buildings that are ticking time bombs wrapped in flammable cladding on high fire watch. We have construction workers and passers-by having walls collapse on them. These occurrences are just the tip of an iceberg which has slid into our day-to-day lives, and most members of the public have not joined the dots as to its root cause – the cutting of red tape.

At some point, we will have a major disaster as the ice is getting thinner and thinner.

The real cost of cutting red tape far outweighs any of the so-called savings as our industry edges closer and closer to third world standards, with “buyer beware” warnings coming directly from VBA CEO.

How can we continue to accept the current regulatory regime after being promised so much and receiving nothing? I challenge anyone to bring forward any intervention or any effective protection the VBA is providing to any consumer.

Industry duty of care from the remaining professionals is all that has kept all of us from further peril.

After 2 decades of engaging multiple governments and traveling the length of our country, we believe it will only be public outcry that can achieve any real change. Therefore, the building industry needs to unite and paint a clear landscape for the public to join all those dots.

Because to this point, nothing has changed to end the misery that is leading to many more good and long-standing people being forced out of a contorted shambolic building industry.

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