Hansard debates

                                 BUILDING BILL
                                 Second reading

  Mr MACLELLAN (Minister for Planning) -- I move:
  That this Bill be now read a second time.
The Bill reforms  Victoria's system of building standards regulation. It follows
a  major review of the existing  Building Control Act which aimed to free up the
regulatory  process and produce  legislation  which will be  compatible with the
current and future requirements of the construction industry. It is the  product
of  an  exhaustive  and open consultation process, both in Victoria and  at  the
national level.

It will provide improvements to the health, safety and amenity of people who use
buildings, together with significant cost savings to the government.
The major reforms are  in the  areas of liability, the provision of a privatised
option  for  building  approval  and of  a  one-stop-shop  approach  to  dispute
resolution.  They   are   being   progressively  adopted  by  other  States  and
Territories, which reflects the national momentum and support for reforms to the
ways in which building standards are determined and enforced.
The consultation process in Victoria  involved  public  forums,  committees  and
reference  groups,  wide distribution of research publications and briefings for
representatives of the major industry bodies.

The Bill has the support of industry  and local government, including the Master
Builders Association,  the Municipal  Association  of Victoria,  the  Australian
Institute  of  Building  Surveyors, the Royal Australian Institute of Architects
and  the Institution of  Engineers. The Building Owners and Managers Association
and the  Housing Industry Association  support in principle  the proposed policy
changes except for the proposed building permit levy. I  shall  now  outline the
major provisions of the Bill.
STRUCTURAL ARRANGEMENTS
Building Control Commission
The legislation establishes  the  Building  Control Commission as the overseeing
body for the building control system. The commission will be made up of a single
commissioner, who will be responsible to the Minister.

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It will be funded from a levy  on building  permits, also  introduced under this
legislation.  To  properly carry out  its function the commission  must have the
resources to  ensure that  it can  fulfil its  role effectively  and so that its
responsiveness to the building industry can be maximised.
The Bill will allow staff to be employed either  as public  servants or  outside
the  Public  Sector  Management  Act.  That  will  give  the commission  greater
flexibility  in the recruitment and  management of its  staff.  In particular it
will enable the staffing numbers of the  commission to respond when the building
industry is buoyant and to be reduced when activity is slow.
Building Practitioners Board

The  Bill proposes the  establishment  of a Building  Practitioners  Board to be
responsible  for  the  registration,  oversight  and  discipline of  a  range of
building  practitioners,   including  mechanical,  structural  and  geotechnical
engineers, building surveyors and inspectors, and  people  responsible  for  the
on-site erection of temporary entertainment structures. It  is expected that the
combination of the commission's capacity  to oversee the system and the Building
Practitioners Board's inspectorial, inquiry and disciplinary powers will achieve
maintenance of the existing high quality of building.
Building Appeals Board
It is proposed to enhance the existing functions of the building referees boards
by establishing a  new  Building  Appeals Board to be responsible for all appeal
matters under  the  new legislation. The  non-legalistic approach of  the former
building referees boards will be, and must be continued.

Building Advisory Council
The  setting  up  of  a  Building  Advisory Council  (BAC)  will  provide senior
representatives of relevant peak industry bodies with a forum in which they will
develop recommendations to  the Minister on key issues concerning the regulation
of building standards.
The  council will consist  of five industry  representatives  plus the  Building
Control Commissioner,  who  will chair  it.  The proposed council  reflects  the
enhanced advisory role that the peak bodies will have under the new legislation.
The  government  is committed  to  providing industry  with  the  opportunity to
directly advise the  Minister on the  operation of the building  control system.
The Building Advisory Council will be the key forum for  the development of this
advice to the responsible Minister.

In the  course of  discussions with  industry on  the provisions of the Bill  it
became  apparent that  there  would be  advantages  in separating  the  detailed
technical advisory  responsibilities from the broader policy advisory functions.
A  Building  Regulations  Advisory  Committee  will  therefore be established to
advise the Minister on technical issues.
MAJOR POLICY CHANGES
Private certification
The  Bill  introduces  the  option  for building permits to be issued by private
surveyors, which  will expedite the issuing of building permits.  Major projects
and other  building  projects will  no  longer be constrained  by  local council
timetables as  the  new provision  will  enable private  building  surveyors  to
compete with council surveyors for business on the basis of timing and cost.

It is  expected that this new  competitive environment will lead to improvements
in  skill levels  of  building surveyors as  well  as faster  building  permits.
Everyone who has been involved in  seeking  a  building  permit will applaud the
development of this service-orientated approach by building surveyors throughout
the State.
When the Bill becomes law, builders will  be able to choose to  engage a private
building surveyor  to  carry out the  building permit, inspection  and occupancy
permit functions and responsibilities  or, where available,  they may choose  to
use the  system  provided  by local  councils.  The  present system  of  private
certification of non-structural aspects of a building design for submission to a
council will remain as an option.
The private building  surveyor  will  be  required to work in a professional and
impartial manner.

