Victoria’s domestic building industry is facing a major regulatory crackdown after the collapse of Porter Davis sparked chaos for hundreds of home buyers.
The state government will reform the Domestic Building Contracts Act and beef up insurance requirements, Premier Daniel Andrews announced on Tuesday 16 May.
Under the changes, a new offence will be created for companies who fail to take out domestic building insurance with the Victorian Managed Insurance Authority on behalf of paid-up customers.
Mr Andrews said Victoria’s regulatory systems are no longer fit for the modern housing market, with the Porter Davis saga exposing “gaps” in the current laws.
“We want people to be protected,” he said.
About 1700 homes across Victoria and Queensland were left in limbo when Porter Davis suddenly collapsed in late March.
Some 560 clients were not covered by insurance despite paying the company a premium before it went into liquidation, forcing the state government to set up a $15 million bail-out scheme.
Exact penalties for the new offence are yet to be determined but Mr Andrews flagged they would be significant.
“We want to make sure that the way it’s structured is an active disincentive,” he said.
“You’d like to think that people will behave and do the right thing without having to have a specific offence but clearly there are some in this industry who are intent to do the wrong thing.”
The incoming offence won’t be applied retroactively.
Mr Andrews said the Domestic Building Contracts Act will be analysed line by line, with the aim of progressing the reforms later in the year.
The Victorian Building Authority and Consumer Affairs Victoria will also be reviewed.
Victoria’s inaugural Commissioner for Better Regulation, Anna Cronin, has been appointed as the building authority’s chief executive after Sue Eddy resigned on Thursday, effective immediately.
Ms Cronin has accepted a two-year contract to oversee the massive reform project, Mr Andrews said.
No reason was given for Ms Eddy’s sudden departure after it was revealed last week some plumbing inspections were still carried out virtually, in addition to physical audits.
The measure was introduced at the height of the COVID-19 pandemic but continued despite advice they should stop.
The authority was also investigated over allegations of a toxic workplace culture after a long-term employee died by suicide in 2022.
Victorian Greens Leader Samantha Ratnam offered in-principle support for the proposed sector overhaul but said the Andrews government was partly to blame for its troubles.
“This is what happens when you privatise the system,” she said.
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