His  or her  conduct will  be regulated by the scrutiny of the  Building Control
Commission,  and  the  proposed  legislation  includes   significant  penalties.
Building surveyors whose  work  falls short of  the  standards required  can  be
deregistered  or  fined. Those formal  powers  will be complemented  by the peer
group scrutiny of other builders and building surveyors, and the scrutiny of the
insurer.  Without a  good  professional record  and  an  acceptable standard  of
professional  practice,  insurers will not maintain the insurance cover required
by a building surveyor on an ongoing basis.
LOCAL GOVERNMENT
Optional regulatory building involvement
The Bill provides councils with a range of options in relation to their building
control responsibilities.

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A council  could  resolve to withdraw  from  the administration of  its building
control functions in whole or in part and  make alternative arrangements for the
issue of permits for building works in its municipal district.
These alternative arrangements could involve a council:
        contracting out its functions in whole or in part  to a private building
        surveyor;
        transferring its functions in whole or in part to another  council or to
        the Building Control Commission subject to the agreement of each party;
        using  the services of a  private building surveyor who  would carry out
        functions for a number of councils;

        with the concurrence  of the Minister  responsible for the Building Act,
        transferring its functions to a regional corporation as provided for  in
        section  196 of  the  Local  Government Act  1989.  In  this case  legal
        responsibility transfers to the regional corporation. In all other cases
        the relevant council retains ultimate responsibility for the function.
LIABILITY AND INSURANCE REFORMS
The Bill  introduces  a  more vigilant  approach  to  the insurance  aspects  of
approval  practices  than  currently  exists. All  building  surveyors  will  be
required to  carry compulsory insurance  cover as a prerequisite  to practising.
There   are   tough  penalties  for   not  doing  so,  ranging   from  fines  to
deregistration. The Bill also provides for the random audit of both  council and
private building surveyors.

This new compliance regime  will  help ensure that building surveyors act with a
high  degree  of professionalism and  integrity  and that the   public is better
protected in the event of building standards not being met.
The  Bill  introduces long overdue  reforms  to update  liability  and insurance
arrangements in the building permit industry. All building practitioners will be
required to  carry  professional  indemnity cover to financially guarantee their
professional obligations, except in the case of residential builders who already
provide the consumer with an indemnity under the Housing Guarantee Fund Ltd.
Traditionally a building owner has had to contend  with the ever-present risk of
not being able  to enforce a  court  determination awarding damages  because the
financial  position  of construction practitioners not backed with insurance can
make such action pointless.

Responsible  insured practitioners have also been disadvantaged  at  the  tender
stage as the cost of their insurance has often made their  prices  uncompetitive
when  compared to those of practitioners who elect not to carry insurance cover.
The introduction of compulsory insurance will put all building practitioners  on
the same footing and will provide building owners with more certainty. A further
benefit  is  the predicted improvement  in care and diligence  which will result
from the compulsory  insurance requirement, as  a no-claims record will  lead to
lower premiums.
The construction industry, local government and interested members of the public
alike are on record as welcoming the liability reforms contained  in  the  Bill.
Abolition  of  the  unfair doctrine  of  joint  and  several  liability,  or the
deep-pocket  syndrome,  will  introduce  a far more  equitable  and  responsible
allocation of risk. No defendant  will  be  liable  for more than his individual
apportionment.

This  means  that architects, engineers, local government officers and  building
surveyors  will  not  have  to  assume  liability  for  the  mistakes  of  other
defendants.  Traditionally, a large part  of the costs of insurance premiums has
resulted from the risk that an insured practitioner has had to accept for awards
involving insolvent defendants. The reforms will  diminish the risk  to insurers
which in turn will restrain  insurance premiums. This reform is one of the major
factors  that will  give  insurers the incentive  to  stay in  the  construction
industry. Together with the new compulsory insurance requirement,  the  measures
will establish a fair and responsible liability regime.
The Building  Bill  will introduce a  clear  trigger date for  consideration  of
construction liability claims. Under the current statute of limitations there is
a  great deal of  confusion  over when the  existing  six-year limitation period
starts and ends. One test is from when damage occurs;  another test is from when
a fault is discernible. The result is confusion and increased litigation risk.

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If one follows  the first  test it  can be  difficult to  ascertain when  damage
actually  occurred. It  is  conceivable that  damage  may have  occurred  during
construction. If  this  were  the  case,  the plaintiff -- that is, the property
owner -- would be able to claim only for significantly less than six years after
the issue of an occupancy permit. On the other hand, if the alternative  test is
followed, namely, from when the damage is discernible  or infinity plus six, the
liability duration is absurdly open-ended, which in turn makes it impossible for
insurers to quantify risk.
In the words of the Honourable John A. R. Dowd,  a previous  Attorney-General of
New South Wales, who in 1989 commissioned an inquiry into limitation  periods in
the construction industry on the basis that the  construction industry warranted
special attention:

  The  present  law  is  unsatisfactory  for  the  victim  of a negligent act or
  omission. The starting date for the reckoning of the  period  of limitation is
  the date when  the damage actually occurs, and time will start to  run even if
  the damage is not  discoverable.  Potential  plaintiffs  may  find  themselves
  barred  from taking  legal action  before they  knew,  or could  even be  in a
  position to know, they had suffered damage.
In introducing  this  reform the government is mindful of the possibility that a
more  widespread review of liability  issues may be undertaken  in future, which
may lead to further changes.
The  Building Bill defines  a  clear starting date --  the  date of issue of  an
occupancy permit --  and a clear conclusion date  of 10 years from  the  date of
issue. This will remove the existing ambiguity surrounding the time during which
the building owner retains the right to issue legal proceedings.

This will  provide property owners with additional protection in  terms of years
beyond the very short number of years that now exists.
The  10-year  cap  reflects  international  trends  and  laws  that   have  been
promulgated in the Northern Territory, South  Australia and New Zealand over the
past 18 months.  It is based upon  local, national and  international  research,
which has  shown  a very low incidence of claims at  or  beyond year 10. It also
represents a logical  and responsible solution  to  a profoundly  deficient  and
uncertain  area of  the law  in a  manner which  protects the  interests of  all
parties.
The 10-year cap applies to property damage resulting from defects in the design,
construction approval and  inspection of buildings. It does not, however, extend
to claims for personal injury or death which may result from the damage.

To ensure that the liability changes do not have an impact beyond that intended,
the clause notes to the Bill acknowledge that the definition  of building in the
Bill  is  not to be read to  include  structures  that are not in the nature  of
buildings, such as railway viaducts.
STATEMENT UNDER SECTION 85(5) CONSTITUTION ACT 1975
I  wish to  make a  statement  under  the  provisions  of  section 85(5)  of the
Constitution Act  1975 about  the reasons it is proposed to alter  or vary  that
section in this Bill.
Clause  128 confers immunity  from action for  municipal building surveyors  and
private building surveyors for anything done or omitted to be done in good faith
in reliance on  a certificate given by  a registered building practitioner under
section 238.

Without that immunity it would be  impossible  for the building surveyor to rely
on  a certificate. Clause 10 of Schedule 4  continues immunities conferred under
the Building  Control  Act  1981  in  respect  of things  occurring  before  the
commencement of this clause. This ensures that existing immunities remain.
Clauses  129 to 133 establish  a system for  apportioning  liability in building
actions, and clause 134 sets a new limitation period for building actions. It is
necessary to make it  clear that the Supreme Court  is to act in accordance with
those  clauses. Accordingly,  clause  260 alters or  varies  section 85  of  the
Constitution Act  1975 to limit  the  Supreme Court's jurisdiction  in  the ways
mentioned above.
BUILDING PERMIT LEVY AND BUILDING ADMINISTRATION FUND

The Bill proposes that the Building Control Commission will be responsible for a
building administration fund  into which all moneys  received under the Act will
be paid. The fund will finance the commission's operations. This will be subject
to the provisions of the Audit Act.
The building  permit  levy is set at 0.064 per cent  of the contract sum for the
work.  This will mean that the cost to  an  owner for a project costing $100 000
will  be $64. The  levy  will  be payable  to  the  commission  at the  time  an
application for a  permit is granted. The levy will be payable on permits issued
from the date on which the provision comes into effect.
PUBLIC SAFETY IN EXISTING BUILDINGS

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The  approach  embodied  in  the  current  Building  Control Act  regarding  the
inspection and  upgrading of existing  buildings will be  extended beyond purely
fire safety matters to include a broader range of public safety  matters such as
structural safety.
PROTECTION OF ADJOINING PROPERTY
An enhanced  version of the existing  building referees boards will  replace the
current more expensive arbitrator system of  resolving  disputes between parties
where  protection works are deemed necessary for properties  adjoining  proposed
building works.
DANGEROUS BUILDINGS

Dangerous buildings,  fire  report  matters  and  closures  of  unsafe  assembly
buildings are matters which will remain local government  responsibilities to be
dealt  with by individual councils or a regional corporation. They will  not  be
within the  jurisdiction  of  a private sector building surveyor. A council or a
corporation will have the option of employing  private sector building surveyors
on a contract  basis to perform the necessary functions, but  the accountability
will not be transferable from the council or corporation.
FLEXIBLE BUILDING PERMIT FEES
The Bill will permit municipal councils to set  the level of fees to be paid for
permits  or  services carried  out  under the Building  Bill.  This will  enable
councils to compete on  an  equal footing with private building surveyors in the
provision of permit services under the legislation.

If  a  council  chooses to  subsidise  the  building permit  process  within its
municipal district  by charging fees below actual costs, it will be  able to  do
so.
ENERGY STANDARDS
The  current Building Control Act  1981 has contained since  its introduction in
August 1982 a regulation-making  power  relevant  to  energy conservation. Under
section 25(a)(iv), regulations may be  made  in  relation  to  resistance to the
transmission of heat . This head of power was utilised  to  amend  the  Victoria
Building Regulations in 1990. Those regulations,  which came into force in 1991,
require with some  minor  exceptions the insulation  of  all new  dwellings  and
additions to existing dwellings.

The proposed  introduction of  a more explicit head of power for  the making  of
building  regulations  covering  energy  conservation  issues  will  enable  new
policies to be covered by regulations in this  important area. The Department of
Energy and Minerals is now working on the development  of  a commercial building
energy  code   that  will  promote  the  application  of  cost-effective  energy
efficiency strategies in new commercial  non-residential buildings. Once agreed,
the code can be embodied in regulations. It is intended that any proposed energy
standards will:
        be compatible with government energy policy;
        result in a net benefit to the Victorian economy in supplying energy via
        conservation;
        be performance orientated; and

        be limited to circumstance  where  similar results cannot be practically
        achieved without regulation.
The Bill provides a head of power  for the  making of  regulations for  swimming
pools.
MAINTENANCE AND USE REGULATION
It is proposed to  enhance the regulation of public safety in existing buildings
by providing for the making  of  regulations on maintenance and use matters, and
for an  ongoing  licensing power to  ensure  the maintenance  of  certain safety
facilities such as fire sprinkler systems, exit signs and emergency lighting.
CONSOLIDATION

Under  the Building Bill places of public entertainment, open-air public venues,
including non-building  venues, and  temporary entertainment structures  such as
circus tents, temporary seating systems,  temporary  halls  and  display  venues
which  are  currently  regulated  by the Health Act will be  brought  under  the
building regulation legislation.  Amendments  will also be  made to the  Housing
(Standard  of Habitation) Regulations 1985 to bring those requirements into line
with the Building Code of Australia.
The Building Bill provides a mechanism for the scrutiny of  any regulations made
under  other  Acts  that may contain matters for which regulations can  be  made
under   the  Building  Act.  A  disallowance  procedure  power  for  duplicatory
regulations is also provided.

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The Building Bill restates  the  amendment to the Building Control Act made last
year  which invalidates  any local  law to  the extent  that it provides for any
matter for which a regulation may be made under the Act, unless the local law is
one that may be made under the Act.
PLUMBERS GASFITTERS AND DRAINERS REGISTRATION BOARD
It was proposed to restate in this legislation Part VI  of the  Building Control
Act 1981 dealing with the  registration of plumbers, gasfitters and drainers. It
has now  been decided that these  provisions should be  in separate legislation.
The Commonwealth and  State  labour Ministers have  instituted a review  of  the
qualifications of plumbers, gasfitters  and drainers and  it would therefore  be
premature  to  proceed  with the legislation in advance of the completion of the
review.

CONCLUSION
The Building Bill  is  a reform package  that  will take  construction  industry
regulation into the 21st century. The new  organisational  arrangements  provide
for the  establishment of a responsive  system that maximises the involvement of
the industry in  the regulatory framework.  The liability and  insurance reforms
will introduce  a much fairer regime and will provide  far more  clarity to  the
law. This  will provide the  public with financial  guarantees and professionals
with a more equitable working environment. It will establish an environment that
is competitive and responsible. The Bill will provide the public with choice and
options and will require building surveyors to deliver cost effective and timely
building permit services.
This Bill will herald a new era in the Victorian construction industry.

I thank, and  express  the appreciation  of  the government to,  those  industry
people who have been involved in the  consultations  with the preparation of the
Bill. The Bill is the result of the work of a number of Ministers, including  my
predecessors. The Bill has been in preparation  for more  than four years: it is
not only my work; it is also the work of many people, and I commend them for the
job they have done in its preparation.
I commend the Bill to the House.
Debate adjourned on motion of Mr DOLLIS (Richmond).

  Mr MACLELLAN (Minister for Planning) -- I move:
  That the debate be adjourned until Thursday, 18 November.

I  suggest that  the debate  be adjourned for one week. Additional time  will be
available if required and,  with the understanding of the honourable member  for
Richmond, the placing of the Bill on the Notice Paper in the following week will
be discussed with the opposition Leader of the House.
Motion agreed to and debate adjourned until Thursday, 18 November.